Employee Benefits Law Report

Important update on the Payroll Protection Program

Since the passage of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), the Small Business Administration (SBA) and the U.S. Treasury Department have released a series of interim final rules and updated Frequently Asked Questions (FAQs) (as of April 8, 2020) regarding Paycheck Protection Program (PPP). These updates provide critical guidance and information to borrowers and lenders alike in the implementation of the highly sought after program. This blog describes some of the key clarifications to the program since its enactment.

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Workplace exposure to COVID-19: Can employers be liable?

As COVID-19 cases continue to mount nationwide, so have lawsuits relating to fallout from the virus. On April 6, 2020, in one of the first COVID-19-related lawsuits of its kind, the estate of an Illinois Walmart Supercenter employee sued Walmart and the premises owner for wrongful death in Toney Evans v. Walmart, Inc., et al. My colleague Brodie Butland details the lawsuit in this Employer Law Report blog.

How to claim COVID-19 tax credits under the FFCRA and the CARES Act

There are three COVID-19 related tax credits that were introduced under the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which are subject to various limitations:

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UPDATE: Tax credits available under the Families First Coronavirus Response Act

On March 18, 2020, the Families First Coronavirus Response Act (FFCRA) was signed into law requiring employers with fewer than 500 employees to make payments for COVID-19 related FLMA leave and paid sick leave required by the Act. To lessen this financial burden to employers, the act provides for refundable tax credits to offset payroll taxes. The FFCRA tax credits will be provided for eligible wages paid from April 1, 2020, to December 31, 2020.

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How ESOP sponsors can survive the disruption from COVID-19

The spread of COVID-19 and the resulting disruption to the economy has led many employers to think creatively about how to manage cash, provide for the sustainability of their businesses and preserve the culture they have created with their employees and customers. These issues are especially critical for employee stock ownership plan (ESOP) companies, many of whom are in the process of their annual appraisal. These appraisals are important because they directly affect the size of the repurchase obligation – the cash companies must pay to participants for their distributions and diversifications during the year. Fortunately, there are some tools that ESOP companies may be able to utilize. This blog will describe ERISA fiduciary and other strategies ESOP companies can consider with respect to valuations and the related cash management needs those valuations will create.

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Tax credits available under the Families First Coronavirus Response Act

This post was updated on April 7, 2020. Please read the update here.

On March 18, 2020, the Families First Coronavirus Response Act (FFCRA) was signed into law requiring employers with fewer than 500 employees to make payments for COVID-19 related FMLA leave and paid sick leave required by the act. To lessen this financial burden to employers, the act provides for refundable tax credits to offset payroll taxes. The FFCRA tax credits will be provided for eligible wages paid from April 2, 2020 to December 31, 2020.

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Navigating employment issues in the wake of COVID-19 webinar

We have all felt the tremendous impact to our workplaces and daily lives following the COVID-19 outbreak We’ve also watched the daily press conferences announcing new legislation and executive orders–but what happens next?

My colleagues Leigh Ann Benedic and Mike Underwood hosted a discussion on effects of the Family First Coronavirus Response Act (FFCRA) on employers, state law developments and provide answered to frequently asked questions that will help you manage your workforce effectively through these unique times. Click here to watch the webinar recording.

This program was recorded on Monday, March 23, 2020 and may not reflect updates in regulations after that date.

IRC Section 409A v. COVID-19: The nonqualified and executive compensation clash, and how employers can navigate it

Unintended consequences are a fact of life. As one of many examples, after the Titanic sank, the United States enacted a law that required any American ship carrying over 100 tons of weight to have enough lifeboats for every passenger. It was a noble thought – no more rationing of lifeboats in the event of a future ship wreck. Unfortunately, the SS Eastland was a poorly designed ship. The additional lifeboats required by the new law added enough weight to cause the ship to roll over not too far away from shore. Some passengers were able to step on to dry land, but others were trapped as the ship took on water, leading to an unintended tragedy.

We may be seeing a similar (but far less tragic) example of unintended consequences play out in the executive compensation arena. In 2004, Section 409A was added to the Internal Revenue Code to restrict the ability of nonqualified plan participants from canceling their deferral elections and accelerating payment. Section 409A and other corporate reforms also restricted the ability to accelerate stock options and revise incentive plan performance goals and payouts.

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