30 Dec

December 2020 Federal HR Updates

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COVID-19 Relief Bill: What It Means for PEOs & Small Business

What happened?
On Monday December 21, the House passed an omnibus spending bill that included $1.4 trillion to fund the federal government and $900 billion of additional COVID relief by a vote of 399-53. The Senate then passed the legislation by a vote of 92-6. 

What are the details?
Below is a summary of the key provisions in the bill impacting PEOs. 

Tax Provisions
The omnibus spending bill – which is almost 5,600 pages long – contained many tax provisions that impact PEOs. Randy Hardock and Courtney Zinter of Davis & Harman (NAPEO’s outside tax counsel) have prepared this document which contains the details of these provisions and how they apply to PEOs.

Specific tax provisions of interest to PEOs include:

  • Paid Sick and Family Leave Credits
    • Extends the paid sick and family leave credits against employment taxes from the Families First Coronavirus Response Act (FFCRA) for three additional months to March 31, 2021.
    • The bill does not extend the FFCRA’s mandate to provide paid sick leave or paid family and medical leave beyond December 31, 2020.
  • Changes to the Employee Retention Tax Credit (ERTC)
    • Repeals the provision denying the ERTC to employers receiving a PPP loan. Instead, mechanisms would be created to prevent the same wages from being used for both PPP loan forgiveness and the ERTC.
    • Extends the ERTC to apply to wages paid before July 1, 2021 (instead of January 1, 2021).
    • Increases the credit percentage from 50 percent to 70 percent of applicable wages.
    • Increases the per-employee limitation on applicable wages from $10,000 total to $10,000 per calendar quarter. In combination with the increased credit percentage, this would increase the maximum credit per employee from $5,000 to $7,000 per quarter (up to $14,000 for the first two quarters in 2021).
    • The following language was added to the ERTC provisions that specifically addresses PEOs: Any forms, instructions, regulations, or guidance described in paragraph (2) shall require the customer to be responsible for the accounting of the credit and for any liability for improperly claimed credits and shall require the certified professional employer organization or other third-party payer to accurately report such tax credits based on the information provided by the customer.
      It is not clear whether this provision applies retroactively or just towards new credits taken in 2021.
    • Makes the ERTC available if the business experienced a decline of at least 20 percent in gross receipts (instead of a 50 percent decline) as compared to the same calendar quarter in the prior year.
    • Modifies the small employer definition of qualified wages to apply to employers that have 500 or fewer employees (instead of 100 of fewer employees).
  • Creates a temporary employee retention credit of 40 percent of qualified wages up to $6,000 (maximum credit of $2,400 per eligible employee) for eligible employers affected by certain qualified disasters. This credit is retroactive and does not apply to COVID-related disasters.
  • The bill also extends the Work Opportunity Tax Credit for five years.

Paycheck Protection Program and Other Small Business Assistance
In addition to the tax provisions, the COVID-19 relief portion of this legislation contains additional assistance for small businesses, which NAPEO has been lobbying Congress in support of. Specifically, it contains the following provisions designed to assist small businesses:

  • Creates a second loan from the Paycheck Protection Program, called a “PPP second draw” loan for smaller and harder-hit businesses, with a maximum amount of $2 million.
  • Creates a simplified application process for loans under $150,000.
  • Expands the expenses that can be covered by a PPP loan.
  • Makes 501(c)6 organizations that do not lobby eligible for PPP loans.
  • Makes the expenses covered by PPP loans tax deductible.

Details on these provisions can be found on this document provided by the Community Banker’s Association.

Unemployment Insurance
The COVID-19 relief provisions also make the following changes to unemployment insurance:

  • Unemployed individuals get an additional $300 per week from December 26, 2020 to March 14, 2021.
  • Extends and phases out Pandemic Unemployment Assistance (PUA), a temporary federal program covering self-employed and gig workers, to March 14, 2021 and extends benefits from 39 to 50 weeks with all benefits ending April 5, 2021.
  • Extends and phases out Pandemic Emergency Unemployment Compensation (PEUC) which provides additional weeks when state unemployment runs out, to March 14, 2021 (after which no new applications) through April 5, 2021.
  • Extends provisions to March 14, 2021, including interest-free loans to the states.

No federal money was provided to shore up the short falls in state unemployment funds.

Miscellaneous Provisions
The omnibus spending bill contained so-called “tax extenders,” which are temporary provisions in the tax code that are designed to support specific economic activities. There are two provisions of interest to PEOs that have been extended for five years. They are: 

  • The employer credit under section 45S for paid family and medical leave, originally enacted as part of tax reform in 2017.

The expanded exclusion for employer-provided educational assistance, including student loan repayment benefits as enacted as part of the CARES Act. NAPEO has lobbied in support of this provision.

What do employers need to do?
PEOs and small businesses working with them should review the above information to know what benefits may be available to them.

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EEOC Releases FAQs on the COVID-19 Vaccine / Considerations for Employers

What happened?
The Equal Employment Opportunity Commission, or EEOC, has provided guidance in the form of Frequently Asked Questions to employers regarding the practice of employers requiring employees to be vaccinated for COVID-19.

What are the details?
As the COVID-19 vaccines are administered around the country many employers were starting to wonder what the outlook was on if they would be able to require employees to have the COVID-19 vaccine before coming into the workplace. The EEOC is the first of the federal agencies to chime in with specific guidance, with the DOL only providing information in the form of references to previous stances. The FAQ covers many questions regarding how employers may go about administering this requirement. For example:

“For any COVID-19 vaccine that has been approved or authorized by the Food and Drug Administration (FDA), is the administration of a COVID-19 vaccine to an employee by an employer (or by a third party with whom the employer contracts to administer a vaccine) a “medical examination” for purposes of the ADA?”

A: “No.  The vaccination itself is not a medical examination.  As the Commission explained in guidance on disability-related inquiries and medical examinations, a medical examination is “a procedure or test usually given by a health care professional or in a medical setting that seeks information about an individual’s physical or mental impairments or health.”  Examples include “vision tests; blood, urine, and breath analyses; blood pressure screening and cholesterol testing; and diagnostic procedures, such as x-rays, CAT scans, and MRIs.”  If a vaccine is administered to an employee by an employer for protection against contracting COVID-19, the employer is not seeking information about an individual’s impairments or current health status and, therefore, it is not a medical examination.”

To read all of the information provided by the EEOC see the guidance provided here. This new guidance can be found by clicking the link and using the find function in your browser (usually ctrl + f) and searching for 12/16.

Additional reading related to this issue can be found in this article. Note: this article was released prior to the EEOC FAQs update. However, it includes some very helpful considerations for employers in regard to deciding whether or not a vaccination program is a good choice for your company.

Additional articles on this subject can be found here: From SHRM, From Jones Walker LLP, and from Dickinson Wright.

What do employers need to do?
Employers who are thinking of implementing a policy requiring or encouraging employees to be vaccinated for COVID-19 should review the information about and review the articles listed to get a complete understanding of all the laws and administrative bodies that play a role here.

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Proposed Changes to HIPPA Relax Requirements

What happened?
On December 10, 2020, the U.S. Department of Health and Human Services (HHS), Office for Civil Rights (OCR) released a proposed rule that would revise the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

What are the details?
In its news release, the OCR noted that the changes “seeks to promote value-based health care by examining federal regulations that impede efforts among healthcare providers and health plans to better coordinate care for patients.” The proposed changes come on the heels of the recently delayed Information Blocking Rule, which seeks to prohibit interferences with access, exchange, or use of electronic health information (EHI). The key proposed changes are below:

Relaxing Requirements:
The HHS is proposing some changes that would loosen the standards for disclosing PHI in certain instances and for technical compliance with HIPAA. For example, the privacy standard currently permits covered entities to make certain uses and disclosures of PHI based on their “professional judgment.” This standard permits such uses or disclosures based on a covered entity’s good faith belief that the use or disclosure is in the best interests of the individual. The proposed standard is more permissive and would presume a covered entity’s good faith; however, this presumption could be overcome with evidence of bad faith.

Strengthening Individuals’ Right to Access:
Consistent with the underlying objectives of the Information Blocking Rule, the proposed rule seeks to increase the ability of individuals’ access to their PHI. This could be achieved by allowing individuals to take notes, videos, and photographs using personal resources after arranging a mutually convenient time and place at no cost to the covered individual. Additionally, the proposed changes reduce the time frame allowed for covered entities to response to requests for access, from the previous 30 days, to instead be as soon as practicable but no longer than 15 days.

Disclosures to Social Service Organizations:
The proposed rule would modify 45 CFR 164.506(c) and add a new subsection 164.506(c)(6), which would expressly permit covered entities to disclose PHI for certain social services. Specifically, it would allow covered entities to disclose PHI to social services agencies, community based organizations, home and community based service providers, and other similar third parties that” provide health-related services to specific individuals for individual-level care coordination and case management, either as a treatment activity of a covered healthcare provider or as a healthcare operations activity of a covered healthcare provider or health plan.”

The proposed changes can be found here.

An article providing additional summaries, can be found here.

What do employers need to do?
Employers dealing with electronic health information should keep an eye on these rules and begin making preparations to adjust workplace practices to accommodate these changes, should they be implemented.

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IRS Announces New Standard Mileage Rates for 2021

What happened?
The Internal Revenue Service (IRS) issued the 2021 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

What are the details?
Beginning on Jan. 1, 2021, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56 cents per mile driven for business use, down 1.5 cents from the rate for 2020,
  • 16 cents per mile driven for medical or moving purposes for qualified active duty members of the Armed Forces, down 1 cent from the rate for 2020, and
  • 14 cents per mile driven in service of charitable organizations, the rate is set by statute and remains unchanged from 2020.

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

The full notice covering these changes can be found here.

What do employers need to do?
Employers should review the above mileage rates and update their internal policies regarding business travel, if needed.

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