Customer Support during COVID-19

An Executive Memorandum issued by the president on Aug. 8, 2020, instructed the Secretary of the Treasury to defer the withholding, deposit, and payment of the tax imposed on the employee portion (6.2%) of the Social Security tax. It also directed the Secretary to issue guidance of how this should be implemented.

Read the article in our WORX library

The guidance left the final decision to the employers on whether to offer this option to their employees. Whether you should make the deferral available or not depends on the facts and circumstances of your business.  

No, employers are not required to choose to defer the employee share (6.2%) of the Social Security tax, and, in fact, should consult with their trusted advisor to understand the risks to their business before making a decision.

• Employers are responsible to pay any tax amounts deferred, even if the employer cannot withhold or collect the deferred amounts from employees.
  • For example, the employee could be on leave. Also, an individual who took the deferral may no longer be employed by the business. 
  • While you may be able to arrange for alternative methods of collecting the tax due from the employee, additional guidance is required to determine what you can do.
• This is only a deferral and current guidance does not indicate any forgiveness.

The deferral period runs from Sept. 1 to Dec. 31, 2020.

Employers will be required to withhold and remit any deferred employee Social Security tax ratably between Jan. 1 and April 30, 2021 from its employees who took the deferral. 

• Employees who defer will therefore have the 6.2% Social Security tax obligation and the deferred amount withheld from their checks for four months. To withhold ratably means that if the employee deferred $800 and there are eight pay periods between Jan. 1 and April 30, the employee will see an extra $100 withheld (in addition to their required Social Security tax) from their paycheck for eight straight pay periods.

Yes, penalties and interest begin to accrue May 1, 2021, on any unpaid amounts.

Employers are not required to offer the option of the Social Security payroll tax deferral and remain liable for the deferred taxes even if they cannot collect them from their employees. Paychex recommends that businesses consult with their trusted advisors before making a decision. If you are interested in more information on offering the option, please speak with your representative.

Read more in our WORX article on the payroll tax deferral

President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law on March 27, 2020. While most of the law provides economic help for businesses, it also offers relief options for participants of 401(k) retirement plans and Individual Retirement Accounts (IRAs), including:

• Enhanced loan availability and relief for outstanding loan repayments
• COVID-related distributions and waived early withdrawal penalty
• Waived Required Minimum Distribution (RMD) for the 2020 calendar year

Paychex has written a CARES Act WORX article outlining some of the high-level provisions.

The CARES Act provides economic relief to individuals and businesses. The economic relief package contains provisions for an employer to defer payment of the employer portion of social security tax on deposits that would otherwise be required to be made during the period beginning March 27, 2020, and ending December 31, 2020. This is essentially an interest-free loan for employers.

The first time you request the Employer Social Security Tax Deferral, we’ll:

1. Put your payroll on a processing hold
2. Email you an addendum to your Services Agreement that must be signed by an authorized officer of the company and returned to Paychex before we can process your payroll without employer social security tax.
3. Your payroll will be processed once we receive the signed addendum and make the requested changes.

Signing the addendum to the Services Agreement:

• You only need to sign the addendum the first time you request the Employer Social Security Deferral under the CARES Act. If you are currently deferring and have a PPP loan you will not need to resign a new addendum.
• Paychex will apply your request to defer the Employer portion of Social Security to every organization that is a party to your service agreement with Paychex. If more than one organization is a party to the Service Agreement, Paychex will apply your request to all organizations included in the agreement.

We’re waiting on more guidance from the IRS on the process of collections and payments of the deferred tax in 2021 and 2022.

Yes. On June 5, 2020, the PPP Flexibility Act was signed into law by President Trump. As part of this Act, if you received a Paycheck Protection Program (PPP) Loan, you can now defer deposit and payment of your share of social security tax incurred through December 31, 2020, regardless of whether or not your loan is forgiven. Previously, you could only defer deposit and payment of this tax until your PPP loan was forgiven.

If any employer social security tax was already collected and paid to the IRS after your loan was forgiven, it can’t be refunded. You can begin deferring deposit and payment of the employer share of social security tax again immediately until December 31, 2020.

Garnishments are governed by government agency or court orders and garnishment payments must continue until a formal notice is received from the entity that issued the garnishment advising that the garnishment has been satisfied, or that collections are to cease.

Yes. Unless a garnishment is subject to a stop order, garnishment wages paid through the new pay codes are subject to garnishment

The Families First Coronavirus Response Act (the "FFCRA"), signed by President Trump on March 18, 2020, provides small and midsize employers refundable tax credits that reimburse them, dollar-for-dollar, for the cost of providing paid sick and family leave wages to their employees for leave related to COVID-19. The leave provisions of the FFCRA generally apply to all private employers with fewer than 500 employees. The effective date was April 1, 2020.

Small businesses with fewer than 50 employees may be exempt if providing an employee such leave would jeopardize the viability of the business as a going concern. This is not an automatic exemption. The guidance provides for the criteria and documentation for consideration.  The guidance further suggests that determination for an exemption must be documented at the time of each leave request. Employers with fewer than 25 employees may be exempt from certain provisions related to job protection.

The effective date was April 1, 2020.

Guidelines:

The FFCRA requires employers to provide paid leave through two separate provisions:

• Emergency Paid Sick Leave Act (EPSLA), which entitles workers to up to 80 hours of paid sick time when they are unable to work for certain reasons related to COVID-19 (EPSL), and
• Emergency Family and Medical Leave Expansion Act (EFMLEA), which entitles workers to certain expanded paid family and medical leave (EFML).

Refundable Tax Credit. The FFCRA provides that employers subject to the EPSLA and the EFMLEA paid leave requirements are entitled to fully refundable tax credits in the full amount (100%) of the qualified sick leave wages and qualified family leave wages, plus allocable qualified health plan expenses and the employer’s share of Medicare tax, paid for leave during the period beginning April 1, 2020, and ending December 31, 2020.

Emergency Paid Sick Leave. Under the EPSLA there are six qualifying reasons for which an employee is entitled to take paid leave related to COVID-19 if the employee is unable to work (including unable to telework) because the employee:

1. is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
2. has been advised by a health care provider to self-quarantine related to COVID-19;
3. is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
4. is caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
5. is caring for his or her child whose school or place of care is closed (or child care provider is unavailable) due to COVID-19 related reasons; or
6. is experiencing any other substantially-similar condition specified by the U.S. Department of Health and Human Services.

Under EPLSA a full-time employee is eligible for up to 80 hours of EPSL, and a part-time employee is eligible for the number of hours of leave that the employee works on average over a two-week period for any combination of the six reasons above.

When taking EPSL for any of the six qualifying reasons, the employee has the independent discretion to use their EPSL entitlement or any accrued paid leave provided by the employer under company policy or jurisdictional leave law where the reason for leave is consistent with the policy and/or law. The employee cannot be forced to use other available paid time prior to using their EPSL entitlement.

Expanded Family Medical Leave. Under the EFMLEA, an employee also qualifies for Expanded Family and Medical Leave (EFML) if the employee is caring for his or her child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19. An eligible employee is entitled to 12 weeks of expanded family and medical leave, however the first two weeks of EFML are unpaid unless EPSL or another applicable paid leave is used. Under the EFMLEA:

• Employees who have been on their covered employer’s payroll for at least 30 calendar days for a covered employer would be eligible for qualifying leave. An employee is considered to be employed for at least 30 calendar days if the employee had the employee on its payroll for the 30 calendar days immediately prior to the day the employee’s leave would begin.
• An employee is eligible for up to 12 total weeks of leave under EFMLA for the same reason as (5) above. The first 2 weeks of EFML are unpaid but eligible employees may receive pay under EPSL taken for the same reason.
• Employees taking leave under the EFMLEA must be permitted to elect to use any available paid time off including vacation, personal time, medical leave and/or sick leave during the first 10 days of their EFML, including EPSL. Following the initial 10 days of EFML, when the employee becomes eligible for EFML pay, the classic FMLA provision for substitution of the employee's accrued paid leave is inapplicable, and neither the employee nor the employer may require the substitution of paid leave. However, employers and employees may agree, where Federal or state law permits, to have accrued paid leave supplement the two-thirds pay under the EFMLEA so that the employee receives the full amount of their normal pay.

Calculation of Pay

Generally, employers subject to the FFCRA must provide up to 80 hours of paid sick leave to eligible full-time employees and pro-rate part-time employee paid sick time based on the average number of hours the employee is regularly scheduled to work in a two-week period (EPLSA) and up to an additional ten weeks of paid leave under EFMLA. The calculation and caps for compensation vary dependent on the reason for leave up to a maximum of $511 per day and up to $200 per day depending on the reason for the leave. Aggregate caps exist as well.  Employees are to be paid according to the following schedule:

Emergency Paid Sick Leave:

• For reasons (1) – (3) above. The higher of the employee’s regular rate or the applicable federal, state, or local minimum wage, up to $511 daily and $5,110 in the aggregate (over a 2-week period);
• For reasons (4) (5) and (6) above. The higher of 2/3 of the employee’s regular rate or 2/3 of the applicable federal, state, or local minimum wage up to $200 daily and $2,000 in the aggregate (over a 2-week period).

Expanded Family Medical Leave

• For the same reason as set forth in (5) an eligible employee is entitled to 12 weeks of EFML. The first two weeks of EFML are unpaid unless EPSL or another applicable paid leave is used. Following the first two weeks, an eligible employee is entitled to up to $200 daily and $10,000 in the aggregate for the next 10 weeks.

Return to these FAQs for the most up-to-date details about requirements of the Act, employer tax credits, and reporting sick time. For more information, refer to the Paychex WORX article, Funding, tax credits, and paid leave laws expanded to respond to COVID-19 pandemic.

As part of the FFCRA, qualified health plan expenses paid by the employer that are associated with wages paid under the Emergency Sick and FML Child Care earnings are eligible for a dollar-for-dollar credit

You need to contact your payroll service representative to set these earning codes up on your payroll. You’ll also need to report the employer portion of the health insurance expenses associated with paid leave as we have no way of calculating the amount.

For information about how to calculate your qualified health plan expenses, go to the IRS site, COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs, Determining the Amount of Allocable Qualified Health Plan Expenses.

By reporting amounts through the earning codes we have set up, we’ll calculate the dollar-for-dollar credit and reduce your federal tax liability on future payrolls. Any excess amount will be carried-over and applied as a credit to the next payroll. Any excess credit at the end of the quarter will be marked for a refund by the IRS on the 941.

Employer taxes on COVID-19 paid leave earnings are:

• Taxable for the Medicare portion of FICA
• Exempt for the social security portion of FICA

Employee taxes on COVID-19 paid leave earnings are:

• Taxable for the Medicare portion of FICA
• Taxable for the social security portion of FICA

By reporting amounts through the earning codes we have set up, we’ll calculate the dollar-for-dollar credit and reduce your federal tax liability on future payrolls. Any excess amount will be carried-over and applied as a credit to the next payroll. Any excess credit at the end of the quarter will be marked for a refund by the IRS on the 941.

Paychex continues to review implementation guidance related to the FFCRA from federal agencies.  We are updating our systems to support you during the COVID-19 (coronavirus) pandemic.

Here’s what we know as of Monday, March 30, 2020:

• The effective date for the FFCRA is Wednesday, April 1, 2020.
• The leave provisions of the FFCRA generally apply to all private employers with fewer than 500 employees.
• Eligible employees with a qualifying need related to the COVID-19 public health pandemic as specified in the FFCRA will be entitled to paid leave as of April 1, 2020.
• Each covered employer must post a notice of the FFCRA requirements in a conspicuous place on its premises.   
• Covered employers will be entitled to tax credits in the specified amount under the law for the benefits paid to eligible employees for qualified leave taken under the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act between April 1, 2020, and December 31, 2020.

Return to these FAQs for the most up-to-date details about requirements of the Act, employer tax credits, and reporting sick time.

The Families First Coronavirus Response Act was signed into law March 18, 2020. The Act dedicates tens of billions of dollars for paid sick and family leave, unemployment insurance, free COVID-19 testing, and other measures to help Americans impacted by the crisis.

The final bill will take effect for covered employers no later than 15 days after enactment and sunsets Dec. 31, 2020.

Emergency Paid Sick Leave Act

• Under the Emergency Paid Sick Leave Act, employers would be required to provide sick time, available for immediate use, to each employee who requires such time for qualifying reasons associated with COVID-19.
• Employers also must provide up to 80 hours of paid sick leave (PSL) to eligible full-time employees and pro-rate part-time employee paid sick time based on the average number of hours regularly scheduled in a two-week period. The calculation and caps for compensation vary dependent on the reason for leave up to the maximum $511 per day if the employee is directly impacted and up to $200 per day if it is for care provided to someone else. Aggregate caps exist as well.

Requirements

• Employees who have worked at least 30 calendar days for a covered employer would be eligible for qualifying leave.
• Small businesses with fewer than 50 employees may be exempt if the leave would jeopardize the viability of their business. Employers with fewer than 25 employees may be exempt from certain provisions related to job protection.
• Qualifying need is defined as “the employee is unable to work (or telework) due to a need for leave to care for a son or daughter younger than 18 years of age of such employee if the school (meaning a primary or secondary school only) or place of care has been closed, or the childcare provider of such a son or daughter is unavailable due to a public health emergency.”
• Eligible employees who qualify for leave under these reasons would be paid by their employer after the first 10 days of leave at a rate of not less than two-thirds of their current rate of pay for the number of hours the employee would otherwise be scheduled to work, up to a maximum of $200 per day or an aggregate of $10,000, for up to 12 weeks in the benefit year.
• Employees taking leave under the Emergency FML Expansion Act must be permitted to elect to use any available paid time off including vacation, personal time, medical leave, and/or sick leave during the first 10 days of their FMLA leave.
• Standards for employees covered under a multiple-employer bargaining agreement are addressed separately in the legislation.
• Exemptions apply for employers of healthcare workers and emergency responders.

For more information, refer to the Paychex WORX article, Funding, tax credits, and paid leave laws expanded to respond to COVID-19 pandemic.

Employers cannot require their employees to take paid time off before using paid sick leave under this Act. These benefits are in addition to any existing sick time policies at your company.

Yes, you will need to track and report wages paid to employees for eligible paid leave benefits covered under the FFCRA. We have updated our payroll system with new earnings codes to enable you to correctly report such wages. 

Employers may start using the new pay codes to report leave and wages paid covered under the FFCRA for leave dates on or after April 1, 2020. Prior to April 1, 2020 and after Dec. 31, 2020 any paid or legally protected leave that an employee is entitled to may be covered under a federal, state, or local law; collective bargaining agreement; or existing employer policy - it is not covered under the FFCRA. The FFCRA addresses eligible paid sick and family leave taken between April 1, 2020 and Dec. 31, 2020 for reasons specified in the Act.

Yes, if (1) you are a covered employer under the FFCRA, (2) your employee is eligible for leave, and (3) the as qualifying leave occurs between April 1, 2020 and Dec. 31, 2020. Eligible employees who take covered paid sick leave (EPSL) or expanded family and medical leave (EFML) between April 1, 2020 and Dec. 31, 2020 must be paid in accordance with the FFCRA

If you are considered a covered employer, your employees are eligible for wages up to the maximum cap. For you to take advantage of the benefits of the Act, those wages need to be included in your payroll reporting/processing.

Our tax team is managing these cases, please contact your normal payroll contact and they’ll connect you to this team.

Nothing in the Families First Coronavirus Response Act requires you to cover employees due to the inability to work because of the location of business shutdowns. Employees may have the choice to use paid leave or forego pay during that period. However, employers must review any applicable state or local law or ordinance that requires employers to provide paid leave and ensure compliance with the same.

The Act does not include any provision for paying employees who are unable to work from home and are not able to go to work because of a shelter-in-place order.

Certain public employers are covered under the Act. Clients should be directed to the U.S. Department of Labor website – FFCRA Questions and Answers page for specifics related to their situation. Covered public employers are addressed in questions 52-54.

We’re working in concert with our industry coalition, the National Payroll Reporting Consortium (NPRC), to urge tax agency adoption of rules that can be easily and quickly administered or implemented for the FFCRA. Please makes sure you are tracking any other credits that you would typically apply to the Form 941 return.

The IRS said that there will be clear guidance for employers with these numbers of employees, but it has not been made available yet.

We’re working in concert with our industry coalition, the National Payroll Reporting Consortium (NPRC), to urge tax agency adoption of rules that can be easily and quickly administered or implemented for the FFCRA. We will send updates once we have final guidance.

Summary: The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020, is designed to encourage Eligible Employers to keep employees on their payroll, despite experiencing economic hardship related to COVID-19, with an employee retention tax credit (Employee Retention Credit). The Employee Retention Credit is a fully refundable tax credit for employers equal to 50 percent of qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees.

Guidelines: An Eligible Employer for purposes of the Employee Retention Credit are those that carry on a trade or business during calendar year 2020, including a tax-exempt organization, that either

• Fully or partially suspend business operations during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious or other purposes) due to COVID-19. For more detail on this requirement go to IRS website COVID-19-Related Employee Retention Credits: Determining When an Employer’s Trade or Business Operations are Considered to be Fully or Partially Suspended Due to a Governmental Order FAQs,

or

• Experiences a significant decline in gross receipts during the calendar quarter. A significant decline in gross receipts begins with the first quarter in which an employer’s gross receipts for a calendar quarter in 2020 are less than 50 percent of its gross receipts for the same calendar quarter in 2019. The significant decline in gross receipts ends with the first calendar quarter that follows the first calendar quarter for which the employer’s 2020 gross receipts for the quarter are greater than 80 percent of its gross receipts for the same calendar quarter during 2019. For more detail on this requirement go to IRS website COVID-19-Related Employee Retention Credits: Determining When an Employer is Considered to have a Significant Decline in Gross Receipts and Maximum Amount of an Eligible Employer’s Employee Retention Credit FAQs.

Notes:

• The IRS also qualified rules for new businesses that allow them to use the gross receipts for the quarter they started business as a reference for any quarter which they do not have 2019 figures because they were not in business, using estimates if they started mid-quarter
• If you or any member of the aggregate group got a PPP loan that is not returned by May 14, 2020, under the safe harbor for returning the loans you do not qualify for the retention credit, regardless how much of the loan is forgiven.

The refundable tax credit is equal to 50% of qualified wages paid to employees after March 12, 2020, and before January 1, 2021.

The credit equals 50% of the qualified wages (including qualified health plan expenses) that an Eligible Employer pays in a calendar quarter. The maximum amount of qualified wages for each employee for all calendar quarters is $10,000 so that the maximum credit for qualified wages paid to any employee is $5,000.

Qualified wages are wages and compensation paid by an Eligible Employer to employees after March 12, 2020, and before January 1, 2021. Qualified wages include the Eligible Employer’s qualified health plan expenses that are properly allocable to the wages. The definition of qualified wages depends, in part, on the average number of full-time employees (as defined in section 4980H of the Code) employed by the Eligible Employer during 2019.

Employers with 100 or fewer employees: If an Eligible Employer averaged 100 or fewer full-time employees in 2019, the Employee Retention Credit is based on qualified wages paid to any employees, regardless of whether they worked or not during any period of economic hardship (1) a full or partial suspension of operations as described above, or (2) a significant decline in gross receipts (i.e., employees who were and were not working, but were still paid).

Employers with more than 100 employees: If an Eligible Employer averaged more than 100 full-time employees on average in 2019, then the credit is allowed only for wages paid to employees who did not work during the calendar quarter due to either (1) a full or partial suspension of operations as described above, or (2) a significant decline in gross receipts. For these employers, qualified wages taken into account for an employee may not exceed what the employee would have been paid for working an equivalent duration during the 30 days immediately preceding the period of economic hardship

Note: For employers with more than 100 employees, paid time off (PTO), sick, and other time away from work as a result of existing employer leave policies do not count towards qualified wages. For more information on qualified wages and full-time employee definitions go to COVID-19-Related Employee Retention Credits: Determining Qualified Wages FAQs.

Application of the Employee Retention Credit. The credit is allowed against the employer portion of social security taxes under section 3111(a) of the Internal Revenue Code (the “Code”), the credits are fully refundable because the Eligible Employer may get a refund if the amount of the credit is more than certain federal employment taxes the Eligible Employer owes.

Paychex updated our software to include earnings codes that automatically take half of the wages entered and apply this amount to the credit up to $10,000 in wages for each employee. The credit is calculated at 50% of the eligible wages, up to a maximum of $5,000 per employee.

By reporting amounts through the earnings codes set up, we’ll calculate the credit and reduce your federal tax liability. Any excess amount will be carried over and applied as a credit to the next payroll. Any excess credit at the end of the quarter will be marked for a refund by the IRS on Form 941.

No. The following wages aren’t eligible for the employee retention credit:    

• Paid Leave under the Families First Coronavirus Response Act
• Paid family and medical leave credit (section 45S of the Internal Revenue Code)
• FICA exempt portion of employee wages (see example below)
• Work Opportunity Tax Credit (WOTC) (section 51 of the Internal RevenueCode) If this credit is claimed on a worker, none of their wages are eligible for the employee retention credit.

FICA Exempt Wages Shouldn’t be Included in the Employee Retention Credit

When you’re reporting the retention credit, only the FICA taxable portion of the wages should be entered in the information pay component.

For example, if a you paid $1000 to an employee for wages that are eligible for the credit, but there was a $100 FICA exempt deduction withheld from that payment, only $900 should be reported, as you’re only eligible to claim $900 in credit for those wages.

When reporting your payroll to Paychex, make sure you don’t include these wages in the Employee Retention Credit earnings codes.

For more information about interaction with other tax credits, go to COVID-19-Related Employee Retention Credits: Interaction with Other Credit and Relief Provisions FAQs.

Paychex will apply the amount of the credit to the federal tax liability, which in most cases is the quickest way to use the credit. If the amount of the credit exceeds the federal liability, and you choose not to carry the credit forward to the liability for the next check date, you can complete a Form 7200 to apply for an accelerated credit from the IRS.

Note: You must inform Paychex if you are filing a Form 7200. If you do not inform Paychex, we will continue to apply the credits to your next payroll, which may result in potential liability for your business and incorrect reporting on form 941.

No. An Eligible Employer may not receive the Employee Retention Credit if the Eligible Employer receives a Small Business Interruption Loan under the Paycheck Protection Program that is authorized under the CARES Act (“Paycheck Protection Loan”). An Eligible Employer that receives a Paycheck Protection Loan cannot claim the Employee Retention Credits.

No. If you receive a PPP loan you may not receive an Employee Retention Credit, regardless of whether and when the loan is forgiven.

Note: Internal Revenue Code Section 45S provides a tax credit for employers who provide paid family and medical leave to their employees. Eligible employers may claim the credit, which is equal to a percentage of wages they pay to qualifying employees while they’re on family and medical leave.

Yes, but not for the same wage payments.

Any qualified wages for which an Eligible Employer claims the Employee Retention Credit may not be taken into account for purposes of determining a section 45S credit. You may not claim a credit under section 45S for wages you claimed the Employee Retention Credit on; however, you may be able to take the 45S Credit on additional wages paid.

Yes, but the requirements vary based on if the eligible employer has 100 or fewer full-time employees or more than 100 full-time employees in 2019.

• 100 or fewer full-time employees in 2019 – Yes, An Eligible Employer may treat its health plan expenses paid or incurred, after March 12, 2020, and before January 1, 2021, during any period in a calendar quarter in which the employer’s business operations are fully or partially suspended due to a governmental order or a calendar quarter in which the employer experiences a significant decline in gross receipts as qualified wages, subject to the maximum of $10,000 per employee for all calendar quarters for all qualified wages. Eligible Employers may treat health plan expenses allocable to the applicable periods as qualified wages even if the employees are not working and the Eligible Employer does not pay the employees any wages for the time they are not working.
   
• More than 100 full-time employees in 2019 - Yes. An Eligible Employer that averaged more than 100 full-time employees in 2019 may treat its health plan expenses paid or incurred, after March 12, 2020, and before January 1, 2021, allocable to the time that the employees are not providing services during any period in a calendar quarter in which the employer’s business operations are fully or partially suspended due to a governmental order or a calendar quarter in which the employer experiences a significant decline in gross receipts as qualified wages, subject to the maximum of $10,000 per employee for all calendar quarters for all qualified wages. 
  However, an Eligible Employer may not treat health plan expenses allocable to the time for which the employees are receiving wages for providing services as qualified wages; only the portion of health plan expenses allocable to the time that the employees are not providing services are treated as qualified wages.

Notes:

• If you are paying for health insurance for your employees without paying wages, you can still report those amounts as qualified wages under the Employee Retention Credit.
• If reported under the employee retention credit earning codes, Paychex systems are handling these amounts correctly.

For examples of both scenarios, you can go to to  COVID-19-Related Employee Retention Credits: Amount of Allocable Qualified Health Plan Expenses FAQs

• Paychex WORX article: What is the Employee Retention Credit? How It Works and What Businesses Qualify

• The IRS published extensive FAQs about these credits on their website at  FAQs: Employee Retention Credit under the CARES Act
• IRS Publication: New Employee Retention Credit helps employers keep employees on payroll

The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act both provide refundable tax credits for qualifying wages. There are three reasons you might file a Form 7200:

• Employee Retention Tax Credit (CARES Act) 
• Refund of wages paid for qualified sick leave ((FFCRA)
• Refund of wages paid for qualified family leave (FFCRA)

Paychex will apply the amount of the credit to the federal tax liability, which in most cases is the quickest way to use the credit. If the amount of the credit exceeds the federal liability, and you choose not to carry the credit forward to the liability for the next check date, you can complete a Form 7200 to apply for an accelerated credit from the IRS. NOTE – you must inform Paychex if you are filing a Form 7200. If you do not inform Paychex, we will continue to apply the credits to their next payroll which may result in potential liability for your business.

Yes, after you let us know that you’ve filed one or more Form(s) 7200.

To correctly report Form 7200 information on your second quarterly returns (941 returns and Schedule R for PEO clients) as required by the IRS, you must report the following information to Paychex as soon as possible, but no later than Tuesday, June 30, 2020:

• A copy of all Forms 7200 as soon as possible
• Contact name, phone number, and email address
• Date you filed the Form 7200
• Quarter Form 7200 was filed for

Important

You are not required to file Form 7200; Paychex will apply the amount of the credits to your federal tax liability, which in most cases is the quickest way to use the credit

If you file Form 7200, you must inform Paychex. If you do not inform Paychex, that you filed these forms, we may apply credits that you’ve already requested; you most likely will incur penalties assessed by the IRS.

You can find Form 7200 and the instructions on the IRS website.

Yes, Paychex will need to know of each Form 7200 that you submit so that we don’t also apply a credit that was requested, and so that we reflect it properly on the 941.

Yes. You can file as many Form 7200s as necessary to request excess credit amounts as an expedited refund through December 31, 2020.

Please refer to the IRS instructions for completing Form 7200.

Yes. Form 7200 can be used to apply for expedited refunds of credits related to sick leave wages and family leave wages (FFCRA) and also for the credits related to employee retention (CARES).

You can fax the form to 855-248-0552.

Yes. The Internal Revenue Service (IRs) released new guidance stating that after July 2, 2020, Forms 7200, Advance Payment of Employer Credits Due to COVID-19, that are filed must request a minimum credit amount of $25.00. Any credit advance requested on the form that totals less than $25.00 will not be processed by the IRS. Any credit advance under $25 can be claimed by reducing a future deposit or claimed on Form 941 at the end of the quarter.

Yes. Paychex is open for business even though some of our locations are closed.

For your health and safety as well as our employees, and to stay aligned with changing government regulations during the COVID-19 (also referred to as “coronavirus”) pandemic, some of our locations have temporarily closed.

We have instituted our Business Continuity Plan (BCP) so we can continue to help you with one of your top priorities – keeping your business running and paying your employees.

According to our sources in Washington, DC, first quarter 2020 federal payroll tax filing and payments will not be delayed; therefore, we’re moving forward with our normal federal tax filing plans. If we learn otherwise, we’ll let you know as soon as possible.

We are actively monitoring changes at the state level as well. As these changes are solidified, we will communicate them to you as soon as possible.

Please note that because of COVID-19, you cannot pick up your Quarter-End package at a Paychex branch location as our offices are temporarily closed. Be sure to contact your Paychex representative to verify or change your delivery method and mailing address if necessary.

With a national presence of more than 100 U.S. locations, our experienced emergency response team has detailed workflows in place to flexibly shift business functions to unimpacted locations should the need arise.

We have temporarily suspended pick up in our offices.  We have alternatives – access all your payroll information online, get overnight delivery from a courier service, set up direct deposit or other payment methods, or receive your package through the U.S Mail. Contact your Paychex service representative for more information about these services.

Now more than ever, you and your employees need the security of knowing that payroll wages will be deposited on time as expected. This is the perfect time for you to set up employees without direct deposit for this service.

Additionally, we have flexible payroll payment options, such as Pay On Demand that allows employees easy access to earned wages, in advance of payday, at no cost to you.  

Contact your Paychex service representative for more information about these services.

We are actively mobilizing our teams to ensure that we are well-positioned to continue to provide best in class support during this crisis while protecting the health and safety of our employees.

We’ll make every effort to connect you with your assigned representative if you have one. We have a highly-qualified team in place to assist you with your payroll and HR questions, 24 hours a day.

Your payroll reporting is “business as usual.” If you normally receive a call from Paychex to report your payroll, expect to receive a call on your regular day. If you normally call us at a regularly scheduled time, then continue to do so. Our call volume may be higher than normal, but we’ll attempt to call you at your usual time.

We are committed to being there for you and will make necessary accommodations so that we can provide service to you and your employees while still following government regulations.

We’re in the process of developing and testing software to support the leave that can be taken by eligible employees for qualifying reasons under FFCRA.

• Emergency Sick Leave – Employee Self-Care
• Emergency Sick Leave – Family Care
• Expanded Family Medical Leave

If circumstances require you to pay wages before software changes are implemented, we’ll work with you to pay the wages now and manually update our systems.

We’ll send another message closer to the release of the software changes to give you additional detail about how these earnings will be reported in our systems.

Yes. However, because of COVID-19, you cannot pick up your Quarter-End package at a Paychex branch location as our offices are closed to the public until further notice. Be sure to contact your Paychex representative to verify or change your delivery method and mailing address if necessary. We can also convert you to paperless reports, which is a fast and easy way to receive your reports each quarter. (To receive paperless reports for the first quarter, you must contact us by April 2.)

You can easily run payroll from anywhere through Paychex Flex® and our mobile app while saving time on payroll-related tasks. This gives you time to focus on other things, such as checking on your employees’ well-being.

You’ll be able to:

• Enter and submit payroll using self-service functionality in as few as two clicks
• View critical data at a glance, such as check dates and cash required for your next payroll
• Set up direct deposit, so your business can pay employees on time
• Track hours for employees working remotely
• Run reports, such as your payroll journal, cash requirements, and tax deposit notices

You can also give your employees the freedom to:

• View paystubs online
• Set up or change direct deposit
• Update their banking information
• Update their personal contact information (phone, email, address) to help with contingency planning
• Check time-off balances

Contact your Paychex service representative, they’ll work with you to set up our online payroll application, Paychex Flex.

If you use our Paychex Flex online payroll service, you can add/change employee direct deposit information using these instructions. Employees can add/modify their direct deposit accounts through their self-service Paychex Flex account.

If you don’t use Paychex Flex, contact your payroll service representative.

Paychex Flex Time includes functionality that can automate time-and-attendance tracking for remote employees.

You’ll get help with:

• Staying compliant with overtime laws and regulations
• Quickly assessing operational needs through manager dashboard updates in real-time
• Allowing employees to easily record time, check schedules, approve and review time cards through employee self-service
• Offering punch in options that meet your employee’s needs, such as mobile, web, and talent
• Determining how resources and time are spent with greater precision

For any wages for March 31, 2020, and before, employees should be paid for worked time as usual. If they were unable to work for any reason, including reasons attributed to COVID-19 (personal health, to care for a child impacted by school and daycare closures, or under quarantine), employees are to be paid using available sick and paid time off (PTO) time. 

For example: Weekly pay period that starts on Sunday, March 29, 2020, and ends on Saturday, April 4, 2020, with a check dated Wednesday, April 8:

• The pay for Sunday, Monday, and Tuesday (March 31) should be paid as sick, PTO, or earned work hours.
• Pay for Wednesday (April 1) through Saturday (April 4) should be paid under the new earnings.

This is applicable only to eligible employees unable to work or telework due to a qualifying reason stated in the FFCRA.

According to our sources in Washington, DC, first quarter 2020 federal payroll tax filing and payments will not be delayed; therefore, we’re moving forward with our normal federal tax filing plans. If we learn otherwise, we’ll let you know as soon as possible.

We are actively monitoring changes at the state level as well. As these changes are solidified, we will communicate them to you as soon as possible.

Please note that because of COVID-19, you cannot pick up your Quarter-End package at a Paychex branch location as our offices are temporarily closed. Be sure to contact your Paychex representative to verify or change your delivery method and mailing address if necessary.

Yes. However, because of COVID-19, you cannot pick up your Quarter-End package at a Paychex branch location as our offices are closed to the public until further notice. Be sure to contact your Paychex representative to verify or change your delivery method and mailing address if necessary. We can also convert you to paperless reports, which is a fast and easy way to receive your reports each quarter.

The IRS is in the process of updating the second quarter 2020 Form 941 return to include COVID-19 related employer tax credits. The IRS released a draft copy of the return. Paychex is in the process of updating our software and we’ll be ready to report your wages and tax liability correctly on the return.

In a continuing effort to protect employees, the Internal Revenue Service (IRS) has closed Service Centers and has very limited services available. As a result of these closures, the IRS will not be processing paper returns until the centers reopen. The IRS is directing all taxpayers to use electronic means for filing and communicating with the agency

As a result, any Forms 941 sent on paper for first quarter 2020 will not be processed until the IRS reopens. The IRS is not expecting to issue any notices relating to these returns. Until the returns are processed, they will not appear on any transcripts for employers.

Paychex gives customers access to many financial wellness tools to help employees receive the financial assistance they need when they need it.

For employees

• Pay-on-Demand gives employees on-demand, real-time access to earned income with no fees to employees for transactions as of the article publication date
• Through our financial wellness program available to all clients at no cost, FinFit offers short-term employee loans for emergencies along with financial consulting and other services
• Access to retirement savings in a crisis through either a loan or hardship withdrawal

For customers:  

• Federal Disaster Loans for Businesses through the U.S. Small Business Administration. Several states have now declared COVID-19 as a disaster to provide eligibility for these loans.
• Small Business Loan Center offers access to working capital loans for your business with funds in as fast as 72 hours.

The federal government has passed the Families First Coronavirus Response Act into law in response to the public health emergency created by COVID-19. This legislation covers family and medical leave, paid sick leave, and payroll taxes. For specific details, read the Families First Coronavirus Response Act FAQs and read the Paychex WORX article, Funding, tax credits, and paid leave laws expanded to respond to COVID-19 pandemic.

Many health insurers are responding to the threat of COVID-19 by offering members no-cost screening and diagnostic testing. Please contact your insurance provider or visit their website for detailed information.

Several of our carrier partners have specific COVID-19 information and policies. A few of them are listed here. Be sure to check your carrier’s website for more detail:

• Aetna  
• Anthem 
• Cigna
• Humana 
• Kaiser Permanente
• United Health Care

Certain states have recently announced an individual market special enrollment period for qualified individuals currently without health insurance. Other states may soon follow. Paychex has a team that specializes in helping employees find coverage that fits their individual insurance needs.

• California
• Connecticut
• District of Columbia
• Massachusetts
• Maryland
• Nevada
• New York
• Rhode Island
• Washington

Centers for Medicare and Medicaid Services (CMS) issued FAQs that intend to clarify how COVID-19 coverage applies to Essential Health Benefits. Note that EHBs may vary by state, and cost-sharing requirements may vary by plan.

HSA participants can use their accounts to pay for qualified medical costs, such as COVID-19  treatment. Regarding carriers and what’s allowed to maintain an HSA-qualified plan, the IRS has announced that high-deductible health plans (HDHPs) can pay for COVID-19-related treatment before the deductible applies without jeopardizing their plan status. This means that an individual with an HDHP that covers these costs may continue to contribute to a health savings account (HSA).

Learn more about HDHPs and HSAs

Please contact your insurance carrier directly for specific coverage information.

Please contact your insurance carrier directly for specific coverage information.

Closeout Period - To comply with the IRS guidance and help ensure participants can use their 2019 balances for claim reimbursement, Paychex automatically updated clients' plans 2019 closeout period to end August 31, 2020, rather than March 31, 2020. For your convenience, we’ve included this email for you to communicate the closeout period extension to your employees

How is Paychex handling the IRS COVID-19 Guidance from the IRS on Mid-Year Election Changes for Flexible Spending Accounts (FSA)?

Mid-Year Election Changes - The new guidance permits mid-year plan election changes in 2020 for health flexible spending arrangements (FSAs) and dependent care assistance programs. The changes, which would require an amendment to your FSA plan, are intended to help employees who may see an increase or decrease in dependent care costs or medical expenses due to the pandemic and its related events.

Please note: Elections can’t be decreased to less than the year-to-date claims paid amount.

In accordance with the IRS notice, you have the option to amend your 2020 plan to allow for mid-year election changes. If you elect to do so, you will need to complete this form and return it to Paychex using the contact information indicated. Paychex will then send you amendment paperwork by year's end to formally adopt the election changes.

Note: You must use Google Chrome as your internet browser to open this form.

Grace Period - In accordance with the notice, we are enabling clients who have FSA grace periods to amend their 2019 plan to extend the 2019 Grace Period to December 31, 2020, with a closeout period of January 15, 2021.

If you elect to extend your grace period, you will need to complete this form and return it to Paychex using the contact information indicated. Paychex will then send you amendment paperwork by year's end to formally adopt the Grace Period extension and election changes.

Note: You must use Google Chrome as your internet browser to open this form.

The Consolidated Appropriations Act 2021 (the Act), signed into law in December, provides economic stimulus provisions as a result of the COVID-19 pandemic. We wanted to make you aware of provisions included in this spending bill that are available for your Medical and Dependent Care Flexible Spending Account (FSA) plans.

Options Available

• FSA Medical Carryover - According to our records, your plan offers the Carryover Provision which allows participants to carryover up to $550 in contributions to the next plan year. In accordance with the Act, we are enabling you to amend your plan to allow participants to carryover any unused benefits from 2020 to 2021 and from 2021 to 2022 plan years.
• Dependent Care Assistance Carryover- You can elect to amend your plan so that participants may now carryover any unused funds from their 2020 Dependent Care Assistance account to the 2021 plan year and from the 2021 to the 2022 plan year.
• Dependent Care Assistance Age Extension- You may amend your plan so that participants who had a dependent who attained age 14 during the pandemic (typically reimbursements would cease after attaining age 13) may continue to receive reimbursements of any unspent funds for childcare for plan year 2020, and any unspent funds at the end of the 2020 plan year may be carried over to 2021.
• Mid-Year Election Changes - The Act continues to permit mid-year plan election changes in 2021 for health flexible spending arrangements (FSAs) and dependent care assistance programs. The changes, which would require an amendment to your FSA plans, are intended to help employees who may see an increase or decrease in dependent care costs or medical expenses due to the pandemic and its related events. 
  Please Note: Elections cannot be decreased to less than the year-to-date claims paid amount.
• Post-termination Reimbursement from Unreimbursed Medical FSA- The Act will allow you to amend your plan so that participants who have ceased participation during 2020 or 2021 may continue to receive reimbursements through the end of the plan year in which they ceased participation. This extends their ability to submit claims from the typical 90-day closeout period until the end of the plan year.
• Grace Period - Per our records, your FSA plan offers a Grace Period and has participants who have leftover 2020 balances. In accordance with the Act, we are enabling you to amend your 2020 and 2021 plans to allow the extension of the grace period for both plan years 2020 and 2021 to 12 months after the end of the plan year (typically 2½ months following the end of the plan year) for any amounts unspent at the end of the plan year.

Please review the options above, complete the attached type form link, and submit it to Paychex to indicate which options you would like to implement for your FSA plan.

Note: You must use Google Chrome as your internet browser to open this form.

Once we receive the form, Paychex will update our system with the changes, and send you plan amendment paperwork by the end of 2021 to formally adopt the election changes.

If you have any questions, please email us at PaychexBenefitAccount@paychex.com
 

Please contact your insurance carrier directly for specific coverage information. Some of our partner links are listed here:

• The Hartford
• Travelers
• Guard
• Liberty Mutual
• Amtrust

The proposed California regulations would apply when employees’ job duties change as a result of the COVID-19 pandemic. If an employee begins to work remotely in California and the job duties remain unchanged, there is no need to change job classification. However, if an employee’s job duties change or if an employee ceases working, but continues to be paid, then the job classification may need to be changed, subject to state regulations.

If an employee begins to work remotely from a different state, the employer should work with their insurance representative to ensure that their workers’ compensation insurance extends to that location.

It is important for employers to be aware that claims may not be paid in cases where payroll was excluded from premium payments.

It will be important to keep excellent records that track this information. Businesses may want to consider beginning to track employees and wages that fall into these categories now, so that if/when these changes go into effect, they will be prepared.

In response to the COVID-19 pandemic, many states have announced changes or proposed changes that may affect workers’ compensation insurance class codes. These vary, but most include the ability for businesses to temporarily reclassify for the purposes of workers’ compensation coverage employees who are being paid but not working, and some states allow businesses to reclassify employees temporarily reassigned to clerical roles.

In response to the COVID-19 pandemic, the state of California has announced proposed changes that may affect workers’ compensation insurance class codes and premium payments:

Allow exclusion of payroll of employees who are not working but still receiving pay from the premium calculation.  

• For businesses that continue to pay employees while they are not working as a result of the COVID-19 pandemic, the affected employees’ payroll could be excluded from workers’ compensation premium charges. The class code for these employees would be temporarily changed to 0012. This will stay in place until 30 days after the stay-at-home order has been lifted.

Allow assignment of classification 8810 for a temporary change in duties.

• For businesses that reassign employees to a clerical job, the employees’ payroll could be reclassified to the clerical class code of 8810. The payroll that is reclassified will be charged at the lower workers’ compensation rate the state has assigned to this class code. This does not apply to employees already in a class code that includes clerical work in the description. This is a one-time change and will remain in place until 60 days after the stay-at-home order has been lifted.

Which businesses would these changes apply to?

These changes would apply to businesses with employees who work in California. Businesses should contact their insurance representative for details on how this legislation affects them and to ensure their employees are properly coded.

These changes are retroactive to the date when the stay-at-home order began (March 19, 2020), or when the business was first affected, whichever is later. For example, when employees ceased working, but continued to be paid wages, or when employees were reclassified to a new class code. Employers should work with their insurance representative to identify when their exposure began and keep separate, accurate and verifiable records to track this information.

In response to the COVID-19 pandemic, the Delaware Compensation Rating Bureau has announced changes that may affect workers’ compensation insurance class codes and premium payments:

• Allow exclusion of payroll of employees who are not working but still receiving pay from the premium calculation.
  For businesses that continue to pay employees while they are not working as a result of the COVID-19 pandemic, the payroll of affected employees may be excluded from workers’ compensation premium charges. The class code for these employees would be temporarily changed to 1212.
• Allow assignment of classification 953 for a temporary change in duties.
  For businesses that reassign employees to a clerical job, the employees’ payroll may be reclassified to the class code of 953. This class code includes telecommuting. The change also allows for reclassification to other codes as appropriate due to temporary COVID-related job changes. The payroll that is reclassified will be charged at the lower workers’ compensation rate the state has assigned to this class code.

These changes are retroactive to April 1, 2020, or when the business was first affected, whichever is later. For example, when employees ceased working, but continued to be paid wages, or when employees were reclassified to a new class code. It will be important for businesses to keep separate, accurate, and verifiable records that track this information.

These exceptions will remain in effect until December 31, 2020. This expiration date is subject to change as circumstances warrant. However, once normal business operations resume, appropriate class codes should be used.

Businesses should reach out to their insurance representative for information on their specific situation.

In response to the COVID-19 pandemic, the state of New Jersey has announced changes that may affect workers’ compensation insurance class codes and premium payments:

• Allow exclusion of payroll of employees who are not working but still receiving pay from the premium calculation.  
  For businesses that continue to pay employees while they are not working as a result of the COVID-19 pandemic, the affected employees’ payroll may be excluded from workers’ compensation premium charges. The class code for these employees would be temporarily changed to 0012.
• Allow assignment of classification 8810 for a temporary change in duties.
  For businesses that reassign employees to a clerical job, the employees’ payroll may be reclassified to the clerical class code of 8810. The payroll that is reclassified will be charged at the lower workers’ compensation rate the state has assigned to this class code. This does not apply to employees already in a class code that includes clerical work in the description.

These changes are retroactive to March 21, 2020, or when the business was first affected, whichever is later. For example, when employees ceased working but continued to be paid wages, or when employees were reclassified to a new class code. Clients should work with their insurance representative to identify when their exposure began. It will be important to keep separate, accurate, and verifiable records that track this information.

The changes will remain in effect during the stay-at-home emergency order, and, if appropriate, for such limited time thereafter as is necessary for the employer to return to standard business operations, not to exceed 45 days after the emergency order has been lifted.

Businesses should reach out to their insurance representative for information on their specific situation.

In response to the COVID-19 pandemic, the New York Compensation Insurance Rating Board issued a bulletin with changes effective May 1, 2020, for new and renewal policies, and effective March 16, 2020, for in-force policies, that will remain in effect for up to 30 days after the New York state stay-at-home order is lifted.

The Board has established a new class code, 8873, Telecommuter Reassigned Employees, that can be applied to the payroll of workers who have been temporarily reassigned to clerical duties, as well as to those who continue to be paid while home not working. The rate of this new class code will mirror that of 8810, Clerical, which has the lowest associated premium rate.

The order also clarifies that workers who are currently classified under 8871, Telecommuter Clerical Employees, are to remain there as the new code is designed to address temporary situations due to COVID-19 only.

Businesses should reach out to their insurance representative for information on their specific situation.

In response to the COVID-19 pandemic, the Pennsylvania Compensation Rating Bureau announced changes that may affect workers’ compensation insurance class codes and premium payments:

• Allow exclusion of payroll of employees who are not working but still receiving pay from the premium calculation.  
  For businesses that continue to pay employees while they are not working as a result of the COVID-19 pandemic, the payroll of affected employees may be excluded from workers’ compensation premium charges. The class code for these employees would be temporarily changed to 1212.
• Allow assignment of classification 953 for a temporary change in duties.
  For businesses that reassign employees to a clerical job, the employees’ payroll may be reclassified to the class code of 953. This class code includes telecommuting. The change also allows for reclassification to other codes as appropriate due to temporary COVID-related job changes. The payroll that is reclassified will be charged at the lower workers’ compensation rate the state has assigned to this class code.

These changes are retroactive to April 1, 2020, or when the business was first affected, whichever is later. For example, when employees ceased working but continued to be paid wages, or when employees were reclassified to a new class code. It will be important for businesses to keep separate, accurate, and verifiable records that track this information.

These exceptions will remain in effect until December 31, 2020. This expiration date is subject to change as circumstances warrant. However, once normal business operations resume, appropriate class codes should be used.

Businesses should reach out to their insurance representative for information on their specific situation.

For customers using our HR Services offerings, please contact your Paychex HR professional.

Consider leaving furloughed employees as active in payroll – we do not currently have a Leave of Absence (LOA) status that would apply to this scenario, so it is not recommended to place employees on leave.

If you offer PEO benefits, these will continue to be offered for active employees. See "I am furloughing my employees and keeping their PEO account active. What happens to their benefits?" for more information on the monthly Benefit True-Up process.

If you can process at least one payroll in April, the PEO account will remain open – then again into May, and so on. We will be as accommodating as possible. We understand this payroll may include significantly fewer employees than your typical payroll.

We believe you will need us now more than ever, so our goals continue to be, showing value and retaining your business. Call us and give us an opportunity to talk to you.

As the end of a co-employment relationship is not a COBRA-eligible event, active employees at the time the PEO account is ended will not be eligible for COBRA.

PEO benefits for employees who are let go will run through the last day of the month in which they are let go. COBRA notices will automatically be sent within 14 days of the discontinued employment being entered in payroll. Example: if an employee is let go on 3/20, benefits will terminate on 3/31. If you self-retain benefits, you should contact your broker/administrator for direction.

If you leave the employees active and continue running payroll, benefits will remain active and you would be responsible for the missed premiums through the monthly Benefit True-Up process.

The March Benefit True-Up will run on 4/7 and deduct on 4/17. The April Benefit True-Up will run on 5/5 and deduct on 5/15 (and so on). You can determine if you will require employees to pay back missed premiums or if you will cover those costs. This would provide a “float” of the premiums while keeping benefits in place. This is the most common way to continue benefits for furloughed employees.

If the employee is reinstated within 30 days of the date employment is discontinued, benefits are automatically reinstated without a waiting period, effective the first of the month following the date employment is discontinued to avoid a lapse in coverage. If there is a break in service of more than 30 days, the employee would serve a new waiting period.

Example: an employee is let go on 3/20 and rehired on 4/5; benefits would be reinstated 4/1, missed premiums would be deducted on the monthly Benefit True-Up statement, if applicable.

You are responsible for determining Full Time (FT)/Part Time (PT) status, tracking changes to employee average hours worked and making updates to FT/PT status in payroll. Under the benefit plans offered through the PEO, if you change an employee from FT to PT, their benefits will terminate on the last day of the month in which the change is effective. An employee who works at least 30 hours a week is full-time under the PEO plan. A small dip in average hours worked does not necessarily require a change to FT/PT status. We recommended that you use discretion when making changes to an EE’s FT/PT status during this time.  If you self-retain benefits, you should contact your broker/administrator for direction.

Keep in mind that Applicable Large Employer (ALE) under the Affordable Care Act’s Employer Shared Responsibility (ESR) provisions have additional considerations. An ALE that utilizes the Look-Back Measurement Method must offer adequate and affordable coverage to employees determined to be full-time employees for the duration of the stability period or risk potentially being assessed a penalty if a full-time employee receives a premium tax credit when purchasing insurance in a government marketplace. An offer of COBRA coverage qualifies as an offer of coverage for ESR purposes but is less likely to be affordable under ESR provisions, putting the ALE at risk of an assessment. 

Note: If employees don’t have enough gross wages to cover their benefit premiums, they will not be deducted. Premiums will be captured on your monthly Benefit True-Up statement. See "When I’m ready to rehire employees that were let go, would the benefits waiting period still apply?"

We will continue to monitor the progression of regulations through development and enactment. We do not anticipate the co-employment relationship to have an impact on your requirement and/or ability to comply. You should determine if you are required to comply with any current or future COVID-19 regulations. Please work with your HR Coach on these matters.

No, Short-Term Disability (STD)/Long-Term Disability (LTD) plans do not coordinate with any other benefits.

Termination and a reduction in hours are considered COBRA qualifying events. If employees are no longer be eligible for the group health plan because of termination or reduction in hours, they would likely be eligible for COBRA or state continuation of health insurance coverage. Note that in the case of a layoff that is intended to be temporary, employers should review their plan documents or speak with their account manager or insurance agent to determine if and how long employees may stay on their group health plan before coverage is terminated.

• If you process payroll through Paychex and you subscribe to our COBRA administration service, entering a termination in our payroll system will trigger sending your affected employees a notification from us of their right to enroll in COBRA or state continuation of coverage.
• If you don’t subscribe to our COBRA administration service, please consult your COBRA administrator for information on how to notify your affected employees.
• If you are a Paychex Insurance Agency client, please contact your account manager with any questions. If you are a PaychexOne, Oasis, or HROi client, please contact your HR representative with any questions. If you are a BeneTrac client, please contact your account manager or account executive with any questions.

Eligible workers must file claims through their applicable state’s unemployment insurance website.

For information on state-specific eligibility requirements, how to apply for, and how to file unemployment insurance claims, please visit the U.S. Department of Labor’s website.

Specific information that is required to apply for unemployment benefits may vary by state, however, the information that is generally required includes:

• Up-to-date personal contact information
• Name and dates of previous employment
• Most recent paystubs
• Amount of any separation pay (severance, vacation, etc.)
• A specific reason for filing for unemployment

For more information, please visit your applicable state’s unemployment insurance website.

Unemployment insurance is a shared state and federal program. Although each state has its own unemployment insurance program, all states abide by the same general guidelines set by federal law.

It generally takes two to three weeks to receive the first benefit check after filing a claim. Due to the increased number of claims filed in the wake of the COVID-19 pandemic, turnaround times may be longer than normal.

Please visit the U.S. Department of Labor’s website or your applicable state’s unemployment insurance website for more information.

Employees must file claims through their applicable state’s unemployment insurance website or by phone. We’ve created a state-by-state breakdown to help direct you to your applicable state’s COVID-19 resource pages.

Yes, employees working reduced or partial hours may be eligible to receive supplemental unemployment benefits. Eligible employees must meet specific state requirements before receiving unemployment benefits.

For more information, please visit the U.S. Department of Labor’s website, or check with your applicable state's unemployment insurance office or website.

Yes, that’s why we’ve created a state-by-state breakdown to help direct you to your applicable state’s COVID-19 resource pages. These resources contain up-to-date information on unemployment insurance benefits, as well as general FAQs, on other programs available during this time.

Any employee who has been partially or fully laid off (temporarily or permanently) should be directed to your applicable state’s unemployment website, with instructions on how to file an unemployment claim and what information is required. Our state-by-state breakdown was created to help direct individuals to their applicable state’s COVID-19 resource pages.

When partially or fully laying off (temporarily or permanently), it is important to remember that, when terminating an employee from the system, that the process is completed in a timely manner. This will help provide us with important information required to respond to unemployment claims timely and accurately. Such information includes the employee’s first and last day worked, job title, rate of pay and the reason for the separation.

Ensuring we have up-to-date contact information is also important when utilizing Paychex for administrative support with claims processing.

Paychex PEO account numbers are not provided to our clients. We understand that some states are requiring PEO account numbers when a claimant is filing, however, we advise employees to put “on file” when the account number is requested.

Disqualifying income varies by state. To determine what types of payments are considered disqualifying, please visit your applicable state’s unemployment insurance website.

The Federal Pandemic Unemployment Compensation Program (FPUC) under the CARES Act provides an eligible individual with $600 per week in addition to the weekly benefit amount received from certain other unemployment compensation programs and is administered through a voluntary agreement between the state and the department. The cost of these additional $600 payments to eligible individuals is 100% federally funded and states may not charge employers for any of the FPUC benefits paid as to impact the employer's experience rating.

Over-the-counter (OTC) medications purchased after December 31, 2019, no longer require a prescription to be eligible for reimbursement through an FSA, Health Reimbursement Arrangement (HRA), or Health Savings Account (HSA). The new CARES Act (Coronavirus Aid, Relief and Economic Security Act) passed on March 27, 2020, overturned the section of the Affordable Care Act that prohibited FSAs, HRAs, and HSAs from reimbursing expenses for OTC medical products. The new law also allows menstrual care products purchased after December 31, 2019, to be treated as qualified medical expenses. Menstrual care products include: tampons, pads, liners, cups, sponges, or other similar products used for menstruation. 

The preceding information is considered accurate as of April 9, 2020, but is subject to change.

We’ve added training courses to the Paychex Learning solution in Paychex Flex, including topics such as important precautionary and prevention measures, business continuity, and communication strategies.

For customers using Paychex Retirement Services offerings, please contact a Paychex representative or visit our customer support page.

To qualify for CARES Act 401(k) loan and distribution relief, the request must be related to Coronavirus (COVID-19), self-certified by the participant, and confirmed by the plan administrator. A participant will be a qualifying individual if any of the following conditions are met:

• He or she, a spouse, or dependent was diagnosed with COVID-19.
• He or she experienced adverse financial consequences because of quarantine, furlough, lay off, reduced work hours, or lack of child care due to COVID-19.
• The participant's own business was closed or had to reduce operating hours because of COVID-19.

Note: COVID-19 related distribution relief (not a hardship distribution) is available for employees who are active, terminated, or on leave of absence.

The Plan Administrator must sign a self-certification statement that will be included in all Paychex COVID-19 related distribution or loan paperwork. Your plan participant will receive an electronic form from Paychex via  DocuSign. Once the participant completes and signs the form it will be automatically forwarded to you through email, from DocuSign, to sign electronically.

If your retirement plan offers loans and the participant qualifies for CARES Act relief, the following changes apply:

• The maximum loan amount for loans issued between March 27 and September 23, 2020, was increased to the lesser of 100% of a participant’s vested account balance or $100,000 (minus any outstanding loan balances). 
• Participants who have new loan balances between March 27 and December 31, 2020, can defer repayments for up to one year.

Participants who qualify for CARES Act relief and held a retirement plan loan balance between March 27 and December 31, 2020, can defer existing loan repayments for up to one year. The delayed timeframe will be disregarded from the loan amortization schedule.

Qualifying participants can take a distribution of up to $100,000, between January 1 and December 31, 2020, from a qualified retirement plan.

The CARES Act waives the 10% early withdrawal penalty for anyone under age 59 ½.  Also, participants can request reduced or 0% tax withholding from the distribution and spread the tax liability over a three-year period. Without specific election, the standard withholding is 10% federal tax. All relevant information will be included on their Paychex paperwork.

If your retirement plan offers hardship withdrawals, and the state in which the qualifying plan participant resides (or is employed) is declared a federal disaster area by the Federal Emergency Management Agency (FEMA), the participant may be eligible for a 401(k) hardship withdrawal for expenses and losses incurred because of the disaster. FEMA is updating the state list regularly at fema.gov/disasters.

RMDs are suspended for 2020 for all qualifying RMD retirement plan and IRA participants required to withdraw funds from such retirement accounts between January 1 and December 31, 2020 (including required beginning date distributions for April 1, 2020).

Paychex does not allow for refinancing or increasing existing loan amounts. The plan would have to allow for two loans, and the participant would need to take a second loan if desired.

Plan administrators can notify their plan participants that they can update their payroll deferrals to 0% via the Paychex Retirement Services website. Participants can then adjust that deferral any time they see fit.

If the 401(k) plan employer match is not a Safe Harbor match, the plan administrator can amend the plan to stop the employer match immediately and restart at a later time. If the plan is Safe Harbor, participants will need 30 days advance notice of the change that the match and Safe Harbor will be discontinued. The plan will also be subject to ADP/ACP compliance testing for the plan year. Safe Harbor plans cannot restart the match until the following plan year.