As COVID-19 vaccines authorized by the Food and Drug Administration (FDA) become more widely available, employers face the question of how to address their employees’ vaccination status. Alston & Bird has issued a Labor & Employment Advisory on COVID-19 Vaccines: Seven Questions for Employers. In it, they review emerging legal and practical issues that all employers should consider as they make decisions about how to address this important matter.
There is no question the ongoing COVID-19 pandemic has impacted the construction industry as a whole, including the mechanical, electrical, and plumbing (MEP) trades. The Mechanical Contractors Association of America (MCAA), National Electrical Contractors Association (NECA), and Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA) have aligned the MEP trades in a collaborative effort to bring to you and the construction industry this white paper.
Find the Change Orders publication referenced in this white paper here.
The $2.3 trillion Consolidated Appropriations Act, 2021 (H.R. 133) provides badly needed COVID economic relief, construction market stimulus and a forward-looking prospect for market recovery in public sector infrastructure investments as the pandemic recedes. In a memo to the MCAA Government Affairs Committee, Chair Jim Gaffney provided a summary digest of the items most likely to impact MCAA members and the MCAA policy agenda. The President is seeking greater individual stimulus checks, so there may be an amendment or veto, but this summary will stand for most of what will be the final result. Correction: The latest COVID relief measure signed into law Sunday does not extend the requirement that employers offer paid sick and family leave as required under the Families First Coronavirus Relief Act passed last March as erroneously reported in the MCAA summary published in the Weekly Update on December 28, 2020. The latest COVID bill extends only the availability of the refundable tax credit as under the FFCRA until the end of March 2021 for those employers voluntarily providing such paid leave after December 31, 2020. MCAA regrets the error.
Wednesday, December 23 | 1:00 PM – 2:30 PM EST
Join experts from Withum’s SBA Financial Services and Tax Services Teams as they navigate through the myriad of provisions included in the more than 5,000 page legislative package finalized early this week. Withum’s team will cover in detail the provisions of the legislation which cover the following topics:
- PPP Loans: Another Round of Funding
- PPP Loan Forgiveness Process (Round 1 and Round 2)
- PPP Loan Forgiveness Deductibility
Withum will also cover the basics of the following provisions, but expect to have more detailed communications on these as guidance becomes more clear:
- Unemployment Provisions
- Stimulus Checks
- Employer Focused Tax Credits
MCAA joins the coalition of 683 groups (as of December 10, 2020) calling on Congress to pass legislation ensuring that expenses associated with PPP loan forgiveness are tax deductible. We continue to share the letter with colleagues and state/regional/local affiliates, hoping to grow the support and push Congress to enact legislation before the end of the year.
December 4, 2020|by Kathleen M. Connelly
Until now, the CDC recommended a 14-day quarantine for individuals who might have had “close contact” with a person who has or is suspected of having COVID-19. This quarantine was longer than the 10-day recommendation for those who test positive, as the longer quarantine period is based on estimates of the upper boundaries of the viral incubation period. However, in its new guidance issued December 2, 2020, the CDC acknowledged three adverse consequences of the 14-day quarantine:
- It can impose personal burdens that may affect physical and mental health as well as economic hardship that may reduce compliance.
- It may pose additional burdens on public health systems and communities, especially when cases are rising and the need to impose quarantines are rapidly rising.
- It may dissuade recently diagnosed persons from naming contacts and dissuade contacts from responding to contact tracer outreach if they perceive the duration of the quarantine is too onerous.
New Shorter Quarantine Options. In an effort to reduce these burdens and increase community compliance, the CDC has announced the following shorter quarantine alternatives to the 14-day quarantine.
- 10-Day Quarantine Option. Under this option, quarantine can end after day 10 without testing and if no symptoms have been reported during this period.
- 7-Day Quarantine Option. If diagnostic testing resources are available, quarantine can end after day 7 if i) the test results are negative and ii) no symptoms are reported during this period. The testing specimen may be collected and tested within 48 hours of the expiration of the 7-day period (or before the planned end of quarantine in the event of testing delays).
Quarantine may only be discontinued under either option if these additional criteria are met:
- no clinical evidence of COVID-19 was elicited via daily symptom monitoring during the entirety of the quarantine;
- daily symptom monitoring continues through day 14; and
- persons are counseled regarding the need to strictly adhere through day 14 to all recommended non-pharmaceutical mitigation strategies, and advised to immediately contact local health officials or their healthcare provider and self-isolate should symptoms develop.
Of course, individuals can continue to quarantine for the longer 14-day period without testing in accordance with the preexisting recommendations, which maximally reduces the risk of post-quarantine transmission.
Persons Who Must Quarantine Together, Such as Households. The CDC further recommends that when housing is shared (e.g., families, incarcerated persons, students), every effort should be made to physically separate the quarantined individual from others through such measures as having the quarantined individual residing alone in a separate closed room with exclusive use of their own bathroom and implementation of other mitigating strategies. If any co-housed person is diagnosed with COVID-19, all co-housed persons will require evaluation as contacts.
 The CDC defines “close contact” as being within 6 feet of an infected person for a cumulative total of 15 minutes or more over a 24-hour period starting from 2 days before illness onset (or, for asymptomatic patients, 2 days prior to test specimen collection) until the time the patient is isolated.
As always Lindabury’s Labor & Employment team is vigilantly monitoring the legislative and regulatory developments in response to the coronavirus outbreak. Stay up to date with the latest information by visiting the Lindabury COVID-19 (Coronavirus) Resource Center. If you have any questions, please contact Lindabury.
The CDC recently updated its guidelines on when to quarantine following exposure to a person who has tested positive for COVID-19. The new guidelines indicate that people who have been in close contact with someone who has COVID-19, excluding people who have had COVID-19 within the past 3 months, should quarantine immediately. It is considered close contact when:
- You were within 6 feet of someone who has COVID-19 for a total of 15 minutes or more;
- You provided care at home to someone who is sick with COVID-19;
- You had direct physical contact with the person (hugged or kissed them);
- You shared eating or drinking utensils; and/or
- The person sneezed, coughed, or somehow got respiratory droplets on you.
People who have tested positive for COVID-19 do not need to quarantine or get tested again for up to 3 months as long as they do not develop symptoms again. People who develop symptoms again within 3 months of their first bout of COVID-19 may need to be tested again if there is no other cause identified for their symptoms.
Withum’s SBA Financial Assistance Services Team held a webinar on November 20, 2020 discussing the latest developments with the SBA Loan Forgiveness Application submissions.
- Detailed discussion of which PPP Loan Forgiveness Application Forms are appropriate to use:
- Form 3508
- Form 3508 EZ
- Form 3508 S
- Common preparation pitfalls and tips in using third party payroll reports
- The newly issued and controversial “Loan Necessity Questionnaires” – Forms 3509 (For-Profit Borrowers) and 3510 (Non-Profit Borrowers)
- Tax and US GAAP treatment of PPP loans
On October 26, 2020, the Small Business Administration (SBA) issued a 30-Day “information collection” regulatory notice (85 FR, 67809-67810) with various forms implementing the Paycheck Protection Program (PPP) loan program under the CARES Act.
Of particular note is SBA Form 3509 – Loan Necessity Questionnaire (For-Profit Borrowers), for borrowers with PPP loans of $2 million or more. The form is to be sent by bank lenders to borrowers after the borrower applies for loan forgiveness. Once the form is sent to the borrower from the bank, the borrower will have only 10 days after receipt of the form to compile the comprehensive responses to the questionnaire. Eventually the answers to the questionnaire will be sent to the SBA for their review and analysis.
Below is a non-scientific compilation of legal and accounting advice relating to the forms. Of particular note among all of them is the requested comparison on 2nd quarter gross revenue between 2019 and 2020, and other issues relating to the good faith application standards of the initial loan application. The advice compiled below counsels early action to be ready for the short response time, careful legal and accounting review of the loan application standards and responses, and other elements of judgment for the loans.
The forms are not listed on the SBA website yet, and are expected to be released on or about November 25th, the close of the comment period. There are some reports that banks already have the draft form and are ready to use it immediately upon approval.
Please review the various advice articles below from:
OSHA recently issued new guidance on how to use workplace ventilation systems to reduce exposures to the coronavirus, including efficiency targets for air filters and recommendations for fan use. The guidance calls for employers to install HVAC filters with minimum efficiency reporting value ratings of “13 or higher, where feasible,” and to “consider using” high-efficiency particulate air fan and filtration systems, “especially in higher-risk areas.”
It also urges several stems to increase the flow of outdoor air into indoor areas, including increasing HVAC systems’ outdoor air intake; taking steps to verify that exhaust air is not being pulled back into a building, such as by traveling through open windows or nearby intakes; ensuring exhaust fans in restrooms specifically are “fully functional, operating at maximum capacity, and are set to remain on”; and opening windows and “other sources of fresh air” when possible.
The CDC recently reported that airborne transmission of SARS-CoV-2 can occur in rare cases under just the right circumstances. In most cases, the virus is transmitted from one person to another in droplet form, and occurs when affected individuals are less than six feet away from the source for 15 minutes or more. That’s because the “droplets” are heavy enough to fall to the ground, and do not stay suspended in air. However, new research indicates that when exposure occurs in enclosed spaces, exposure time is greater than 30 minutes, and some kind of expiratory exertion is taking place, such as shouting, singing, or exercising, the virus can be transmitted in aerosol form (smaller particles suspended in air). Social distancing, use of masks, hand hygiene, surface cleaning and disinfection, ventilation, and avoidance of crowded indoor spaces are effective protective measures for both forms of transmission. However, adequate ventilation and avoidance of crowded indoor spaces are especially important when work is being performed in enclosed spaces where circumstances can increase the concentration of suspended small particles carrying the infectious virus. If you believe your workers could be exposed to airborne transmission of the virus, MCAA recommends that you revise your COVID-19 Exposure Control Plan to ensure adequate ventilation and avoidance of crowded indoor spaces in affected work areas.
As the very public debate in Congress regarding another stimulus bill rolls on, Withum wanted to share an update issued late last week by the SBA, in conjunction with the Department of Treasury. With lobbying groups, lenders, and borrowers long-since advocating for a more simple forgiveness process, specifically for smaller loans, the SBA took this into their own hands late last week, as they released a new interim final rule (“IFR”). Because they are required to work within the confines of the current statutes, the consequences of this interim final rule are not as far reaching as proponents for a simpler forgiveness process would like, but it’s certainly a movement in the right direction. Here are the highlights:
New Application Form and Simplification for Loans under $50,000: In the release of the IFR, the SBA granted a de minimus exemption that all borrowers who have loans under $50,000 (provided that they do not, with affiliates, exceed $2M) would be exempt from any reductions in the loan forgiveness amount based on reductions in full-time equivalents or reductions in salaries/wages. This is welcomed news to these borrowers. The SBA also released the Form 3508S, a much more simple version of the Form EZ previously issued, which just asks the borrower for the bare minimum of requirements – loan information, forgiveness amount, and for the borrower to sign the certifications. While this is welcomed news to borrowers, the statutes of the CARES Act still require that forgiveness is not to be issued unless supporting documentation supporting the expenditures is provided, and there was no change to this rule offered by the SBA. Borrowers who utilize this form are still required to submit the supporting documentation for their expenditures, ultimately supporting the amount claimed for forgiveness. Further, the IFR clarifies that lenders are required to complete the following when in receipt of such application: 1) confirm receipt of the certifications, 2) confirm receipt of the documentation required to be submitted. It clearly indicates that the borrower is responsible to provide an accurate calculation of the loan forgiveness amount.
With 3.57 million outstanding PPP loans totaling $62 billion in funds, this is set to simplify the process for about 12% of the PPP funds distributed. Withum expects that lending institutions will need some time to update their systems to allow for these applications, so borrowers who fit this mold will likely need to wait a couple more weeks to apply for forgiveness if they desire to use the new form.
Changes to the Lender Review Process for All Loans: In addition to the above, the IFR also amended lender responsibility with respect to reviewing documentation from submitted borrowers. In response to what appears to be an overwhelming number of borrowers submitting applications with documentation of eligible payroll and non-payroll costs in excess of the loan amount, lenders responsibilities are now adjusted such that they are only required to confirm the borrower’s calculation and review the required documentation up to the amount of the request forgiveness amount. Although we cannot be sure how each lender will approach/implement this guidance, it stands to increase the speed with which loans are being processed if utilized.
What Else is Going on in Congress? Since the IRS published Notice 2020-32, disallowing deductions for expenses that were forgiven under the PPP, Congress members have spoken publicly about how this notice was not in line with the intentions of the CARES Act. On October 1, the House passed an updated Heroes Act which contained language allowing such deductions, marking the first time we have seen any legislation overturning the IRS notice make any headway. Based on what has transpired since that date, we know that the Heroes Act, in it’s current form, is very unlikely to be signed into law, however inclusion of language in this regard is encouraging nonetheless.
Also at the forefront of these discussions are additional appropriations for the PPP funds. At the very least, the White House has signaled that they would be amenable to redeploying the nearly $130B of unused appropriations for the PPP, and Congress members on both sides of the aisle have indicated they are favor of a PPP v2. The most solid proposal we have seen to date is within the updated Heroes Act, which includes a second round of loans, utilizing the same formula as the first round, to eligible ‘smaller businesses’ of 200 employees or less who can also demonstrate a 25% reduction in revenues in either Q1, Q2 or Q3 as compared to last year. The maximum size loan under this proposal would be $2M. Eligibility under alternative size standards and how the affiliation rules would be applied are not clear at this time.
The Alston & Bird Health Care Group details how changes by the Centers for Medicare & Medicaid Services to the AAP loan program delays repayment obligations for all health care providers and suppliers that received AAP loans during the COVID-19 pandemic.
September 28, 2020
I hope this email finds everyone safe and healthy. This year has certainly challenged us all. COVID-19 has forced us all to change and adapt, to re-invent the way we provide services and resources and change the way we learn. Thanks to your MCAA Officers, Board of Directors and dedicated national staff, MCAA has not skipped a beat. Considering the safety of MCAA members, the association and our industry partners, it was decided that the MCAA 2021 Annual Convention will be cancelled due to the impacts of COVID-19.
What does this mean for MCAA members and our industry partners? Instead, MCAA will hold the first MCAA Virtual Education Conference. This conference will feature top quality education seminars, a virtual trade show/exhibit, our annual business meeting, student chapter competition, safety awards and scholarship presentations and the annual changing of the guard. The MCAA Virtual Education Conference will be held March 22-25, 2021.
This four-day educational experience is not a substitute for our convention as nothing can compare to actually being together. Until we can be together, safely, the MCAA Virtual Education Conference will provide MCAA members with what they have come to expect, top quality education that will aid and enhance their businesses. Keep an eye out for more information during the next few months as the plan and vision come together. I hope that everyone and their families stay safe and healthy. I look forward to when we can all get back together and celebrate our MCAA family in person.
Timothy J. Brink
PPP Loans – Disallowance of Expense Deductions: Withum is getting a lot of questions regarding the denial of tax deductions relating to PPP loan forgiveness. As you may recall, cancellation of debt relating to the PPP loan is not taxable income. While that is the case for the loan itself, the amount forgiven actually ends up being fully taxable because the IRS issued Notice 2020-32 to disallow the tax deductions (expenses) that gave rise to the loan forgiveness. Here is a link to a Withum article on the Taxation of PPP Loans and Loan Forgiveness. Thus, taxpayers should expect more taxable income as they will have less deductible expenses in 2020 than are reflected on their internal books and records.
This also has caused some fiscal year-end borrowers to consider whether they can choose which deductions to disallow so they can defer the taxation of the loan forgiveness amount until a later tax year.
Consider this example: a borrower obtained a PPP loan 8 weeks before the end of its 2020 FYE. If it obtains loan forgiveness based on the first 8 weeks of covered expenses, then those expenses would be disallowed and the loan forgiveness amount would be taxable in 2020. If, however, the borrower can disregard the first 8 weeks of expenses and rely only on the last 16 weeks of covered expenses paid or incurred during the covered period, then it could defer the expense disallowance, and therefore the taxation of the loan forgiveness amount until 2021. There is no guidance on this issue from the IRS or from the SBA, and while there are reasonable arguments to be made both ways, we cannot recommend borrowers take this position because eligibility for loan forgiveness is based on “the sum of” the covered expenses paid and incurred during the covered period, according to section 1106(b) of the CARES Act.
Could Deductibility of PPP Expenses Change? Many have speculated that denying tax deductions for PPP loan recipients was not the intent of the program. Several members of Congress have indicated that they intend to pursue legislation that would allow for all PPP related expenses to be deductible in order to avoid having small businesses deal with an unexpected tax bill after such a difficult year. Even though at least one bill to restore the deductions has been proposed, at this point no agreement has been reached, so taxpayers need to proceed assuming that no change is coming. That said, it is possible that we could see this addressed in an upcoming stimulus bill ….stay tuned.
Reminder Section: (what should I be doing):
- Talk to your lender to find out when its PPP loan forgiveness application portal will be ready.
- Talk to your payroll company about claiming the employer payroll tax deferral and employee retention credits (ERC) that were made available in the CARES Act.
- Talk to your payroll company about claiming the qualified sick/family leave refundable tax credits (from FFCRA, passed prior to the CARES Act).
Please see the most-recent DEWALT Newsletter with a LinkedIn Live event scheduled for this Wednesday, September 16 in support of SAFETY WEEK.
By: Jim Paretti, Michael J. Lotito, and William Hays Weissman
August 31, 2020
On August 28, 2020, the U.S. Department of the Treasury issued guidance for employers with respect to the deferral of the employee portion of certain payroll taxes. This guidance stems from a presidential memorandum issued earlier in the month authorizing employers to defer payment of these taxes. That memorandum allowed for the deferral of the employee portion of federal payroll taxes (6.2% for Social Security and 1.45% for Medicare) from September 1, 2020 until December 31, 2020. The memorandum allows employers to defer payment of the employee portion of these payroll taxes for workers earning less than $4,000 on a biweekly basis (roughly $104,000 annually).
Treasury’s guidance makes clear that an employer may elect to defer the payment of the employee portion of these taxes on “applicable wages” until next year, when they would be owed in installments between January 1, 2021 and April 30, 2021. “Applicable wages” are defined as those wages paid to an employee on pay dates between September 1, 2020 and December 31, 2020, “but only if the amount of such wages or compensation paid for a bi-weekly pay period is less than the threshold amount of $4,000 or the equivalent threshold amount with respect to other pay periods.” The guidance specifies that applicable wages are determined on a pay period by pay period basis. Finally, the guidance makes clear that employers are required to pay these taxes to the federal government, but goes on to state that employers “may make arrangements to otherwise collect the [due taxes] from the employee.”
The guidance leaves several clear takeaways. First, it is clear that an employer is permitted to defer payment of these taxes, but is not required to. Second, it is likewise clear that unless further action is taken (likely by Congress), these taxes are merely deferred, not forgiven, and will be due by the end of April 2021. Finally, it is not clear what, if any, role an individual employee plays with respect to determining whether they want their share of these taxes deferred, or paid in the normal course. Employers will want to keep each of these points in mind as they evaluate whether or not to participate in this elective deferral.
It is unclear whether Treasury will issue additional guidance regarding this program. Littler WPI will keep you apprised of relevant developments.
MCAA’s Model COVID-19 Return to Work Exposure Control Plan was again revised to address changes to CDC guidance and add additional COVID-19 safety resources to the plan. MCAA recommends that you evaluate these changes to ensure that your company’s program is current.
Revisions were made to the actual MCAA Model COVID-19 Return to Work Exposure Control Plan and to the accompanying documents, including:
- The addition of the Temperature and Symptom Screener Training PowerPoint with accompanying instructor notes;
- Changes to COVID-19 symptoms;
- Changes to discontinuing isolation protocol;
- Definition of “Prolonged Period”;
- Changes to temperature and symptom screening protocol; and
- Changes to PPE requirements for screeners.
The following resources can be found in the RESOURCE CENTER and below: