The CDC has revised its guidelines regarding cleaning and disinfecting surfaces to prevent the spread of COVID-19. The virus that causes COVID-19 can land on surfaces, and it’s possible for people to become infected if they touch those surfaces and then touch their nose, mouth, or eyes. However, it has been determined that the risk of infection from touching a surface is low. The CDC now believes that the most reliable way to prevent infection is to regularly wash hands and use hand sanitizers. When there have been no confirmed or suspected cases of COVID-19 in a given space, cleaning only once a day is usually enough to sufficiently remove the virus from surfaces in the space.
MCAA and much of the construction industry will be participating in COVID-19 Vaccine Awareness Week in Construction during the week of April 19-23, 2021. MCAA encourages you to join us and participate! The purpose of the safety week is to support the CDC’s campaign to raise awareness about the safety, effectiveness, and benefits of receiving a COVID-19 vaccine. The CDC is providing an Essential Workers COVID-19 Vaccine Toolkit to help affected employers educate their workers about COVID-19 vaccines. The toolkit includes:
- A customizable letter you can send to your employees with information about vaccine awareness educational offerings;
- Content for company newsletters and social media sources;
- A PowerPoint presentation on COVID-19 vaccines; and
- Key messages for all affected workers.
MCAA encourages you take advantage of these materials. Setting aside a few minutes during the safety week to bring your workers up to speed on the vaccines could be very beneficial to your company. A few options to consider for delivering the information to your workers include:
- A COVID-19 vaccine awareness safety meeting;
- A short duration vaccine awareness safety talk each day throughout the week;
- A COVID-19 vaccine awareness safety Lunch & Learn; and/or
- Worker access to the Wednesday, April 21, 2021 vaccine awareness webinar, which will be presented by the CDC and NIOSH from 2:00 p.m. to 3:00 p.m. ET by way of NIOSH Zoom. REGISTER
The new administration is putting a lot of pressure on OSHA to perform COVID-19 related inspections and enforce the agency’s guidance to prevent the spread of COVID-19 in the workplace. OSHA’s new Special Emphasis Program (SEP) on COVID-19 gives the agency the impetus it needs to do just that. Employers should prepare for the possibility of unprogrammed and programmed COVID-19 inspections.
To start, make sure you know your rights as an employer, so that you will not unnecessarily provide OSHA with information that could result in a citation. Unprogrammed inspections typically result from the mandatory reporting of a fatality, an employee complaint, or a referral from another government agency. When an inspection is unprogrammed you can limit the scope of the compliance officer’s inspection to the reason for the unprogrammed inspection. For example, if an employee complains to OSHA that the portable toilets are not being regularly sanitized, and that complaint results in an unprogrammed inspection, you can limit OSHA to inspecting only those toilets and prevent the compliance officer from seeing other areas of the jobsite. However, compliance officers can issue citations for safety violations they identify while on the way to inspect the subjects of unprogrammed inspection, so choose the path and mode of transportation to that subject area wisely.
- Compliance officers are required to hold pre-inspection conferences. Make sure the conference occurs. There have been cases where compliance officers have omitted this required step in the process;
- Make sure your company is represented at the conference by someone who knows what to ask and understands how to respond;
- The instant the conference begins your company representative should ask the compliance officer for the reason for the inspection;
- If it is an unprogrammed inspection, limit the compliance officer to the area of the jobsite where the incident that resulted in the inspection occurred, i.e., where the fatality occurred, the specific area of the employee complaint, or the specific area stated in the referral; and
- Never leave a compliance officer alone to wander the jobsite. Even though it is an unprogrammed inspection, if a compliance officer sees a violation, he or she can still issue a citation that is unrelated to the reason for the unprogrammed inspection.
Programmed inspections are randomly selected by OSHA from Dodge Reports. Get prepared ahead of time in case your company is working on a project that comes up for a programmed COVID-19 inspection. To get prepared, consider what the compliance officers are most likely to look for during the inspection process, and what standards that they are most likely to cite.
Based on OSHA’s most recent COVID-19 compliance directive its compliance officers will be looking specifically for the following items during COVID-19 inspections:
- Evidence of retaliation against workers for actions related to the virus;
- Use of face coverings or masks throughout the workplace;
- Active encouragement of workers to stay home if they are sick;
- Proper social distancing and accommodating workers with telework where possible;
- Emphasis on proper respiratory etiquette;
- Emphasis on proper hand hygiene;
- Routine environmental cleaning; and
- Planning for possible infectious disease outbreaks in the workplace.
Since OSHA does not currently have a COVID-19 standard, the agency uses existing standards to enforce worker COVID-19 protection. When performing COVID-19 inspections the agency is most likely to issues citations from provisions in the following standards and its general duty clause.
Mechanical Service and Fabrication Shops:
- 29 CFR 1904 – Recording and Reporting Occupational Injuries and Illnesses;
- 29 CFR 1910.132 – General Requirements – Personal Protective Equipment;
- 29 CFR 1910.134 – Respiratory Protection;
- 29 CFR 1910.141 – Sanitation;
- 29 CFR 1910.145 – Specification for Accident Prevention Signs and Tags;
- 29 CFR 1910.1020 – Access to Employee Exposure and Medical Records;
- 29 CFR 1910.1030 – Bloodborne Pathogens; and
- Section 5(a)(1) – General Duty Clause – From the OSH Act of 1970.
- 29 CFR 1904 – Recording and Reporting Occupational Injuries and Illnesses;
- 29 CFR 1926.28 – General Requirements – Personal Protective Equipment;
- 29 CFR 1926.33 – Access to Employee Exposure and Medical Records;
- 29 CFR 1926.51 – Sanitation;
- 29 CFR 1926.103 – Respiratory Protection;
- 29 CFR 1926.200 – Accident Prevention Signs and Tags; and
- Section 5(a)(1) – General Duty Clause from the OSH Act of 1970.
If you have any questions or need any assistance protecting your workers from COVID-19 orpreparing your company for possible OSHA COVID-19 related enforcement, please contact Pete Chaney at firstname.lastname@example.org or 301-990-2214.
There may be some good news regarding OSHA’s new National Emphasis Program (NEP) on enforcing worker protections against COVID-19. Despite the Office of the Inspector General’s February 2021 recommendation that OSHA promulgate an Emergency Temporary Standard (ETS) on COVID-19, it appears that the agency will postpone development of an ETS in favor of the NEP. Here’s what you should know about the NEP to protect your company from OSHA citations.
NEP INSPECTION TYPES
- OSHA’s primary emphasis will be on unprogrammed inspections triggered by
2nd Complaints; and/or
- OSHA’s secondary emphasis will be on programmed inspections.
- There are two tiers of “high risk” employers being targeted by OSHA, Primary Target Industries and Secondary Target Industries.
- The agency’s emphasis concerning programmed inspections first will be on Primary Target Industries, such as dental care, hospitals, health care, nursing homes, ambulance services, etc.
- Construction falls into the Secondary Target Industries category along with agriculture, manufacturing, and certain types of transportation.
Programmed Inspections in Construction
Programmed inspection locations will be selected randomly from a list of construction worksites (F.W. Dodge Reports). The emphasis will be on larger projects that are 30% to 60% complete.
What Compliance Officers Will be Looking to Find
OSHA compliance officers will be looking for obvious signs of non-compliance with the agency’s February 2021 COVID-19 Guidance to Prevent the Spread in the Workplace (MCAA Summary). MCAA urges you to pay close attention to your:
- Prevention Programs;
- Return to Work Criteria;
- Social Distancing Measures;
- Engineering Controls;
- Face Coverings and PPE; and
- Sanitization, Cleaning, and Disinfecting Practices.
- General Duty Clause
- Respiratory Protection Standard
- Personal Protective Equipment Standards
The new administration’s January 21, 2021 Executive Order, Protecting Worker Safety and Health, requires OSHA to evaluate it’s COVID-19 enforcement actions and make improvements where necessary. In response, OSHA has launched a national emphasis program focusing enforcement efforts on companies that put the largest number of workers at serious risk of contracting the coronavirus. The program also prioritizes employers that retaliate against workers for complaints about unsafe or unhealthy conditions, or for exercising other rights protected by federal law.
National accounting firm Withum shares some recent developments from the IRS with respect to the ERC and one PPP development.
IRS Issues Notice 2021-20:
On the evening of March 1, the IRS released 102 pages worth of guidance surrounding the 2020 ERC program. While much of the notice was regurgitating the FAQs already on its website, they did provide some notable clarifications:
- Self-employed individuals are not entitled to ERC with respect to their own wages, but can claim the credit for their employees’ wages.
- Entities subject to aggregation are treated as one employer to determine the following: (i) full or partial shutdown rule, (ii) gross receipts test, (iii) 2019 FTE calculation, and (iv) determining maximum credit per employee.
- Rules surrounding full or partial suspension of activities were greatly expanded, installing a definition of ‘nominal’ for businesses who have part of their business shut down while others are able to continue to operate. These rules are fairly facts and circumstances based, so we recommend you reach out to your advisor to discuss on a more detailed level.
- Interplay of PPP is discussed with 7 examples provided – in general, the notice reaffirms the flexibility of wages to be allocated in advantageous manner between programs. It further clarifies that borrowers who have already submitted their loan forgiveness application can re-allocate wages to the ERC, provided those wages were not needed to obtain forgiveness within the context of the PPP forgiveness application was filed – any excess wages can be re-allocated as necessary.
- IRS confirmed that when claiming the 2020 credit, separate 941-Xs should be filed for each quarter.
Taxation of the ERC:
We have received many questions around this, so we thought it appropriate to include a point of emphasis. Unfortunately, the ERC carries with it a disallowance of otherwise deductible costs in the amount of the credit. Because the amount of the credit will reduce otherwise deductible expenses, this means that taxable income for recipients will increase. Generally, this taxable income increase would occur in the year to which the credit relates. This is an important note, as companies applying now for the 2020 credit will have to adjust their 2020 taxable income and 2020 tax returns. This treatment seems particularly inequitable, especially because the actual credit amount for borrowers not receiving the amounts is not likely to be received until well after the tax deadline. We are working on a more detailed discussion of this issue, which will be posted in our resource center in short order.
Federal Reserve Board Extends PPP Facility to June 30, 2021:
We also have one piece of news regarding the PPP to share. The Federal Reserve Board announced yesterday that it will extend the expiration date of the PPP servicing from March 31, 2021 to June 30, 2021. It is unclear whether this will also be followed by Congress and/or the SBA. The deadline of March 31, 2021 was set by the CAA, which would need to be updated in order to allow applications to be approved after March 31, 2021. If extended to June 30, 2021, this would provide businesses, including those with more than 20 employees who have not been able to apply for the PPP over the last two weeks, some comfort that they will not be up against a March 31 deadline to be approved. In theory, an extension also would provide the ability of a borrower who received PPP1 funding during 2021 to use the funds within the rules of the program and then apply for PPP2 funding prior to the cutoff date of June 30, 2021.
These last two weeks have been busy from the IRS and SBA – with Congress in the final phases of stimulus package negotiations, we are sure to have further updates for you in the coming week. As always, we welcome you to follow along our Stimulus Package Headquarters resource center, where we will continue to publish information as notable guidance becomes available. If you have questions on the above information, please reach out to your Withum advisor.
National accounting firm Withum shares information about the Small Business Administration’s (SBA) new Interim Final Rule and updated FAQs.
SBA Issues a New Interim Final Rule (“IFR”):
Much-awaited guidance on the changes to the calculation for sole proprietors and independent contractors has been released. Would-be borrowers that fall into these two categories will now be able to utilize either their net income or their gross receipts as their portion of ‘payroll costs’ with respect to calculating the loan amount . While the overall $100,000 limitation still remains, the change benefits any sole proprietor or independent contractor who has less than $100,000 of net income reported on their schedule C, but higher gross receipts. A borrower who has payroll costs paid to employees must reduce their overall gross receipts for these payroll costs in order to avoid double dipping.
An important (and sure to be controversial) point made in the IFR is that the SBA is implementing the change on a prospective basis, and will not allow borrowers who already have an approved loan to increase their loan amount. Finally, the SBA indicated that any borrower who utilizes the gross receipts metric to calculate their loan amount, and receives in excess of $150,000 in loan (presumably combined with employees), will not be covered by the safe harbor that presumes their loan necessity certification was made in good faith.
The SBA has also released updated borrower loan application forms to account for these changes, which can be found here.
SBA Issues Updated FAQs:
Concurrent with the above IFR, the SBA released updated FAQs which now reflect the changes in FAQs as a result of the Consolidated Appropriations Act in December 22. The FAQs are 65 strong – some highlights are as follows:
- FAQ 14 updates the understanding of which period the borrowers should use to determine their number of employees – borrowers may use the average employment over the time period used to calculate their loan amount to determine their number of employees for purposes of applying an employee-based size standard. Borrowers may also elect to use the SBA’s usual calculation – average number of employees per pay period in the 12 calendar months prior to the date of the loan application.
- FAQ 36 reminds borrowers that employee count for establishing eligibility under the 500 or 300 thresholds requires a company to count all employees, not FTEs. Example provided is 200 full-time employees, 50 part-time employees working 10 hours a week – resulting employee count is 250.
- FAQ 31 continues to indicate that all borrowers should review carefully the required certification that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
- FAQ 46 updates the prior safe harbor guidance issued around the loan necessity certification. Specifically, it indicates “because Second Draw PPP Loan borrowers must demonstrate that they have had a 25% reduction in gross revenues, all Second Draw PPP Loan borrowers will be deemed to have made the required certification concerning the necessity of the loan in good faith.” While not precluding the IRS from selecting certain loans for review, this is certainly a big update for all borrowers of PPP loans.
- FAQ 53 reaffirms that borrowers of $2m+ loans for PPP1 will receive the Form 3509 Loan Necessity Questionnaire and that the SBA will utilize it in conjunction with other data to affirm that the borrower made economic uncertainty certifications in good faith at the time the loan application was made. The focus continues to remain on the time at which the loan application was made, regardless is subsequent developments resulted in the loan no longer being necessary.
- New FAQ 61 provides color to the certification that the borrower has utilized all of the first draw PPP funds prior to the disbursement of PPP2 funding. Specifically, it indicates that a borrower can make this certification in good faith provided they have spent the funds on eligible expenses, regardless of the percentage of those funds used toward payroll costs. This appears to be a departure from a prior IFR, which seemed to indicate that the 60% requirement still had to be met.
- New FAQ 63 reaffirms previous guidance that the alternative size standard cannot be utilized to establish eligibility for a second draw loan.
This week has been a busy week from the IRS and SBA – be on the lookout in the next couple days for another update dedicated to discussing the guidance that was issued on the ERC. As always, we welcome you to follow along our Stimulus Package Headquarters resource center, where we will continue to publish information as notable guidance becomes available. If you have questions on the above information, please reach out to your Withum advisor.
National accounting firm Withum shares some thoughts on recent developments related to the PPP, PPP2, Loan Forgiveness, and Employee Retention Tax Credits.
White House Announces Changes to PPP:
Yesterday afternoon, President Biden announced changes to the PPP geared toward making the program easier to access for smaller businesses. Last night, the SBA released further guidance solidifying these changes:
- Starting February 24, 2021 at 9am, the SBA will establish a 14-day exclusive loan application period for businesses/not for profits with fewer than 20 employees.
- SBA will also enact the following changes to promote equitable access to SBA relief:
- Allow sole proprietors, independent contractors and self-employed to receive more financial support by revising the PPP’s funding formulas for these categories
- Eliminate restrictions for small business owners with non-fraud felony convictions and restrictions for student loan debt delinquency
- Ensure access for non-citizen small business owners who are lawful US citizens (ITINs will be used for PPP)
- The adjustments to the funding formula for these groups are not available at this time, neither is any information on whether these borrowers who have previously received PPP2 funding can apply for more with their lender
- It is not clear if/how this will affect applications that are currently in processing with lenders or the SBA or whether funding will be delayed in these instances
After re-opening for business in mid-January with new appropriations of $284 billion, the PPP has had it’s fair share of bumps along the way. Here are some updates:
- Through February 21, the program has had 1.9 million loans approved for approximately $140 billion in loan dollars during 2021. Average loan size of approximately $73k is considerably less than the first round, as expected due to the employee count and maximum loan amount standards imposed
- The SBA installed more than 50 validation checks to prevent fraud and misuse of program funds. An unintentional effect of this was that many otherwise eligible borrowers were being held from receiving funds due to “hold codes” not applicable to their situation. The SBA has indicated that they are working to correct this, and on February 10, 2020, issued guidance to lenders on how to bypass to allow borrowers to receive their funding.
- The SBA has installed a loan cap of $35,000 per employee for funding within either a PPP1 or PPP2 loan. This cap is not specified anywhere in the legislation or subsequent guidance, however they have been limiting certain loan amounts of borrowers for this through the SBA E-Tran system. We believe this would be calculated at $20,833 in wages and $14,117 of employer sponsored health insurance, retirement contribution and state and local taxes. We are not sure how they are determining the $14,117 amount as that information is not supplied on an employee basis.
- In last night’s release, the SBA announced they are working with their partners to improve the “digital front door” – presumably aimed at correcting some of the hold code issues previously identified.
For a refresher on the eligibility criteria for receipt of a second draw PPP loan, please visit our article here.
Loan Forgiveness Update:
The SBA has published the following forgiveness data through February 18, 2021:
|Issued:||5.2 million loans||$521 billion loan dollars|
|Forgiven:||1.7 million loans||$152 billion loan dollars|
|Under review:||187k loans||$76.9 billion loan dollars|
|Not yet received by the SBA:||3.3 million loans||$292 billion loan dollars|
|Not forgiven:||– not provided –||$500 million loan dollars|
Employee Retention Tax Credits (“ERC”):
Outside the PPP, the revamped ERC program has been the hottest topic of the new year for businesses in need of relief after the downturn has negatively impacted their revenues. The program, which carries a refundable $19,000 credit per employee for businesses who qualify for both 2020 and 2021, should be explored by ALL small businesses who have either had significant reductions in gross receipts or were fully or partially suspended due to government orders during 2020. A brief summary of each program is as follows:
- 2020 Opportunity: The CAA removed the requirement that businesses cannot obtain a PPP loan and claim the ERC. This means that any business that previously obtained a PPP loan can now retroactively claim the ERC for 2020 if they qualify. The test for the 2020 ERC is that the business must have suffered either (i) a full or partial suspension of its business operations due to COVID-19, or (ii) it experienced a decline in gross receipts for any quarter in 2020 by more than 50% compared to the same quarter in 2019.
- 2021 Opportunity: Under the CAA, businesses can now claim an ERC for the first two quarters of 2021, and the rules are less restrictive than they were in 2020. Two key changes include: (i) the maximum credit per employee is $14,000 in 2021, compared to $5,000 in 2020, and (ii) the decline in gross receipts test has been relaxed to include a decline of 20% instead of 50%. Businesses can also utilize the prior quarter to establish eligibility for the 2021 program. This means for Q1 2021, the Q4 2020 can be used to determine the 20% decline in revenues. There are other expansions of the ERC that are favorable for businesses with employee counts between 100 and 500.
- Note that businesses can only claim the ERC for eligible wages that were not used to support PPP loan forgiveness, and this prohibition against double dipping applies in 2020 and in 2021.
Our team has put together some resources for small businesses to start evaluating whether they might benefit from this program. Please visit our ERC flowcharts here, or our article on the overall program here. We also invite you to view our on-demand webinar from last week here.
The International Foundation of Employee Benefit Plans (IFEBP) shared information regarding these important questions. Before deciding to require employees to have the COVID-19 vaccination, employers should consider possible implications, and may decide to encourage or incentivize, rather than mandate, employee vaccination.
OSHA recently released guidance to help employers protect their workers and prevent the spread of the COVID-19 virus in the workplace. MCAA’s new summary highlights the bottom line items in the areas of COVID-19 Prevention Programs, Return to Work Criteria, Social Distancing Measures, Engineering Controls, Face Coverings and PPE, and Sanitization, Cleaning, and Disinfecting Practices.
Take a few minutes this week to remind your workers how to help protect themselves and prevent spreading the virus.
The recently released OSHA guidance is aimed at helping employers and workers identify risks of being exposed to and/or contracting COVID-19, and determine appropriate control measures to implement in the workplace. The guidance contains recommendations as well as descriptions of compulsory safety and health standards. The recommendations are advisory in nature, informational in content and intended to assist employers in providing a safe and healthy workplace.
Safety is top priority for MCAA member companies, especially during the COVID-19 pandemic. MCAA’s COVID-19 Safety Stand Down from February 1-5, 2021 will revisit the protective measures and MCAA safety resources associated with COVID-19. A series of resources will help you provide the necessary information about COVID-19 risks, protective measures, forthcoming vaccines, and vaccine administration phases to your workers. Also included is information to help you remind your state and local officials that mechanical construction work is both safe and essential, and must continue to be categorized that way.
- Two COVID-19 Toolbox Safety Talks for Mechanical Industry Workers LEARN MORE
- CDC COVID-19 Vaccine Toolkit for Essential Workers LEARN MORE
- CDC COVID-19 Vaccine Phases LEARN MORE
- Access to MCAA’s COVID-19 Safety Resources LEARN MORE
- COVID-19 Information for Construction Employers Concerning Keeping Construction Safe and Essential LEARN MORE
If you have questions about any of these resources, or need other safety-related assistance, please contact Pete Chaney.
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.
Experts from Withum’s SBA Financial Services and Tax Services teams navigate through the myriad of provisions included in the more than 5,000 page legislative package finalized mid-December. Withum’s team covers 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 also covers 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.