24
March, 2020

How to Pay Employees During COVID-19

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How to Pay Employees During COVID-19

The Coronavirus (COVID-19) pandemic has presented businesses of all sizes with a series of challenges never faced before. It has caused us all to reconsider how we conduct business to protect our employees and make it through this uncertain time together. In this COVID-19 blog series, we’re going to talk about ways to manage your business during Coronavirus so you can weather this difficult storm. In our first article, we’re discussing how to pay your staff during COVID-19.

Offer Paperless Payroll

Keeping your payroll consistent and accurate minimizes fear and reduces confusion. With an employee self-service solution, your company can eliminate manual time tracking, and avoid inaccurate payroll records. Your employees’ pay is directly linked to the time your employees work. Paperless payroll lets you reassure your workers that they will be taken care of during times of crisis.

To ensure accurate payroll, there are several options to track employee time and attendance. If you have several workers offsite, ask your payroll provider what time tracking solutions they offer so you can capture their time efficiently. Make sure your provider offers online clock-in through a self-service solution or app that allows remote workers to clock in based on their location.

Paperless online payroll is also an ideal alternative to paper checks because it eliminates the need for printing and distributing checks. As the Coronavirus spreads, the demand for our supply-chain distributors like FedEx and UPS will continue to increase. Fedex and UPS will no longer require signatures for packages, but store hours nationwide will be reduced.

During this time, Fedex is also eliminating the money-back guarantee for all FedEx Express, FedEx Ground, FedEx Freight and FedEx Office services. In lieu of this, paperless payroll is the ideal solution. It helps keep your business flowing with minimal disruptions, which will ultimately save your company money.

Provide Paycards

To further bolster your paperless payroll efforts, a paycard is another alternative for paying your staff. This is especially true for businesses and employees that don’t use traditional banking.

In a recent study conducted by the FDIC, 8 million American households don’t have a bank account. A paycard allows an employer to load an employee’s wages to a card. Similar to a debit card, a pay card has a balance and can even be used at an ATM. When the employer sends money to the card, an employee can use that card as an alternative to direct deposit.

Alternative to Paperless Payroll

If you still need to provide paper checks, on-site check printing is an alternative to paperless payroll. Because you are able to physically print checks wherever you are at, this solution avoids any delays that might occur in check shipping.

Make sure your company has proper check printing software or use your payroll solution. In this difficult time, it’s important that you verify your payroll provider can print checks for you on an as-needed basis.

Also, check that you are using the proper materials. To avoid forgery, you will want to make sure you have compatible 8.5 x 11 check stock, magnetic ink, and an industrial printer.

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Alternative to Paperless Payroll

If you still need to provide paper checks, on-site check printing is an alternative to paperless payroll. Because you are printing checks on-site, this solution avoids any delays that might occur in check shipping.

If you are considering this option, make sure your company has proper check printing software or use your payroll solution. To avoid forgery, you will want to make sure you have compatible 8.5 x 11 check stock, magnetic ink, and an industrial printer.

Offer Paid-Time Off

With the passing of the Families First Coronavirus Response Act, many employers are now required to offer paid leave. If paid time off is not something you normally offer, here’s what you need to know:

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Two Weeks of Full Pay

The Act provides that employees of eligible employers can receive two weeks (up to 80 hours) of paid sick leave at 100% of the employee’s pay. This is if the employee is unable to work because the employee is quarantined, and/or experiencing COVID-19 symptoms, and seeking a medical diagnosis.

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Two Weeks of ⅔ Pay

In addition to two weeks of full pay, an individual can also receive two weeks of ⅔ pay. An employee who is unable to work because of a need to care for an individual subject to quarantine, or to care for a child whose school is closed , or child care provider is unavailable for reasons related to COVID-19 can receive two weeks (up to 80 hours) of paid sick leave at 2/3 the employee’s pay.

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10 Additional Weeks of ⅔ Pay

If an individual has been employed for at least 30 days, and needs to care for family longer than 2 weeks, ⅔ pay will be continued. An employee who is unable to work due to a need to care for a child whose school is closed, or child care provider is unavailable for reasons related to COVID-19, may in some instances receive up to an additional ten weeks of expanded paid family and medical leave at 2/3 the employee’s pay.

Paying Government-Mandated Employee Leave

The new Families First Coronavirus Response Act (FFCRA) provides key provisions for paying employees during the COVID-19 pandemic:

Employers with 50-500 Employees

If you have 50-500 workers, you are subject to the FFCRA that requires businesses to pay sick or quarantined employees two weeks of leave. If you have employees who have to stay home due to school closures, you are required to pay staff ⅔ of their normal pay for up to 12 weeks. The exemption to this would be for healthcare workers on the front lines of COVID-19.

Employers With Under 50 Employees

The U.S. Department of Labor has agreed to exempt employees and small businesses with less than 50 workers in cases where the viability of the business is threatened.

  • To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week.
  • The Department of Labor will release “simple and clear” criteria for businesses with fewer than 50 employees to apply for exemptions from the leave provisions related to school and childcare closures.
  • There will be a 30-day non-enforcement period for businesses making a reasonable effort.

Tax Credit and Accelerated Payment Examples

  1. If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 out of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
  2. If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments; and, file a request for an accelerated credit for the remaining $2,000.

Equivalent child care leave and sick leave credit amounts are available to self-employed individuals under similar circumstances. These credits will be claimed on their income tax return and will reduce estimated tax payments.

Warning

We are sharing everything we know below and will not be able to answer follow-up questions about the act until agency guidance has been released, which will take some time. We will update our COVID-19 Resources page when we have more information, and we encourage you to check there.

Handling Employee Layoffs

If you have laid off any employees due to the Coronavirus pandemic, several states are now waiving waiting periods for unemployment. You can encourage individuals to apply for unemployment benefits through their state.

Prioritizing the Livelihood Your Business

The greatest thing you can do for your staff during times of uncertainty is to offer them stability in the form of a paycheck. As the Center for Disease Control continues to roll out precautions for workers, keeping your workforce calm and assured in your organization is key.

Whether you offer sick time, vacation time, or personal days, ensure your employee’s paychecks are consistent and timely. When you provide your workers with consistent income, they will be happier. Building up your employees’ morale now will ultimately help your business thrive in the future.

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