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No, that is voluntary separation. “FTE Reduction Exceptions: Indicate the FTE of (1) any positions for which the Borrower made a good-faith, written offer to rehire an employee during the Covered Period or the Alternative Payroll Covered Period which was rejected by the employee; and (2) any employees who during the Covered Period or the Alternative Payroll Covered Period (a) were fired for cause, (b) voluntarily resigned, or (c) voluntarily requested and received a reduction of their hours. In all of these cases, include these FTEs on this line only if the position was not filled by a new employee. Any FTE reductions in these cases do not reduce the Borrower’s loan forgiveness.”
Yes, subject to a max of $15,385 during the covered period (8 week period).
Can you pay someone for 40 hours even if there is not 40 hours of work? And these people would count towards FTE total?
Yes, keep in mind that from a government perspective the goal is to keep employees on payroll regardless of whether there is work available to them or not.
Is it correct that PPP could NOT be used to pay for anyone taking leave under FFCRA or the Emergency Sick Leave Act. Can it in fact be used for one of these purposes as long as a tax credit is not claimed as well? If so, could you please provide that regulation or guidance.
It has to be claimed as a credit under FFCRA and not included as a PPP Loan forgivable expense.
No, it does not fall under the non-payroll costs under SBA rules.
What happens if you do not use all the funds and fall under 75 % can you give back funds to the bank?
Does the PPP Loan Forgiveness FTE Reduction Safe Harbor law/regulation FTE employee level include both full-time and part-time employees?
If my payroll is more than the 75% and I don’t use the entire 25% will it be forgiven as long as it doesn’t go over 100%?
Yes. For example, you received a $100,000 loan, used $80,000 for payroll (more than 75% of the loan) and $25,000 for rent. Total spent was $105,000 of which $5,000 is out of your pocket and not the loan. In this situation you should receive forgiveness for the entire $100,000.
No, you have to prove what you spent to obtain forgiveness, but not all of the loan will need to be spent to obtain forgiveness.
This first quarter of 2020 we had 490 employees. At the time of the application we had 317 employees. We now have 460 employees. Do we have to reach the 490 for the loan to be forgiven?
Please keep in mind that there are two base period for FTE comparison. 1/1/2020-2/29/2020 OR 2/15/2019 – 6/30/2019. You determine the FTE on each period compare to your 8 week covered period, and use either base period that is most beneficial to you.
Alternatively you can look at your FTEs on 2/15/2020 and as long as you offer employment to that FTE equivalent by 6/30/2020 there should be FTE reduction.
Yes, just make sure that you do not exceed $15,385 or total pay per employee during the covered period.
We received funding on 4/14. We issued a payroll on 4/15. Does the timeframe between 3/16 to 3/31 considered towards payroll count?
This is still open for interpretation. The loan forgiveness application is very specific as to the covered period and alternate payroll covered period, but we understand the administrative complexities involved here.
PPP loan forgiveness calculation for FTE is based on 40 hr work week. Our company has a 35 hr work week. Do we base 1 FTE on a 40 hr week?
You will need to use 40 hours based on the PPP Loan forgiveness application, but since you are comparing apples to apples (35 hours in the covered period and 35 hours in the base period) your FTE may not be negatively affected.
If the banks defer the interest payment for real estate or equipment, can we include it or have the bank deduct it within the covered period?
If we understand this correctly, to get the interest payments forgiven they would need to go back to the bank and request to not have the interest deferred so they can pay it during the covered period to obtain forgiveness for the amounts paid out of the PPP Loan.
Both should be adjusted based on the PPP Loan Application for Forgiveness. However, note that the refusal must occur during the Covered Period or the Alternate Payroll Covered Period. Further note that the documented refusal is specified only in the FTE Reduction Exception and not in the wage reduction exception, but it would conceptually make sense that if the employee refuses and for FTE Reduction you receive an exception, you would also need to receive an equivalent exception for the wage reduction.
Can you please just confirm one last time if you OPT for the APCP, does payroll has be paid by June 14 and it can be paid by June 20?
See questions below and see PPP Loan Application for Forgiveness that covers this. It can be paid on 6/20 based on the latest SBA guidance.
It can be paid on the ninth week. That is you need to pay it on the next pay day even if it falls after the normal 8 week covered period. See PPP Loan Application for Forgiveness that covers this.
Alternative Payroll Covered Period: For administrative convenience, Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date (the “Alternative Payroll Covered Period”). For example, if the Borrower received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, June 20. Borrowers who elect to use the Alternative Payroll Covered Period must apply the Alternative Payroll Covered Period wherever there is a reference in this application to “the Covered Period or the Alternative Payroll Covered Period.” However, Borrowers must apply the Covered Period (not the Alternative Payroll Covered Period) wherever there is a reference in this application to “the Covered Period” only.
If the employee refuse to comeback and in writing, is FTE and Wages reduction a non-issue or just FTE?
Both are non-issues based on the PPP Loan Application for Forgiveness. However, note that the refusal must occur during the Covered Period or the Alternate Payroll Covered Period. Further note that the documented refusal is specified only in the FTE Reduction Exception and not in the wage reduction exception, but it would conceptually make sense that if the employee refuses and for FTE Reduction you receive an exception, you would also need to receive an equivalent exception for the wage reduction.
We pay real estate taxes direct to the borough not the landlord. Can that count towards the eligible of non-payroll costs?
Good question. The CARES Act just specifies that the lease agreement must be in place before 2/15/2020 and lease payments as specified under the agreement be counted as rent. Therefore if you lease agreement includes the real estate taxes as part of the rent, then it may qualify. Discuss this with your bank to determine how they would see this.
What if some non-exempt (hourly) get paid every 2 weeks vs. that exempt get paid monthly. What would you say is the “payroll schedule” Do you check both options on the Forgiveness Form?
Perhaps in this instance it may be more advantageous, at least for the 8 week period, to pay everyone on a bi-weekly basis.
No, only the costs specified in the CARES Act count as non-payroll costs.
Is it correct that temporary employees hired through a temporary staffing agency count towards FTE?
We believe that the temp employee must be part of your payroll to satisfy the CARES Act requirements and not paid via the temp agency. The rules are not clear here, but clearly define payroll costs as costs for your employee not a person that is hired via a temp agency and receives their payroll via the temp agency.
Is it correct that anyone taking leave under FFRCA does count for FTE count even though not paid through PPP loan?
We believe that they do count for FTE, but compensation paid would not count since you can obtain a federal tax credit for amounts paid.
If for physical assets you can touch, that would make sense. However, if it is for software or software as a service perhaps no as this would not fit the definition of personal property at least for tax purposes.
How should customers be treated if they refuse temperature check or wearing mask, social distancing?
With regard to temperature checks, these are not particularly common, so you may get push back on this. Additionally, if you are doing this, make sure the employee who takes the tests takes appropriate precautions (i.e uses a contactless thermometers, is wearing appropriate PPE, etc.). Imagine the nightmare if your test taker got sick and then got your customers sick.
There is no good reason why anyone cannot social distance from others, beyond showing an obvious mobility disability that requires someone to physically assist them in moving around. Outside of someone with a obvious disability, I think you would be well within your rights to remind the customer social distancing is required and if they continue to refuse to do so without citing any medical reason, you may ask them to leave.
With regard to wearing a mask, you may require any customer to wear a mask. If they refuse, you should ask why. Unless they say they have a medical condition of some sort, they should be barred entry. If they say they have a medical condition, you may NOT ask them for any further information. While you are required to provide them service and accommodate their disability, this does not mean you must allow them into your store. You can provide other reasonable accommodations instead. If you plan on taking this aggressive approach, I would strongly advise you consult counsel so that you can discuss what steps are appropriate and how to mitigate the risk of any blowback from customers.
Can an employer pick and choose which employees may telework? Employees in the office feel like their lives do not matter, but the ones allowed to work from home are. Note, everyone that is in the office can telework.
The employer may pick and choose so long as their choices are not based on discrimination of a protected class (only picking or excluding people from a certain religion, ethnicity, race, gender, etc) or their choices lead to discrimination. Certainly it is recommended at this point in time that to the extent it is viable, employees be allowed to telework to some degree, if for no other reason than, to reduce the number of employees in the office at any one time and reduce the likelihood of an entire office getting sick at the same time.
Yes, UNLESS they advise they have a medical condition/disability that should exempt them. In that case, you will engage in the interactive process (an open dialogue) to determine what the issue is. If necessary, you will request that the employee provide medical documentation confirming the disability. However, in light of the current executive order issued by the governor, I’d encourage you to speak with legal counsel if this issue arises.
No. I do not believe the employer could unilaterally decide that someone should not be re-hired because they are in a high risk category. This is especially true given that those in a high risk category are typically disabled or in a protected age group (40+). In other words, these people are all in protected categories and by refusing to hire them, you would be discriminating against these individuals. While the ADA permits employers to exclude employees with a medical condition that would pose a direct threat to health or safety, I don’t see how these individuals could be deemed to meet this threshold. These individuals are simply more likely to suffer catastrophic effects from the virus. They, themselves, are not a threat to the health and safety of others.
If you, as an employer, wanted to offer these individuals a reasonable accommodation in order to reduce the likelihood of harm, that’s certainly allowed. It will be a rare circumstance where there is no reasonable accommodation available given that telework or leave are generally accepted reasonable accommodations.