Tax Implications of COVID-19

In the past several weeks, President Trump, Congress, and the Internal Revenue Service (IRS) have taken immediate actions impacting Kansas taxpayers in response to the COVID-19 pandemic. This article summarizes noteworthy changes in tax deadlines and provisions.

Filing and Payment Deadline Extensions

The IRS extended filing and payment deadlines for federal returns from April 15, 2020 to July 15, 2020. This relief extends to income, estate, gift, and generation-skipping transfer tax forms and payments. Quarterly estimated tax payments for the first and second quarters of 2020 are postponed to July 15, 2020. No interest, penalties, or additions to tax for failure to file such returns or pay such taxes will accrue on the deferred filings or payments through July 15, 2020. Further, the deadlines for taxpayers to make IRA contributions for tax year 2019 have been extended to July 15, 2020.

Families First Coronavirus Response Act (FFCRA)

The FFCRA was signed into law by President Trump on March 18, 2020. As a general rule, the FFCRA requires employers with less than 500 employees to provide two weeks of sick leave for certain employees. As an extension of the Family and Medical Leave Act (FMLA), the FFCRA provides for an additional ten weeks of pay for paid family leave for child care. As to employers, the FFCRA provides employers with refundable tax credits against the cost of paying such sick and family leave. The FFCRA applies to wages paid for the period beginning April 1, 2020 and ending on December 31, 2020.

Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

The CARES Act was signed into law by President Trump on March 27, 2020. The CARES Act is comprehensive legislation impacting individual and business taxpayers. Most notably, the CARES Act implemented a one-time cash recovery rebate (i.e. an “economic impact payment”) of $1,200 to individuals and $2,400 to married couples with an additional $500 for each qualifying child, subject to certain limits and phase-outs.

As to retirement withdrawals, the 10% early withdrawal penalty is waived for retirement plan coronavirus hardship distributions of up to $100,000 made after January 1, 2020.

The CARES Act also established the Paycheck Protection Program (PPP). Under the PPP, the Small Business Administration (SBA) offers loans of up to $10 million for qualifying small businesses. Here, eligible borrowers are small businesses with under 500 employees, including sole proprietors, paid independent contractors, other self-employed individuals, and section 501(c)(3) nonprofit organizations. The PPP provides for partial and full loan forgiveness if the borrower uses proceeds for payroll costs, rent, utilities, and interest paid on mortgages.

Businesses which do not participate in the PPP may consider the Employee Retention Credit (ERC). The ERC provides a qualifying employer with a refundable payroll tax credit of up to $5,000 per employee for wages paid from March 13, 2020 through December 31, 2020. Employers may not receive both an SBA loan under the PPP and an Employee Retention Credit.

Other noteworthy tax provisions of the CARES Act include the following:

• Individual taxpayers who do not itemize deductions are entitled to a charitable contribution deduction of $300 for cash contributions made in 2020 to qualifying charitable organizations. This is an above-the-line deduction used to calculate an individual taxpayer’s adjusted gross income (AGI).
• As to limits on the amount of cash charitable contributions made in calendar year 2020, individual taxpayers who itemize may deduct 100% of qualified contributions, rather than being limited to 60% of the taxpayer’s AGI. Corporate taxpayers may deduct up to 25% of taxable income, rather than being limited to 10% of taxable income.
• The CARES Act temporarily suspends Net Operating Loss (NOL) limits and allows for a five-year NOL carryback period, resulting in additional cash flow and liquidity for taxpayers. Specifically, NOLs generated in taxable years beginning in 2018, 2019 and 2020 may be carried back for up to five taxable years. Further, the limitation of the deduction of an NOL carryforward to 80% of taxable income is delayed until 2021.
• The CARES Act increases the limitation on deductible business interest from 30% of adjusted taxable income (ATI) to 50% of ATI for tax years beginning in 2019 and 2020. For partnerships, the increase only applies to the 2020 tax year.

This summary should not be considered legal advice and does not create an attorney/client relationship. For further details and guidance regarding the provisions contained in this summary, contact the tax and legal professionals at Triplett Woolf Garretson, LLC.

Brand New IRS Guidance Speaks To Documentation Required to Take Paid Leave and To Get Payroll Credits

Late yesterday, the IRS issued FAQs, link here, which details the documentation employers can require from employees who want paid sick leave and emergency paid FMLA for child care per The Families First Coronavirus Response Act. The IRS states that only one caretaker can take leave for a child whose childcare or school is closed. Those with a child over 14 must explain the circumstances requiring the need for the employee to provide care. The guidance also details the documentation the employer must maintain to obtain the tax credits for this paid leave. Note questions 44-46 in particular.

Jeff Nowak has prepared a nice summary of this IRS guidance in his FMLA Insights blog here.

As always, if you have questions about The Families First Coronavirus Response Act, including emergency paid sick leave (EPSL) and emergency paid FMLA (FMLA+), or any other employment law questions, call my cell at 316-214-4866 or email. Eric

Our office is currently operating with reduced staff. Telephone and electronic meeting are preferred. In the event of our office closure or other disruption, we are equipped to work remotely in a technologically secure environment.

Our attorneys will continue to be accessible via e-mail and phone. All attorney contact information (including phone extensions) is available at TWGfirm.com/TWG-attorneys. Clients may call 316-630-8100 for assistance in reaching any TWG team member.

Your partnership, friendship and trust mean more now than ever. We look forward to continuing to serve you and we wish safety and good health to everyone.

This post is intended as an information source for the clients and friends of Triplett Woolf Garretson, LLC. Its content should not be construed as legal advice, and readers should not act upon information in its contents without professional counsel.

Families First Coronavirus Response Act

Dear clients and other friends:

These are strange and unprecedented times. The speed of developments, including employment law and related issues, is now minute by minute. I am keeping up with developments, and stand ready to address your questions.

One of the most urgent issues is the recently enacted Families First Coronavirus Response Act, passed by Congress and signed into law on March 18, 2020. The law becomes effective within 15 days of signing (April 1, 2020). Of relevance to almost all of you, it applies to all employers of less than 500 employees. It has provisions for 80 hours of paid leave and up to 10 weeks of FMLA leave for child care under certain circumstances.

Instead of me trying to summarize the law, I am tracking many sources for information regarding this law. As we are unlike massive law firms that have the resources to summarize the law, I am reviewing many sources and am identifying what I think are good sources and summaries. I will provide links to those I think are helpful. They include the following:

• DOL guidance on the new COVID-19 paid leave law. Plus, the IRS has tax credit info. And catch the replay of our Friday chat! By Eric B. Meyer, The Employer Handbook here:
• Families First Coronavirus Response Act, Insights for Employers here:
• President Trump Signs Emergency FMLA Leave and Paid Sick Leave in Wake of Coronavirus Pandemic: Here are the Details By Jeff Nowak here:
• How Does the Families First Act Apply to Independent Contractors? by Todd Lebowitz here:

Our office is currently operating with reduced staff. Telephone and electronic meeting are preferred. In the event of our office closure or other disruption, we are equipped to work remotely in a technologically secure environment. Our attorneys will continue to be accessible via e-mail and phone. All attorney contact information (including phone extensions) is available at TWGfirm.com. Clients may call 316-630-8100 for assistance in reaching any TWG team member. Your partnership, friendship and trust mean more now than ever. We look forward to continuing to serve you and we wish safety and good health to everyone.

I am here to answer your questions and to help as needed. If you have questions regarding the Families First Coronavirus Response Act or any other employment matters, do not hesitate to call or email. My office number is 316-630-8100, and my cell is 316-214-4866. Eric

This post is intended as an information source for the clients and friends of Triplett Woolf Garretson, LLC. Its content should not be construed as legal advice, and readers should not act upon information in its contents without professional counsel.

Department of Labor Issues Guidance on Paid FMLA Leave and Emergency Paid Sick Leave

Dear clients and other friends:

The DOL's first guidance on the Families First Coronavirus Response Act was announced on March 24. It includes a fact sheet for employees, a fact sheet for employers and a Q&A document. The Department also provided model workplace posters for nonfederal employers and federal employers that are covered by the Act.

Here are some highlights:

Effective Date: While we thought the Effective Date was going to be April 2, 2020, the Effective Date is April 1, 2020. The Act is scheduled to expire December 31, 2020.

Posters: By April 1, which is when the law takes effect, you need to post the notice in a conspicuous place at work. Since many facilities are now closed, emailing or direct mailing the notice to employees, or posting the notice on an employee information website, either internal or external, will comply. If you have laid people off/terminated them prior to April 1, you do not need to give them a copy of the notice.

Regular Rate of Pay: The employer must pay employees at their regular rate of pay (or 2/3rds of that regular rate, depending on the reason for which leave is taken). The guidance from the DOL states that the regular rate of pay is, generally, the average of the employee’s regular rate over a period of up to six months prior to the date on which they take leave. Tips, commissions, and piece rates are included in the calculation. If the employee has not worked for six months, the regular rate used to calculate paid leave is the average of the regular rate of pay for each week worked. Alternatively, the employer can compute the regular rate by adding all compensation as part of the regular rate over the same period and dividing that sum by all hours actually worked in the same period.

Overtime Hours are Included in Scheduled Hours: Employers must pay an employee for hours the employee would have been normally scheduled to work, even if that is more than 40 hours in a week. The Emergency Paid Leave Benefits are capped at 80 hours total over a two week period. By way of example, an employee who is scheduled to work 50 hours a week may take 50 hours of paid sick leave in the first week and 30 hours of paid sick leave in the second week, but in any event, the total number of hours paid is capped at 80 hours.

Calculating Hours for Part-time Employees: Part-time employees are entitled to receive leave for their average number of work hours in a two week period. To determine this number, the DOL’s guidance provides that employers should calculate leave hours based on the number of hours the employee is normally scheduled to work. If the normal hours scheduled are unknown, or if the part-time employee’s schedule varies, you may use a six-month average to calculate the average daily hours. Such a part-time employee may take paid sick leave for this number of hours per day for up to a two-week period, and may take expanded family and medical leave for the same number of hours per day up to ten weeks after that.

These New Benefits Not Retroactive: The DOL guidance provides that these new benefits are not retroactive, and are required effective beginning April 1, 2020. It is important to note that any paid leave provided prior to the effective date of April 1, even if consistent with the new paid leave benefits, will not count toward the new required paid leave, nor are they eligible for the tax credits made available under the paid family and medical leave portion of the Act.

The Department of Labor is expected to publish additional guidance in the near future. I will try to keep you advised of further developments. If you have questions regarding the Families First Coronavirus Response Act or any other employment matters, do not hesitate to call or email. My office number is 316-630-8100, and my cell is 316-214-4866. Eric

Our office is currently operating with reduced staff. Telephone and electronic meeting are preferred. In the event of our office closure or other disruption, we are equipped to work remotely in a technologically secure environment.

Our attorneys will continue to be accessible via e-mail and phone. All attorney contact information (including phone extensions) is available at TWGfirm.com. Clients may call 316-630-8100 for assistance in reaching any TWG team member.

Your partnership, friendship and trust mean more now than ever. We look forward to continuing to serve you and we wish safety and good health to everyone.

This email is intended as an information source for the clients and friends of Triplett Woolf Garretson, LLC. Its content should not be construed as legal advice, and readers should not act upon information in its contents without professional counsel.

Deaf Applicant for a Parking Valet Job? Security Guard With Bad Back Who Can’t Walk His Patrol Rounds? Beware the ADA!

The Americans With Disabilities Act (ADA) requires employers to reasonably accommodate employees and applicants with disabilities unless the employer can demonstrate that doing so would create an undue hardship. The ADA also requires employers to engage in an interactive process to determine if a reasonable accommodation for a given employee is available. Both the employer and the employee must enter in this process in good faith. A recent federal lawsuit and an EEOC settlement demonstrate the scope of these duties.

The Security Guard Who Can’t Walk His Patrol

In a case in federal court in Kentucky (Todd v. Covenant Security Services, Inc. ( W.D. Kentucky 2018), a security guard who claimed that his employer failed to accommodate him under the ADA and failed to enter into the interactive process was allowed to go to trial, despite the fact that the court found that his patrol rounds were an essential function of his job, and the security officer could not walk his rounds due to a back condition.

The plaintiff was employed as a security guard for approximately six years. For the first few years of his employment, he both walked patrol rounds and drove a vehicle for rounds. Approximately four years into his employment, the plaintiff suffered a disabling back issue. His hours were lowered and he was allowed to take additional breaks.

Approximately ten months before his termination, the employer sent an email to all security guards indicating that the employer was implementing a program that required all guards to perform patrol rounds. The plaintiff requested various accommodations, one of which was being provided some kind of mobility device to use to make rounds inside the plant. While the plaintiff’s employer temporarily excused him from performing some walking patrol rounds by having another officer handle them, the employer later indicated that the other employee no longer wished to perform all of the walking patrols. The plaintiff’s employer denied all of the accommodations requested, indicated that the plaintiff could not perform the job duties, and terminated the plaintiff. The plaintiff claimed that he was discriminated against under the ADA, as he could perform the job with accommodations. Plaintiff also claimed the employer did not engage in the interactive process as required by the ADA.

While the court found that walking patrols were an essential function of the job, the court found there was an issue for trial as to whether the plaintiff’s requested accommodations were reasonable, and whether he was qualified for the position of security officer. The court found that the employer’s rejection of the suggestion of a mobility device for safety reasons was “suspect”, given that the employer permitted security officers to walk patrols where there was a heavy volume of vehicles and foot traffic, and there was no indication that the employer considered any mobility devices to accommodate the plaintiff.

The district court also found that the employer failed to enter into the interactive process with the plaintiff, as no one met with the plaintiff regarding his reasonable accommodation requests for approximately seven months after making his requests. Also, it appeared the employer had already hired someone to replace the plaintiff before they met with him to discuss his requested accommodations.

The Deaf Applicant For A Parking Valet Job

On February 27, 2019, the EEOC announced it had reached an agreement with a valet parking company to pay $150,000.00 to settle a disability discrimination lawsuit brought by the EEOC on behalf of a deaf applicant. The EEOC indicated that its lawsuit claimed that the valet parking employer violated the law “by refusing to hire a deaf applicant for a valet attendant position based on the assumption that a deaf person could not perform the essential functions of the job rather than conduct an individualized assessment of his abilities.”

In addition to paying the $150,000.00, the consent decree requires the valet company to: affirmatively recruit applicants who are deaf and hearing impaired; add TTY capability its discrimination hotline; change the essential qualifications of the valet attendant position to make clear that the job can be performed by anyone who can effectively communicate with customers, whether verbally or in writing; educate its workforce on disability discrimination through annual management and employee training; and report to the EEOC periodically.

The EEOC stated it “will continue to fight for deaf job applicants’ rights under the ADA to be provided an interpreter when they are interviewed for employment.”

Takeaways

These are two examples of the scope of an employer’s obligations under the ADA. While it may seem reasonable that a deaf person cannot perform the duties of a parking lot valet’s job, or that a security officer that cannot walk his patrol rounds is not qualified for his job, these two cases demonstrate that additional inquiries must be made. Also, the ADA requires that the interactive process must be entered into by the employer in good faith before making job decisions.

If you have questions regarding the ADA or any other employment matters, do not hesitate to call or email Eric Metz at 316-630-8100, ebmetz@twgfirm.com.

This email is intended as an information source for the clients and friends of Triplett Woolf Garretson, LLC. Its content should not be construed as legal advice, and readers should not act upon information in its contents without professional counsel.

Be Careful in Requiring an Employee to Use PTO During FMLA Leave

The Family and Medical Leave Act (FMLA) is a complicated collection of federal laws and regulations, making compliance difficult. One trap for the unwary is how employers deal with paid leave during FMLA leave.

Most employers know that the FMLA allows employers to have a policy requiring an employee to substitute paid leave during FMLA leave. Typically, employers require employees to use earned vacation, PTO (paid time off), and/or sick leave concurrently with FMLA leave. This is done so employees cannot extend their leave by using FMLA and paid leave consecutively instead of concurrently.

Some employers, however, overlook a subtlety in the FMLA regulations that prohibits employers from requiring employees to use paid leave, such as PTO, during any time in which employees are receiving some other form of paid leave.

FMLA regulations provide that “the employer may require the employee to substitute accrued paid leave for unpaid FMLA leave.” However, the regulations also provide that if during FMLA leave, an employee also receives benefits in any amount from, for example, workers’ compensation or a disability plan, FMLA leave is not unpaid. Therefore, because the rule allowing employers to require employee substitution of paid leave only applies to unpaid FMLA leave, during any periods of FMLA leave when some type of income replacement is received by the employee, employers cannot require the substitution of paid leave. As noted, this prohibition from requiring the use of paid leave applies regardless of the amount of income replacement received by the employee.

For example, during the time an employee receives workers’ compensation benefits in any amount, the employer cannot require that the employee use PTO or other paid leave. If an employee taking FMLA leave is receiving short term disability benefits that replace some portion of his or her income, the employer cannot require the employee to use PTO or other paid leave. Policies can allow for an employee to elect to overlap their paid leave with any of these benefits received, but the employer cannot require the use of PTO or other paid leave under these circumstances. However, the employer can require the employee to use paid leave during a waiting period before disability benefits are received, because the limitation applies only when the employee is actually receiving income replacement benefits.

Employers should carefully review their FMLA policies, procedures, and employee handbooks to insure that they comply with FMLA regulations regarding the mandatory substitutions of paid leave. In certain states (Kansas is not one of them), there are state family and medical leave laws that also regulate the substitution of paid leave.

If you would like help in drafting or reviewing your FMLA policies and procedures, contact your TWG attorney or Eric Metz at ebmetz@twgfirm.com or 316-630-8100.

This email is intended as an information source for the clients and friends of Triplett Woolf Garretson, LLC. Its content should not be construed as legal advice, and readers should not act upon information in its contents without professional counsel.

Triplett Woolf Garretson, LLC recently secured a 1.3 million dollar judgment to recover squandered investment funds. Three sisters had invested more than $400,000 in a Nebraska ethanol plant pursuant to four separate promissory notes issued by the plant’s promoters. Their funds, however, were not invested in the ethanol venture but were commingled with personal funds in a corporate account used by the plant’s promoters. When the promoters told the sisters that their money was gone, they hired Triplett Woolf Garretson, LLC to investigate. Attorney Derek Casey sued the promoters and took the case to trial to secure the 1.3 million dollar verdict to recover the investment, interest, and attorney’s fees from the plant’s promoters.

Handbook Relief: NLRB Issues Helpful Guidance On Work Rules

Unless you are an HR professional, you may not have known how hard federal regulators had been making the drafting of legally compliant but reasonable employee handbooks. The National Labor Relations Board (NLRB) is, according to its own web site, the “federal agency vested with the power to safeguard employees' rights to organize and to determine whether to have unions as their bargaining representative” and “acts to prevent and remedy unfair labor practices committed by private sector employers and unions.” What many don’t know is that the NLRB has authority over essentially all private employers, not just those who have union employees.

In the recent past, the NLRB has taken very strong positions against employment policies that had long before been accepted as legal. Recently, following the change of administrations, the NLRB has backed off many of these positions. Earlier this summer, the NLRB’s General Counsel issued a memorandum in which he addressed a number of work rules that the Board had previously indicated were improper in some way. So, although you may not have even known there were problems with the following rules, the NLRB has now stated they are presumed lawful:

• Civility rules. Rules that prohibit rude behavior, disparaging the organization, or other such behavior are permissible.
• No-photography rules and no-recording rules. You can have rules prohibiting employees from taking videos or photos and recording conversations at work.
• Rules against insubordination, non-cooperation, or on-the-job conduct that adversely affects operations. On-the-job conduct that negatively affects business operations can be prohibited.
• Disruptive behavior rules. You can ban disorderly conduct or other bad work behavior.
• Rules protecting confidential, proprietary, and customer information or documents. Be aware that you still can’t prohibit employees from discussing employee organizing, work conditions, or wages.
• Rules against defamation or misrepresentation. This seems obvious.
• Rules against using employer logos or intellectual property. It’s important to protect the company’s intellectual property.
• Rules requiring authorization to speak for the company. It is appropriate to have a policy that only certain persons can speak for the company or that authorization must be obtained to speak for the company.
• Rules banning disloyalty, nepotism, or self-enrichment. Once again, seems obvious.

While you may think it self-evident that these work rules are appropriate, before the Counsel memo was issued, the NLRB had indicated they presented problems. The Counsel memo also identified polices that remain generally unlawful because they would prohibit or limit NLRA-protected conduct, and the adverse impact on the rights guaranteed by the NLRA outweighs any justifications associated with the rule. These rules include:

• Confidentiality rules specifically regarding wages, benefits, or working condition, such as "Employees are prohibited from discussing wages, salaries, commissions, or bonuses."
• Rules against joining outside organizations or voting on matters concerning the employer.

With regulations and interpretations constantly changing, it is always a good time to review your employee handbook for compliance and improvement. If you need help in drafting or finalizing an updated handbook, or if you have any employment related questions, contact your TWG attorney or Eric Metz at ebmetz@twgfirm.com or 316-630-8100.

This email is intended as an information source for the clients and friends of Triplett Woolf Garretson, LLC. Its content should not be construed as legal advice, and readers should not act upon information in its contents without professional counsel.

TWG Attorney Eric Metz was recently invited to speak at the annual meeting of the Kansas Chapter of the International Public Management Association for Human Resources (IPMA-HR Kansas) on the topic of “Harassment After #MeToo: Today’s Landscape”.

The meeting took place April 6th in Andover, Kansas and was hosted by the Kansas Chapter President Elect, Jennifer McCausland, Assistant City Administrator of Andover. The IPMA-HR Kansas chapter members are a group of HR professionals working in the public sector, primarily for cities and counties.