La retórica del equipo de Biden ha sido de tolerancia y reconciliación, por lo que hay motivos para creer que hay buenas noticias para los inmigrantes y los titulares de visas. Dicho esto, Estados Unidos no está exento de la mayor seguridad y el creciente sentimiento antiinmigrante en todo el mundo, y no todos están a favor de relajar las restricciones implementadas durante los últimos cuatro años.

Este artículo analiza algunos de los cambios de política específicos de Trump y cómo han afectado a los empleadores estadounidenses. Para determinar si las políticas de la era Trump han tenido un impacto positivo o negativo en la economía de los EE. UU., Una encuesta nacional reciente preguntó a los empleadores sobre sus experiencias y cómo han respondido a los cambios.

Es importante comprender las diferencias entre las leyes de inmigración y las políticas / procedimientos de inmigración. Las leyes actuales son muy difíciles de cambiar porque tienen que pasar por el Congreso.

La Administración Trump, como todas las demás administraciones, no logró mucho en términos de cambiar los estatutos existentes. Eso, sin embargo, ciertamente no significa que nada haya cambiado.

Como todos hemos visto, aunque los presidentes no pueden cambiar unilateralmente las leyes de inmigración, pueden implementar nuevas políticas y procedimientos. Estas políticas / procedimientos tienen un impacto muy directo e inmediato en las empresas y las personas.

A fines de 2020, se realizó una encuesta a 215 empleadores estadounidenses [1] para evaluar cómo las políticas de Trump han afectado a sus empresas, así como sus sentimientos sobre las reformas migratorias esperadas bajo Biden.

La encuesta indica que las más de 400 políticas y reglas implementadas entre 2017 y 2020 han causado retrasos y mayores costos para los empleadores. Además, los propietarios de empresas afirmaron que estos cambios de política condujeron directamente a un aumento de la deslocalización y la subcontratación, con solo un ligero aumento en la contratación nacional. Desde una perspectiva puramente económica, tiene sentido que los empleadores prefieran subcontratar el trabajo a mercados extranjeros más baratos que aumentar los gastos contratando empleados domésticos.

Si estos resultados de la encuesta son representativos, entonces las políticas de Trump destinadas a aumentar la contratación de trabajadores locales en realidad tuvieron exactamente el efecto contrario.

Entre la pandemia y las regulaciones de Trump, la tubería para el talento extranjero casi se cerró por completo. Entre enero y abril de 2020, el número de visas emitidas a ciudadanos extranjeros se redujo en un 93,2%. Según los empleadores encuestados:

Tarjetas verdes

36% dijo que hay muy pocas tarjetas verdes disponibles cada año

39% dijo que el número era el correcto

18% dijo que hay demasiados

Visas

41% dijo que había muy pocas visas basadas en empleo disponibles

37% dijo que la cantidad es correcta

17% dijo que hay demasiados

Estos resultados se alinean con los datos actuales sobre la brecha de habilidades STEM en la fuerza laboral de EE. UU. A pesar de la recesión económica debido a la pandemia de COVID-19, las tasas de desempleo de diciembre de 2020 [2] para trabajos de ciencias de la computación y matemáticas fue de solo 3.0%, que es esencialmente el mismo que era antes del inicio de la pandemia en marzo de 2020.

Mientras tanto, la tasa general de desempleo alcanzó un máximo del 14,4% en abril y se estabilizó en el 6,5% en diciembre de 2020. [3]

Políticas específicas de Trump

En abril de 2017, la Administración Trump emitió la orden ejecutiva «Buy American, Hire American», que prometía proteger a los trabajadores estadounidenses restringiendo la inmigración. USCIS, DHS y DOL implementaron una serie de nuevas políticas, reglas y regulaciones destinadas a llevar a cabo los propósitos de la orden ejecutiva.

Solicitudes de pruebas

El USCIS emite una Solicitud de evidencia, o «RFE», cuando desean que un solicitante presente información adicional. Las RFE siempre ralentizan el proceso de visa y generalmente se consideran una «mala señal» ya que la solicitud está siendo examinada. Entre 2017 y 2019, la tasa de emisión de RFE aumentó de 21% a 40,2%. Los encuestados indican lo siguiente:

¿Cómo ha impactado el mayor número de RFE en el programa de inmigración de su empresa?

Las RFE han hecho que el proceso sea más engorroso.    45%

Hemos dejado de patrocinar a extraterrestres para ciertos roles.   20%

Hemos retirado ofertas a extraterrestres.   29%

Hemos tenido que dejar ir a los trabajadores.    22%

Regla de carga pública

Un cambio de política fuertemente litigado fue la Regla de Carga Pública, que se implementó por primera vez en febrero de 2020. Esta regla requiere que los empleadores presenten solicitudes de tarjeta verde para sus trabajadores extranjeros para demostrar que el trabajador no ha dependido ni dependerá de ningún beneficio del gobierno como Medicare, alimentos sellos o vales de vivienda.

Las respuestas fueron las siguientes:

¿La regla de carga pública ha afectado su proceso de patrocinio?

Es menos probable que patrocinemos a ciudadanos extranjeros.    14%

No es menos probable que patrocinemos a ciudadanos extranjeros, pero ha sido más costoso y lento.    51%

Nuestros empleados extranjeros se resisten a iniciar el proceso de la tarjeta verde.    12%

Ningún cambio.    20%

No aplica.    3%

Visas previamente aprobadas

Además, en 2017, el USCIS cambió una política de larga data de no cuestionar las solicitudes aprobadas previamente al evaluar solicitudes de extensión o nuevas solicitudes de visa. Sin embargo, bajo Trump, cada vez que un trabajador solicita una extensión de una visa actual o presenta una petición para una nueva visa, los oficiales examinadores pueden volver atrás y cuestionar si la petición inicial debería haber sido aprobada para empezar.

Restricciones de la visa H-1B

En noviembre de 2020, la Casa Blanca publicó dos nuevas reglas que imponen restricciones a las visas H-1B. Primero, el DHS redujo la definición de una “ocupación especializada” e hizo requisitos de grado más estrictos. En segundo lugar, el DOL aumentó los salarios requeridos para los roles patrocinados. Un tribunal de distrito anuló ambas reglas a principios de diciembre, por lo que puede haber un litigio adicional a menos que la Administración de Biden cambie de rumbo al respecto.

De todos modos, el tema es de cierta preocupación para los encuestados, quienes dijeron esto.

¿Cómo cree que afectarán a su empresa los cambios en los requisitos para el patrocinio H-1B?

Buscaríamos rutas alternativas para patrocinar a ciudadanos extranjeros.    24%

Estamos considerando abrir una oficina u oficinas fuera de los EE. UU.  En países con políticas de inmigración más favorables. 25%

Deberíamos considerar trasladar los trabajos al extranjero 14%

Aumento de los requisitos salariales

Aunque los nuevos requisitos salariales supuestamente están destinados a garantizar que los empleadores tengan menos probabilidades de contratar extranjeros para trabajos que un trabajador estadounidense podría realizar, los encuestados indican esto:

¿Cómo espera que los cambios propuestos al requisito de salario vigente para las visas H-1B afecten su negocio?

Nuestros niveles salariales ya cumplen con los nuevos requisitos y / o estaríamos dispuestos a aumentar los salarios para cumplir con los nuevos estándares.    60%

Los cambios llevarían a patrocinar menos extranjeros para trabajos.    40%

O moveríamos esos trabajos al extranjero, subcontrataríamos o eliminaríamos los puestos por completo.    46%

HLA’s Immigration Practice

El futuro

Los empleadores encuestados indicaron en gran medida que los cambios de política de Trump en el sistema de inmigración fueron disruptivos y costosos para sus negocios. Sin embargo, expresaron su apoyo a reformas migratorias más amplias. En particular, los empleadores parecen interesados ​​en facilitar el patrocinio y brindar más transparencia al sistema de inmigración.

Proceso de selección

Los legisladores y las partes interesadas han pedido cambios fundamentales en los procesos de inmigración basados ​​en el empleo. Por ejemplo, el DHS propuso un nuevo proceso de selección para las visas H-1B que daría prioridad a las peticiones para roles mejor pagados, en contraposición a la lotería aleatoria que se usa actualmente. Los encuestados dicen que tal cambio sería positivo para sus organizaciones. Sin embargo, algunos empleadores dicen que tal cambio dificultaría mucho las cosas para los empleados principiantes.

¿Cómo espera que el cambio propuesto al sistema de selección H-1B afecte a su empresa?

Positivamente porque patrocinamos a trabajadores mejor pagados.    59%

Negativamente porque será menos probable que se aprueben nuestras aplicaciones.    24%

No aplica.    7%

No estoy seguro.    10%

Sistema basado en puntos

El Reino Unido ha puesto en marcha recientemente un sistema de inmigración basado en puntos, que promueve la inmigración basada en el empleo. Muchos, incluidos los encuestados, quieren que EE. UU. Promulgue un modelo similar y elimine el sistema de cuotas actual.

¿Cuáles serían los beneficios de que EE. UU. cambiara a un sistema basado en puntos?

Criterios de selección claramente definidos.    51%

Flexibilidad para satisfacer las demandas cambiantes del mercado.    43%

Más equidad al evitar sesgos y aleatoriedad percibida.    42%

Para ser justos, no todos los encuestados vieron el sistema basado en puntos como algo completamente positivo.

¿Cuáles serían los aspectos negativos de que Estados Unidos cambiara a un sistema basado en puntos?

Preocupaciones sobre la privacidad de los datos debido a la cantidad de información recopilada 29%

Se podría considerar que un sistema basado en puntos contradice la política estadounidense de dar la bienvenida al 33%

Mayor riesgo de abuso por parte de los empleadores 31%

La visa «Heartland»

Durante las últimas elecciones presidenciales, varios candidatos hablaron sobre la creación de una visa basada en la ubicación que promovería el desarrollo en áreas rurales o no costeras. Joe Biden incluyó esta idea en su plataforma de inmigración, junto con una expansión de las cuotas actuales para visas y tarjetas verdes. Los encuestados dijeron esto.

Si se introdujera una “Visa Heartland”, ¿la utilizaría su organización?

Sí.    67%

No.   14%

No estoy seguro.   16%

No aplica.   3%

Conclusión

Debido a la pandemia, las tasas de desempleo actualmente rondan el 6,5%. Sin embargo, la tasa de desempleo es solo del 3.0% para las ocupaciones de matemáticas y ciencias. Incluso sin las políticas de Trump, hay una escasez de talento STEM en la fuerza laboral de EE. UU. Los últimos cuatro años han obligado a los empleadores a buscar alternativas para cubrir sus puestos, que era, por supuesto, la idea.

Sin embargo, un porcentaje significativo de empleadores afectados ha respondido a las políticas restrictivas subcontratando el trabajo a ubicaciones en el extranjero, ya sea contratando una empresa extranjera o permitiendo que un empleado extranjero trabaje de forma remota desde fuera de los EE. UU. Es prácticamente imposible determinar un número exacto, pero el resultado probablemente ha sido que cientos de miles de trabajos altamente calificados se muden de los EE. UU.

Han sido cuatro años dramáticos en inmigración, y la presidencia de Biden seguramente traerá muchos cambios nuevos. Anticipamos que las nuevas políticas deshacerán muchos, si no todos, los cambios de Trump. Los efectos de las políticas de Biden aún están por verse, pero tenemos la esperanza de que aliviarán las restricciones actualmente vigentes y traerán empleos de regreso a los EE. UU.

~ Jeff Harrington, Esq.

[1] Envoy Global

[2] Bureau of Labor Statistics. “Labor Force Statistics From Current Population Survey” December 2020.

[3] Bureau of Labor Statistics. “Labor Force Statistics From Current Population Survey” April 2020.

Unemployment Benefits under CARES Act

First, understand that unemployment benefits are handled at the State level.  So, that means there will be some delay and inefficiency in getting from Point A (federal legislation) to Point B (actual checks in the mail), and there will be some differences from State-to-State.  Our firm is headquartered in Florida, so we will provide some additional detail for Florida businesses.  That said, here is basically what everyone can expect.  Request Consultation

Pandemic Unemployment Assistance

The CARES Act includes a Pandemic Unemployment Assistance program (“PUA”), which expands the definition of a “covered individual.”

Eligible Workers

• full and part time employees (W-2)
• self-employed
• independent contractors (including gig workers)
• religious workers (workers laid off from churches)
• workers who do not have sufficient work history to normally qualify under State law

Qualifying Criteria

Workers who cannot work due to any one of the following circumstances:

• diagnosed with COVID–19 or experiencing symptoms and is seeking diagnosis
• a member of a household where someone has been diagnosed with COVID-19
• provides care for a family member or a member of the household who has been diagnosed with COVID-19
• takes care of a child or other person in the household who is unable to attend school or daycare as a result of COVID-19
• cannot reach the workplace because of a quarantine or isolation order
• has been advised to self-quarantine due to COVID-19 concerns
• was scheduled to commence employment (i.e. does not currently have a job) but now cannot go in due to COVID-19
• has become the breadwinner or major supporter for a household because the former head of the household died as a result of COVID-19
• had to quit his or her job as a direct result of COVID-19
• cannot work because the place of employment is closed as a result of COVID-19 (telework not an option)

Available Benefits

Covered individuals get the amount they would normally receive under State unemployment law (maximum of $275/week in Florida), plus an additional $600 per week.

So, a Florida employee could potentially get $875/week or $3,500/month.

How long do benefits last?

As long as the unemployment is due to the Coronavirus, regular benefits can extend up to 39 weeks in most states. However, the extra $600 per week is only available through July 31, 2020.  Note: Florida only provides 12 weeks of unemployment benefits. So, in Florida, once the 12 weeks runs out, the worker will continue to get just the $600/week under PUA.  Request Consultation

What is “furlough”?

Furlough is an unpaid leave of absence.  So, technically, the workers still retain their positions, but they cease working and do not earn a salary.  The idea, of course, is that furloughed workers will one day return to their jobs.  Also, workers usually continue to receive their company benefits during the furlough.

By contrast, being terminated or laid-off is permanent.  If the worker comes back to the company after being terminated or laid-off, then that “return” is actually new employment.  All previous arrangements are open for renegotiation.  That may be beneficial for the company, or maybe not . . .

Usually, furlough is temporary and short-term.  Otherwise it would make more sense to both the company and the worker to just terminate the employment and move on.  However, there is no defined limitation on how long a furlough can last. So, under the current circumstances, where workers probably cannot get another job for as long as the Coronavirus crisis continues, it seems likely we will see unusually long furloughs.

Advantages to furlough?

Yes, probably.  For most business owners, telling workers they are «furloughed» is a lot easier than saying «terminated.»

Most importantly, furloughed workers are entitled to unemployment benefits, including the extra PUA money.  So, as a business owner or manager, you do not have to terminate workers in order for them to receive benefits.

Let me hasten to qualify this statement by saying that, normally, whether a furloughed worker can collect unemployment or not is determined at the State level. Under PUA, though, the federal government has extended benefits to all furloughed employees as long as the meet the criteria above.

As a business owner, you would probably prefer to bring back your staff out of a sense of loyalty, as well as the fact that they are already trained.  So, the furlough option may be one to carefully consider.  Request Consultation

Potential Drawbacks

Taxable Income

As it stands now, these PUA payments will be counted as income for tax purposes as well as for determining eligibility for some welfare programs, though not for Medicaid or Children’s Health Insurance.  This may be only a minimal concern, though, since nobody is going to get rich off of unemployment payments, even with the extra PUA money.

Unemployment Tax Liability

If you are wondering if your business is going to have to pay higher unemployment rates in order to compensate for the additional payments to employees, the answer is «maybe.»  The CARES Act does not address this issue, probably because unemployment is administered at the State level.  So, the answer could be different on a state-by-state basis.  It is still too early to provide much guidance in this regard.  And, as a practical matter, it probably will not affect your decision-making, especially given the CARE Act tax breaks for businesses.

Other Considerations

Immediate Availability.  The normal one-week waiting period is waived under the PUA. So, unemployed or furloughed workers can apply immediately for unemployment benefits.

This is important because we are still waiting for the Families First business loans to become available.  However, the paid leave requirements went into effect April 1, 2020.  So, for companies that are in real danger of running out of money, terminating or furloughing can be a stop-gap measure.

Short Term/Work Share Programs.  This might make sense to a lot of employers. The concept of Work-Sharing or Short-Term compensation is where the company does not have enough work to give someone a full-time position but does have some work to offer. The conundrum for some workers is that they face losing their unemployment benefits if they take on work. That creates a sort of all or nothing scenario for them. It can be a disincentive to taking on partial or temporary work.

This kind of perverse disincentive is resolved by States that allow such short-term/work-share without penalty. Florida does have a short-term/work-share program, which could be very useful for businesses that have not completely shut down but are significantly affected by the Covid-19 crisis.

Our firm plans to discuss this option on a client-by-client basis.  Request Consultation

Conclusion

So, now you have all the pieces of the puzzle and can put together a plan of action for your business: business loans, tax breaks, paid leave, and unemployment. We all want what is best for our employees and, presumably, helping the company survive the Coronavirus crisis is in the employees interest. They will understand that. Now, it is a numbers game.

Understanding the interplay between the available business loans, tax breaks, paid leave obligations and unemployment benefits is the whole game at this point.  You have to weigh your options and make the best choices you can for your business. 

April 1, 2020 is here, so it is time to make decisions.  Our firm is here to help.  Request Consultation

~ Jeff Harrington, Esq.

The paid leave requirements come under the Families First Coronavirus Response Act (FFCRA).  There are two separate Acts that apply to all businesses (and non-profits) with fewer than 500 employees: the Emergency Paid Sick leave Act (EPSLA) and the Emergency Family and Medical Leave Expansion Act (EFMLEA).  Request Consultation

Beware: Both the EPSLA and the EFMLEA are in effect from April 1, 2020 to December 31, 2020.  And there are penalties for non-compliance.

Emergency Paid Sick leave Act (EPSLA)

What workers are eligible?

All W-2 employees, both full and part time, that have one of these six (6) situations:

Personally affected:

1. Is subject to a federal, state, or local quarantine or isolation order
2. Has been advised by a healthcare provider to self-quarantine
3. Is experiencing COVID-19 symptoms and is seeking medical diagnosis

Caretaker of affected person:

1. Is caring for an individual subject to a quarantine/isolation order or medical advice to self-quarantine
2. Is experiencing any other substantially-similar condition specified by the Secretary of Health & Human Services
3. Is caring for a child whose school or care provider is closed or unavailable

How much time and pay?

Full-time employees get up to 80 hours, and part-time employees get up to two weeks. As for calculating the amount of pay the employee can get, it actually depends on the reason for the leave.

If the employee falls into the «Personally Affected» category above, then

• Pay at regular rate under the FSLLA (capped at $511/day and $5,110 in the aggregate over a 2-week period)

For those employees that fall into the «Caretaker» category above, then you have to break it down a little further:

• If the employee is caring for someone else who is subject to a quarantine or isolation order (or who has been advised to self-quarantine) OR who is subject to another substantially similar condition specified by the regulatory agencies, then

Pay at 2/3 their regular rate under the FLSA (capped at $200/day and $2,000 in aggregate over a 2-week period, up to 80 hours).

• If an employee is caring for a child because school or care is unavailable, then

Pay at 2/3 of regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $12,000 in the aggregate (over a 12-week period – two weeks of paid sick leave followed by up to 10 weeks of paid expanded family and medical leave).

And, as Employer, you cannot _

• offset this emergency sick leave with other sick leave already provided by employee contract or state law
• require your employee search for a replacement worker to cover the hours for which he/she is receiving paid sick leave
• require your employee use other paid sick leave prior to using this emergency paid sick leave.

The only carve-back is that employees cannot carry over the emergency paid sick leave to subsequent years.

An employee may choose to substitute accrued vacation leave, personal leave or medical/sick leave for the first two weeks of the leave.  That is up to the employee, though. You, the employer, do not get to decide.

How can your company afford this?

There are two forms of aid coming your way. The first, and probably the most important, is the business loans  under the Paycheck Protection Program and Economic Injury Disaster Loans.  Read more here.  Florida, and other states, will offer business loans as well, though with terms less favorable than the federal programs.

The other help is tax breaks.  For details on the Employee Retention Tax Credit and Payroll Tax Delay, go here. There is even a way to get some of the credits paid to your business in advance.

For some companies, though, these aids may not be enough. In that is your situation, then you will have to make your case for exemption.

Are there any Exemptions?

Yes.  You will have to apply to the Department of Labor (DOL) and show your business has fewer than 50 employees and that compliance with the new provisions would jeopardize the viability of the business.  Additionally, the Act does not apply to employees who are healthcare providers or first responders.

For many, the magic words are “jeopardize the viability of the business.” We will find out more about what exactly that means as the DOL starts making decisions.

If your business cannot afford to comply with the paid leave requirements, consider hiring counsel to help obtain the exemption.  Request Consultation

Emergency Family and Medical Leave Expansion Act (EFMLEA)

Here the situation is a little different because we already have the Family and Medical Leave Act.  The EFMLEA is just an amendment to the existing law. So, all the provisions of the Family and Medical Leave Act that do not conflict with the following continue to be in full effect.

Who is eligible?

Employees that

1. have been with the company for at least 30 days prior to the leave
2. are unable to work (or telework) because they need to care for a minor child due to (i) closure of school or daycare center or (ii) care provider’s unavailability.

How much time and pay?

• Unpaid leave for the first 10 days, although employees can elect to use any other accrued paid leave, including personal, vacation or sick leave (including emergency paid sick leave).
• After 10 days the emergency leave becomes paid leave. The total leave can extend up to 12 weeks.
• Employees are required to be paid at a rate equal to at least 2/3 their regular rate of pay multiplied by the number of hours in their average work week, not to exceed $200 per day or $ 12,000 total (over a 12-week period).
• Employees who take emergency leave are entitled to job restoration rights unless the employer has fewer than 25 employees.
  • Fewer than 25 employees – the employer meets its obligations if the previous position no longer exists due to the emergency and the employer makes reasonable efforts to return the employee to an equivalent position — including benefits, pay and other terms of employment — at some point during the one-year period beginning from when the employee’s leave ends or 12 weeks after the leave begins, whichever comes first.

WHAT ELSE SHOULD YOU KNOW?

This part applies to both Acts:

Posted Notice

Employers must post a notice of FFCRA requirements in a conspicuous place at the job site.

Penalties and Enforcement

Employers in violation of the first two weeks’ paid sick time or unlawful termination provisions of the FFCRA will be subject to the penalties and enforcement described in Sections 16 and 17 of the Fair Labor Standards Act 29 USC 216; 217.

• Employers in violation of the provisions providing for up to an additional 10 weeks of paid leave to care for a child whose school or place of care is closed (or child care provider is unavailable) are subject to the enforcement provisions of the Family and Medical Leave Act.
• The Department will observe a temporary period of non-enforcement for the first 30 days after the Acts takes effect, so long as the employer has acted reasonably and in good faith.
• For purposes of non-enforcement, “good faith” means the violations are remedied and the employee is made whole as soon as practicable by the employer, the violations were not willful, and the Department receives a written commitment from the employer to comply with the Act in the future.

Prohibitions

Employers may not discharge, discipline, or otherwise discriminate against any employee who takes paid sick leave under the FFCRA and files a complaint or institutes a proceeding under or related to the FFCRA.

Understanding the interplay between the available business loans, tax breaks, paid leave obligations and unemployment benefits is the whole game at this point.  You have to weigh your options and make the best choices you can for your business. 

April 1, 2020 is here, so it is time to make decisions.  Our firm is here to help.  Request Consultation

~ Jeff Harrington, Esq.

Payroll Taxes

For most companies, the most notable tax relief under the CARES Act relates to payroll taxes coming due from April 1, 2020 – December 31, 2020. There are two categories, each with slightly different benefits and criteria.

Employee Retention Tax Credit

There is a «refundable tax credit» equal to 50% of employee compensation available to all businesses, both big and small, that _

(i) continue to pay their employees
(ii) do not receive Paycheck Protection loans
(iii) have been fully or partially suspended as a result of government order OR suffered a 50% reduction in quarterly receipts due to the Coronavirus crisis

Amount of Credit

Businesses with fewer than 100 employees – May claim a credit for wages paid to employees, with a cap of $10,000 per employee.

Businesses with more than 100 employees – Get a credit for employees who are furloughed or whose hours are reduced as a result of business closure or economic hardship.

Applying for the Tax Credit

So, what is a “refundable tax credit”? How does this actually work?

When you file your company’s quarterly payroll tax, you can take a credit equal to 50% of what you pay employees.  If the credit you claim is greater than the tax liability, you will receive a refund for the difference.

What are the limitations?

There are no restrictions on business size.  You do have to meet the three criteria above, though.

Payroll Tax Delay

You know the employer portion of the payroll taxes you normally have to pony up every pay cycle?  Under the CARE Act, your business can defer those payments through the end of 2020. In effect, the delay is like an interest-free loan.

Requirements

(i) continue to pay employees
(ii) do not take a Paycheck Protection loan

Payback

The deferred payroll taxes can be paid back in two installments. The first half (50%) is due by December 31, 2021, and the second half (50%) by December 31, 2022.

Defer-able Portion of Payroll Taxes

Your company can defer all of the following:

– employer portion of FICA taxes
– employer and employee representative portion of Railroad Retirement taxes
– half of SECA tax liability

Other portions of your company’s payroll taxes, such as amounts charged by your State, are not affected by the CARE Act.

Advance Payment of Tax Credits for Paid Leave

If your business is required to provide paid leave to employees due to the Families First Act, then you may be wondering how you can afford that. This may help.

The CARE Act allows the US Treasury to send advance payments of tax credits. The details are still sketchy, but it appears the calculation will be based on a projection as follows:

Company liability for payroll taxes minus Payroll Tax Credits available under CARE Act =

(A) remaining amount due to be paid to the IRS

OR

(B) excess credit due to the company

If, in your case, the result is (B), then you can apply to have the refund sent to you in advance. Having those funds in-hand may help your company meet its obligations to pay for employee leave during the crisis.

The emergency paid leave provisions go into effect April 1, 2020. For more details on your company’s obligations under Families First Coronavirus Response Act, click here.

Net Operating Losses

The Tax Cuts and Jobs Act of 2017 put restrictions in place regarding Net Operating Losses (NOLs), such as (i) limiting NOLs to 80% of taxable income, and (ii) eliminating NOL carrybacks to prior years. The CARE Act modifies these restrictions . . . in your favor.

CARRYBACKS

Your business can now carryback NOLs for the last five (5) years, meaning 2015 to 2020. This effectively delays the 80% taxable income limitation until 2021, while at the same time providing retroactive relief for the past five (5) years.

CARRYFORWARDS

First, your business can now deduct its NOLs up to 100% of taxable income, as opposed to be limited to 80%. Second, for taxable years after 2021, the business can write off all its NOLs for tax years prior to 2018. Finally, your business can take a deduction up to 80% of modified taxable income for NOLs arising in tax years after 2017.

Other Limitations on Losses (less common)

The CARES Act retroactively suspends the current rule that limits deductible business losses. The limitations were previously effective as of 2018 but have now been pushed back to 2021. The same is true for active farming loss rules.

Corporate Alternative Minimum Tax
The CARES Act allows corporations to claim 100% of AMT credits in 2019 as fully refundable and also provides an election to accelerate claims to 2018. Previously, there were limits to how much AMT credit a corporation could take.

Business Interest Deduction
The CARE Act permits businesses to elect to increase the interest limitation from 30 percent to 50 percent of ATI for 2019 and 2020. Further, businesses may elect to use 2019 ATI in calculating their 2020 limitation. There is a special rule for partnerships, which allows 50 percent of any excess business interest allocated to a partner in 2019 to be deductible in 2020, rather than being subject to the ATI limitation. The remaining 50 percent of excess business interest from 2019, however, is subject to the ATI limitation.

Property Improvement
This one may interest our clients who own restaurants or commercial building, as well as those in real estate investment (i.e. fix and flip). The CARE Act will permit you to immediately deduct the expenses of property improvements or depreciate over 20 years. Previously, you had to depreciate over 39 years.

Alcohol Taxes on Hand Sanitizer
The CARES Act exempts undenatured spirits from excise taxes for those distillers that are producing hand sanitizer on an emergency basis.

So, what is our take-away from all of this?  For one thing, you are going to be spending some quality time with your accountant and/or tax attorney.  Beyond that, my feeling is that these tax benefits will be of great interest to businesses that have done well in past years and do not really need or want business loans.  For a lot of businesses that are «at risk,» these tax breaks may not be enough.

Understanding the interplay between the available business loans, tax breaks, paid leave obligations and unemployment benefits is the whole game at this point.  You have to weigh your options and make the best choices you can for your business. 

April 1, 2020 is here, so it is time to make decisions.  Our firm is here to help.  Request Consultation

~ Jeff Harrington, Esq.

Under the FLSA, there are no limits to the number of hours an employer may require an employee to work in per day or week. However, employers are required to pay employees an overtime rate of one-and-a-half (1 1/2) times their regular rate for all hours worked in that week beyond the standard 40 hours, unless some exemption applies. 29 CFR 778.107.

In Florida, as long as an non-exempt employee does not work more than 40 hours in a week, the employer is not required to pay overtime even if (i) the employee works more than eight (8) hours in one day, or (ii) the employee works on a holiday, a Saturday, or a Sunday.

So,  to calculate the appropriate amount of overtime owed to an employee, determine the employee’s regular rate and hours worked by the employee in the applicable week.

Exempt Employees

Most employers must pay  employees overtime pursuant to the Fair Labor Standards Act (FLSA). However, there are some categories of employees that are exempt from overtime pay. Section 213(b) of the Fair Labor Standards Act (FLSA) provides for several exemptions from its overtime requirements. 29 USC 213

(a) Minimum wage and maximum hour requirements 

The provisions of sections 206 (except subsection (d) in the case of paragraph (1) of this subsection) and 207 of this title shall not apply with respect to—

Believe it or not, that is about as simple as we can lay it out.  Naturally, it would be wise to consult a labor attorney where any doubt exists.

~ Jeff Harrington, Esq.

Are you allowed to require employees to attend meetings and training sessions without counting those hours under the FLSA and paying them for the training time?

~ Jeff Harrington, Esq.

Many of my foreign business clients are used to employing unpaid interns.  That concept exists here in the US as well, but be careful.  The practice is fraught with potential peril.

If you are reading this article then, like all business owners, you want a quick and concrete answer to the question «Can I use unpaid interns in my business?»  Like a typical attorney, my answer is «Well . . . maybe.»

The first question is what body or bodies of law apply to your business.  The most prevalent is the Fair Labor Standards Act (FLSA), which is federal labor law.  There are particular criteria that you can look at to determine whether the FLSA applies to your business, but I’m going to save you some time.  Assume that it does.  Why do I say that?

Courts have gone so far out of their way to find that the FLSA applies — even to businesses that seemingly have nothing to do with interstate commerce — that we might as well say the FLSA applies to every business in every state.

I’m sure there are exceptions but, even if your business is the paradigm of an exempt employer, it would still be dodgy to count on that.  So, assume the FLSA applies to your company.

Department of Labor’s Standard

The Wage & Hour Division of the US Department of Labor has kindly given us some factors to consider in order to determine whether your company’s interns must be considered «employees» and paid minimum wage:

1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

So, that does give you something to go by.  The Courts have a similar but different list of criteria . . . and the decisions have not be uniform throughout the country.

The Judicial Standard

1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school.
2. The training is for the benefit of the students.
3. The trainees or students do not displace regular employees, but work under their close observation.
4. The employer that provides the training derives no immediate advantage from the activities of the trainees or students, and on occasion his/her operations may actually be impeded.
5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period.
6. The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.

If you’re going to use unpaid interns, you had better (i) have a carefully-written internship agreement, and (ii) really try not to make an enemy of the intern.

The Enforcers: Labor Law Attorneys

There are attorneys out there who do nothing other than market to these disgruntled workers.  And, they take these cases on contingency, so it doesn’t matter that the intern cannot afford a lawyer. 

Labor attorneys take the cases for free because labor laws always award attorneys’ fees in a successful lawsuit.  But, that isn’t the worst of it.

Labor attorneys can turn a single disgruntled worker into a gold mine by putting together a class action.  I won’t go into detail about how they do that, but it is quite easy . . . and quite effective.  So, even though all your other happy interns are happy and uninterested in suing your company, they can still be pulled into the class.

The bottom line is your company’s exposure is not limited to the single unhappy intern.

Conclusion

It seems to me internships should probably be limited to training that forms part of a course of study–and, even then, you’re completely safe.  But, if you are the owner of a private company bringing on «interns» who are not participating in any kind of educational program, it may not be possible to put together a program that is 100% safe from legal exposure.

You can do it, but be sure you hire a lawyer to give you some legal analysis and draft the Internship Agreement.  And . . . be nice to your interns.

~ Jeff Harrington, Esq.