Today we notified all employees of a 1/3 reduction in work hours and pay.
Most people were sympathetic and grateful that they did not get laid off.
Some have requested furlough but we have only discussed verbally with them.
However the latest Cares Act which was enacted today, would allow Furloughed employees to gain federal / state unemployment benefits at 2/3 of their wages rate AND now an additional $600 per month paid by the stimulus bill!!
For most hourly employees this amounts to about 60K per year (and not having to work)!!!
Any and all of our employees would and should request furlough if that is the case!
Senator Lindsey Graham was very against this latest provision in the bill and even stated that this incentivizes employees not to work and receive unemployment pay way above their employment pay! See you the following link:
Therefore we are considering a sudden about face and informing (requiring) employees that everybody has their previous work hours, pay rate and benefits.
If we do this though, we will not be able to continue to you survive our 59K biweekly payroll over the unforeseeable future.
If they resign or we lay them off, then WE are stuck paying their unemployment benefits!
This is a real conundrum!
Is anybody else experiencing this???
Small business owners should be furious about this and very worried!
Are we missing something?
Sorry to hear about the reduction in the workforce…I know it was a tough decision to make. Often times, it is better for everyone to take a hit than a select few to bear the entire burden. As for them still being able to draw unemployment, this sounds like one of the unintended consequences of the legislation approved (maybe). My concern is that the recently passed FMLA updates really complicates things- pushing more people to the scenario you alluded to- simply staying home and making more money than if they worked.
The most interesting part of the PPP is that it keeps all employees fully employed and allows for some forgiveness of the cost incurred by the practice…the article above refers to: So long as the funds from loans issued pursuant to the PPP are used for the purposes listed above, the principal balance is eligible for loan forgiveness.
I would definitely check with your accountant to see if they have any additional guidance.
This is where I am hoping to see an employment lawyer and an accountant get together and go through all the if, and, or butts and put together a matrix of various scenarios that helps determine most economical choices for employer and employee. Unemployment, vs CARES act stay at home with kids and we get reimbursed through payroll tax credits, vs PPP loans that hopefully are forgiven.
All 3 are options and will be different for every employee and every employer, but would really enjoy a document that includes all of the options instead of just hearing about them separately, because they all interact.
You bring up a good point…the only thing in common between practices is that they are not the same in terms of employee count, employee actions, corporate structure and financing needs. I suspect that since the PPP program was finally signed Friday, there will be more information coming out in the coming days to help decipher. We will continue to explore and post what we find…if anyone stumbles into anything good, please post.
We are very interested in the PPP loan to keep our employees working. From what Paul wrote on another thread, it looks like we have to keep our employees working thru June 30, 2020. But I saw another comment on another thread regarding keeping the same work staff for 2 years…can you clarify?
The PPP provides a loan and they will forgive the amounts spent within a defined 8-week perioid prior to June 30 related to payroll cost (with some limits), rent and utilities.
Basically, they are offsetting the cost to fully employ the staff during a specified 8-week period. For those who have reduced hours, the plan should be to keep them at reduced hours until the 8-week period begins and then have all the employees work their regular hours. The 8-week period begins as of the “loan origination date”.
Paulie this is what we are planning and completely agree. Just hope the 8wks ties in with the surge in cases in our area. Damn I want a crystal ball. I may even use an EIDL loan for it’s purchase. Nonforgiveable loan but hey Crystal Ball.
Practices need to be very careful with cash planning. Many are making budgets as if they are certain the entire pandemic will come to an end at the end of the eight-week period where approved expenses are forgiven.
What happens if your part of the country has a later outbreak of COVID19 and you’ve already burned through all the cash because you were fixated on the forgiveness? Practices need to accept the reality that the entire loan may not be forgiven knowing they can finance the balance over 10 years.
For my practices, I’m making a budget as if things will go into July/August. If it doesn’t drag out that long and I have any leftover funds, I simply pay it back right away. All this to say, if you are approved for $200k, plan on spending $150k so you have some cushion and possibly avoid having to get financing again later.