HCM Insights April 2021

Upcoming Holiday

Memorial Day

In observance of Memorial Day, CBIZ HCM offices will be closed on Monday, May 31, 2021. Memorial Day is a Federal Reserve Bank Holiday, which means payroll draft dates may need to be adjusted.

Important Payroll Deadlines

As always, your CBIZ HCM team is here to help should you have questions. We appreciate your continued partnership, and we wish you and your business the best of health. Please contact your payroll services team if you have any questions.

Employee Retention Tax Credit

The IRS recently issued IRS Notice 2021-23 to explain the changes to the Employee Retention Tax Credit (ERTC) for the first two calendar quarters of 2021. The ERTC was part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed in 2020, which initially offered a credit equal to 50% of qualified wages paid to employees. Now, with the passage of the Consolidated Appropriations Act (CAA) of 2021, employers were able to claim an even larger credit, and the recent passage of the American Rescue Plan Act (ARPA) of 2021 extends that credit until the end of 2021.  

The CAA allows eligible employers to claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees between January 1, 2021, and June 30, 2021. The ARPA extends that credit through December 31, 2021. Qualified wages are limited to $10,000 per calendar quarter in 2021, which means that the maximum credit available is $7,000 per employee per calendar quarter for the entire 2021 calendar year. Plus, employers with an average of 500 or fewer employees may be eligible to request an advance payment of the credit using Form 7200.

According to an IRS press release, other changes include:

• Expansion of the category of employers that may be eligible to claim the credit
• Modifications to the gross receipts test
• Revisions to the definition of qualified wages
• New restrictions on the ability of eligible employers to request an advance payment of the credit

COVID-19 Vaccination

In early April, President Joe Biden directed all states to make every adult eligible for a coronavirus vaccine by April 19, which is earlier than the original May 1, 2021 deadline. Many states had already made the vaccine available to all adults ahead of the President's announcement, as the vaccine rollout may vary from state to state. As many businesses urge employees to become vaccinated, The Centers for Disease Control (CDC) has issued guidance on Workplace Vaccination Programs. 

The CDC guidance provides recommendations concerning the structure of vaccination programs and discusses ways employers can boost employee confidence in the vaccine.

Key points of the guidance include:

• Assess whether to host an on-site vaccination clinic or direct employees to off-site vaccination sites
• Appoint Vaccine Champions within the organization
• Offer paid leave for vaccinations and flexible, non-punitive sick leave options for employees with signs and symptoms after vaccination
• Pay for employee transportation to off-site vaccination clinics
• Consider staggering employee vaccination to avoid worker shortages due to vaccine side effects.

CBIZ Small Business Employment Index

The CBIZ Small Business Employment Index (SBEI) tracks hiring trends among thousands of companies across the U.S. with 300 or fewer employees. In March 2021, the SBEI reported an increase in hiring among small businesses, with a seasonally adjusted increase of 0.86% for the month. The March data extends gains reported in February, which rebounded from initial declines to start the year. The findings underscore the impact of a reopening economy, hopefulness from continued vaccine developments, and increased activity among consumers.

“The small business landscape has been greatly impacted by the pandemic over the last year, and recovery has not been linear,” said Philip Noftsinger, Executive Vice President, CBIZ, Inc. “The CBIZ SBEI’s continued growth in March is a promising sign.”

CBIZ also recently released the Q1 2021 Main Street Index to gauge the continued impact of the COVID-19 Pandemic on the small and midsize business marketplace. The findings show that while challenges persist, businesses are staying resilient and maintaining a positive outlook. 

“The CBIZ Main Street Index shows that although businesses are still dealing head-on with the pandemic’s impact over one year later, their overall tone is optimistic and they are leveraging varied strategies for growth,” said Noftsinger, “A major takeaway from the data is that businesses feel they have the capacity to weather the storm. The index results speak to how flexible and innovative the SMB marketplace can be in a business climate like this while continuing to focus on short-term and long-term goals.”

Your Employees' Role in Cybersecurity

It's not just the job of information technology (IT) professionals to keep your organization safe from online predators, as each employee can play a significant role in protecting your company from cybersecurity threats. A leading cause of data breaches for small businesses are emails, so making your employees aware of basic internet best practices can help prevent cyber attacks.

Email phishing scams may appear to be legitimate, referencing names of leadership, including their signature and/or contact information, and even containing their picture, but recipients should pay close attention to the sender's email address and be suspicious of emails asking them to click a link. These attacks are meant to trick the recipient into logging in with their company credentials (username, password, and multi-factor authentication code). Cybercriminals can then use this information to compromise an email account for identity theft, financial fraud, and new attacks based on their address book and existing email.

By educating employees on these and other types of attacks, they will know the proper response, which can safeguard your company. Organizations such as the Small Business Administration provides cybersecurity tools and resources for small businesses. Along with basic information about cybersecurity best practices, they offer free online training events.

The SECURE Act

It’s been over a year since the Setting Every Community Up for Retirement Enhancement (SECURE) Act was passed and became law. Provisions in the Act include reforms intended to make it easier and more accessible for many Americans to save for retirement. At the same time, employers may benefit from additional tax credits for starting a retirement plan.

Among the twenty-nine provisions in the SECURE Act, small-business owners can potentially receive up to a $5,000 tax credit for starting a retirement plan. For the first three years that a small employer (employers with 100 or less employees) offers a qualified retirement plan (SEP, SIMPLE, 401(k) and profit[1]sharing), the employer can receive an annual start-up credit of $250 per non-highly compensated employee eligible to participate, up to $5,000. If the established retirement plan includes automatic enrollment, an additional credit of up to $500 is available.

Other notable retirement account changes brought about by the SECURE Act include:

• Allows long-term part-time workers to participate in 401(k) plans
• Increases the required minimum distribution (RMD) age for retirement accounts to 72 (up from 70½)
• Offers more options for lifetime income strategies
• Repeals the maximum age for traditional IRA contributions
• Permits parents to withdraw up to $5,000 from retirement accounts penalty-free within a year of birth or adoption for qualified expenses
• Allows parents to withdraw up to $10,000 from 529 plans to repay student loans

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The information contained in this HCM Insights is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. This information is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.