HCM Insights March 2021

HCM Insights - March 2021

American Rescue Plan Act of 2021

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (ARPA). ARPA is a $1.9 trillion economic stimulus package designed to speed up the United States' recovery from the economic and health effects of the COVID-19 pandemic. The following summarizes a few pieces of the plan. The summary includes information about the Employee Retention Tax Credit, Emergency Paid Sick & Family Leave Tax Credits, Paycheck Protection Program, COBRA Subsidies, and Dependent Care Flexible Spending Accounts.

 Employee Retention Tax Credit 

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The American Rescue Plan Act of 2021 extends the Employee Retention Tax Credit (ERTC) through December 31, 2021, restructures the way it is claimed and expands benefits for qualifying companies. We’ve provided a summary of just some of the key changes to the ERTC, along with additional information about this available credit.




Key Changes to the Employee Retention Tax Credit

  • ARPA restructures the credit in such a way that it is claimed against the employer’s share of the Hospital Insurance (HI) payroll tax instead of the employer’s share of OSADI (Social Security) tax and the equivalent amount of tax for railroad employees.
  •  ARPA modifies the ERTC to benefit “recovery startup businesses,” defined as businesses established after February 15, 2020, with average annual gross receipts that do not exceed $1 million. These recovery startup businesses can claim an employee retention credit of up to $50,000 per calendar quarter.
  • ARPA provides that “severely financially distressed employers,” which are employers with gross receipts that fell by more than 90% over the comparable quarter during 2019, will be able to treat all wages as qualified wages.

More About the Employee Retention Tax Credit

  • During 2021, the ERTC is equal to 70% of qualified wages and health plan costs, and although it is initially claimed against payroll taxes, excess amounts are fully refundable.
  • The per-employee amount of the 2021 ERTC is based on $10,000 of qualified wages and health plan costs per calendar quarter. Thus, the maximum per-employee credit amount for 2021 is now $28,000 (70% of up to $40,000 in qualified wages and health plan costs).
  • An employer’s amount of qualified wages depends on the number of employees the employer had in 2019.
  • For employers with more than 500 full-time employees, qualified wages generally are wages paid when employment services are not provided.
  • For employers with 500 or fewer full-time employees, all wages paid by eligible employers are eligible for the credit.
  • Qualified wages do not include wages used to support PPP loan forgiveness.

Emergency Paid Sick & Family Leave Tax Credits

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The American Rescue Plan Act of 2021 offers both an extension and enhancement of the payroll tax credit for employer-provided sick and family leave. The credit was set to expire for wages paid after March 31, 2021, but has been extended for wages paid through September 30, 2021. These credits now include the employer’s share of payroll taxes incurred on creditable wages, in addition to the credit for the wages themselves.



What You Need to Know

  • The credit remains limited to 10 days of paid sick leave, but the 10-day period resets April 1, 2021, and ends on September 30, 2021. (If an employee has taken up to 10 days of qualifying leave prior to April 1, 2021, then he or she can take up to an additional 10 days of qualifying leave after that date, and the employer will be eligible for the credit for that employee again.)
  •  The definition of qualifying sick leave is expanded to include leave taken to obtain immunization related to COVID-19 or to recover from any injury, disability, illness, or condition related to COVID-19 immunization.
  • The denial of the double benefit rule is still applicable, and the employer must include any credit received in gross income.
  • The credit has been restructured and is now claimed against the employer’s share of HI tax.
  • The legislation adds a rule that provides that any paid leave program is ineligible for the credit if it discriminates against highly compensated employees.
  • The family leave overall wage limit is increased from $10,000 per employee to $12,000 per employee.
  • The family leave qualifications are expanded to include all qualifying uses of paid sick time, including for leave provided if the employee is subject to a quarantine or isolation order due to COVID-19 or is caring for someone in a similar situation.

Paycheck Protection Program

PPP

The American Rescue Plan Act of 2021 authorized an additional $7.25 billion for the Paycheck Protection Program (PPP), which is now set to expire on June 30, 2021. The additional money is intended to expand eligibility for the loans to include more nonprofit organizations than were eligible before, as well as digital news services providing local news and public health guidance during the pandemic.

 


COBRA Subsidies and Special Enrollment Window

Dependent Care

The American Rescue Plan Act of 2021 includes a provision for a COBRA continuation coverage premium subsidy of 100 percent for individuals and families who experienced an involuntary termination of employment or reduction in hours. This subsidy will be available for Assistance Eligible Individuals (AEIs), as determined by the Act, from April 1, 2021, through September 30, 2021.



COBRA Participants Must Meet the Below Criteria to be an AEI:

  • Coverage was lost due to involuntary termination of employment or reduction in hours.
  • The COBRA participant is still within the COBRA eligibility period as of April 1, 2021.
  • Eligible COBRA participants who do not have an election in place will have the opportunity to make an election during an Extended Election Period and will be able to take advantage of the subsidy effective April 1, 2021. This will be referred to as the “lookback period” in determining member eligibility.
  • Eligible COBRA participants who have an election in place as of April 1, 2021, will be able to take advantage of the subsidy effective April 1, 2021.
  • Eligible COBRA participants who become eligible for COBRA continuation coverage on or after April 1, 2021, will be eligible for the subsidy while it is in effect.  

Dependent Care Flexible Spending Accounts

Dependent Care

The American Rescue Plan Act of 2021 increases the dependent care flexible spending account (FSA) limit from $5,000 to $10,500 for the 2021 tax year only. Employers are not required to offer this temporary increase. To implement this increase, the employer must amend their dependent care FSA plan no later than the last day of the plan year in which the amendment is effective (e.g., December 31, 2021, for calendar-year plans). The amendment can have a retroactive effect back to the beginning of the plan year.


 

Recognizing Women’s History Month with CWA

CBIZ Women's Advantage

In alignment with Women’s History Month, CBIZ Women’s Advantage (CWA) announced the finalists for the first annual Women Transforming Business Award. Lori Novickis, National Leader of CWA said, “there are countless female leaders making an impact across their organizations every day; we know this because we work with many of them.”



We are happy to have the opportunity to spotlight and recognize the following nominees:
  • Danielle David, Chief People Officer, CRB
  • Ellen Purdy, Chief Financial Officer, Office Practicum
  • Emilia DiMenco, President and Chief Executive Officer, Women’s Business Development Center
  • Jenn Docherty, Managing Director and Associate General Counsel, Piper Sandler Companies
  • Julie Brandle, President, Metis Construction Services
  • Katie Briscoe, President, MMGY Global
  • Dr. Kimberly Beatty, Chancellor, Metropolitan Community College
  • Lisa Ginter, Chief Executive Officer, Community America Credit Union
  • Robin Potts, Chief Financial Officer, Harvesters Community Food Network
  • Sherronda Rhyan, Director of Finance, Church Health Center

The winner will be announced alongside a message from keynote speaker, Christina Kosmowski of LogicMonitor, during the virtual celebration taking place on April 27, 2021, at 1:00 pm ET. All are welcome, so save a seat by registering here.

CBIZ Women’s Advantage was founded in 2007 as a network to help other women succeed in business through professional training, development, mentorship, recognition, and career development.


 

Is Your Recruitment Problem Really a Retention Problem?

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Recruiting the right talent is always a challenge. Retaining that talent is an even greater challenge. All too often, organizations from every industry are underestimating the true cost of employee turnover. Most don’t have a solid retention strategy, and way too many don’t track turnover at all. That leaves leaders unaware of the fact that the average cost in turning over a highly skilled job is 213% of one year’s compensation for that role. On top of that, 51% of employees are either watching opportunities or actively looking for a new job.


Organizations that focus on retaining employees have been found to have better financial outcomes and better overall performance. If your organization is looking to simplify recruitment and reduce turnover, read the full report to learn top retention strategies, from evaluating the effectiveness of supervisors to the tools that increase employee engagement.

 

State Unemployment Tax Rates 

Many state unemployment tax agencies have mailed 2021 tax rates to employers. Please send this information to the CBIZ Payroll Tax Team once received.

SUI Rates Available - January 2021

Arizona, Connecticut, Hawaii, Maryland, Massachusetts, Michigan, Mississippi, New York, Rhode Island, South Carolina, Washington, and Puerto Rico.

SUI Rates Available November - December 2020

Alaska, Arkansas, California, Colorado, Delaware, District of Columbia, Florida, Idaho, Illinois, Iowa, Indiana, Kansas, Kentucky, Louisiana, Maine, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Texas, Utah, Virginia, West Virginia, and Wisconsin. (Georgia employers will need to obtain their rates online)


Email Your 2021 SUI Rates to CBIZPayrollTax@cbiz.com. If you have questions call 833-224-9426

 

E-Verify Updates: SSA Tentative Nonconfirmation Process

SSI

On March 4, 2021, E-Verify updated the Social Security Administration (SSA) Tentative Nonconfirmation (TNC) process. If an employee receives a TNC result from E-Verify and they wish to contest, they can now do so by calling instead of having to visit an SSA office.

The SSA and Dual TNC Further Action Notices have been updated to include the updated option for contesting results.