Armanino Blog

President Trump's Executive Orders for Pandemic Relief; Update on the FFCRA

by Jenn McCabe
August 12, 2020

The Executive Orders

On August 8, President Trump signed four executive orders to extend federal pandemic relief. These executive orders include:

  • Payroll tax deferral of 6.2% of Social Security taxes on wages for employees who earn less than $100,000 per year from September 1 to December 31, 2020. Note: This is currently a deferral, not a tax credit. It is unclear whether the taxpayer (employee) or the employer will eventually be required to pay the full amount.
  • Federal unemployment benefits have been extended beyond the original July 31 expiration date but reduced to $400 per week for qualified persons through mid-December 2020. Note: The unemployment memorandum includes a contingency that the states contribute at least 25% ($100) of these funds. We don't know yet when this will go info effect, whether it will be retroactive to August 1,, or which states will participate.
  • Federal student loan payment deferrals (including waivers of interest) have been extended through December 31, 2020.

Employers and employed workers will be particularly interested in understanding how the payroll tax deferral will work. The intent is to put more money in workers' pockets by increasing their take-home pay. At this point, it's understood the taxes will be deferred to be paid at a later date. However, the order directs the Secretary of Treasury to explore ways to eliminate this tax obligation altogether.

Unemployed workers will be eager to know whether their state will participate in the extended unemployment program. Each state will need to confirm whether or not they can afford to participate.

Legal challenges are expected.

The Update on the Family First Coronavirus Response Act (FFCRA)

On August 3, the United States District Court for the Southern District of New York struck down four portions of the FFCRA final rules that were issued by the Department of Labor. Though it is not clear if the district court's decision to strike down portions of the final rules will apply nationwide, employers should study the court's decision. It suggests employers may want to consider adopting a more generous approach on granting FFCRA leaves. Employers are eligible to receive tax credits on the wages paid under FFCRA, so this has financial ramifications.

The New York federal court decision addresses the following interpretations:

  • An employee on furlough may be eligible for FFCRA leave.
  • Certain employees who work for health care providers will be eligible for FFCRA leave.
  • An employer's permission is no longer needed to take intermittent FFCRA leave under qualified reasons for taking such leave.
  • Employees are not required to provide documentation to support their reasons for taking FFCRA qualifying leaves as a precondition before taking their leave.

We'll continue to monitor this case and will provide updates as this ruling evolves. Have questions or need some help? Don't hesitate to reach out to our experts. For more information on keeping your business running during disruption, visit our COVID-19 Resource Center

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Jenn McCabe - Partner, Outsource HR - El Segundo CA | Armanino
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