Tag Archives: Unemployment Compensation

How the Stimulus Bill Benefits Small Employers

Attendence, Compensation, Medical, Personnel Policies, , ,

The Families First Coronavirus Response Act has expired as of December 31, meaning that employers are no longer obligated to provide two weeks of emergency paid sick leave to employees who miss work because they are sick with COVID-19 or were exposed and quarantined.

However, employers may still voluntarily provide this paid sick leave through March 31, 2021, and claim the federal payroll tax credit if they do so.

The same holds true for paid family leave if schools are completely closed (which rarely has been happening in the Panhandle of Texas). If an employer voluntarily pays up to 10 weeks in paid family leave while still following the FFCRA rules about who is eligible for this leave, the employer can get the federal government to absorb the cost of that leave through the tax credit mechanism.

This tax credit extension during the first quarter of 2021 is just one part of the new stimulus bill signed into law on December 27 that affects employers. To be clear, if an employee has already used up the 80 hours of emergency paid sick leave or 10 weeks of paid family leave during 2020, this tax credit extension does not mean that you as an employer can take a tax credit for any additional COVID-related leave given to that employee in 2021.

The helpful Paycheck Protection Program has been funded again in the new stimulus bill, but there is a new twist to it that may be very beneficial to small businesses who continue to be adversely affected by the pandemic. A business can apply for a second PPP loan, even if you received one in 2020, as long as you can show that you had at least one bad revenue quarter in 2020.

These “Second Draw” PPP loans are available if you can demonstrate:

  1. You employ no more than 300 employees; and
  2. You have used all of your earlier PPP loan; and
  3. You had gross receipts in one quarter of 2020 that were at least 25 percent less than the same quarter in 2019.

Another piece of good news coming out of the stimulus bill is that Congress corrected a ridiculous IRS opinion that said while your PPP loan(s) were going to be taxed as income to your business, you couldn’t deduct the business expenses that you paid with the loan proceeds. That has now been clarified to reflect Congress’ original intention—the loan proceeds will not be taxed as income and the expenses that you paid with them (payroll, rent, utilities, etc.) will be deductible as normal business expenses.

Congress also simplified that forgiveness process even more for PPP loans under $150,000. You’ll now have to just self-certify that you spent the PPP loans as required by law.

Congress also addressed unemployment insurance for the 20 million Americans who are still out of work. Under the CARES Act passed in the spring of 2020, in addition to state unemployment benefits (which are very skimpy in Texas), the federal government provided an additional $600 per week through July 31, 2020. After that expired, the unemployed were left with just their state benefits. Under the new stimulus bill, the feds are adding $300 per week to state unemployment payments for 11 weeks, through March 14, 2021. The new bill includes a return to work reporting requirement, meaning that the states must allow employers to report when a worker refuses an offer to return to his/her job without good cause.

If you were one of the few employers who deferred their employees’ payroll taxes from September – December 2020 under President Trump’s vague Executive Order issued in August, you will now have to increase their withholding to pay back those deferred amounts. Your employees have until the end of 2021 to get those amounts repaid. The December stimulus bill extended that deadline from April 30, 2021 to December 31, 2021. Some employees were hoping for complete forgiveness of these deferred taxes, but alas, an extended time to repay was all they received.

Finally, employers may be happy to learn that business meal deductions have returned to their previous 100% level for 2021 and 2022. So once this pandemic has subsided, you can fully deduct your celebratory meals with your clients.

What did the new stimulus bill not do?

  • There will be no $2000 per person stimulus checks. The $600 check is it, and it phases out at higher incomes.
  • Liability protections for businesses from lawsuits for COVID-related injuries did not make it into the final bill.
  • Help for states and municipalities whose tax revenue has declined but who have had enormous COVID-related expenses was not approved.

10 Facts Texas Employers Should Know About Unemployment

Compensation, Forms and Policies, Litigation, Personnel Policies, Termination, , ,

Do I have to pay unemployment on my employee who just quit/resigned/got fired/was laid off?

During most of my thirty years as an employment lawyer, I have been asked that question at least once a week. Here are ten basic facts that every employer in Texas needs to understand about our state’s unemployment system: Continue reading 10 Facts Texas Employers Should Know About Unemployment →

Running Off an Underperforming Employee Is Not a Viable Option

Discrimination, Management, Termination, , , , , ,

In my long experience as an employment law attorney, I have come to realize that employers really, REALLY hate to fire employees. Some employers are scared of confrontation, others hate admitting they made a bad hire, and some just can’t find the right words.

Whatever the reason for being unable to fire a poor performer, employers often ask me about “running off the employee”. Running off an employee usually means making the employee so miserable the employee will voluntarily quit.

The employer trying to run off an employee may give the employee the worst duties at the company, criticize the employee in front of others, deny the employee’s vacation request, cut the employee’s pay, transfer the supervision of the employee to the worst supervisor, or make the employee work the graveyard shift.

Of course, this approach to termination often also makes the employee so angry that when the employee leaves, he or she becomes much more likely to sue the employer.

Running off an employee is the layman’s way of doing what we in the legal field call a “constructive termination”. A constructive termination occurs when the employer makes the working conditions so intolerable that any reasonable employee would feel forced to resign.

When an employee quits with good cause because the employer made continuing to work there intolerable, there are numerous legal consequences, such as: Continue reading Running Off an Underperforming Employee Is Not a Viable Option →

Should You Protest Unemployment Claims?

Discrimination, Termination, , , , ,

Unemployment claims can cost you money as an employer because your Texas Workforce Commission tax rate will escalate the next year if an employee is awarded benefits. But handling your unemployment claim deftly has become critical in avoiding even more expense down the road when your employee sues you.

It is not always an easy decision about whether to protest unemployment and you have to make that decision quickly (usually within 14 days of the notice of an unemployment claim). On the one hand, you as an employer don’t want your tax rate to increase. On the other hand, you don’t want to say something harmful in an unemployment appeal hearing that will have significant consequences in later litigation.

At an employment law conference that I attended this week, I heard an employee’s lawyer with 40 years of experience say that he believes that TWC unemployment appeal hearings are one of his best tools for winning discrimination cases for employees. Why? Because at the appeal hearing, the company’s witnesses have to testify under oath about the reasons an employee was fired. Often, the employer’s witnesses are not represented by legal counsel and they are not adequately prepared for the testimony they are going to give. They give inconsistent or unprovable reasons that later come back to haunt them when the former employee sues the company in a completely different matter.

The plaintiff’s lawyer admitted that he likes to ambush supervisors and HR representatives at the TWC unemployment hearing and get helpful sworn testimony for his client from those witnesses, because the company’s representatives rarely expect the employee to appear at the hearing with legal counsel. When he cross-examines them, the witnesses get flustered and accidentally provide testimony harmful to the company.

The result is Continue reading Should You Protest Unemployment Claims? →

TWC Creates Calculator to Estimate the Effect of Unemployment Claim

Benefits, Termination,

Whenever a Texas employer receives a Notice of Application for Unemployment Benefits, the first question that runs through the employer’s head is “How much is this going to cost me?” The answer to that question can influence whether the employer decides to protest the unemployment decision, how much time, effort and worry to invest in the protest and whether to hire a lawyer to protest the unemployment award. The cost estimate has been a difficult question for employment lawyers to answer. But now the TWC has provided all of us a calculator that will estimate how a particular employer’s tax rate will change if the former employee collects the maximum unemployment benefits.

When you receive the initial notice, go to this site and input your former employee’s salary for four of the last 6 quarters and the tax rate information off of your annual Tax Rate Notice from the TWC to get a tax rate estimate. With that estimated tax rate, you can compare it to your previous TWC reports and see the change that will occur in the Texas unemployment taxes that you will pay based on that one employee receiving unemployment benefits. Remember as you make that comparison that your tax rate increase will be effective for three years, not just one, after an employee files a successful unemployment claim.