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PEO v. PSP

You’ve decided to outsource your payroll, but now what? One of the most difficult and most common decisions that business owners face is which type of payroll outsourcing to utilize—either a Payroll Service Provider (PSP) or a Professional Employer Organization (PEO).   

A PSP processes and performs all functions related to paying employees and paying federal payroll taxes. On the other hand, a PEO does everything a PSP does, but much, much more.  

So, what does a PEO do that a PSP doesn’t?  

A PEO handles many aspects of Human Resource Management from tax administration and government compliance to employee onboarding and verifications. 

PEO’s are known for their co-employment, or Employer of Record, which allows you to outsource specific managerial tasks including the administration of employee benefits, scheduling, and payroll. This also includes the management of your business’ workers compensation policy. However, this doesn’t mean that a PSP would not be able to assist with workers compensation insurance or employee benefits. While a PSP may not have the resources to provide these services in-house, they may have partnerships with companies they can recommend.   

How do I know which service is the right fit for my business?  

If you manage a start-up business and only manage one or two employees, chances are you don’t need the full-service benefits associated with a PEO. In this case, you might be better off outsourcing your payroll or HR process.   

However, this doesn’t mean your small business wouldn’t benefit from partnering with a PEO. HR Administration requires a substantial amount of time and effort which can be distracting form your primary focus-–growing your business. In many cases, PEO’s offer professional advice and guidance to help you make educated and strategic business decisions while complying with federal and state employment laws.   

When it comes down to it, choosing which type of payroll provider depends on your business goals and needs. Before educating yourself on the difference between a PSP and PEO, it is important to define your business goals and needs. Want to avoid the hassle associated with payroll and quarterly reports, or reduce stress related to recruiting, compliance, and benefits administration? No matter what your business needs, chances are, a PEO can help you accomplish your goals, AND help save you time and money. 

News

Employer Checklist for Federal Emergency Paid Leave Laws

Our partner, GovDocs, has published a very good checklist for employers.

The FFCRA was signed into law March 18 and went into effect April 2. It expires Dec. 31, 2020.

The legislation, which includes both paid sick leave and expanded paid family and medical leave, applies only to companies with fewer than 500 employees

You can find the check list HERE.

News

Congress Replenishes PPP

Congress has just passed legislation to add additional funding the Paycheck Protection Program (PPP). The President is expected to sign the bill later today. Thank you to all of you who weighed in and urged your lawmakers to support this important bill to keep the PPP afloat. It’s a critical program that is sustaining the backbone of our economy: small business.

Here’s a breakdown of what’s in the law:

1.) $310 billion increase for PPP

  • Sets aside the following amounts:
    • $30 billion for loans made by Insured Depository Institutions and Credit Unions that have assets between $10 billion and $50 billion
    • $30 billion for loans made by Community Financial Institutions, Small Insured Depository Institutions, and Credit Unions with assets less than $10 billion
  • No changes to eligibility for the PPP

2.) $10 billion increase for EIDL Grants and an additional $50 billion to
support EIDL Loans

3.) $75 billion increase for reimbursement to hospitals and healthcare
Providers4.) $25 billion for COVID-19 tests

Uncategorized

CARES Act: Small Businesses

The uncertainty surrounding COVID-19, or the coronavirus, has left many small business owners concerned about the future. While some businesses are practicing social distancing with work-from-home policies, other businesses don’t have the capabilities to do so, leaving many without work. This unprecedented series of events has left many small business owners worried about their future. However, the recent passing of The CARES Act, the largest economic stimulus package in US history, includes a number of provisions that will assist businesses both large and small.  

For businesses with less than 500 employees, here is a quick breakdown of how The CARES Act will impact your operations and employees. 

Emergency Paid Sick Leave Act 

The Emergency Paid Sick Leave Act will require businesses to provide paid sick time to employees if they are unable to work due to COVID-19 or other related reasons including the following: 

  • Entering self-isolation 
  • Experiencing symptoms of COVID-19 
  • Responsible for the care of an individual in quarantine 

During paid sick leave, employees will receive pay equal to the average number of hours typically worked over a two-week period up to 80 hours. If the time off is taken for self-care, employees must be compensated at either the employee’s regular rate of pay, the federal minimum wage, or the local minimum wage, depending on which of those is highest. If the time off is taken in order to care for a sick relative, employees will be compensated at two-thirds of their regular rate of pay. However, if you are an employer of health care providers or emergency responders, you are not required to provide this leave.  

Families First Coronavirus Response Act 

Serving as an expansion of the Family and Medical Leave Act (FMLA), The Families First Coronavirus Response Act will provide paid emergency family leave for employees who are unable to work due to the closing of their child’s school or place of care. 

The paid leave will be applicable for up to 12 weeks. The employee may choose to substitute vacation or personal time during the first 10 days. After that, workers will receive two-thirds of their regular pay rate, with a maximum of $200 per day. If an employee’s weekly hours fluctuate, the employer may take an average over a six-month period.  

For companies with 25 or more employees, the FMLA’s standard requirements for job restoration apply. Employers with fewer than 25 employees will not be held to these requirements if the employee’s position no longer exists due to economic conditions or if the employer restores the employee to an equivalent position.  

Paycheck Protection Program 

For most small businesses, the most important provision included in the stimulus bill is the Paycheck Protection Program. The program sets aside $350 billion in government-backed loans to create an emergency loan that can be used to maintain payroll. Small businesses can receive a loan advance of up to $10 million, with an interest rate at no higher than 4%. In addition, loans will be forgiven if all employees are kept on the payroll for eight weeks, and the loan is utilized to pay for rent, mortgage interest, or utilities.  

Available until June 30, this program allows more banks, credit unions, and lenders to issue these loans. The program’s purpose is to encourage small businesses to avoid employee lay-offs and allow for businesses to rehire individuals who have already lost their jobs due to COVID-19. 

In addition to the policies stated above, the relief bill brings additional changes including adjustments to business tax policies and the SBA’s Economic Injury Disaster Loan eligibility.  

human resources

FFCRA: New Rule and Guidance from DOL and IRS

From our ThinkHR Partner:

New FFCRA Guidance in Temporary Rule and FAQs

The Department of Labor (DOL) has released rules related to administration of leaves under the Families First Coronavirus Response Act (FFCRA) and answered more common questions on their Questions and Answers page. Below are some key highlights to keep in mind when administering these leaves. We also recommend reading our summary of the FFCRA in Comply if you have not already done so.

  • Documentation: Employers may not require more documentation from employees than is described below. For instance, employers may not request a doctor’s note or an official notice from a closed school or daycare.
  • Childcare Provider: The definition of childcare provider includes anyone who generally cares for the children in question. This includes individuals paid to provide childcare, like nannies, au pairs, and babysitters, as well as individuals who provide childcare at no cost and without a license on a regular basis, for example, grandparents, aunts, uncles, or a neighbor.
  • Reasons for Self-Quarantine: Employees are only eligible for emergency paid sick leave (EPSL) if a health care provider directs or advises them to self-quarantine because the health care provider believes the employee may have COVID-19 or is particularly vulnerable to COVID-19.
  • EPSL due to Stay-at-Home Orders: In some narrow circumstances, an employee who is subject to a stay-at-home order may be able to receive EPSL. They will only be eligible if the business is open and has work for them to do, but a stay-at-home order that applies specifically to them as an individual prevents them from working. For instance, if the retail store where an employee works as a cashier is still open, but the employee is over 65 and subject to an executive order from their governor that all people over 65 should stay home, they would be eligible for EPSL.
  • Exempt Healthcare Workers: The exemption for healthcare workers is optional and the DOL encourages employers to be judicious in denying leave (if someone is sick with something that looks like COVID-19, you are encouraged to provide them leave anyway, even if they could be exempted). Healthcare facilities should still post the Employee Rights Poster required by the FFCRA.
  • Limited Small Employer Exemption: Although this is not new information, we want to reiterate that small employers are only potentially exempt from the childcare leaves provided by EPSL and emergency Family and Medical Leave Act (EFMLA) leave. For instance, one reason for exemption is that providing leave would cause the employer to cease functioning at a minimal capacity. If a single employee asks for intermittent childcare leave one day per week, but can telework the other four days, that is very unlikely to be a financial burden that causes the employer to cease operations. It would therefore be inappropriate (or illegal) for an employer to announce that they will not be considering or granting any childcare leaves.

IRS Guidance on Required Documentation for Leave Tax Credits

Employers have been anxious to find out what kind of documentation they will need to claim a payroll tax credit. The documentation that can be requested of employees is listed below. The IRS has a very helpful overview and FAQ that covers other common questions about the tax credits in detail.

Employers can substantiate eligibility for the sick leave or family leave credits by receiving a written request from the employee that includes the following:

  1. Their name;
  2. The date or dates for which leave is requested;
  3. A statement of the COVID-19 related reason they are requesting leave and written support for such reason; and
  4. A statement that they are unable to work, including by means of telework, for such reason.

For leave based on a quarantine order or self-quarantine advice, the request should include the name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine. If the person subject to quarantine or advised to self-quarantine is not the employee, that person’s name and relation to the employee should be included.

For a leave request based on a school closing or child care provider unavailability, the statement should include the name and age of the child (or children) to be cared for, the name of the school or place of care that has closed, and a representation that no other person will be providing care for the child during the leave. If a child who needs care is 15 or older, the employee must affirm that there are special circumstances (but need not explain them) — the IRS otherwise assumes kids 15 and older can take care of themselves for the length of a workday.

According to the DOL, this is the extent of the documentation you may require.

News

CARES Act: Independent Contractors

The CARES Act states “individuals who operate under a sole proprietorship or as an independent contractor and eligible self-employed individuals shall be eligible.”

Unemployment benefits may be available for those that are freelancers, independent contractors and others that do not receive a W-2. Each state is administering these benefits differently. Many states are still developing the process of applying benefits.

The stimulus also include potential payments from the IRS. Independent workers and freelancers are entitled to receive a $1,200 payment ($2,400 for married couples) from the IRS, plus an additional $500 per dependent 16 years or younger. In order to qualify for the full amount, you have to have earned $75,000 or less in the prior year ($150,000 or less if married). Above those income thresholds, the stimulus payment decreases until it stops altogether for single people earning $99,000 or married couples who have no children and earn $198,000. If you haven’t prepared your 2019 tax return, you can use your 2018 return to see if the income threshold is met.

News

Stimulus Checks

INVO PEO knows that many of our client’s employees are anxiously waiting to receive their CARES ACT relief check. Those individuals that qualify and have direct deposit accounts on file with the IRS, should start seeing the deposits after April 17.

The IRS states that it has about 60% of taxpayers direct deposit information. For everyone else, the IRS will soon have a website available to provide this information.

Visit IRS.gov for more information. We will continue to post updates as we have them.

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