COVID-19 FAQ

This is a very complex decision based on your individual practice.  There are many opportunities for assistance with loans, tax credits and other benefits.  It is also dependent on much you want to keep your business open for essential care during the crisis.

No.  The IRS has ruled that you will not be able to deduct the PPP loan repayment as an expense for income tax purposes.

It is VERY confusing.  CARES did not clearly define full-time (FT) well but very recent Treasury guidance did.  For loan calculation, FT is not a traditional SBA amount. For PPP loan amount calculation, it is a straight head count "individuals employed on a full time, part time or other basis".  Someone working 5 hours a week is part of the head count and counts as 1.  For forgiveness, the calculation uses "full time equivalent" (FTE) which for CARES was clarified to be the total number of people working 30 hours or more  plus the total hours of employees not working 30 hours or more divided by 30 (for one week or like 240 if counting for eight weeks). 

EXAMPLE: FTE calculation.  During the eight week period of your loan amount you have ten employees that work 30 hours a week or more, two employees that each work 20 hours a week and two employees that work 10 hours a week.  The FTE for the part time workers is their total hours during the eight week period (20+20+10+10=60) times the number of weeks in the calculation period (8X60=480) divided by number of potential FT hours during the same period (30 x 8= 240 so 480/240=2).  Your FTE is the 30 employees working 30 hours a week or more PLUS two more FTEs from your part time workers.  For more info, see:  https://practicecompliancesolutions.com/blog/f/calculation-of-ppp-forgiveness 

No. The SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that, to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.  

Yes.  You are considered a sole proprietor and are eligible for all the benefits under the CARES Act.  The payroll you would attribute to yourself is the amount on your 2019 Schedule C, limited to the first $100,000.

 The loan forgiveness amount is a very complex calculation based on payroll expenses as incurred during the time period one year before the date of the loan application.  

While PCS cannot make specific recommendations regarding your business operations, it seems logical that everyone would want to consider taking out a PPP loan.

Expect extreme scrutiny of your loan proceeds usage.  Some experts advise you create a separate expense accounting system that could easily be provided upon request.

You do not have to do this, but it is an excellent way to document, sort, and track activity. 

The PPP loan period starts on the funding date of the loan and continues for the next eight weeks.  The only control you have over when the eight weeks begins is based on when you decide to file for the loan and if you can ask your lender to assist in controlling the funding date.

PPP is designed to help you continue to pay your employees, If employees are re-hired at initiation of loan, any reduction in forgiveness will be limited to how much your expenses were reduced compared to the prior year period.  The loan will also assist in payment of certain applicable operation costs like rent, utilities, etc.  The logic of your question is sound.  The best scenario is to obtain funding at a point you can best guess will coincide with a time business will be heading back to normal.   Otherwise for the most part you are funding a payroll of a mainly empty staff that could have been on unemployment.

The CARES Act places the decision of what documentation is required with the lender.  As a rule, these are the things you might consider gathering before you apply:  

• Articles of Incorporation/Organization of each borrowing entity
• By Laws/Operating Agreement of each borrowing entity
• All owners Driver’s Licenses
• Payroll Expense verification documents to include:
• IRS Form 940 and 941
• Payroll Summary Report with corresponding bank statement
• If a Payroll Summary Report is not available, Employee Pay Stubs as of February 15, 2020 (or corresponding period) with corresponding bank statement, and,
• Breakdown of payroll benefits (vacation, allowance for dismissal, group healthcare benefits, retirement benefits, etc.
• 1099s (if Independent Contractor)
• Certification that all employees live within the United States. If any do not, provide a detailed list with corresponding salaries of all employees outside the United States 

Other than the point that all actions must be made inside the law and without discrimination, there is no real answer to this question.  Each employer must look at their business, decide what they want to do or can do for their employee and then make an individual decision that works for them.  Here are a few options to consider with some pros and cons.

     Close the office completely and lay off all hourly employees.

          PROS

• Maximum and immediate reduction in employee expenses which is likely the or one of the largest practice expenses
• If done before April 1, 2020, reduces or likely eliminates all obligations from State or Federal paid time off laws (see our post “Emergency Legislation HR 6021”)

          CONS

• Creates largest burden for employee
• Doesn’t feel good
• Lay off is a termination of employment. It will still be your choice if you wish to simply reinstate employees or go through standard re-hire process once you start back toward full operations.
• You still have to pay your salaried employees

     Close the office and furlough all hourly employees

          PROS

• Maximum and immediate reduction in employee expenses which is likely the or one of the largest practice expenses

          CONS

• If they are still technically employees this may not reduce or eliminate obligations from State or Federal paid time off laws
• Creates largest burden for employee
• Doesn’t feel good
• Although there is no legal delineation of “furlough”, most consider this denotes a temporary situation more like a leave of absence but not receiving pay at this time, typically for economic reasons. The choice to reinstate or re-hire will still be the employers.
• You still have to pay your salaried employees

     Try to maintain some pay to employees until you can build back to full operations

          PROS

• Feels good
• Provides some economic benefit to employees during the crisis
• There are likely ways to achieve your goal without maintaining full employee status – reduced hours, maintaining a skeleton staff, etc. You can also consider providing them a large bonus in conjunction with a lay off or furlough.

          CONS

• Largest economic burden on the employer
• If they remained employed on April 1st and are entitled to all applicable benefits under HR6021
• There is no magic or predictable time frame when this may resolve. It is likely NOT two weeks which has become an arbitrary standard for how long employers are trying to keep paying employees. Consider what your next step will be at the end of whatever continuation period you decide.

In the final analysis each business owner has to make a hard decision that is a balance that spreads the hurt out in a manner they can live with.

See the prior question on layoff vs furlough.  In some cases, furlough is recognized in the manner most look at it – the individual is still your employee just not receiving pay at this time.  Health care insurance and retirement plans may not agree. In many cases, whether you call it laid off or furloughed, your action will trigger a COBRA event.   You should check with your individual policies to see if your actions are allowed.  

No.  Benefits under HR 6021 cannot be substituted by existing paid time off.  Again, this would only be for action taken after April 1st.  Prior to that time, and pending what your employee policies state, you have every right to ask them to use or allow them to use accrued paid time off during a mandated closure or reduction in hours.  You can likely even deviate from your employee policies given the crisis nature of this event but deviations must be uniformly applied to ALL employees – no potential discrimination.

You can but we consider this a very bad idea unless the employee is exempt.  If you have laid off the employee, you can contract with them for part-time work at a negotiated rate for work at home – make this a short formal signed agreement that spells out the terms of what they are expected to do, how their time will be recorded and how you will pay them.  In most cases this would be an ill-advised action but we are in different times.

 See previous answer. You still should have a short agreement with them clearly stating the terms of the arrangement. You also have to avoid discrimination issues e.g. allowing some to work and not others. Make sure that what you are allowing them to do is a specific function for which they are uniquely competent and not something anyone in the office can do. Also consider looking into any shared work options under your state’s unemployment system.

They can. They are directed to report any wages earned while they are collecting unemployment and it is likely that those amounts may be deducted from their unemployment benefits.

An employee working full time somewhere else should not be included in the PPP loan 

In most states, the amount an individual can receive for unemployment has a cap.  High wage earners are typically not provided anywhere close to their usual wages under the unemployment system.

Retention of unemployment benefits requires that the individual be ready and willing to work if work is available.  If you notify them they have a job waiting and they refuse to come back to work, their benefits will be terminated. 

Closing a business due to economic impact is not a “qualifying event” under HR6021 and therefore does not apply. Any qualifying event that were to occur from April 1 to the time you close would apply. 

The FMLA extension benefits afforded in the Families First Coronavirus protection act still contain the rule that the employee must have been on the job thirty (30) days prior to claiming benefits under FMLA (including the extension).  Technically the employee would have to return to work for thirty days before accessing the FFCRA benefit.  The benefits under unemployment would normally require the same but the CARES act makes clear most all restrictions for unemployment access should be viewed with leniency.  The employee is likely eligible when she returns to work in this scenario but the bottom line is you will need to check with TWC for the best answer.

The FMLA extension benefits afforded in the Families First Coronavirus protection act still contain the rule that the employee must have been on the job thirty (30) days prior to claiming benefits under FMLA (including the extension). Technically the employee would have to return to work for thirty days before accessing the FFCRA benefit. The benefits under unemployment would normally require the same but the CARES act makes clear most all restrictions for unemployment access should be viewed with leniency. The employee is likely eligible when she returns to work in this scenario but the bottom line is you will need to check with TWC for the best answer.

All wages, salaries and commissions, and any employee receiving a W-2 may be counted but high wage earners applicable wages are limited to $100,000.

As of April 3, 2020, SBA ruling states that independent contractors may not be counted in the owner’s payroll.  Independent contractors are allowed to file for their own PPP loan.

Your 1099 status and your owner status are separate as long as the practice is not paying you as a 1099 contractor.  There is no guidance on whether each entity can apply for benefits but it appears you can.

Yes.  Under the Pandemic Unemployment Act most all prerequisites and other conditions for employment are removed.  Those requirements are typically state law specific but the CARES Act action supersedes those regulations.  At this time, the Department of Labor has not provided instructions to the states on how to process these types of requests for unemployment benefits. Given this, it is possible if the individual applies now they could be denied.  Further directions on this issue should be forthcoming from the DOL.

You are not covered under the SBA loan programs specific to the CARES Act (PPP) but you are still eligible for standard SBA loans.  You are eligible for unemployment under the Pandemic Unemployment benefit under CARES. 

Yes.  You are like another employee in this case.  Your documentation of payment to yourself would be your W-2 or if you do not get a W-2 documentation of any disbursements of funds to you from your account. 

If you have received confirmation of your application you should do nothing.  If you have not received confirmation, contact SBA for a status report before making a second application.  What you do not want to do is have two EIDL loan requests operational at the same time.

The SBA loan process/benefits and the unemployment system are unrelated.  Your decision to apply for one, both or none would be based on your individual financial needs and how much available cash you want.

 As written right now yes you can.  But any monies you receive from your EIDL disaster loan will be deducted from  the forgiveness amount awarded on the SBA loan.

According to recent posts on the SBA website, the answer is yes.

Several questions.  First, you cannot use EIDL for exactly the same thing as your PPP funds or it will decrease the amount of your PPP forgiveness.  If you have both loans, use the PPP funds as much as possible for direct payroll costs and the EIDL funds for other allowed expenses (rent, utilities, etc).  Second, you cannot “roll” your EIDL loan into your PPP loan unless you received you EIDL funds prior to April 1, 2020.

You cannot use EIDL for exactly the same thing as your PPP funds or it will decrease the amount of your PPP forgiveness.  If you have both loans, use the PPP funds as much as possible for direct payroll costs and the EIDL funds for other allowed expenses (rent, utilities, etc).  

You cannot “roll” your EIDL loan into your PPP loan unless you received you EIDL funds prior to April 1, 2020.

The EIDL loan program was closed for a brief period of time but has reopened to applicants.  The loan application is available at https://covid19relief.sba.gov/#/.  Specific guidance was issued for independent contractors and sole proprietors for completing the form including:

• Check the box that you are applying as an independent contractor or sole proprietorship.
• You must add your Social Security number.
• You can estimate your income and applicable cost of goods based your average monthly income and cost of goods from 2019.
• Where it asks for “Owner” put your name and “100” percent owner.
• The date your business was established should be the actual date or a good faith estimate but much be prior to January 31, 2020.
• Bank account information must include the account number and the routing number.  For direct deposit of funds, include the bank name.
• “Is your business owned by a business entity?” The answer is no.
• When the form asks for your business name, just enter your individual name if you don’t have a business name.
• Ignore the question “If anyone assisted you in completing this application …” 
• Make sure to check the box that says you want to apply for the $10,000 grant but for independent contractors without employees the grant will be limited to $1,000.

This is a very complex answer.  Under the Department of Labor optometrists are classified as health care providers just like MDs.  When they wrote HR6021, they referenced a definition of health care provider inside FMLA that applies to who can determine if an employee has a qualifying reason to collect FMLA.  That definition in standard FMLA is restricted to MD/DO.  The Department of Labor has hence ruled related to the coronavirus crisis, optometrists are considered healthcare providers just like MDs, even regarding the ability to determine if an individual should isolate or quarantine.

This clarification has nothing to do with the ability of any employer with less than 50 employees to ask for an exemption from the law based on financial hardship to the business.

 Governor Abbot's recent order was focused on doctors performing elective surgeries in hospitals or in a situation where complications could lead to hospitalization of the patient.  These two scenarios would strain the hospital capacity to deal with admissions related to COVID-19.  It does stress the recommendation that all doctors should be evaluating each patient that contacts them and making a prudent decision whether the care is necessary now or can be delayed.  The term "routine exams" is thrown around a lot and we should probably be more specific.  Most "routine exams" would not be considered essential or medically necessary at this time e.g. "I just want a new pair of glasses, I'm doing fine but our of contact lenses".  Someone who calls with significant vision concerns, lost their glasses, etc - those could actually end up a "routine exam" but evaluating them and solving their functional vision problem could certainly be considered essential.  When a patient calls for help, we should be spending a bit more time asking them more specifics about their needs and making appropriate decisions regarding when they need to be seen. 

 Many states have issued stay at home, shelter in place or other similar rulings.  We know of no state order mandating health care providers to close their offices.  Optometrists provide essential vision and eye care services to the public.  Each doctor needs to decide what services would be essential and if they personally want to provide those services.  The profession in general should remember that this still is an individual physician decision and be respectful of how we all elect to address our role in this crisis.