What Costs Are Eligible for Payroll?
Because the CARES Act is still being shaped by questions and case precedents, and this governs the PPP loans, we may see some changes yet to come. That said, here is the current language, and we suggest employers request the maximum under the following standards. The following is directly from the CARES Act as defined by Senate subcommittee.
QUESTION: What costs are eligible for payroll?
- Compensation (salary, wage, commission, or similar compensation, payment of cash tip or equivalent)
- Payment for vacation, parental, family, medical, or sick leave
- Allowance for dismissal or separation
- Payment required for the provisions of group health care benefits, including insurance premiums
- Payment of any retirement benefit
- Payment of State or local tax assessed on the compensation of employees
Because the Paycheck Protection Program covers both employee payroll and insurance premiums where payments are due and made, interpretive guidance would suggest that both employee and employer payment portions made could be loaned against in a self-funded program, and this would include workers’ compensation payments made unless or until the act defines differently.
When completing paperwork (which may be changing), if asked to isolate employee and employer insurance payment portions due during the period, we suggest doing so. What can be included are the payments actually made during the PPP period, not more and not an annualized or future-based premium calculation.
Beyond the CARES Act financial provisions, the FFCRA provides “Paid Sick Leave” which provides paid sick leave for employees for COVID-19 reasons to include testing. These paid leave costs for testing time are eligible for government tax credits and, in some cases, advances to companies to cover the leave.
Jessica Ollenburg, CMC, CPCM, is Managing Partner of Ollenburg LLC and former CEO of HRS, Inc., enjoying a 35+ year legacy with topic success. Delivering executive consulting relative to talent management, employment law and consulting Chief HR Officer solutions, Ollenburg LLC offers discounted programs to Starr Group clients. Please contact Ollenburg LLC for more information, including bios, methodology and sources of statistics published herein. www.OllenburgLLC.com, John@OllenburgLLC.com or 262.227.9333.
These answers address the needs of self-funded employers. This article is not intended as legal advice and should not be assumed as such. If you have questions that pertain to your specific business or policy please call The Starr Group and speak to your Certified Insurance Counselor or Licensed Account Manager.