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Department of Labor Updates COBRA FAQs and Model Notices

On May 1, 2020, the Department of Labor (DOL) issued updated Frequently Asked Questions and revised model notices under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA is a federal law that permits individuals to continue group health plan coverage for a limited period of time following certain events, such as a termination of employment, that are coupled with a loss of coverage. Employers are required to notify individuals of their rights under COBRA. The changes in the model notices are primarily designed to help Medicare-eligible individuals understand their options for healthcare coverage. The model notices, however, do not include language that addresses DOL relief issued earlier in the week that provides additional time for individuals to elect COBRA coverage through the end of the coronavirus pandemic. Plan sponsors should work with their COBRA vendors and legal counsel to determine whether the model notice updates or coronavirus...

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CARES Act—Tax Deferral Opportunities for Employers

The CARES Act created several payroll tax deferral opportunities but also left employer board members and executives asking what exactly was deferred and worrying about “responsible person” liability. In particular, Section 2302 of the CARES Act (Public Law 116-136) allows all employers to defer the deposit and payment of the employer’s portion of Social Security taxes for a minimum of 12 months and, for some deferrals, a period of more than 32 months. Despite the confusion among some advisers, unlike the employee retention tax credit available under the CARES Act, this opportunity to defer employer Social Security taxes is even available for those employers applying for Small Business Administration loans. Access the full article.

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CARES Act Payroll Tax Forum: IRS Weighs in on High-Profile Employee Retention Tax Credits

Decisions aimed at preserving your workforce in response to the COVID-19 pandemic can have a long-term impact on your business. As you prepare to emerge from government shutdown orders, recall that your workforce is your single most valuable asset. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides employee retention tax credits to help employers defray the cost of keeping their workforces intact in the post-COVID business environment. At the same time, taking advantage of these credits requires careful, upfront planning, particularly in light of the recent FAQs issued by the IRS. During our interactive discussion, we will address the critical matters that you need to understand when planning for these credits, including: What constitutes a partial suspension of business operations, and how government shutdown orders impact those suspensions under the FAQs Which types of compensation and benefits are considered “qualified wages” under the...

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SARS-COV-2 Occupational Health and Safety Standard in Germany

In response to the COVID-19 pandemic, Germany has introduced special occupational safety measures to protect the health of employees, restore economic activity and interrupt the chains of infection. On April 16, 2020, Federal Minister of Labour and Social Affairs (Bundesminister für Arbeit und Soziales) Hubertus Heil and the CEO of the German statutory accident insurance (Deutsche Gesetzliche Unfallversicherung) Dr. Stefan Hussy presented a unified occupational health and safety standard for the duration of the Coronavirus pandemic. The regulations took effect immediately. Access full article here.

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UK Coronavirus Job Retention Scheme: Significant Developments

Her Majesty's Revenue and Customs (HMRC) has issued its sixth update to the Coronavirus Job Retention Scheme Guidance (Guidance). Separately, the UK Treasury has issued a Treasury Direction (Direction) to HMRC setting out the legal framework for the Scheme. There are few points that have been clarified in the Guidance, but there is one glaring inconsistency between the Guidance and the Direction that will be of understandable concern to employers – the requirement that there is a written record of the furlough arrangement. Access full article here.

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Recently Updated | COVID-19 FAQs for US Employers

How should US employers approach the Coronavirus? With rapid developments in local, state and federal guidance and law, the appropriate approach for each employer will vary depending on the nature of the work, industries served, location(s), size, amongst other considerations. We recently updated these FAQs to provide you with the latest developments and best practices for your business. Access the FAQ here.

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SUB-Pay Plans: An Alternative to Severance Programs

SUB-Pay Plans: An Alternative to Severance Programs While the coronavirus pandemic wreaks havoc on the economy and jobs, employers consider disaster-related employee benefit structures, such as easily administered qualified disaster assistance relief programs and the financially attractive severance alternative known as “supplemental unemployment benefit plans” or “SUB-pay plans.” Compared to the typical severance program, restructuring a temporary or permanent layoff program as a SUB-pay plan can yield financial and tax savings exceeding 30% of an employer's typical severance costs while also providing FICA tax savings to employees of 7.65%. Access full article.

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COVID-19 — Tax Planning Opportunity for Defined Benefit Participants?

Much has been written about the new CARES Act distribution that allows impacted COVID-19 participants to access up to $100,000 in their tax-qualified defined contribution plan penalty-free and with income taxes spread over three years. However, the CARES Act legislation applies to all “eligible retirement plans” as defined in Code Section 402. So technically the CARES Act also applies to defined benefit plans. Consider, the following examples. A cash balance plan permits lump sum distributions to terminated participants. If this cash balance plan decides to add CARES Act distributions, and if its record keeper will administer the provisions, terminated participants who meet the CARES Act conditions can access their funds penalty-free and spread the income tax consequences over three years. In addition, if a plan will offer a lump sum window during 2020, then participants who qualify under the CARES Act distribution rules could elect a lump sum and use the...

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COVID-19 FAQs: For Employee Benefits & Executive Compensation

Coronavirus (COVID-19) raises serious concerns for employers of all shapes and sizes, across all industries and in every business sector. As the impact of COVID-19 continues to grow, many employers are faced with new challenges that affect not only their businesses and their employees, but the health and welfare, retirement and executive compensation plans and programs on which those employees rely. These new issues are arising in addition to the myriad benefit plan challenges that employers face each day. We address a number of frequently asked questions regarding health and welfare, retirement and executive compensation issues in the COVID-19 era. This includes not only questions about issues employers are currently facing, but questions about issues employers may face going forward. Given the rapidly evolving nature of the crisis, McDermott’s Employee Benefits and Executive Compensation team will periodically update these FAQs to provide you with the most...

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