Dairy Farm Employers Have New Opportunities and Obligations Under Recently Enacted Coronavirus Legislation

Joel Hastings

Ashlie Johnson

To help dairy farmer and ag small business employers keep their employees safe at work during the COVID-19 pandemic and to take advantage of the programs recently enacted to assist them, we spoke with an expert on employee matters, Ashlie Johnson, owner of Brooke Human Resource Solutions near Madison, Wisconsin. Her firm assists many smaller companies with HR issues involving workplace safety, employee wellness and issues of recruitment and retention. She helps her clients conform to labor laws and regulations. She recently spoke on a webinar with Dairy Herd Improvement organizations.

Editor’s note: Since we conducted this interview with Ms. Johnson, the SBA announced that the $349 billion authorized for the Paycheck Protection Program (PPP) has been exhausted. Some lenders are still taking loan applications with the expectation that additional funding will be provided in the next round of legislation.

She responded to our questions as follows:

DairyBusiness: What should I do and what is my obligation as an employer to safeguard employees with instructions, along with social distance, handwashing and cleaning facilities?

Johnson: The Families First Coronavirus Response Act (FFCRA)offers some protections for workers. In the past, these kinds of regulations affected firms with over 50 employees. But in this case, it affects every business, including farms with payroll employees, with 500 or fewer employees.

When making plans, employers should consider levels of occupational risk, local disease severity, and the potential impact of disease on vulnerable employees and customers. The Occupational Health and Safety Administration has developed guidance to help assess occupational risk and lists a number of examples to help workplaces prepare for COVID-19.

Farm employers will need to provide adequate safety equipment and implement social distancing measures to keep workers safe, even if those safety measures might cause a reduction in productivity.  (See the Department of Labor’s Guidance on Preparing Workplaces for COVID-19 for additional information and resources.)

Here are some guidelines:

  • Access to the dairy farm by non-essential persons should be limited.
  • Wash your hands often with soap and water for at least 20 seconds. If soap and water are not available, use an alcohol-based hand sanitizer.
  • Wash your hands before you eat after working in the milking parlor or other areas of the dairy.
  • Avoid touching your eyes, nose and mouth with unwashed hands.
  • Avoid close contact with people who are sick, both on and off the dairy.
  • Stay home when you are sick.
  • Cover your cough or sneeze with a tissue, then throw the tissue in the trash.
  • Always wear milking gloves.
  • When you get home after working in the dairy, always take a shower and wash your work clothes.
  • Clean and disinfect frequently touched objects and surfaces. See the CDC COVID-19 Disinfection Guidance.
  • Social distancing reducing the number of close physical and social contacts with one another should be practiced, such as when there is a need to get supplies from a farm and feed store.

Editor’s note: For a video presentation of this information by Ms. Johnson, go to

https://www.dairybusiness.com/ashlie-johnson-of-brooke-human-resource-solution-on-financial-information-for-payroll-with-covid-19/

 

DairyBusiness: We understand that paid sick leave needs to be provided for every employee. Under what circumstances and what about my farm’s current policy of paid time off?

Johnson: Paid time off must be provided to an employee under these circumstances:

  1. When a Federal, State, or local quarantine or isolation order or if the employee
  2. Is advised by health care provider to self-isolate.
  3. Is experiencing symptoms of COVID-19 and is seeking a medical diagnosis.
  4. Is caring for an individual subject to quarantine/isolation order or who has been advised by health care provider to self-isolate.
  5. Is caring for a minor (<18) child whose school is closed or childcare provider is unavailable.
  6. Is experiencing “any other substantially similar condition specified by the Secretary of Health and Human Services in conjunction with the Secretary of the Treasury and Secretary of Labor.”

DairyBusiness: What is the amount of leave that must be provided?

Johnson: Up to 80 hours for full-time employees. For part-time employees, average number of hours employee works during 2-week period. This is determined based on number of hours employee was scheduled to work per day over the prior 6-month period.

DairyBusiness: Is there a cap on the dollar amount of leave?

Johnson: Sick leave taken for the purposes listed in 1-3 above is paid at 100% and capped at $511 per day/$5,110 aggregate. Sick leave taken for the purposes listed in 4-5 above is paid at 2/3, capped at $200 per day/$2,000 aggregate.

Employees can use earned PTO to “top up” but not be more than 100% of these amounts but employers cannot require employees to use PTO during this time.

Here are some links to FFCRA resources: Families First Coronavirus Response Act: Employee Paid Leave Requirements

 





 

DairyBusiness: What are the requirements for staying home sick? What about employees who don’t have symptoms but say they are concerned about catching the virus? What about taking the temp of my employees? Can I send an employee home?

Johnson: Employees are asked to use their best judgement here.  Being “concerned” is not a covered reason for staying home and is not paid by the FFCRA.  The employee has the right to refuse to come to work and you can handle that as you would any other time that an employee might not come to work and following your existing policy is acceptable. But employers are encouraged to be lenient to the extent that they can.

If you have the ability to take the temperature of your employees it is allowed.  the Centers for Disease Control and Prevention (CDC) and state and local health authorities have issued related precautions, saying  "employers may measure employees' body temperature. However, employers should be aware that some people with COVID-19 do not have a fever." Likewise, it is important to note that some people with a fever do not have COVID-19.

As an employer, you can always send someone home. Just bear in mind that if you do, you need to comply with the FFCRA.

DairyBusiness: What if an employee must care for a child home from school or, worse yet, an ill family member? 

Johnson: These are two separate issues.  The expanded FMLA now covers the need to stay home with a child who does not have school or childcare available for up to 12 weeks. The first two weeks are paid by the emergency sick leave provision of the FFCRA while the next 10 weeks would be paid under the FMLA provision.  Please note the cap on this is 2/3 pay or $200 per day.

If you have a sick family member this would only be covered by the sick leave provision, not FMLA and is also at the 2/3 level of pay

DairyBusiness: What is the definition of “family”?

Johnson: The language of the FFCRA has expanded “family” to be “individual”, meaning that a specific familial relationship is not required in order for the provision to apply.

DairyBusiness: We’ve seen information about businesses getting reimbursed for this expense of paid sick leave. How does that work?

Johnson: This is the FICA Deferral Provision of the CARES Act. It includes these elements.

  • Dollar-for-dollar credit: Employers are provided a “dollar-for-dollar” tax credit for wages paid as either paid sick leave or paid FMLA leave, up to the maximum caps for each type of leave.
  • FICA Payroll Tax: The amounts are credited against the employer’s FICA payroll tax payments on wages due to all employees (even those who did not take either type of leave).
  • Refunds to employer: If the credits exceed the amount due, the excess is refunded to the employer and must be included in the employer’s gross income.

 





 

DairyBusiness: There is also Payroll Protection Program in the CARES Act. What is this about?

Johnson: While none of these programs are under the jurisdiction of the U.S. Department of Agriculture (USDA) and therefore not exclusively targeted to farmers, many farmers are looking to the Small Business Administration (SBA) to make sure farmers are treated just like any other small business and are able to receive emergency assistance.   Questions do still remain on whether or not businesses must also fall under the revenue cap set by SBA for defining “small business”, so farmers should work with their lenders.

According to USDA, farms are eligible if: (i) the farm has 500 or less employees, OR (ii) it fits within the revenue-based sized standard, which is on average annual receipts of $1M.

Additionally, farms can qualify for PPP if it meets SBA’s “alternative size standard.” The “alternative size standard” is currently: (1) a maximum net worth of the business not more than $15 million, AND (2) the average net income Federal income taxes of the business for the two full fiscal years before the date of the application be not more than $5 million.

PPP loans are capped at $10 million and can cover up to two months of a business’s average monthly payroll costs (plus an additional 25 percent for non-payroll expenses). Although the payment is made as a loan, any loan proceeds that a business uses to cover payroll costs, mortgage interest, rent, and utilities during the eight-week period after the loan is made can be forgivable. However, this forgivable amount will be reduced if businesses don’t maintain full-time employees (as of February 2020), decrease salaries or wages by more than 25 percent or spend more than 25 percent of the loan on non-payroll costs.

The interest rate on PPP loans is 0.5 percent, and loan payments for any non-forgivable costs will be deferred for 6 months. The loan term is up to two years.

There is also the Employee Retention Credit

  • Employers who receive PPP Loans do not qualify for the retention credit
  • All employers are eligible for a credit up to $5,000.00, representing 50% of the first $10,000 of wages paid this year
  • Credits are limited to the total employer social security liability for the quarter but reduced by the FFCRA credits taken against those same taxes. Limits also apply to Qualified R&D credits and WOTC credit for employment of qualified veterans
  • Employers with 100 or fewer employees can take credit for all employees
  • Employers with 100 or more employees can only apply the credit to employees furlough whose wages are continued for business closure relative to COVID-19
  • Employers are eligible for this credit if:
    • their operations were suspended due to a COVID-19 related order, OR
    • they have 50% less cash receipts for the same period the prior year unless the quarter prior to the credit period has increased gross receipts of 80% the prior year
  • Employers may take this credit against their current employment tax liability

Because there are multiple options, it is important to seek out a knowledgeable lender and work closely with them on the application and documentation process.

DairyBusiness: In the case of dairy farms, we still need the employees working. Can I still be reimbursed… or is this only for businesses that close or for employees who are sent home if there is no work?

Johnson: You can still be reimbursed.  Even businesses who are remaining open are eligible for these programs; they just need to determine which fits their needs and go through the application process.

Borrowers under the PPP are eligible for loan forgiveness equal to the amount of costs incurred and paid during the 8-week period beginning on the loan origination date for:

  • Payroll costs;
  • Payments of interest on mortgage obligations incurred before February 15, 2020;
  • Payment on rent obligations under a lease in force before February 15, 2020; and
  • Utility payments for electricity, gas, water, transportation, telephone, or internet if the service began before February 15, 2020.

To receive loan forgiveness, the borrower must submit an application to the lender servicing the loan with appropriate verifying documentation, a certification by an authorized representative, and other documentation required by the SBA. Loan forgiveness will not be given in the absence of such documentation. Lenders must make a decision on loan forgiveness within 60 days of receiving the borrower’s application.

DairyBusiness: Does it include all payroll costs? FICA, Medicare, income tax withholding?

Johnson: Payroll costs include:

  • The sum of payments of any compensation with respect to employees that is a:
  • 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; or
  • Payment of state or local tax assessed on the compensation of employees; and
  • The sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in 1 year, as prorated for the covered period.

Payroll costs do not include:

  • the compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the covered period;
  • taxes imposed or withheld under chapters 21, 22, or 24 of the Internal Revenue Code of 1986 during the covered period;
  • any compensation of an employee whose principal place of residence is outside of the United States;
  • qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act; or
  • qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act.

DairyBusiness: Where can I get this loan? Is any collateral or personal guarantee required?

Johnson: Starting April 3rd, farmers and other small businesses can apply for PPP loans through existing SBA lenders, or through any federally insured bank or credit union, and Farm Credit System institutions. Other lenders will be available to make these loans as soon as they are approved and enrolled in PPP

The CARES Act also provides $10 billion to expand SBA’s Economic Injury Disaster Loan (EIDL) program by adding emergency grants of up to $10,000 that do not need to be repaid. While smaller in scope than PPP loans, EIDLs can cover a broader range of business-related expenses and are more likely to help farmers and food businesses overcome the temporary loss of revenue related to the COVID-19 crisis.

DairyBusiness: Who is eligible for this part of the program?

Johnson: Small businesses, farms and non-profit organizations with fewer than 500 employees are eligible to obtain an EIDL, including the new emergency EIDL grant.

As regulations and guidance are evolving in some cases, it is important to watch for additional guidance on the FFCRA, CARES and other Covid-19 related topics.

Here are some additional resources:

Ashlie B. Johnson, PHR is owner of Brooke Human Resource Solutions, Madison, Wis. She may be contacted by phone: (608) 490-2200 or email  ajohnson@brookehrs.com and her website www.brookehrs.com

Ashlie Johnson of Brooke Human Resource Solution video on financial information for payroll with COVID-19:

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