There are a few PPP approvals that have come down and even fewer of those approvals have actually been funded. If you still have your employees on payroll, you are likely struggling with the best way to get them paid with the least impact on your delicate financial situation. This is where the Employer Tax Credits may be of value. The options outlined below are based on this assumption: your practice is closed to non-emergency procedures but you are seeing emergency patients.
To the extent you have staff members with minor children at home:
- Option 1: Family Leave. You will pay them at least 2/3 of their regular salary for their typical number of hours. We recommend paying them 75% of their typical rate (but that can’t be less than $8.75/hour or more than $200/day). These wages are eligible for Family Leave credit. You will have to front the cash; but will get back 100% of the wage amount from the IRS by shorting your 941 tax deposits or requesting a refund. If you are using a payroll service, you will want to designate these hours as Family Leave hours. Any hours actually worked will be paid as usual and not available for the credit but we would recommend all actual hours be reserved for staff members with no minor children at home.
- Option 2: Unemployment. It’s going to be far reduced from their usual pay. The $600 federal boost is supposed to help compensate for that reduction but no one has seen those funds yet so the employees will be left waiting. Any hours actually worked will reduce their benefits.
For the staff with no minor children at home there is no leave available
- First: To the extent feasible, use these employees for your emergency patients. For those hours, you will pay them as usual and no credit is available; the theory being that you have patient revenue coming in to cover these costs.
- Then Option 1a: If you take a PPP loan, there is no further relief available for these employees. You will have to cover this payroll entirely (remember your PPP loan isn’t received yet). You should be soon receiving your EIDL advance which will help. If you can’t cover the payroll, you have no choice but to furlough them.
- Or Option 1b: If you do not take a PPP loan, there is an Employee Retention credit available. In this case you can pay leave to the staff to bring them up to their typical hours—we would recommend this be paid at 75% of their typical rate (but that can’t be less than $8.75/hour or more than $200/day). These wages will be eligible for the Employee Retention credit. This credit is not as good because it’s only worth 50% of the wages paid up to $5K per employee. But it’s not bad. Again you have to front the cash, but will get back 50% of the wages from the IRS by shorting your 941 tax deposits or requesting a refund. If you are using a payroll service, you will want to designate these hours as some type of general leave so it will be easy to tell which credit to which they apply.
- Option 2: Unemployment.
Once you receive your PPP funds, beginning with the next payroll you will pay staff from those funds. The hope is the PPP money lasts until your practice is up and running. But what if it isn’t?!? Don’t panic—we’ll help you navigate that when and if needed. Some of the credits would still be available to you, you may have received EIDL loan proceeds by then, or unemployment is still available.
Here’s one possible decision tree that outlines the possibilities above. Your specific situation could modify the scenario so this will not necessary apply in all situations.