...from the HR Perspective
Human Resource Update

June 2020 

Our firm's motto is:
The human resource is the most critical, most expensive, and the most fragile resource of modern business.
Good ergonomic policy strives to preserve an organization's investment in this most valuable resource - people. Ergonomics is the application of both physiological and, yes, psychological principles to the design of devices, products, and processes.
Ergonomics is not a new science, but a developing one. It started with the prevention of workplace accidents. Going back to the mid 1800's when industrialization started to get a hold, there was an apparent disregard for workplace safety. While an industrial worker would most likely not get hurt if the worker did everything right, if there was a small mistake or if the machine malfunctioned, severe injury or loss of life could result. Railroad workers also had their problems with little signaling, no procedures for between car coupling and uncoupling and riding on top of cars to set brakes. Sometimes sketchy equipment, roadbed and bridge construction contributed to accidents. Interestingly, not much is known about office workplace incidents in the 1800's and even into the mid 1900's.
Today's workplace has changed dramatically in three ways: 1) companies look for ways to prevent industrial accidents and injuries, 2) the United States has changed from a manufacturing culture to a service culture, and 3) we have a government department to develop and police practices and policies to protect worker safety: the Occupational Safety and Health Administration (OSHA). The result of these changes is that there are far fewer workplace injuries than there were in the past.
The COVID-19 situation has made us appreciate a subset of the change from a manufacturing culture to a service culture: the ever-growing dependence on office jobs, whether they be in administration, IT, or management. These are the individuals who can continue to work from home to perform their usual, and sometime additional tasks and responsibilities. Technology has allowed them to continue to work and interact as if nothing has happened. In a prior newsletter, we pondered if this change in the location in which people work would produce permanent change - will it be in an office or at home, or a combination of both such as sharing offices on different days, office "hoteling". Would the need for less office space nudge organizations to reduce their office space and save money? Would the advantages of working at home: no commuting time or expense, less lunch cost, fewer office type clothes, reduced need for child-care, etc. make workers ask to continue to do so?
This has been a long path to why should we be concerned about ergonomics at home. Once COVID-19 is a memory, if an organization either decides that an individual's workplace will be at home, or that an employee can elect to continue to work from home if they wish, does that organization now have an additional responsibility to advise the employee about workplace ergonomics? In either scenario, does the organization have a responsibility to advise the employee about workplace ergonomics and demand that the employee follow such advice? Should the organization require the employee to attest that they are following such advice? While most of us think of OSHA as protecting the industrial worker, it also has advice for office workers. The apparent OSHA policy regarding those who work at home may be found by clicking here. While OSHA will not hold employers liable for home offices, a prior letter to an employer may provide some insight regarding their thinking: https://www.osha.gov/laws-regs/standardinterpretations/1999-11-15
Additional OSHA material that an organization may wish to pass along to its work at home employees may be found here:  
Other advice may be found at:
We strongly suggest that if work at home becomes a norm at your organization that you develop a general ergonomics policy that is given to each employee. While OSHA says that it will not hold employers liable for employees' home offices, distributing said policy will help you preserve your organization's most valuable resource.
Michael F. Yates


If you find value in this newsletter please let us know. Feel free to call me with a comment and/or ask a question at any time (908-689-4200) or send me an email (myates@mfyco.com). We offer this timely information as another benefit of your relationship with our company. If you feel a friend or colleague would benefit from receiving our newsletter, please feel free to forward a copy. 

You can view all of our newsletters by clicking the 'newsletter archives' link at our company website www.mfyco.com.


In This Issue
WHD Offers Webinar For Business Owners and Employers
Just Out: IRS Extends COVID-19 Relief, Safe Harbors
Increased Flexibility For PPP Loan Forgiveness
MFYCO Facebook
Retirement Plan Implications for Small Business Owners
New SBA Guidance - Clarifying Key PPP Provisions
WHD Announces Families First Coronavirus Response Act
2020 Retirement Plan Limits
Terms of Use
WHD Offers Webinar For Business Owners and Employers
on Coronavirus-Related Paid Sick Leave Requirements
On June 23, 2020, the U.S. Department of Labor's Wage and Hour Division (WHD) in Kansas City announced that they with the IRS and the U.S. Small Business Administration will present a webinar to review paid sick leave requirements, tax relief and other coronavirus-related information critical for employers and business owners (release number20-1266-KAN). The webinar will provide information on the Families First Coronavirus Response Act (FFCRA) , including paid sick leave and paid child care leave and will also focus on eligibility, requirements for providing paid leave and tax credits for participating business owners.
Employers, business owners and other stakeholders are encouraged to join the webinar on June 30, 2020, from 9:00 a.m. to 10:30 a.m., CDT. Participants should join the audio portion by following the screen prompts after joining the webinar. Interested participants may test their connection by join a test meeting  prior to the meeting. Please note the Microsoft Edge browser will not connect to the meeting.
The FFCRA helps the U.S. combat and defeat the workplace effects of the coronavirus by giving tax credits to American businesses with fewer than 500 employees either to provide employees with paid leave for the employee's own health needs or to care for family members. Please visit WHD's " Quick Benefits Tips" poster for information about how much leave workers may qualify to use, and the wages employers must pay. The law enables employers to keep their workers on their payrolls, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.
WHD continues to provide updated information on its website and through extensive outreach efforts to ensure that workers and employers have the information they need about the benefits and protections of this new law. The agency provides additional information on common issues employers and employees face when responding to the coronavirus and its effects on wages and hours worked under the Fair Labor Standards Act and on job-protected leave under the Family and Medical Leave Act .
For more information about the laws enforced by WHD, call 866-4US-WAGE, click here.
F or further information about the coronavirus, please visit the Centers for Disease Control and Prevention. 

Just Out: IRS Extends COVID-19 Relief, Safe Harbors
The IRS has announced that it is extending relief to plan participants whose spouses are laid off and that take COVID-19 related distributions or loans from their retirement accounts, as well as new safe harbors for loan repayments. In Notice 2020-50, issued on June 19 , the IRS expands the categories of individuals eligible for these types of distributions and loans and provides guidance and examples regarding how qualified individuals will reflect the tax treatment of these distributions and loans on their federal income tax filings.
IRS Notice 2020-50 was issued to help retirement plan participants affected by COVID-19 take advantage of the CARES Actprovisions providing enhanced access to plan distributions and plan loans. More specifically, the notice provides guidance relating to the application of section 2202 of the CARES Act for qualified individuals and eligible retirement plans.
Notice 2020-50 expands the definition "qualified individual" to take into account additional factors such as:
  • reductions in pay;
  • rescissions of job offers;
  • an individual's delayed start date; and
  • adverse financial consequences to an individual arising from the impact of the COVID-19 coronavirus on a individual's spouse or household member.
Under Notice 2020-50, a qualified individual is anyone who:
  • is diagnosed with COVID-19 by a test approved by the CDC (including a test authorized under the Federal Food, Drug, and Cosmetic Act); or
  • whose spouse or dependent is diagnosed with COVID-19 by a test approved by the CDC (including a test authorized under the Federal Food, Drug, and Cosmetic Act); or
  • experiences adverse financial consequences because the individual, the individual's spouse or a member of the individual's household experienced the following due to COVID-19:
    • being quarantined;
    • being furloughed;
    • being laid off;
    • having work hours reduced;
    • being unable to work due to lack of childcare;
    • closing or reducing hours of a business that they own or operate;
    • reduced pay or self-employment income; or
    • having a job offer rescinded or start date for a job delayed.
Notice 2020-50 clarifies that:
  • implementation of these coronavirus-related distribution and loan rules is not mandatory;
    • qualified individuals can claim the tax benefits of coronavirus-related distribution rules even if plan provisions aren't changed; and
    • administrators can rely on an individual's certification that the individual is a qualified individual (and provides a sample certification).
Notice 2020-50 also notes that an individual must actually be a qualified individual in order to obtain favorable tax treatment. And it provides employers a safe harbor procedure for implementing the suspension of loan repayments otherwise due through the end of 2020, but notes that there may be other reasonable ways to administer these rules.

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Increased Flexibility For PPP Loan Forgiveness
The Paycheck Protection Program Flexibility Act of 2020 (PPP Flexibility Act), a measure that provides additional flexibility for small businesses under the Paycheck Protection Program was signed into law on June 5, 2020.
The Paycheck Protection Program Flexibility Act of 2020 modifies provisions related to the forgiveness of loans made to small businesses under the program implemented in response to COVID-19. The legislation would:
  • establish a minimum maturity of five years for a PPP loan with a remaining balance after forgiveness;
  • extend the expense forgiveness period from 8 weeks to 24 weeks during which a loan recipient may use such funds for certain expenses while remaining eligible for forgiveness; and 
  • raise the non-payroll portion of a forgivable covered loan amount from 25% to 40%.
PPP Flexibility Act also extends the period in which an employer may rehire or eliminate a reduction in employment, salary, or wages that would otherwise reduce the forgivable amount of a paycheck protection loan, though the forgivable amount must be determined without regard to a reduction in the number of employees if the recipient is either:
  1. unable to rehire former employees and unable to hire similarly qualified employees; or
  2. unable to return to the same level of business activity due to compliance with federal requirements or guidance related to COVID-19.
The bill revises the deferral period for paycheck protection loans, allowing recipients to defer payments until they receive compensation for forgiven amounts. Recipients who do not apply for forgiveness get 10 months from the program's expiration to begin making payments.
The bill also eliminates a provision that makes a paycheck protection loan recipient who has such indebtedness forgiven ineligible to defer payroll tax payments.
Please note that a Statement for the Record was issued clarifying that the extension of the covered period defined in section 1102(a) of the CARES Act should not be construed so as to permit the SBA to continue accepting applications for loans after June 30, 2020. The Statement for the Record provides the following: "Our intent and understanding of the law is that, consistent with the CARES Act as amended by H.R. 7010, when the authorization of funds to guarantee new PPP loans expires on June 30, 2020, the SBA and participating lenders will stop accepting and approving applications for PPP loans, regardless of whether the commitment level enacted by the Paycheck Protection Program and Health Care Enhancement Act has been reached."
Additionally, the legislation does not address the IRS' recent interpretation denying deductions for otherwise deductible expenses under the loan forgiveness of the PPP. Nor does it add any new funding to the program.

Rep. Richard Neal (D-MA), who is chairman of the House Ways and Means Committee, said in a June 3 webinar sponsored by Tax Analysts that he intends to clarify in the next stimulus bill that the loan forgiveness expenses are tax deductible

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Retirement Plan Implications for Small Business Owners Under  
Tax Cuts and Jobs Act
In December, 2017, Congress passed a massive tax-reduction law entitled the "Tax Cuts and Jobs Act," making substantial cuts in business tax rates. The top corporate tax rate was cut from 35% to 21%. For individual filers, moderate changes were made in the income tax brackets and tax rates, as well as the rules pertaining to deductions and tax credits, which resulted in most individuals realizing a modest tax decrease.
The corporate tax cut was undoubtedly generous. However, a large percentage of businesses are not corporations, but instead are LLCs, partnerships or individually owned. These types of endeavors are not taxed under the rules that apply to corporations, but instead are taxed using the individual brackets and rates of Form 1040 on their business income less expenses. (Note that the owners of Subchapter S corporations are also taxed in this manner.)
As discussed above, tax reductions for individuals and small businesses were not as dramatic as those for corporations. Therefore, in order to give some level of parity between corporations and small businesses in their tax treatment, Congress created a tax benefit for small business in the form of a special 20% deduction to the lesser of (1) their "Qualified Business Income," as defined in the law, and (2) their taxable income reduced by capital gains. For purposes of simplicity in this article, we will assume that the above determination has been done and simply refer to "income." The effect of this deduction is to lower the company's net amount on which taxes are calculated, thereby giving a special tax break to qualifying companies.
There are, of course, many hurdles, conditions and limitations that a company must traverse in order to determine whether or not it meets the qualifications for this deduction. Generally, however, small companies with lower levels of income can expect to qualify for this 20% deduction.
So, with this general background, lower taxes, etc. what's not to like?
To answer this, consider an example. Assume the company does not sponsor a retirement plan with tax-deferred contributions. Assume the income is $165,000, equal to net business profit after deductions. Using the 20% deduction applied to income, then the company's taxable income would be $165,000 - $33,000 = $132,000. If the tax rate is 22%, then income tax equals 22% x 132,000 = $29,040, and the tax savings would be 22% x $33,000 = $7,260.
Let us now change the example to assume that, instead of having no retirement plan with tax-deferred contributions, a plan is adopted with a contribution of $29,000, all tax-deductible. In this situation, the company's taxable income is calculated by first deducting the $29,000 retirement contribution from income, i.e. $165,000 -$29,000 = $136,000. Then applying the 20% deduction to this gives 20% x $136,000 = $27,200, so that taxable income equals $165,000 -$29,000 - $27,200 = $108,800.
We see that by adopting the tax-deferred retirement plan, the value of the 20% deduction has been sharply decreased, from $33,000 to $27,200. This is because, according to the law, the deduction percentage is applied to income less the retirement plan contribution.
In addition, the calculation of tax savings in this scenario recognizes that the $29,000 contribution to the retirement plan is not necessarily a tax savings, especially if the contribution is distributed back out fairly quickly. The contribution is a tax- DEFERRAL, which will incur the postponed taxes sometime in the future.
Therefore, the only real tax savings is the tax rate applied to the 20% deduction of income less the retirement deduction, which is 22% x $27,200 = $5,984. This is a reduction of $1,276 from the $7,260 savings in the example with no tax-deferred retirement plan.
So, in answer to the question posed earlier, -Something possibly not to like is that the presence of a tax-deferred retirement plan has the effect of immediately lowering the value of the 20% deduction.
Does this mean that tax-deferred retirement plans should be re-considered for a small business? The answer is that, yes, those plans should be examined, but so should all of a company's benefit plans, because the new law has made it imperative that a thorough ground up evaluation should be done for each business covered.
These studies may reveal that:
  1. It might be more advantageous to switch over to a Roth after tax 401(k) plan instead of the tax deferred approach, especially if future tax rates that would apply to a business are estimated to stay close to current levels.
  2. It may turn out to be more beneficial for the owner not to contribute to any plan, but instead to take the money as ordinary income, invest it and then pay capital gains on it when used.
  3. For those with higher incomes, the study might show that the use of a tax-deferred plan is the correct approach, since the 20% deduction is phased out at higher income levels.
In conclusion, the new law is complex. Each company has its own quirks and characteristics, all of which have good, bad or neutral implications under the new rules. If you are a small business owner, then you should determine whether or not your current benefit structure has the best fit for your company's profile.
Please let us know if you wish our assistance in this endeavor.


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New SBA Guidance - Clarifying Key PPP Provisions
The U.S. Small Business Administration (SBA), in consultation with the Treasury Department, has issued new guidance providing important clarifications for those taking advantage of the Paycheck Protection Program.  
The  Interim Final Rule released June 11  revises the SBA's Interim Final Rule published April 15, 2020, to address changes included in the Paycheck Protection Program Flexibility Act (PPP Flexibility Act), signed into law on June 5, that provides additional flexibility regarding loan maturity, deferral of loan payments and forgiveness provisions.
One key provision in the PPP Flexibility Act is a lowering to 60% the requirement that 75% of a borrower's loan proceeds must be used for payroll costs and that 75% of the loan forgiveness amount must have been spent on payroll costs during the 24-week loan forgiveness covered period.
When the PPP Flexibility Act was under consideration in the Senate, concern was raised that a technical glitch in the House-approved bill raising the non-payroll portion of a forgivable covered loan amount from 25% to 40% would result in a "cliff effect," such that some borrowers would not be eligible for any loan forgiveness if they did not fully meet the 60% threshold for payroll costs.
The new SBA guidance, under the Interim Final Rule, clarifies that if a borrower uses less than 60% of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for "partial loan forgiveness," subject to at least 60% of the loan forgiveness amount having been used for payroll costs. The Interim Final Rule states that, "While the Flexibility Act provides that a borrower shall use at least 60 percent of the PPP loan for payroll costs to receive loan forgiveness, the Administrator, in consultation with the Secretary, interprets this requirement as a proportional limit on nonpayroll costs as a share of the borrower's loan forgiveness amount, rather than as a threshold for receiving any loan forgiveness."
The guidance further explains that this interpretation is consistent with the new safe harbor in the PPP Flexibility Act (detailed below), which provides that if a borrower is unable to rehire previously employed individuals or similarly qualified employees, the borrower will not have its loan forgiveness amount reduced based on the reduction in full-time equivalent employees.
In addition, the new guidance also implements the changes listed below, that were enacted as part of the PPP Flexibility Act:
  • Extends the loan forgiveness "covered period" from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement. Borrowers who have already received PPP loans retain the option to use an eight-week covered period.
  • Provides a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees (1) for borrowers that are unable to return to the same level of business activity the business was operating at before 2/15/2020, due to compliance with requirements or guidance issued between 3/1/2020 and 12/31/2020, by the Secretary of Health and Human Services, the Director of the CDC, or the Occupational Safety and Health Administration, related to worker or customer safety requirements related to COVID-19 and (2) to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on 2/15/2020, and unable to hire similarly qualified employees for unfilled positions by 12/31/2020.
  • Increases to five years the maturity of PPP loans that are approved by SBA-based on the date SBA assigns a loan number-on or after June 5, 2020.
  • Extends the deferral period for borrower payments of principal, interest and fees on PPP loans to the date that SBA remits the borrower's loan forgiveness amount to the lender. If the borrower does not apply for loan forgiveness, the deferral payment period is 10 months after the end of the borrower's loan forgiveness covered period.
In addition, the new rules confirm that June 30, 2020, remains the last date on which a PPP loan application can be approved.
As part of the new guidance, the SBA issued modified borrower  and lender  application forms and plans to soon issue a modified loan forgiveness application implementing these changes to the PPP.
A separate Interim Final Rule released June 12 revises the SBA's April Interim Final Rule by changing the eligibility requirement related to felony convictions of applicants or owners of the applicant.  

 What would you like to see in a future issue?

Contact our office with your suggestions.

   email: info@mfyco.com
WHD Announces Families First Coronavirus Response Act (FFCRA)
Interactive Online Tool For Employees
The Wage and Hour Division of the Department of Labor (WHD) announced on June 23 (release number 20-1249-NAT) the creation of an online interactive tool for employees to determine if they qualify for paid sick leave or extended family and medical leave to cover time away from work for reasons related to the coronavirus. Click here to go to the online tool.
The tool guides workers through a series of questions to help them determine if the paid leave provisions of the Families First Coronavirus Response Act (FFCRA) apply to their employer. If the provisions do apply, the tool helps them learn whether they qualify for either paid sick leave or extended family and medical leave under that law.
The FFCRA requires certain employers to provide employees with up to two weeks of paid sick leave if they are unable to work or telework due to a federal, state or local quarantine or stay-at-home order. Employees are also eligible if a healthcare provider has advised them to self-quarantine for reasons related to the coronavirus or are seeking diagnosis for coronavirus symptoms. Paid sick leave may also be available to workers caring for someone subject to a quarantine order or self-quarantining based on a healthcare provider's advice, or caring for a child whose school, place of care or child care provider is closed or unavailable due to the coronavirus. Up to 10 additional weeks of expanded family and medical leave is available for workers forced to miss work to care for their children because the pandemic has closed or made unavailable their school, place of care or child care provider.
Soon to come will be an interactive online tool for employers.

WHD continues to provide updated information on its website and through extensive outreach efforts to ensure that workers and employers have the information they need about the benefits and protections of this new law. The agency also provides additional information on common issues employers and employees face when responding to the coronavirus and its effects on wages and hours worked under the Fair Labor Standards Act and on job-protected leave under the Family and Medical Leave Act .
For more information about the laws enforced by the WHD, call 866-4US-WAGE, or click here.  

2020 Retirement Plan Limits
All limits are based on the calendar year.  
Maximum Annual Defined Benefit
Maximum DC Annual Addition ($$)
$ 57,000
$  56,000
$  55,000
Maximum 401(k) Deferrals
$ 19,500
$  19,000
$  18,500
Older EE Catch-Up Contribution
$   6,500
$    6,000
$    6,000
Maximum Plan Compensation
Highly Compensated Threshold
Key Employee in a Top-Heavy Plan
Income Subject to Social Security Tax
PBGC Maximum Monthly Guarantee*
Maximum DC Annual Addition (%)
Social Security Tax - Employee
Social Security Tax - Employer
Medicare Tax**
DC Plan Deduction Limit
Definition of Compensation for DC Plan Deduction Limit
*Life Annuity at age 65
** Individuals with earned income over $200,000 pay an additional 0.9% in Medicare taxes

If you have not received our business card with these numbers printed on it and would like one, please let us know! We would be happy to mail you one (or a few to share!)

Michael F. Yates & Company, Inc. 
101 Belvidere Avenue
P.O. Box 7
Washington, NJ 07882-0007 

fax: 908-689-6300
email: info@mfyco.com


about MFYCO ... 

  • Michael F. Yates & Company, Inc. can help you with a variety of services ranging from retirement plans to providing results-oriented survey instruments, training and development programs for your employees. Our products and services are intended to help you maximize the effectiveness of your Human Resources function.
  • These products and services incorporate our years of experience so that you receive rapid results and exceptional value. From onsite consulting, to strategic business integration, to Web enablement, we understand how Human Resources can be applied to solve your problems and achieve your goals. As a result, we can help you get the most out of your investment and turn your most precious resource into a competitive advantage.
  • We offer Consulting, Retirement Planning, Pension and 401(K) both qualified and non qualified Plans, Welfare Plans, Communications, Computer Systems, Executive Plans, Compensation, Mergers, Acquisitions, Divestitures and Other Services. 
  • We offer a true and honest, Client Partnership.

Take the Michael F. Yates & Company, Inc. challenge!

Call us today ... 908-689-4200 




Our staff and firm are proud
of the following professional organizations: 

Society of Actuaries
American Society of Pension Professionals & Actuaries

Society for Human Resource Management
(Sussex-Warren NJ Chapter)
GAPS (Global Association Pension Services)


 American Management Association


National Federation of Independent Business

Better Business Bureau



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Michael F. Yates & Company, Inc. 
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Concluding Note

As always, any statements regarding federal tax law contained herein are not intended or written to be used, and cannot be used, for the purposes of avoiding penalties that may be imposed under federal tax law or to market any entity, investment plan or arrangement.