The coronavirus pandemic is creating unprecedented challenges, both for public health and the economy—and those challenges are causing many businesses to lay off their employees and shutter their doors, at least for the time being.
If your business is having to lay off employees, the process can feel overwhelming and confusing. Let’s take a look at some of the most common questions about how to navigate employee layoffs and terminations in California—and, more importantly, the answers you need to navigate layoffs during the coronavirus:
Q: What information do I need to get my employees to ensure they have what they need to file for unemployment benefits?
A: When your employees file unemployment insurance (UI) claim with the Employment Development Department, they’ll need the following information:
Your official company name (as it appears on their pay stub or W2)
Company contact information, including both mailing and physical addresses, direct supervisor’s name, and company phone number
Their last physical workday
Gross earnings in the last week they worked, beginning with Sunday and ending with their last day of work
If you want to make the process easier for your employees, you can provide this information at their termination meeting so they have it readily available when they apply for UI benefits. (You can access their earnings information through Hourly’s Payroll function and information on hire date on each employee’s individual W4.)
Q: How do I confirm my employee’s unemployment status with the Employment Development Department?
A: Once your employee files a UI claim, you’ll receive a Notice of Unemployment Insurance Claim Filed from the EDD through the mail. Unless you wish to dispute the claim, there’s nothing you need to do. If there is any incorrect information on your employee’s claim (for example, the time of termination), you’re required to return the form with the correct information within 10 days of receipt.
Q: Is it even legal for me to lay off all of my employees—especially suddenly and without warning?
A: Under normal circumstances, the California WARN Act requires employers to give employees and state and local representatives 60 days notice before moving forward with mass layoffs.
However, we’re not operating under normal circumstances—and many businesses are having to close their doors immediately, both to protect their employees’ safety and to comply with the current statewide shelter in place order.
In response, Governor Newsom has issued Executive Order N-31-20, which temporarily suspends the WARN Act’s 60-day notice requirement. There are still, however, a number of requirements employers have to meet in order to remain compliant with the WARN Act, including providing written notice to all affected employees, the EDD, the Local Workforce Development Board, and the chief elected official of each city and county government where the closure and/or layoffs are taking place. (For more on WARN Act requirements and what needs to be included in your written notice, visit the EDD’s COVID-19 WARN FAQ page.)
Q: When do I give my employees their last check—and what needs to be included?
A: The appropriate time to give your employee their final paycheck is at their termination meeting. Their final paycheck needs to include any outstanding money owed to the terminated employee, including any accrued PTO.
To process and print a termination check through Hourly, follow these steps:
Choose “Payroll” in the navigation bar;
Choose the employee you are terminating;
Ensure the direct deposit option is off;
Confirm all hours worked during the week are entered into the timesheet;
Navigate to “Manual Timesheet” and add any accrued PTO hours and/or sick pay;
Return to the Payroll screen;
Select the terminated employee;
Click “Pay” in the upper right of the screen;
Choose the “Print at Home or Office” option;
Click “Run” at the bottom right of the screen;
Confirm Payroll Run
Once you go through these steps, the check will be sent straight to your email address on file—that way, all you have to do is print and you’re ready to go.
Need compatible checks for your printer? You can order them on Amazon.
Q: With social distancing in full effect, how do I make sure my employees get their final paycheck in a timely manner?
A: Under normal circumstances, you would terminate your employee and give them their final paycheck in person. But the coronavirus—and accompanying social distancing—is changing the way we interact; in order to protect the safety of yourself and your employees, an in-person meeting might not be possible. You still, however, need to get them their final paychecks in a timely manner.
Unfortunately, this is a new situation—and, as such, there’s no clear answer as to how to handle the situation and what constitutes a “timely manner.” If you’re unclear, talk to your lawyer or call the EDD or the Labor Commissioner’s Office for additional guidance.
Q: What about insurance?
A: If you offer health, dental, vision, and/or medical reimbursement plans, you’ll need to provide terminated employees with a COBRA notice outlining their rights for continued coverage. You’ll also need to contact your insurance carrier and fill out any paperwork necessary to terminate the employee’s coverage.
Q: What other steps do I need to take when terminating an employee?
A: There are a few other housekeeping issues you’ll want to take care of when laying off employees, including:
Collecting any company property (cell phones, tools, company computers, etc.)
Terminating access to any sensitive company information
Canceling or removing access to any company accounts or credit cards
Q: Is there any support available to help employers prevent layoffs during the coronavirus pandemic?
A: There is. Both the federal government and the state of California are moving forward with initiatives to help employers during the coronavirus pandemic.
Rapid Response Team
If you’re considering large-scale layoffs or closing your business, Rapid Response Services may be able to help. Rapid Response is a business-focused program designed to assist companies facing potential layoffs and closures. If you need assistance, the Rapid Response team can meet with you to discuss your options—including ways to potentially avoid layoffs or closing your business—as well as provide transitional services to affected workers facing job losses.
Payroll tax extensions
If you’re experiencing financial hardship as a result of COVID-19, the EDD is allowing businesses to request an up to 60-day extension to file state payroll taxes and/or deposit state payroll taxes without interest, penalties, or fines. In order to qualify, businesses need to request an extension in writing within 60 days of the original due date of the payment or return.
Q: What should I do if I have to slow down operations or cut down on employee hours? Do I have to lay off my team so they can apply for unemployment?
A: The state of California’s Unemployment Insurance (UI) Work Sharing Program is an alternative that may be able to help prevent layoffs in your business—while also making sure your employees are eligible for unemployment benefits while their hours are reduced or cut.
There are strict employer requirements for the Work Sharing Program, including restrictions on how much hours and wages can be reduced. For the full eligibility requirements and to apply for the Work Sharing Unemployment Insurance plan, visit the EDD’s website.
Q: How can I make sure terminating my California employees doesn’t result in legal action or a wrongful termination suit?
Clearly, the coronavirus is the reason behind the vast majority of layoffs at the moment. But regardless of the reason, in order to protect yourself, your business, and your employees, it’s important to make sure you follow California law, federal law, and applicable employment law (state or federal) when ending the employment relationship.
While California is an at-will employment state (which means California employers can end the employment relationship at any time, for any reason), there are certain exceptions. Moving forward with a layoff or a firing for any of the following reasons could result in an accusation of wrongful termination:
Discrimination, including based on gender identity, age, race, disability, citizenship status, national origin, medical status, sexual orientation, or religion;
Retaliation (for example, for filing a worker’s compensation claim, taking medical leave, or coming forward with sexual harassment allegations); or
Violation of Public Policy (for example, refusing to work in an unsafe or illegal work environment or refusing to partake in illegal activity as part of their job responsibilities)
If you have an employment contract in place with your employees, it’s also important to ensure that you comply with the terms of your contract during the termination process.
With coronavirus impacting many small businesses, many have been asking about what’s available in terms of self-employed unemployment benefits and small business relief. As part of the Senate’s $2T coronavirus stimulus bill passed on March 25, 2020, unemployment benefits are being extended to all workers including freelancers, gig-economy workers, and other independent contractors. For small business owners, emergency grants of up to $10,000, a Paycheck Protection Program (100% federally guaranteed loans to small businesses), and a payroll tax credit to help retain employees are available.
CARES Act Aid Comparison Chart (PPP vs EIDL vs Unemployment for Self Employed) for Small Businesses
As we’ve heard how challenging it can be to fully understand what’s included in each CARES Act relief option that applies to small businesses, we put together a comparison chart summarizing PPP loans for self-employed vs EIDL vs Unemployment for Self Employed Individuals and the differences between them. To view the chart below, click here.
CARES ACT Aid Comparison Chart for Small Businesses
Self Employed Unemployment
If you are unemployed, laid off, or a freelancer (sole-proprietor or single-member LLC) out of work, here’s what’s new:
Eligibility for unemployment insurance extended for all workers, not just full-time employees.
The federal government will provide an extra $600 per week for up to 4 months on top of your state’s current state unemployment benefits.
State unemployment benefits range from $200 to $550 per week on average and are collected between 12 and 28 weeks.
For additional information, check out the FAQ below.
Is the coronavirus stimulus package finalized?
Yes. Both the Senate and House of Representatives have passed the plan and Donald Trump has signed the bill as of Friday, March 27.
Can you get unemployment if you are self-employed?
Self-employed and part-time workers are not usually eligible for unemployment benefits. However, the new bill extends unemployment to self-employed people and part-time workers. Self-employed people include gig workers, freelancers, and independent contractors. Basically, those who cannot work due to coronavirus-related reasons would be more likely to qualify for benefits.
Who is eligible?
Under the new plan, you would be eligible if you meet any of the example conditions below:
You are self-employed or part-time and lost work due to a coronavirus reason
You received a COVID-19 diagnosis, are experiencing symptoms, seeking a diagnosis, or caring for a member of your family/household who received a diagnosis AND you’re unemployed, partly unemployed, or cannot work as a result
You rely on a facility, daycare, or school to care for a child or other family member so you can work, and that facility has closed due to coronavirus
You must self-quarantine on the advice of a healthcare provider because of exposure to coronavirus
You are unable to get to work because of an imposed quarantine
You were about to start a new job but can’t get there now because of an outbreak
You were immediately laid off from a job and don’t have enough work history to qualify for benefits under normal conditions
You are unemployed, partly unemployed, or unable to work because your employer shut down your workplace
Who is not included in the bill?
Workers who are able to work from home (Note: This seems to reference corporate workers and not self-employed or part-time workers who work from home.)
Those receiving paid sick leave or paid family leave
New entrants to the workforce who cannot find jobs
People who quit (or want to quit) because they are afraid of being at greater risk of contracting coronavirus if they continue to work (However, if you had to quit because of a healthcare provider-recommended quarantine, or something similar, you would be eligible.)
How much would you get?
How much you get depends on which state you live in and would be calculated based on your previous income. Additionally, eligible workers would get an extra $600 per week from the federal government on top of their state’s weekly benefit.
So for example, the weekly benefit in California is a maximum of $450. With the additional $600 from the federal government, eligible Californians could receive self-employed unemployment benefits up to $1050 each week. States can send the payment in two separate amounts or in one payment, but it must be paid weekly.
How long would benefits last?
This also varies by state. Most states provide benefits for 26 weeks, although some provide benefits for less. The new bill adds an additional 13 weeks for all eligible workers. 39 weeks is the maximum time eligible workers can receive benefits, but this may be less depending on the state.
The extra $600 payment would last for up to four months and cover weeks of unemployment ending July 31.
How long would the self-employed unemployment program last?
The extended program would be open to workers who were newly eligible for unemployment benefits starting Jan. 27, 2020, through Dec. 31, 2020.
How do I apply?
Unemployment benefits will be administered by your state’s unemployment offices. To Apply, find your state here and click on the link to apply with your state’s office. Or for more information about filing for self-employed unemployment benefits, check this unemployment benefits finder.
Please note: According to careeronestop.org, “States are in the process of implementing these new rules and may not have updated information immediately. If you are out of work or have had your hours reduced you should continue to follow your state’s guidelines for filing for unemployment. Many states are experiencing extensive traffic and ask filers to be patient and persistent.”
Coronavirus Stimulus Package
Coronavirus Stimulus Package Relief
If you are a small business owner, here’s what’s new:
Emergency grants of up to $10,000 as part of an Economic Injury Disaster Loan
Paycheck Protection Program (PPP loan for self-employed individuals and small businesses)
A payroll tax credit to help retain employees
Economic Injury Disaster Loan (Includes emergency grant up to $10K)
Small businesses may apply directly to the federal Small Business Administration to receive an economic injury disaster loan that may include a grant of up to $10,000 that does not need to be paid back. The money would be paid out to business owners within three days of their application’s submission. It can be used to maintain payroll, cover paid sick leave, and service other debt obligations.
Update as of 4/9/2020
The amount of the grant depends upon the number of employees in your business. In an email received from the SBA on April 9, they say, “To ensure that the greatest number of applicants can receive assistance during this challenging time, the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. The Advance will provide $1,000 per employee up to a maximum of $10,000.”
Paycheck Protection Program Loans (PPP loan for self-employed individuals and small businesses)
As part of the Senate bill, $350B is being designated for small business loans (an initiative known as the Paycheck Protection Program) that may be granted and partially forgiven if borrowers maintain their payroll during the crisis, restore it afterward, or spend their loan money on rent for a leasing agreement or paying utilities, among other things.
Note that we believe you cannot apply for both unemployment and PPP. PPP is used to pay payroll, and if you’re on unemployment you’re saying you’re not on payroll (this would apply to both companies and sole proprietors). Because of this, you may want to calculate how much you would receive from Unemployment and compare that to how much you would receive (and that would be forgiven) in a PPP loan, and apply to the program that provides the greater benefit.
How to apply for a PPP loan for self-employed individuals and small businesses?
These new loans will be available through over 800 lending institutions approved by the Small Business Administration. Apply for the Paycheck Protection Loan directly through your local lending institution.
When to apply for the Paycheck Protection Program?
Small businesses and sole proprietors can apply to start on April 3. Independent contractors and self-employed individuals can apply to start April 10. Because there is a limit to how much aid is available, be sure to apply quickly.
Who is eligible?
You are eligible if you are one of the following:
An individual who operates as a sole proprietor
An individual who operates as an independent contractor
A small business with fewer than 500 employees
A small business that otherwise meets the SBA’s size standard
A 501(c)(3) with fewer than 500 employees
An individual who is self-employed who regularly carries on any trade or business
A Tribal business concern that meets the SBA size standard
A 501(c)(19) Veterans Organization that meets the SBA size standard
What will lenders look for?
Lenders will be checking for the following requirements:
Your business was in operation before February 15, 2020, and had employees for whom you paid salaries and payroll taxes or paid independent contractors (including yourself)
Good faith certification that states
The loan is a necessity due to the uncertainty of current economic conditions
You will use the loan to retain workers and maintain payroll or make mortgage, lease, and utility payments
You do not have a pending application for a loan of the same amount or purpose as the PPP loan
You have not received a loan for the same amount or purpose as the PPP loan from February 15, 2020, to December 31, 2020.
For independent contractors, sole proprietors, or self-employed individuals, you will be asked to provide:
payroll tax filings
Forms 1099-MISC
and income and expenses from the sole proprietorship
See below for additional details.
What forms are required for the PPP application process?
Payroll summary report for last 12 months
IRS Form 940 & 941 (payroll tax forms)
2019 business tax returns (or 2018 return if 2019 is not yet filed)
2019 year-end financials (if the tax return is not prepared)
Statement of payroll benefits offered to employees
Evidence of payroll taxes, insurance premiums, and benefits paid
Driver’s licenses for all owners with 20% or greater ownership stake
Entity formation documents:
Articles of Incorporation (or Articles of Organization)
Bylaws and Operating Agreement
Tax ID Number (Employer Identification Number)
Board of Directors Minutes (if applicable)
Ownership Verification (if applicable)
How muchcan I borrow through a PPP loan for self-employed people and small businesses?
Loans may be approved for up to 2.5x of your average monthly payroll up to $10 million
For sole proprietors, independent contractors, and self-employed individuals, your payroll equals the sum of payments of any compensation or income you received that is a wage, commission, income, net earnings from self-employment, and that is in an amount that is not more than $100,000 in one year, as pro-rated for the covered period
For example, if you make $100,000 in a year, your average monthly payroll to yourself would be $8,333. 2.5 x 8333=20,833. Your loan amount would be $20,833.
Additionally, businesses who qualify for the $10,000 grant will see the amount of their loan forgiveness reduced by the amount of their grant
How much will be forgiven?
Part of your PPP loan is eligible to be forgiven. The forgiven amount equals how much you spend on the following items in the 8-week period after the loan origination date:
Payroll costs (using the same definition of payroll costs used to determine loan eligibility)
Interest on the mortgage obligation incurred in the ordinary course of business
Rent on a leasing agreement
Payments on utilities (electricity, gas, water, transportation, telephone, or internet)
For borrowers with tipped employees, additional wages paid to those employees
Any part of the loan that is not forgiven will have a 1% interest rate.
When will the loan be forgiven?
The loan will be forgiven at the end of the 8-week period after your loan is funded.
Can you refinance EIDL into a PPP loan/grant?
Yes, as long as you do not duplicate the purposes for the funding and subtract other EIDL grant awards, you can refinance for loan forgiveness purposes.
Businesses that have experienced a 50% drop in gross receipts relative to the same quarter last year may qualify for a payroll tax credit worth up to $10,000 per employee so long as they are still paying their employees wages and/or health benefits.
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Right now, every single country is wondering where the world economy will stand in the upcoming months. Families are worried about their loved ones, whether they will make it through the deadly COVID-19 or not. There are numerous possible outcomes of this novel virus that keep spreading further. How society and governments respond to the coronavirus will pave the way for the fluctuations in the world economy.
One cannot wipe off the image of recession, unemployment, and the rise of patients infected by the COVID-19. News is all about the spread of this virus and how things are getting worse day by day. The main focus is given to the rising number of patients, the global economic crisis, and the rapid decline in productivity. This global dynamic has given a new perspective to everyone –how the world can turn upside down within a matter of days. Keeping this in mind, let’s ponder upon the global side effects of the COVID-19 on the world economy.
The Global Impact:
In the past few weeks, the global economy went through several ups and downs. Due to the COVID-19, financial markets have been at the brink of collapse and industries are now super vulnerable. Since the industry of tourism and travel make up 10% of the total GDP worldwide, almost 50 million jobs can be lost easily. Small to medium enterprises are facing the consequences of the virus outbreak as well, with many people living at God’s mercy.
People who are paid well by their organizations cannot really relate much to the sufferings of SMEs employees. Many states have already announced relief packages for unemployed people, guaranteeing monthly wages to them. Regardless of the current plans in action, economic measures introduced by the governments are not suitable for everyone.
Well, a fixed pattern can be noticed by various economists which are known as the ‘domino effect. Factors like financial markets, health systems, employment rates, and world trade getting close down have a significant impact on the economy. Due to the closure or slow growth of economic activities, everything else is getting affected one way or another. What the future holds for the human race is still unpredictable, causing fear across the globe. Economic markets are declining at an alarming rate, with a 20% decline recorded in the 52-week turnover. The S&P 500 index decreased over 7% within March, which later postponed trading worldwide. This ‘circuit breaker’ change recorded in the trading index happened for the very first time since the year 1997.
Interest rates have severely decreased, with a lower cost of borrowing in the U.S. government. This is something that will directly hit the liquidity position of the private companies, with little to no benefit to any of these profit-centered firms. The uncertainty of the world economy due to COVID-19 will keep rising, giving birth to deadly outcomes on a mass level. The relationship between the virus and the economy is a direct one. The longer this disease stays in the air, the more time it will take for the economy to get back on track.
By considering the economic viewpoint, we can deduce four future outcomes of this deadly disease:
• People will spiral into insanity over time.
• The state of capitalism will flourish.
• Society’s transformation into a place never seen before.
• The world’s reliance on socialism.
These outcomes may not have a high probability of succession, but relevant desirable outcomes can be expected.
From the Human Perspective:
So far we have learned how to tackle the COVID-19 outbreak, with less human interaction daily. By doing so, non-essential activities will be reduced, as humans now leave their houses only when necessary. Such a conscious measure will keep the virus intact and climate change will occur as well. The emission rate of greenhouse gases has decreased, further preventing the virus from spreading around the world.
In Wuhan, immediate lockdown and social distancing tactics were proven to be effective. Now, China is back in business, with rapid production taking place daily. Indeed, the pressure is building up globally, but we can learn from China and do the needed.
As of now, there is a serious threat of facing a recession in the future. This can only be tackled by efficiently decreasing the coronavirus cases globally. No doubt, every other business wants to generate higher rates of profits, but they are unable to do so in such a global crisis. As mentioned earlier, the domino effect will take place and people are already aware of it.
Moreover, it has been suggested in a recent study that lifting up lockdown in Wuhan too early will cause another COVID-19 crisis within the next months. Countries need to understand the deeper impact of this disease, training people to become resilient towards such pandemics. Before the COVID-19 outbreak, nobody was prepared for the worst-case scenario which severely affected the global economy. Besides the financial loss, there is an ongoing loss of precious lives that cannot go unnoticed.
What to do now?
Due to the frightening future ramifications of COVID-19, some essential plans will be needed to act upon.
• Firstly, health measures should be improved, with greater emphasis given to the safety of health professionals and patients.
• Local communities will be needing our support as well, with the financial backing of small enterprises.
• Sufficient allocation of funds to the Research department, with frequent updates from scientists working on finding a cure.
• Encouraging philanthropists to donate as much as possible.
• Making everyone prepared for the unexpected, just like the COVID-19 outbreak.
• Increasing the warehouses in countries, with higher distribution capacity to cover the underprivileged areas.
• Rigid policies about social distancing and closure of public places.
With so much going on, many countries are already trying to make amends to beat the pandemic. For instance, South Korea, Italy, and Japan announced effective fiscal measures to reclaim their position in the financial sector. On the other hand, the Bank of England and the European Central Bank will be updating their monetary policies as well. Through doing the necessary, the coronavirus will be easier to control, with adequate spending done to get back in the business.
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