For the past 5 months church life has looked different. Services and in person ministry have been adjusted, budgets have been reevaluated, and laws affecting employment have become a topic of high interest. In April, Wisdom wrote about some of the items found within the CARES Act passed by both the House and Senate. In addition to the CARES Act, the public has recently seen much about the Paychex Protection Program, Families First Coronavirus Response Act (FFCRA), and the Presidential Memorandum written by President Trump. We have been getting questions regarding what effects the FFCRA and recent Presidential Memorandums will have on churches and want to address those items.
Families First Coronavirus Response Act (FFCRA) was passed in March of 2020 and requires most employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19.
Here is what churches should know about the FFCRA:
It applies to all employers with less than 500 employees.
These provisions will apply from April 1, 2020 through December 31, 2020.
An employee qualifies for sick time if the employee is unable to work or telework due to a need for leave due to an employee experiencing illness, quarantine or school closures related to COVID-19.
An employee qualifies for expanded family leave if the employee is caring for a child whose school or place of care is closed or unavailable for reasons related to COVID-19.
Those who fall into one of the reasons found above related to COVID-19 would be eligible for:
Up to two weeks of sick leave with full pay if it is for self, 2/3rds pay for family care due to illness, quarantine, or school closures.
Up to 12 weeks of FMLA 10 days unpaid and then up to 10 weeks at 2/3rds pay for school closures.
Many in the church world waited and wondered if this would apply to them. There has been no exemption put in place for non-profits, but there is one exemption that your church may be included in. For employers with less than 50 employees they may be eligible for an exemption if, when participating, it would jeopardize the viability of the small business as a going concern.
If a small business deems themselves as meeting this criterion, they must document all the facts and circumstances to justify the denial and retain these notes in their records.
Presidential Memorandum
On Saturday, August 8th President Trump signed a Memorandum on Deferring Payroll Tax Obligations. In this Memorandum, President Trump orders that due to the ongoing COVID-19 disaster the Secretary of Treasury is directed to defer employee FICA taxes that would be calculated and collected September 1, 2020 through December 31, 2020. This would be the employee side of the related employer FICA tax deferrals previously legislated in the CARES Act. The Memorandum directs the Secretary of the Treasury to issue the necessary guidance to implement the deferral and to explore avenues to eliminate the obligation to pay these deferred taxes.
In effect, President Trump’s desire was to create a way for employees to keep more money in their paychecks by not having FICA withheld. At this time, barring any elimination of the obligation to pay these taxes, employees would still be expected to pay these taxes to the IRS in 2021.
Both this memorandum and the previous employer FICA deferral from the CARES Act appears not to apply to clergy as clergy fall under SECA (Self Employed Contributions Act) instead of FICA (Federal Insurance Contributions Act).
Over the past two weeks it has become abundantly clear that the only way for these taxes to be eliminated or forgiven would be through legislation passed by Congress. Wisdom advises that unless legislation is passed for the forgiveness of these taxes, it is the best interest of employees to continue to withhold and send these taxes in.
As with all legislation that has been passed and signed into law since March, the complete ramifications of both the FFCRA and the Memorandum on Deferring Payroll Tax Obligations continue to be unknown. As changes progress and information is released, Wisdom will continue to be here to guide your church as you navigate these uncharted waters.
Wisdom understands clergy compensation and the different approach church payroll needs. At least 60% of church payrolls are done incorrectly due to the unique rules surrounding clergy compensation. Whether you are navigating COVID related issues or not, Wisdom offers Payroll Solutions specifically designed with churches and clergy in mind. We would love to talk with you about your church’s payroll concerns and needs. Contact us for a complimentary payroll review and learn how Wisdom can help!