June Client Line
Payroll Considerations for Rehiring Employees after a Layoff
The coronavirus (COVID-19) pandemic forced many employers to place workers on temporary furlough, or to terminate their employment agreements entirely. As the economic damage of the pandemic recedes, many employers are faced with hiring or rehiring to meet the productivity needs of their businesses. Accordingly, several states have passed regulations regarding rehiring.
Right to recall - Several states and localities have enacted "Right to Recall" ordinances aimed at ensuring that terminated or furloughed employees are the first to be considered for rehire when an employer makes a position available, similar to the one formerly occupied by the terminated employee. So far, the state of California and multiple California localities, as well as the cities of Baltimore, Honolulu, Minneapolis, New Haven, New York, Philadelphia, and Washington, D.C. have adopted regulations creating the right to recall for furloughed or terminated employees.
Non-compete clauses - Many employers looking to hire after a slow-down may find their perfect candidates, only to discover the existence of a non-compete agreement with the candidate's former employer ties their hands. Importantly, the mere existence of a non-compete agreement is not necessarily enough to preclude hiring the candidate bound by the agreement. In several states, such agreements are completely invalid, while in others, the validity of the agreement is dependent on very specific factors, such as industry or previous job description and duties. Before giving up on a potentially great hire due to a non-compete agreement, be sure to research the legal restrictions in the business's resident state.
Other factors - Other factors to consider when rehiring furloughed employees or hiring new workers for an expanding business include: industry contract requirements (such as prevailing wage), collective bargaining agreements, new hire reporting rules, and benefits and paid leave considerations. © 2021 Thomson Reuters/Tax & Accounting. All Rights Reserved
Child Tax Credit
The American Rescue Plan signed into law in March expands the Child Tax Credit for 2021 only. The refundable portion of the credit is increased to $3,600 for children under 6 at the end of 2021 and $3,000 for children between 6 and 17 at the end of 2021. The credit is reduced for taxpayers over certain adjusted gross income amounts. These amounts are $150,000 for Married Filing Joint, $112,500 for Heads of Household and $75,000 for all other taxpayers.
Additionally for 2021, one half of the credit may be distributed in regular payments between July and December. Advance payments will be estimated from information included in 2020 tax returns, or 2019 returns if 2020 returns have not yet been filed. Taxpayers can elect out of the advance payment, and claim the entire amount when filing their 2021 tax return. This can be done through an online portal that the IRS will set up, which can also be used to report any changes in dependents.
Dates to Remember
June 15th – Second Quarter Federal and Pennsylvania Individual and corporate estimated taxes for 2021 are due for payment.
Fourth of July Hours
In honor of America’s Birthday, our office will be closed on Monday, July 5th, and will reopen on Tuesday, July 6th.
Have a safe and happy holiday!