CPA Practice Advisor - 21

A YEAR IN THE LIFE: PAYROLL ACCOUNTANT

and income loss, as well as the devastation of 401(k)
accounts as a result of the pandemic, will force many
near-retirement employees to want to keep working.
Many were already considering this as a result of the
significant losses to retirement plans incurred in the
2008-2009 recession. Knowing the difficulty of finding suitable employment when a person is 50 or 60, or
perhaps even older, they will desperately want to hang
on to their pre-pandemic jobs. Therefore, if theirs are
the jobs eliminated, or it even appears to be the case,
the potential for claims of ageism could be significant.
In a recent study on "Ageism in the Workforce" by
global specialist insurer Hiscox, it was noted that of
the 400 full-time U.S. workers, equally divided between
men and women over the age of 40 that they surveyed,
67% responded that they planned to continue working
after they turn 66. The study also noted that workers
age 55 and older will soon comprise at least 25% of
the nation's workforce, with the fastest growth among
persons aged 65 and older. Given the very real concerns
of this segment of the workforce with continuing to
work that were already present prior to the impact
of the Coronavirus pandemic, they can be expected
to challenge even the appearance of discriminatory
treatment.

STATE ORDERS PROTECTING VULNERABLE WORKERS
Some states may enact additional protections that
prohibit companies from laying off certain workers
that meet certain requirements. For example, on
April 13, Governor Inslee of Washington State issued
Proclamation 20-46, "High-Risk Employees- Workers'
Rights," which prohibits any employer from failing to
accommodate high risk workers from COVID-19. The
proclamation requires companies to accommodate
workers that are over 65 and those that have severe
obesity, heart disease and several other conditions.
Employers are required to allow these employees
to telework if possible, reassign them, or allow the
employee to take leave or file for unemployment.
Employers must also fully maintain all provided health
insurance benefits for these high-risk workers. Employers are also prohibited from permanently replacing any
high-risk employee who takes leave or exercises their
right to an alternative work assignment. Companies
should expect other states to take similar action.

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Workers Earning Less than $75k
Are Being Laid Off Most By Isaac M. O'Bannon
COVID-19 HAS STRONGLY shaken the labor market in March and April,
driving layoffs and unemployment in the U.S. to their highest points since
the Great Depression. As of May 1, 2020, about 30 million Americans
have lost their jobs during the outbreak, resulting in at least 18% of the
country's workforce now being idle.
New data from Rippling, a provider
of HR and technology solutions for businesses, reveals that layoffs have most
severely impacted those workers who
can least afford it. The company looked at
anonymized payroll and termination data
from more than 600 small and midsize
businesses and found a significant shift in
layoffs toward lower wage-earners since the
onset of Covid-19 in the U.S.
The analysis included companies from a
broad array of industries, from hospitality
to tech startups, and a correspondingly diverse range of job
roles, including chefs and couriers alongside product managers
and software engineers.
Employees with an annual
salary under $75,000 made
up 49.4% of all terminations
between March 1 and April 14,
2020, up from 42.2% of terminations at the
beginning of the year (January 1 - February
29, 2020). This represents a 7.2 point-swing
toward lower wage-earner terminations,
taking share from all other salary brackets
below $300,000.
Meanwhile, high wage earners, defined
as employees making $100,000 or more, fell
4.6 percentage points as a share of total
terminations during the Covid-19 spread.
The median salary of employees laid
off prior to the broad spread of Covid-19
was $80,000 compared to $75,000 during
the spread.
The research suggests this trend cannot
be explained by seasonal discrepancies.
When looking back at the same period
(March 1 - April 14) in 2019, employees
earning below $75,000 made up 48.3% of

terminations -up only 2% from the beginning of the year (January 1 - February 28).

COMPOUNDING
DISADVANTAGES
Recessions often hit low-income households
the hardest. In each of the past four recessions, the lowest 20% of earners fared far
worse on a relative basis than the average
American. The Covid-19 recession looks
likely to continue that trend. The survey
data suggests that the spread of Covid-19
has largely spared high-wage
jobs compared to their lowerearning counterparts across
many sectors.
The workers most affected by
the coronavirus downturn are
also the least prepared. People
who work low-wage jobs are
uniquely vulnerable to economic
booms and busts. They have less personal
savings to tide them over and higher levels
of personal debt.
In one recent survey, 34% of adults
making under $50,000 in annual income
said they would run out of savings in three
months if someone in their household lost
their job, while 18% said they have no savings to fall back on at all.
To make matters worse, because
healthcare in the U.S. is usually employerprovided, most terminated workers will lose
their health insurance at the same time
they lose their jobs, compounding their
financial insecurity. It's a devastating turn
of events for millions of families. Just a few
months ago, pay was rising for low earners
thanks to minimum wage laws and robust
economic growth.

MAY 2020 ■

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