July 23, 2020
One of our payroll cycles included a special one-off payment for an employee. Does that one week’s pay have to be considered in whether to put that employee in the over $100,000 earnings category?
Posted by Armanino Financial Advisory Team
Yes, but let’s be clear about what you are asking. If you are asking for purposes of the Salary Reduction Factor, a person who is paid bi-weekly that received an amount greater than $3,846 in any single pay period in 2019 would be considered an “over $100,000” person — but ONLY for the Salary Reduction Factor. Do not confuse this $100,000 rule with the $100,000 maximum compensation cap. They are different rules that operate differently, but just happen to use the same line of demarcation. If you are asking whether that person has exceeded the $100,000 maximum compensation cap based on this one payroll, that is not the correct test. If you choose an eight-week Covered Period, the test is not what happens in any given payroll, it is what happens across the entire eight weeks — the total they could be paid for forgiveness purposes is capped at $15,385, regardless of how that amount was distributed across the eight weeks. The same holds true for a 24-week Covered Period, except the maximum amount there is $46,154 instead.