Although the federal and state governments are working diligently to provide needed financial assistance to those employees impacted by the COVID-19 crisis, aid is either slow in being provided or not nearly sufficient enough.
Employers looking for ways to further help those employees impacted by COVID-19 should consider setting up a tax-advantaged employee crisis relief fund, which is a program to help employees cope with financial problems that render them unable to provide for basic necessities in their personal lives.
An alternative to a tax-advantaged fund is to provide employees with interest-free loans or direct monies to the employee from the employer. However, these programs usually result in the money being considered taxable income for the employee.
Because this pandemic has been declared a national disaster, any fund grants will be tax-free for employees and deductible for employers as long as they are used for expenses incurred by employees because of the disaster.
For those employees laid off or furloughed, these emergency grants can be used for basic needs, including money to pay for food, rent and utilities, or to pay for safe child care options for those who continue to report to work.
Creating this type of crisis fund can take from six to eight weeks to mobilize, but the urgent nature of this crisis is causing employers to look for much quicker solutions. A non-profit company called E4E Relief based out of Charlotte, N.C. can help employers quickly set up these funds in three to five days by providing employers unique solutions.