New mandates regarding COVID-19 vaccinations and mask requirements in federal buildings will mean big changes for government contractors.
In areas of high or substantial COVID-19 transmission, federal employees, contractors and visitors are now required to wear masks inside of federal buildings regardless of vaccination status. For unvaccinated individuals, masks will be required regardless of community transmission levels and testing will be required on a weekly or twice-weekly basis. Federal agencies will require federal employees and onsite contractors to confirm their vaccination status. You can read more about these changes here.
There will be costs associated with this mandate for government contractors and grantees. Right now, government insurance reimbursements cover the cost of most COVID-19 vaccinations. However, this could change. I’d recommend verifying the number of employees who want a vaccine and the cost of weekly or twice-weekly testing of unvaccinated employees. Use those numbers to create a cost projection.
There is a tax credit to cover an employee’s leave for vaccine appointments and to recover from the vaccine, if needed. This credit is available until September 30, 2021 and will offset some vaccination costs. You should plan to treat the credit similar to an employee retention credit or sick leave credit in your indirect cost calculations.
This credit is limited to businesses with less than 500 full-time and part-time employees. Costs that exceed the credit will need to be accounted for as additional fringe, overhead or direct costs, depending on how you have treated similar costs in the past and arguments that you make for the impact of this new mandate. Either way, you need to make sure you are consistent in how you are recording these costs and document any decisions on the treatment of the costs.
There will be additional human resources (HR) and project manager (PM) work to ensure on-site workers and visitors are vaccinated or meet testing protocols. If this is determined to be de minimis, it may cost more money to track, segregate and bill than to report as HR/PM labor, depending on how you charge for those related labor hours. Prepare a projection on anticipated costs before making and documenting a determination on the treatment of the costs.
Let us know if we can be of assistance in projecting costs or making a determination in the treatment of such costs and related tax credits by contacting us online or by calling 800.899.4623.
Published on August 04, 2021
