Main Street Lending Program

The Federal Reserve has approved $2.3 trillion in new economic initiatives designed to provide support to households, businesses, and local governments impacted by the coronavirus pandemic. One such initiative is the Main Street Business Lending Program which is designed to help small and mid-sized businesses during this time. Through this program, the Federal Reserve will provide loans to companies with up to 10,000 employees or less than $2.5 billion in revenue last year. These "Main Street" loans would be four-year, low interest loans for a minimum of $1 million with principal and interest payments deferred for a year.

The Federal Reserve is partnering with eligible banks to offer new Main Street loans or increase the amount of existing loans. The proposed term sheets for these loans can be found on the Federal Reserve’s website at this link.

Additionally, businesses must also follow the same compensation, stock repurchase, and dividend restrictions that apply to direct loan programs under the CARES Act. 

The program is not yet final and will be open for consumer and industry feedback through April 16, 2020.

Coronavirus Emergency Loans

Several funding sources are available to businesses to help keep workers employed among the COVID-19 pandemic; while legislation is evolving rapidly, for Florida businesses, aside from private lending, the following three sources are currently available to qualified businesses:

  • The Florida Small Business Emergency Bridge Loan Program is currently available to small business owners located in all Florida counties statewide that experienced economic damage as a result of COVID-19, offering up to $50,000 per eligible small business. Loans of up to $100,000 may be made in special cases as warranted by the need of the eligible small business. The term of the loan is one year, and the loan is interest free for the term, and then 12% per annum thereafter These short-term, interest-free working capital loans are intended to “bridge the gap” between the time a major catastrophe hits and when a business has secured longer term recovery resources, such as sufficient profits from a revived business, receipt of payments on insurance claims or federal disaster assistance. The Florida Small Business Emergency Bridge Loan Program is not designed to be the primary source of assistance to affected small businesses, which is why eligibility is linked pursuant to other financial sources. Note: Loans made under this program are short-term debt loans made by the state of Florida using public funds – they are not grants. Florida Small Business Emergency Bridge Loans require repayment by the approved applicant from longer term financial resources. More information is available here at this link.
  • The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply. More information is available here at this link.
  • The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic
    downturn. Known as the Paycheck Protection Program, the initiative provides 100% federally guaranteed loans to small businesses and loans may be forgiven if borrowers
    maintain their payrolls during the crisis or restore their payrolls afterward. The administration soon will release more details including the list of lenders offering loans under the program. In the meantime, the U.S. Chamber of Commerce has issued a guide to help small businesses and self-employed individuals prepare to file for a loan, which is available here at this link.

The Families First Coronavirus Response Act Analysis (H.R. 6201)

The Families First Coronavirus Response Act H.R. 6201 (the “Act”) was signed into law on March 18, 2020.  The Act, among other things, requires certain employers to provide public health emergency leave and paid sick leave, and provides tax credits for those employers.  This outline summarizes key provisions of the Act relevant to employers.

Public Health Emergency Leave

The Act expands the Family and Medical Leave Act’s requirement that eligible employees are entitled to 12 weeks of job-protected paid leave.

Who is a Covered Employer?

  • Employers with fewer than 500 employees and covered government employers are covered by the Act.
  • Small businesses with fewer than 50 employees may be eligible for an exemption. Under the Act, the Secretary of Labor has the authority to exempt small businesses with fewer than 50 employees if requiring the employer to provide public health emergency leave would jeopardize the employer’s viability.
  • We reached the Department of Labor via telephone and were informed that the Secretary of Labor has not yet confirmed whether he will apply such exemption, and to date the Department has not issued any regulations or guidance regarding how such exemption will be applied. The Department of Labor Employment and Training Administration website (https://www.dol.gov/agencies/eta/) will provide updates as they become available in the “News” section of the homepage.

What Employees are Eligible?

Eligible employees must have been employed for at least 30 calendar days by their employer and require leave because they are unable to work (or telework) because they must care for their minor child (under 18) whose school or place of care has closed, or whose child care provider is unavailable, due to a coronavirus emergency declared by a Federal, State, or local authority.

Employers of healthcare providers or emergency responders may exclude these employees from eligibility for paid leave under the Act.  In addition, the Secretary of Labor may exclude certain health care providers and emergency responders. The Act does not define the terms “healthcare provider” and “emergency responder.”

Is the Leave Paid?

Yes, after the first ten days, paid leave (capped at $200 per day or $10,000 in aggregate) equal to at least two-thirds of the employee’s regular rate of pay for the number of hours that the employee would otherwise have normally been scheduled to work is required. The first ten days of the public health emergency leave may be unpaid; however, the employee may voluntarily elect to use any accrued vacation, personal, medical, or sick leave during the first ten days (but employers may not require the employee to do so).  The remaining leave must be paid subject to the caps and limits described below.

If an employee’s schedule varies from week to week, employers must use the average number of hours the employee was scheduled to work per day over the past six months, including hours for which the employee took leave of any kind.  If the employee did not work over this six-month period, use the average number of hours per day that the employee reasonably expected at the time of hiring. 

Does the Employee Have to Provide Notice to Take Leave Under the Act?

Yes, in cases where the necessity for leave is foreseeable, employees shall provide notice of leave as soon as is practicable.

Is the Employee’s Job Protected While on Leave?

Yes, an employee who takes public health emergency leave is entitled to be restored to the position the employee held when the leave commenced, or to an equivalent position with an exception for employers with less than 25 employees in certain circumstances as described below. 

Job protection is not required for employers with less than 25 employees if all the following conditions are met:

(1) the position held by the employee when leave commenced no longer exists due to economic conditions or other changes in operating conditions that affect employment and were caused by a coronavirus emergency declared by a Federal, State, or local authority during the employee’s leave;

(2) the employer made reasonable efforts to restore the employee to an equivalent position; and

(3) the employer made reasonable efforts during the “contact period” to contact the employee if an equivalent position became available.  The “contact period” lasts for one year following the date on which the qualifying need for the leave ends or the date that is 12 weeks after the leave began, whichever is earlier.

What Impact Is There on Collective Bargaining Agreements?

Employers with employees subject to multiemployer collective bargaining agreements may, if consistent with its bargaining obligations and collective bargaining agreement, fulfill their obligations under the Act by making contributions to a multiemployer fund, plan, or program based on the paid leave each of its employees is entitled to while working under the multiemployer collective bargaining agreement, provided that the fund, plan, or program enables employees to secure pay from such fund, plan, or program based on hours they have worked under the multiemployer collective bargaining agreement for paid leave taken under the Act.

What is the Effective Date of the Act?

This portion of the Act relating to public health emergency leave shall take effect on or before April 2, 2020 and expire on December 31, 2020.

Emergency Paid Sick Leave

The Act requires employers to provide their employees with up to two (2) weeks of paid sick leave if their employees are unable to work (or telework) for any of the following reasons:

  • The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
  • The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19;
  • The employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis;
  • The employee is caring for an individual who is subject to an order as described in paragraph (1) or has been advised as described in paragraph (2);
  • The employee is caring for their child whose school or place of care has closed, or whose child care provider is unavailable, due to COVID-19 precautions; or
  • The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

What Employers Are Required to Comply?

This requirement applies only to employers with fewer than 500 employees and covered government and non-private entity employers. Small businesses with fewer than 50 employees may be eligible for an exemption. Under the Act, the Secretary of Labor has the authority to exempt small businesses with fewer than 50 employees if requiring the employer to provide public health emergency leave would jeopardize the employer’s viability of the business as a going concern. Additionally, the Secretary of Labor has the authority to exclude certain health care providers and emergency responders by allowing the employer of such health care providers and emergency responders opt out.  

We reached the Department of Labor via telephone and were informed that the Secretary of Labor has not yet confirmed whether he will apply such exemption, and to date the Department has not issued any regulations or guidance regarding how such exemption will be applied.  The Department of Labor Employment and Training Administration website (https://www.dol.gov/agencies/eta/) will provide updates as they become available in the “News” section of the homepage.

What Employees are Eligible?

An employee is eligible regardless of how long that employee has worked for the employer.  Employers may elect to exclude an employee who is a health care provider or emergency responder. 

Employers of healthcare providers or emergency responders may exclude these employees from eligibility for paid leave under the Act.  In addition, as noted above, the Secretary of Labor may exclude certain health care providers and emergency responders. The Act does not define the terms “healthcare provider” and “emergency responder.”

How Much Paid Sick Leave is Required?

Full-time employees are entitled to 80 hours of paid sick leave. 

Part-time employees are entitled to paid sick leave equal to the number of hours that employee works, on average, over a two-week period.  For an employee whose schedule varies from week to week, use the average number of hours the employee was scheduled to work per day over the past six months, including hours for which the employee took leave of any kind.  If the employee did not work over this six-month period, use the average number of hours per day that the employee reasonably expected at the time of hiring.  Paid sick leave will not carry over from one year to the next.

The amount that must be paid by the employer varies depending on why the employee is taking the paid sick leave.

If the employee must take paid sick leave due to any of the following reasons that directly impact the employee on an individual level: the employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19; or the employee has been advised by a health care provider to self-quarantine due to concerns related to COVID–19; or the employee is experiencing symptoms of COVID–19 and seeking a medical diagnosis.

Then the paid sick leave rate shall be the greater of the following: the employee’s regular rate of pay; the minimum wage rate in effect under the Fair Labor Standards Act; or the minimum wage rate in effect in the applicable State or locality,

Paid sick leave in these circumstances is capped at $511 per day or $5,110 in the aggregate. 

If the employee must take paid sick leave due to any of the following reasons that require the employee to care for others who are impacted by COVID-19 quarantines, isolation orders, or school/childcare closures: the employee is caring for an individual who is subject to Federal, State, or local quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or the employee is caring for their child whose school or place of care has closed, or whose childcare provider is unavailable, due to COVID-19 precautions; or the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor, then the paid sick leave rate shall be two-thirds (2/3) of the greater of the following: the employee’s regular rate of pay; or the minimum wage rate in effect under the Fair Labor Standards Act; or the minimum wage rate in effect in the applicable State or locality. Paid sick leave in these circumstances is capped at $200 per day or $2,000 in the aggregate.  The Act requires the Secretary of Labor to issue guidelines to assist employers in calculating the amount of paid sick time.

Does the Paid Sick Leave under the Act Carryover to the Next Year?

No, paid sick time under the Act does not carryover from one year to the next.

What If the Employer Has an Existing Paid Sick Leave Policy?

The paid sick leave under the Act cannot be construed to diminish any other paid sick leave right or benefit currently granted under applicable Federal, State, or local law, collective bargaining agreement, or existing employer policy. The employer may not require the employee to use other paid sick leave before using the paid sick leave provided for in the Act. 

The employer also may not require the employee to search for or find a replacement employee to cover the hours during which the employee is using paid sick leave.  However, the employer may require the employee to follow reasonable notice procedures in order to continue receiving paid sick leave.

Are Employers Required to Cash-Out Unused Paid Sick Leave under the Act at Separation of Employment?

No. The Act expressly states that it shall not be construed to require financial or other reimbursement upon termination, resignation, retirement, or other separation from the employer for paid sick leave granted under the Act that has not been used by the employee.

What Prohibitions Are Included in the Act?

Employers are prohibited from retaliating against employees. It shall be unlawful for the employer to discharge, discipline, or otherwise discriminate against any employee who takes leave in accordance with the Act, or who files any complaint or institutes or causes to be instituted any proceeding under or related to the Act, or who testifies or is about to testify in any such proceeding.

Any employer who violates the paid sick leave requirements of the Act or discharges, disciplines, or discriminates against an employee in violation of the Act will be found to have violated the Fair Labor Standards Act and will be subject to penalties.

What Notice Must Employers Provide?

Each employer shall post and keep posted, in conspicuous places where notices to employees are customarily posted, a notice of the requirements described in the Act, to be prepared or approved by the Secretary of Labor.  The Act requires the Secretary of Labor, within seven (7) days of enactment, to make publicly available a model notice that meets the necessary requirements.

What Impact Is There on Collective Bargaining Agreements?

Employers with employees subject to multiemployer collective bargaining agreements may, if consistent with its bargaining obligations and collective bargaining agreement, fulfill their obligations under the Act by making contributions to a multiemployer fund, plan, or program based on the paid sick time each of its employees is entitled to while working under the multiemployer collective bargaining agreement, provided that the fund, plan, or program enables employees to secure pay from such fund, plan, or program based on hours they have worked under the multiemployer collective bargaining agreement for paid leave taken under the Act.

What is the Effective Date of the Act?

The paid sick leave requirements under the Act shall take effect on or before April 2, 2020 and expire on December 31, 2020.

Tax Credits for Public Health Emergency Leave and Paid Sick Leave

Refundable quarterly tax credits are provided for in the Act to use against the employer’s quarterly payroll tax liability subject to the caps based on the reason for the leave and the maximum amount of leave allowed under the specific circumstances. Employers are permitted to receive up to 100% of the paid qualified paid sick leave wages and qualified public health emergency leave wages in tax credits. The Treasury Department is expected to release regulations on the tax credits.

The tax credit is increased to cover a portion of the employer’s qualified health-plan expense as are properly allocable to the qualified sick leave wages or qualified family leave wage for which the credit was allowed. Subject to certain limitations, excess credits over the employment tax liabilities will be refunded. For purposes of chapter 1 of the Internal Revenue Code, the gross income of the employer shall be increased by the amount of the tax credit. 

Any wages taken into account in determining the credit allowed shall not be taken into account for purposes of determining the credit allowed under section 45S of the Code. The beginning date of the tax credits will be designated by the Secretary of Treasury and must be a date during the 15-day period beginning on the date of the enactment of the Act. The ending date of the tax credits is December 31, 2020. The Act has relief for self-employed individuals that are subject to different rules.

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Weaponizing GDPR Data Privacy Requests

Data privacy requests have been weaponized in a manner inspired by glitter-filled tubes. An intrepid individual recently created the website www.shipyourenemiesGDPR.com; the site notes it is inspired by the infamous www.shipyourenemiesglitter.com, which sends glitter-filled springing tubes or phallus-shaped gummies as gag gifts upon request.

The shipyourenemiesGDPR.com site is based around European Union’s General Data Protection Regulation (GDPR) requirements and provides a quick and easy template to send your “enemies” GDPR Data Access Requests seeking access to personal data pursuant to the provisions of the GDPR. From the website platform, users are invited to target those they are less-than-friendly with, such as landlords, email providers, insurance providers, banks and ex-employers by means of GDPR data requests that recipients may in some cases be legally required to respond to within 30 days. The stated idea is to bombard data protection officers with requests for consumers’ personal data and, in the words of the website itself, “waste as much of their time as possible.”

To give you some context to how this works, you’ll need a quick primer on the GDPR itself. The GDPR is a set of strict regulations in the European Union (EU) and European Economic Area (EEA) for data protection and privacy of individual citizens. Although it is an EU regulation, it attempts to transcend the geographic limits of the EU and broadly impacts the international market including foreign companies that engage in business in the EU or interact with EU citizens as consumers. The goal of the regulation when adopted was to empower EU citizens to control the use their personal data. To give the individual consumer some control and oversight over this industry, if GDPR is applicable to a business, it requires the business to disclose data collection practices and enacts safeguards to protect certain personal information. Under GDPR, a consumer has the right to request access to certain of their personal information.

The creator of www.shipyourenemiesGDPR.com claims that the website is a form of parody or satire meant to call attention to the fact that people can and will abuse this process, but if consumers do take up the call to submit the requests as the website allows, it poses some interesting legal questions. Chief among them, does the service facilitated by shipyourenemiesGDPR.com meet the elements for tortious interference with a business relationship? It can be actionable to interfere with a validly existing business relationship between two parties without a legitimate reason to do so. We can see from the oversized and animated title line that shipyourenemiesGDPR.com is directly targeting parties whom the user is engaged in a business relationship with – “Do you hate your competitor, insurance provider, your bank, your ex-employer, your internet service provider, your email provider?” The website implies it is aware of the business relationship and encourages consumers to act against the parties with which they are engaged in a business relationship. However, if nothing else, GDPR requests seem far preferable to receive than tubes of glitter.

Five Steps to Control Legal Risk

Benjamin Franklin coined the axiom that an ounce of prevention is worth a pound of cure. In the 1970s, Fram oil filters used the advertising jingle of “Pay me now or pay me later” to tout buying a $4 oil filter regularly to prevent having to replace an engine later on. Taking a small amount of time to address a potential problem up front will often save a substantial amount of time and money down the road. This is as true in the legal and compliance world as it is in the healthcare and automotive fields. Here are five steps your business can take to help control legal risk:

Losey PLLC Controlling Legal Risk Infographic 2.10.19

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