Weekly Update: Employment Law Business Advisory 4/27/20

EMD&R COVID-19 / STATE OF EMERGENCY ADVISORY FOR BUSINESSES IN MASSACHUSETTS AND NEW HAMPSHIRE

APRIL 27, 2020: At EMD&R we are getting phone calls from our business clients, and as such this email is designed to keep you posted on those questions from clients and public statements of Governors and Mayors that may impact your business.

PAYROLL PROTECTION PLAN (Part 2)
Due to the pandemic, Congress passed the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act in late March 2020. The CARES Act provides financial assistance for individuals and families, states, and businesses impacted by COVID-19. A critical part of this stimulus bill is the Small Business Paycheck Protection Program (PPP), which offers billions of dollars in potentially forgivable loans through the U.S. Small Business Administration (SBA) to small businesses, so they can stay afloat and keep their workers on payroll during the pandemic.

Unfortunately, the initial PPP funds of $349 billion ran out on April 16, 2020. On April 23, 2020, however, Congress approved additional funding of more than $300 billion. Eligible businesses are strongly encouraged to work with lenders now to prepare their applications and be ready to take advantage of these additional funds.

The new PPP funds are now available as of Monday, April 27, 2020! As before, it is “first come, first served” for applications for PPP funds and the program is currently only open until June 30, 2020. Small businesses should immediately apply for PPP as soon as possible if not already done. The SBA has come out with more guidance that restricts large public companies from applying (some of those who received PPP funds are being forced to return their PPP funds by May 7, 2020) so that will free up more money for true small businesses with no other reasonable source of funding to stay in business.

The loan documents are pretty basic: non-recourse, no collateral necessary, the amount is based upon a calculation of your payroll plus compensation for you as owner up to annualized $100,000. 75% must go to employee costs. The balance can be spent on utilities, rent, insurance, and some other office expenses. It is a 2-year loan, at 1% interest, which can be forgiven entirely if spent properly. Have your bookkeeper create a separate ledger to keep track of the expenditures of the funds so that you can document to the bank your expenditures when you apply for forgiveness of the loan.

For most small businesses, this funding will keep you afloat for payroll for at least 8 weeks so the one question we have been facing is: What is the status of those employees working on the PPP Loan? A good resource for all employees and employers to visit is The U.S. Department of Labor: COVID – 19 and the American Workplace Families First Coronavirus Response Act. This resource will outline and answer questions you may have about Employee Paid Leave Rights and other information to help you sort through these unprecedented times.

EMPLOYEE STATUS: THEY ARE WORKING
They are not unemployed. Although at home or on some limited restrictions, they are working so this puts an onus on management to monitor their time and activity. They should be treated for all purposes as regular employees, recognizing vacation, or personal time. You also should abide by all company policies and issues related to harassment and discrimination apply.

The science of a pandemic, where we may be asked to re-enter society without sufficient testing will be a major issue. Some employees may balk, so case-by-case review will be necessary to determine policies that are fair and equitable and put in place to fend off potential claims of discriminatory or unfair behavior.
Compensation issues will arise as well, but you should pay close attention to existing Wage Act provisions as they have not been lifted and still apply.

Managing the working hours of employees is challenging in this environment. The hours are not 9-5 all the time while people are “staying in place” at home with family. Many issues interfere with employees being able to carry on the work they normally do: homeschooling, dealing with limited space, and limited home resources and equipment, to name a few.

Identify tasks and projects that give employees a sense of engagement and completion and evaluate aspects of your business that need help. Revisit tasks that you may want to be done but never get done in the normal workplace. This is an opportunity to address those needs and clean up some lingering administrative details.

TIP: Be firm but fair. Be careful. This is a hardship. As time goes on we all will see how everyone reacts to the pressure of many weeks of confinement.

THE NEW NORMAL
We have heard a lot about the “New Normal” and it begs the questions, was the Old Normal that great? The pandemic will ravage some businesses and industries; bankruptcies and foreclosure and debt collection are inevitable. It will especially hit those companies that were vulnerable to begin with. They may not have operated well in the old normal, so the New Normal may not give them any opportunity either.

The statistics on workplace efficiency and productivity are telling. Studies show that among workers in major industries and smaller companies, loneliness has increased by 52%, anxiety is up 56.4%, and productivity is down 69.7%. Exploring new options and keeping contact with your employees while they work remotely is vital. Keep them informed with positive messages and updates on the direction that your business is taking. Involve them in discussions for future strategic planning.

The New Normal may be better than the old normal for those businesses nimble enough to weather the storm and adapt. The New Normal may produce profits. As humans, we naturally adapt. But if the core is not stable, it is time to revisit and rebuild. We will learn efficiencies that we did not have in the past; new technology will be introduced to make us better in some respects; and business practices will have to change and be tested by law, litigation, and new legislation.

HAVE WE LEARNED ABOUT PREVENTION?
But what have we learned about prevention? We have learned about washing hands, masks, social distancing, health care, and herd immunity. We know about comorbidities and physical ailments that make people vulnerable.

Doesn’t the same apply to your business?
We will keep you posted as regulations come down from the various agencies that will be responsible for administering these programs.

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