News and Articles

Legal Update - COVID-19 - March 24th

Yogi Patel - Tuesday, March 24, 2020

Dear Valued Clients, Colleagues and Supporters: We hope that you and your families continue to remain safe and healthy during these extremely uncertain times. We are writing again as part of our continuing commitment to provide useful legal updates and other information pertaining to options and resources for those affected by the COVID-19 pandemic.

Mortgage and Rent Payment Suspension

On March 24, 2020, Governor Andrew Cuomo signed Executive Order No. 202.9 directing financial institutions to grant a forbearance on mortgage payments to individuals and businesses suffering a financial hardship as a result of the COVID-19 pandemic for a period of ninety (90) days.

Those businesses and individuals looking for some cash-flow relief or reducing their financial stress during these uncertain times may consider making that call prior to the end of the month for mortgage payment relief.

As for rent relief, there are no executive orders issued as of the date of this newsletter, but that could change. However, pursuant to the "New York State on PAUSE" executive order, which went into effect March 22, 2020, there is a 90-day moratorium on both commercial and residential evictions. It is not clear as of the date of this letter, whether any provisions will be made for rental payments to be forgiven, for direct assistance to be provided, or if landlords will receive tax breaks to offset losses in rental income.

In the meantime, to determine whether you already have any options for immediate rent relief–whether in the commercial or residential context–the terms of your individual lease will govern. Look to business interruption clauses to understand whether you have any rights to suspend rent payments in commercial leases (no such right in residential leases). While you may also want to review your business interruption insurance policies, it is our understanding that most carriers are disclaiming such losses. Regardless, contact your landlord or tenant and start an earnest discussion about reasonable options. This is a time of communication - positive and equitable communication. Some options could include written rent deferral agreements or temporary reduction agreements.

One major question many clients have asked in the interim is whether any rent or mortgage payments would become due at a later date as a lump sum amount or be added back into the principal with the mortgage or future rent payments with the terms extended at the bank end of the loan or lease. For the time being, many lenders are not committing, but are providing 30 day extensions automatically as of the date of this letter with 60 and 90 day further extensions available under the Executive Order. For renters, this will have to be negotiated on a case-by-case basis, until further guidance is issued.

New York Courts All But Closed

As ordered by Chief Judge Janet DiFiore and Chief Administrative Judge Lawrence Marks, New York Courts will be closed to all legal proceedings except those deemed "essential matters." Courts will not be accepting filings, electronically or on paper, in any non-essential proceedings and will be extremely lenient on any party who is unable to meet deadlines due to the COVID-19 pandemic. Litigants or anyone considering court proceedings should discuss their option with counsel before taking action and to determine whether their situation falls within an "essential" category.

Pursuant to Executive Order 202.8, Governor Cuomo has extended any statutes of limitations or court imposed deadlines until April 16, subject to further extensions so for most client and most matters, this court shutdown will not result in a loss of any right to bring a claim or pursue a remedy in court but will certainly create substantial delays both during and after the shutdown.

Small Business Assistance

New York City has offered some initial financial assistance for small businesses who are suffering during this crisis. Any New York City business with four (4) or fewer employees that can demonstrate a decrease of 25% or more in revenue as a result of COVID-19 are eligible to receive a grant covering up to 40% of their payroll for two (2) months, up to $27,000.

Businesses must also have been in operation for at least six (6) months and have no outstanding tax liens or legal judgments against them.

Additionally, the City is making zero interest loans of up to $75,000 available to business with under one hundred (100) employees. Business must likewise demonstrate that they have no outstanding tax liens or legal judgements and that they will be able to repay the loan.

For both of these forms of relief, the City has made applying accessible via the internet at the following website.

One of both of these options may be better for certain business than the furlough-related options we previously discussed.

Paid Leave

New York state has expanded the Paid Family Leave Act to apply to individuals who are quarantined as a result of the COVID-19 outbreak or if they have to care for their dependent child as result of the pandemic. Employees who work from home are not eligible for these benefits. The State has issued extensive guidance on Paid Family Leave under COVID-19 here. Readers can view our previous posts on PFL here and here.

On the Federal level, the Families First Coronavirus Response Act (FFCRA) goes into effect on April 2, 2020. The FFCRA expands the Family and Medical Leave Act to allow employees to take leave for reasons related to COVID-19, including to care for children who are home due to school closings. The U.S. Department of Labor has issued extensive guidance here. As with any of these developments, we are available to discuss how they impact both employees and businesses alike.

Miscellaneous

Credit card companies have been cooperating with customers in forgiving payments for a month and waiving any interest and penalties related to the deferment. You should call your credit card companies right away to see what relief is available and what relief maybe made available in the future.

Federal and State tax filings are now due July 15, 2020.

As always, we will continue to stay abreast of any legal developments that affect our clients, their families, and their businesses and do our best to share them directly with you. Until then, stay strong.

Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.



Legal Update - COVID-19 - March 18

Yogi Patel - Wednesday, March 18, 2020

Dear Valued Clients, Colleagues and Supporters: During these unprecedented times, we at Lloyd Patel LLP would like to take a moment to let you know that we are here to help as needed. We are monitoring both federal and state legislative proposals and measures on COVID-19 related responses and will provide updates as they become available. In the meantime, we have been receiving inquiries from employees and employers with regard to their rights and responsibilities in connection to the pandemic. In this newsletter, we address some of the common concerns we are hearing about, related to furlough and contractual obligations.

Furlough/Reduction in Employment

A furlough is a temporary, unpaid leave from employment for a set period of time. Furloughs can be voluntary or mandatory and can be taken in full or partial-week increments. Furloughs are commonly implemented when companies suffer economically to the point where they cannot afford to pay employees for the short-term foreseeable future, something countless businesses are currently experiencing with the outbreak of the COVID-19 virus and government response thereto.

When implementing a furlough, it is essential to be clear as to why it is happening and to ensure temporary leaves or reductions in hours are not being carried out in a discriminatory manner.

A second consideration is whether or not an employee is exempt for overtime purposes. For non-exempt, hourly employees, employers can generally reduce the employee's hours at the employer's discretion, so long as the employee is paid for all hours actually worked. If a non-exempt, hourly employee has her hours completely eliminated for a limited time, they may qualify for and apply for unemployment benefits. If the employee has her hours reduced, she may be eligible for the New York State Shared Work Program, which provides similar benefits to underemployed individuals as it does to the unemployed. Some employers prefer this option as it allows them to keep employees on payroll while significantly reducing costs, however, to participate in the Shared Work Program employers may not reduce employee benefits.

For exempt employees, reducing hours is more complicated as these employees typically receive the same salary no matter how many hours they work. The easiest way to furlough an exempt employee is to have them perform no work at all for week-long increments. As long as no work is performed, an employer need not pay the employee for that week and the employee may apply for unemployment benefits for the periods of time they are not working. Alternatively, an employer can reduce an exempt employee's normal hours in a week and their salary accordingly, so long as the salary does not drop below the legal minimum amount to meet the salary exemption.

One other consideration is whether or not employees who have their hours reduced will lose their benefits. Employers and employees should consider reviewing and potentially revising their benefit plans to allow fringe benefits to continue for employees whose hours may be reduced to less than full time. If employees lose their health insurance, for example, as a result of a furlough or reduction in hours, this counts as a "qualifying event" under the Consolidated Omnibus Budget Reconciliation Act ("COBRA") and employers must give affected employees notice of their right to receive continuation coverage.

Finally, please note that if you are a part of a union, the terms of your collective bargaining agreement ("CBA") will govern in the event of a furlough or reduction in employment. If you have questions about your rights under a CBA, you should consult with your union representatives or an attorney.

WARN/Reduction in Force Considerations

For employers with 25 of more employees, they must also take into consideration the federal and New York State Worker Adjustment Retraining Notification Acts ("WARN" Acts). Under the WARN Acts in New York, where affected employees suffer a reduction in hours of more than 50% or are completely laid off for a period lasting more than six months, employers are generally required to provide at least 90 days' advance notice and also must notify any applicable union representative, the New York Department of Labor, and the Local Workforce Investment Board.

However, where the reduction in force is unexpected and due to an unforeseeable circumstance, the 90-day period does not apply, but employers are still required to provide as much notice as is practicable under the circumstances. Employers with 25 or more employees who are anticipating a mass layoff or furlough are strongly advised to consult with counsel and ensure any applicable notice requirements are met.

Force Majeure in the Time of COVID-19

Force majeure, sometimes also called an "Act of God," refers to an unforeseen event that makes the performance of one's obligations under a contract virtually impossible. It is common for contracts to contain provisions that specifically state what the parties' obligations are in the event of a force majeure and whether or not their duty to perform is excused. However, in the absence of a force majeure clause, parties may be left scrambling to determine what their obligations and liabilities are if they are unable to continue fulfilling their contracts.

While it seems likely that the COVID-19 pandemic would trigger the application of force majeure provisions, it is strongly advised that you review your contracts closely with counsel to fully understand what your obligations may be in these uncertain times. Speaking with counsel is even more essential if you have contracts or ongoing obligations that do not have specific terms regarding what happens in the event of a force majeure, as you may have to consider whether common law doctrines--such as impossibility--would excuse your non-performance. This is a high standard to meet, but for some entities and contracts, a pandemic during which many businesses are being ordered closed could excuse performance even in the absence of an express provision in the agreement.

Overall, if you have contractual obligations that you are struggling to meet, you should speak with your attorney right away. Please also keep in mind that state and federal lawmakers are expected to enact additional, specific legislation to address the impacts of the COVID-19 pandemic that may affect this analysis. In fact, some industries have already seen rules and regulations being adjusted in response to the crisis.

We at Lloyd Patel will continue to stay abreast of ongoing developments that may impact our clients and are doing all we can to meet our clients' needs during this extraordinary time. We hope you are all staying healthy and safe and please know that we are here for any questions you may have.

Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.



Legal Update - March 2020

Yogi Patel - Wednesday, March 04, 2020

Dear Valued Clients, Colleagues and Supporters: This month's newsletter will focus on: 1) Liability for Foreign LLC Owners in Wage and Hour Cases; 2) Recent Enforcement of New York City's Sick Leave Law; and 3) An Update to the Federal Joint Employer Rule.

Liability for Out-of-State LLC Owners

As of February 10, 2020, the ten largest owner members of out-of-state limited liability companies can be held liable for wage and hour violations under New York Labor Law. Previously, the law only allowed for personal liability against members of New York (domestic) LLCs. Now, members of LLCs formed out of state but doing business in New York can be held personally liable for wage and hour violations involving employees. To establish such liability, an employee must first be awarded a judgment against the LLC itself, demonstrate that it has been unpaid, and then give the LLC members advanced written notice that they may be held personally liable. Member liability is "joint and several," meaning each applicable member may be required to pay the full amount, though they may seek reimbursement from the other members.

Enforcement of NYC Sick Leave Law

In a case that has made headlines, a Chipotle employee who works in Manhattan has demonstrated the consequences for employers if they do not abide by the New York City's Paid Safe and Sick Leave Law (the "Law"). As we have previously covered, the Law entitles employees of New York City businesses with 5 or more workers to accrue up to 40 hours of paid time off for various uses, including caring for ill family members. This particular employee was fired by Chipotle for missing work to care for her sick father and pregnant daughter last fall. The employee filed a complaint with the Department of Consumer and Worker Protection in January, which resulted in the employee receiving her job back, payment for the sick leave she was entitled to, plus an additional $2,500 for her retaliatory firing. Employers should take note and ensure their leave policies are in compliance and their managers are well-trained to avoid violations and swift penalties.

Update to Federal Joint Employer Rule

Under the Fail Labor Standards Act, ("FLSA"), the main federal statute on wage and hour laws, it is possible for an employee to have multiple "employers" for the purposes of establishing violations under the FLSA. Whether an employee has more than one employer is assessed under the "joint employer" doctrine. As of March 16, 2020, the new rule regarding the joint employer doctrine as released by the Department of Labor sets forth a four-factor test in assessing whether a business is a joint employer. The rule requires looking at whether the alleged employer 1) can hire or fire the employee; 2) can supervise or control the employee's work schedule or conditions of employment to a substantial degree; 3) can determine the employee's rate or method of pay; and 4) maintains employment records. These factors are weighed together and none is dispositive alone. While this rule is very similar to the previous rule, the DOL made it clear that a second employer must actually exercise one of these factors, not just theoretically have the ability to do so. Business owners, particularly those that share resources and staff with others, are encouraged to discuss the joint employer doctrine with their counsel to fully understand their rights and obligations.


Readers are encouraged to follow us on Twitter (@lloydpatelllp) and Facebook to receive updates on these and other issues throughout the month.



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