News and Articles

Legal Update - COVID-19 and the Road Ahead

Yogi Patel - Tuesday, April 21, 2020

Dear Valued Clients, Colleagues and Supporters: We wish you continued health and safety and in the spirit of solidarity and cooperation, below is our fourth newsletter installment with COVID-19 oriented information. Our three previous editions can be found here, here and here.

The Road Ahead

As the dust begins to settle and states begin to formulate policies to re-engage, we believe it is important for employers and employees to start preparing and planning for the new normal.

Absent a medical breakthrough, we anticipate that over the next few months, states will issue additional rules and regulations governing the work-place in response to COVID-19 - on top of the numerous regulations and guidelines that have already been issued over the last month alone. As businesses are permitted to re-engage, it is imperative that employers and employees understand existing regulations and begin to think of strategies to implement these and future regulations in order to remain in compliance and mitigate liability.

To that end, join partner Yogi Patel, Esq. (Lloyd Patel LLP) and immigration law attorney Steve Maggi, Esq. (SMA Law Firm) for a discussion focused on COVID-19 and its effect on businesses and their employees moving forward. The discussion will touch on regulations governing essential businesses, what happens when an employee contracts COVID-19 and what benefits are currently available under State and Federal law. We will also discuss employers with foreign workers and how they can manage the crisis while keeping in mind immigration-related obligations and consequences and what strategies and best practices should be implemented as we look ahead to the new normal.

This webinar is scheduled for April 22, 2020 at 10:00am and sponsored by lawline.com. We hope you can join us. Register here.

 

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 - April 1st

Yogi Patel - Wednesday, April 01, 2020

Dear Valued Clients, Colleagues and Supporters: We wish you continued health and safety and in the spirit of solidarity and cooperation, below is our third newsletter installment with COVID-19 oriented information. Our two previous editions can be found here and here.

Federal Small Business Assistance

On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which allocated billions of dollars in loans and disaster funding for small businesses. These loans, many of which are fully or partially forgivable, are intended to provide much need financial assistance for businesses struggling to make payroll and keep their employees working. The US. Senate Committee on Small Business & Entrepreneurship put out a guide on SBA loans under the CARES act, portions of which are highlighted below.

Paycheck Protection Program

This application is now available at the following website: fundera.com. Please be advised that we have no affiliation with this site, but are just sharing it because it is the only one we know of currently accepting applications for this program.

One of the most essential forms of relief available for small business is provided under the "Paycheck Protection Program", which provides 100% federally guaranteed loans to employers for the purposes to maintaining payroll during the pandemic. Generally speaking, as long as employers keep up their payroll payments, these loans are forgiven for up to eight weeks of payroll, depending on salary levels. Repayment of loans can also be deferred for six months to a year and come with no associated fees.

To qualify, businesses, including non-profits, sole proprietorships, independent contractor, and the self-employed, must have been in operation as of February 15, 2020, and have less than 500 employees. Loans are available through June 30, 2020 and are retroactive to February 15 to give businesses an opportunity to bring back workers who have been laid off already. The loan monies can be used to cover payroll costs, benefits, mortgage interest payments, rent, utilities, and interest on other debt obligations.

The amount of each loan is typically calculated as 250 percent of your average monthly payroll costs from February 15, 2020 - June 30 2020. The maximum term of a loan is 10 years at an interest rate of 4 percent. The amount of the loan that is forgiven is equal to the payroll costs during the same 8-week period from the previous year (excluding compensation of $100,000) plus morgue interest payments, rent, and utilities. There should be further guidelines on how to apply for these loans and which entities are authorized to grant them.

Economic Injury Disaster Loans & Emergency Economic Injury Grants

This application is now available at the following website: sba.gov

Small business, non-profits, independent contractors, sole proprietorships, tribal small business, and cooperatives/employee owned business can apply for an advance of up to $10,000 as a forgivable grant and offset against the PPP loan. This amount is supposed to be paid out within 3 days of applying and does not have to be repaid under any circumstances.

You can still apply for a loan under the Paycheck Protection Program if you receive an emergency loan, though the PPP loan will be reduced by whatever emergency amounts you receive.

Families First Coronavirus Response Act FAQ Update

The United States Department of Labor recently updated its frequently asked questions page to address common inquiries and concerns regarding the newly available benefits for workers who need to take leave due to COVID-related reasons. As we previously covered, both the New York State and federal governments passed emergency legislation expanding the permitted reasons for taking leave from work and available related benefits under for who are infected with COVID-19, are under quarantine, or have to care for a child whose school is closed due to the pandemic. The federal benefits become available as of April 1, 2020.

The DOL's FAQ page clarifies to which business the new federal legislation applies, how to calculate the amount of pay an individual will receive under various circumstances, what benefits are provided for each reason for taking leave, how the new laws interact with previous laws, and what happens if your place of business closes or you are furloughed. One particularly important clarification the DOL provided is that a worker who has the technological capability to work from home but cannot actually work because he or she is caring for a child whose school has closed is "unable to telework" and is therefore eligible for benefits under the Act. The DOL also clarified that leave may be taken intermittently and may, under certain circumstances, account for lost overtime hours. While there are too many specific issues addressed to cover in one newsletter, we are available to discuss any specific questions or concerns you may have about your particular situation.

There should be additional information available in the coming days and weeks regarding not only what benefits are available, but how individuals and business go about applying for them. As soon as the regulations, guidance, or other guidelines are published, we will do our best to summarize them in another newsletter.

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 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.




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