Plan, Prepare, and Respond to Coronavirus!

The Cromeens Law Firm is here to help you with any questions you may have about your business during the Coronavirus crisis. During this Coronavirus crisis, many of us, as well as our country’s leaders and medical professionals, have more questions than answers, and in return, many of our clients are concerned about how this pandemic will affect their business. In this article, we discuss important information on local stay at home orders, Department of Labor regulations, managing active projects and employment during this pandemic.

Sections

Loans through the SBA and the CARES Act
Tax Credit for paying out the paid the Sick Leave Act or the Family Medical Leave Expansion Act due to the Coronavirus

Small Business Exemptions from the Families First Coronavirus Response Act
DOL Workplace Notices
Stay at Home, Work Safe Order for Harris County and City of Houston
Stay at Home, Work Safe Order for Bexar County & San Antonio
Employers
FMLA Expansion Act
Sick Leave Act
Active Projects and Force Majeure
Stay at Home, Work Safe Order & Guidance for the Construction Industry for Travis County & Austin

Loans through the SBA and the CARES Act

There is a lot of buzz right now around multiple new loans that are available to small businesses through the Small Business Association (SBA) and the CARES Act. These loans were created to help get small businesses through this pandemic.  Here at The Cromeens Law Firm we are here to be your partners through this trying time. We have thoroughly reviewed the loan requirements and the governments’ bills and acts that these programs are stemming from. We have seen some misinformation go out from other sources regarding these loans. We want to make sure that you are making the best and most accurate decision for your business, so we have created a review of the programs for you. Below is an outline of the CARES loan, the Paycheck Protection Program, and the Economic Injury Disaster Loans (EIDL).

The Paycheck Protection Program (PPP) is designed to provide an incentive for small businesses to keep workers on their payroll. The SBA will forgive PPP loans if all employees are kept on the payroll for eight weeks and the money is used for payroll. There is some discussion between the agencies right now as to what exactly is forgivable. The SBA website says that the loan is forgivable if you use the money for payroll, rent, mortgage interest, or utilities. However, this is a government agency’s website and not the actual bill. The CARES bill, where the PPP forgiveness is located, states that up to the full amount can be forgiven, but distinctly clarifies that the payroll section of the loan “shall” be forgiven while the rest of the loan forgiveness will be discretionary. You can apply for this loan through any existing SBA 7(a) lender, and I have attached a PDF of those institutions here.

Who can apply? Any small business with less than 500 employees can apply for this loan. This includes sole proprietorships, independent contractors and self-employed persons), private non-profit organizations or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.

Any other important information?

  • Loan payments will be deferred for six months
  • No collateral or personal guarantees required
  • There will be no fee to acquire this loan
  • The loan will likely have a maturity of 2 years and an interest rate of 1%, but we have also seen a maximum maturity of 10 years and an interest rate of up to 4%.

The SBA also provides Economic Injury Disaster Loans (EIDL). If you apply for this loan, it is eligible to receive an advance of up to $10,000. An advance should be made available to you within 3 days of a successful application. The loan advance will not have to be repaid. The loan itself acts as a standard SBA loan. This means that the loans are low-interest rates and you can borrow up to $2,000,000. The SBA can defer interest for up to 4 years. You may use this loan to pay for expenses that could have been met had the disaster not occurred, including payroll and operating expenses.

Who can apply for the loan?

Any small business with less than 500 employees can apply for this loan. This includes sole proprietorships, independent contractors and self-employed persons), private non-profit organizations or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.

Any other important information?

  • The SBA can defer interest for up to 4 years
  • You may use this loan to pay for expenses that could have been met had the disaster not occurred, including payroll and operating expenses.
  • Applying for this loan does not exclude you from applying for the PPP loan.

Bankruptcy: Chapter 7 and 11

While there are the options of the PPP and EIDL loans, sometimes the short-term relief of the loans cannot hold the business up.

Forecasting the future is difficult due to the social distancing requirements being extended and the Stay Home Orders are being extended. The important question is this: What is the business impact if these measures are extended to May 31st or June 30th?

When evaluating your business and its viability in this uncertain time, there are some factors to take into consideration. What will the recovery curve look like before you return to pre-virus business levels? Whether that answer is 1 month or 1 year, we are here to advise you.

Your company’s creation and success are built from thousands of hours of dedication and time away from those you love, and it deserves to be protected.  At the Cromeens Law Firm, our true purpose is to protect and defend all that you have worked hard for and be your partner in business. Please contact The Cromeens Law Firm so that we can advise on the viability of the federal loans assisting your business and weigh them against other options such as bankruptcy. We know this is a scary time for many of us, but we are here to support you and want you to know, you do have options.

Tax Credit for paying out the paid the Sick Leave Act or the Family Medical Leave Expansion Act due to the Coronavirus

Many of you may have heard about a possible tax credit if you end up having to pay out the paid sick leave or family medical leave to your employees due to the Coronavirus, but are you wondering if your business qualifies for the credit and how much the credit may be? Here at The Cromeens Law Firm we want help you navigate the waters during this trying time, in doing so we have created a basic explanation of the possible tax credits you may be entitled to receive.

The Federal Government has provided tax credits in the event you as an employer pay an employee wages under the Sick Leave Act or the Family Medical Leave Expansion Act to help lessen the burden of employers retaining their employees instead of furloughing or laying them off.  You as an employer are required to pay payroll taxes each calendar quarter on the wages paid to all your employees. When the second calendar quarterly payroll tax is due, you could be entitled to a tax credit. This amount would be the total amount of wages you have paid any employees, if any, under the Sick Leave Act and Family Medical Leave Expansion Act. For example, if your second quarter payroll tax amounts to $5,000 and during the second calendar quarter you paid two employees under the Sick Leave Act in the amount of $3,000, you would receive a credit against the $5,000 in the amount of $3,000.  The tax credit cannot exceed the total tax liability for the payroll tax. In the event there is an excess, for example: your payroll tax is $5,000 but you paid out $7,000 to your employees under the relevant Acts, your tax break will not exceed the $5,000 requirement. You would claim the tax credit of $5,000 and the excess of $2,000 will eventually be refunded by the government.

While this tax credit could help alleviate some, if not all, of your extra labor expenses incurred from having to pay the coronavirus leave, it does not provide immediate relief. It should also be noted that the tax credit will be counted as income for you, the employer when you file your taxes at the end of the year. However, this shall not apply with respect to any employer for any calendar quarter if you elect (at such time and in such manner as the Secretary of the Treasury (or Secretary’s delegate) may prescribe) not to have this section apply. For more information please visit the IRS website.

Small Business Exemptions from the Families First Coronavirus Response Act

We have pulled some important information for you from the Department of Labor’s (DOL) website about the small business exemption for the paid sick leave and the family medical leave expansion act that was included in the Families First Coronavirus Response Act on March 18th, 2020.

When does the small business exemption apply to exclude a small business from the provisions of the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act?

An employer, including a religious or nonprofit organization, with fewer than 50 employees (small business) is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern. A small business may claim this exemption if an authorized officer of the business has determined one of the following:

  1. The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
  2. The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
  3. There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.

If I am a small business with fewer than 50 employees, am I exempt from the requirements to provide paid sick leave or expanded family and medical leave?

A small business is exempt from certain paid sick leave and expanded family and medical leave requirements if providing an employee such leave would jeopardize the viability of the business as a going concern. This means a small business is exempt from mandated paid sick leave or expanded family and medical leave requirements only if all of the following three conditions are met:

  • employer employs fewer than 50 employees;
  • leave is requested because the child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; and
  • an authorized officer of the business has determined that at least one of the three conditions described in the questions above is satisfied.

The Cromeens Law Firm encourages employers and employees to collaborate to reach the best solution for maintaining the business and ensuring employee safety. The regulations provided by the DOL so far are still very vague and we recommend that you give us a call to discuss your exemption status before taking any action. We can guide you through this and help you make the best decisions for the viability of your business.

DOL Workplace Notices

As you have heard, the Families First Coronavirus Response Act was passed into law last week requiring employers to payout paid sick leave or FMLA for those affected by the Coronavirus. The DOL just came out with an update in regards to this act. The poster, linked below, is required to be on display at ALL businesses no later than April 1, 2020. *If your company qualifies for the exemption (details above), it is still recommended that you post the poster.

The non-federal employee poster can be found here:

The federal employee poster can be found here:

The FAQ’s for this posting can be found here:

This must be posted by April 1st at your offices and on ALL job sites. If you have employees working remotely, it is recommended you email it to those who are at home.

We are still closely monitoring the Department of Labor’s website for potential forthcoming regulations issued, which may affect your liability under the Act.

Stay at Home, Work Safe Order for Harris County and City of Houston

As of 8:15 am this morning, March 24, 2020, Harris County Judge Lina Hidalgo, in coordination with Houston Mayor, Sylvester Turner, issued a Stay at Home, Work Safe Order effective tonight at 11:59 PM, March 24, 2020, through at least April 3rd, 2020.

Per the order, all businesses operating within Harris County & the City of Houston, except Essential Businesses, are required to cease all activities at facilities located within the County. To the greatest extent possible, all Essential Businesses shall comply with the Social Distancing Guidelines, including maintaining six-foot social distancing for both employees and the general public.

Per the order, Essential Businesses include:

  • Essential Services Necessary to Maintain Essential Operations of Residences or Other Essential Businesses:
    • For example, Plumbers, electricians, exterminators, yard and maintenance crews, housekeepers, janitorial staff, pool cleaners and other service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operations of residences and Essential Businesses.
  • Infrastructure, Development, Operation and Construction:
    • For example, public works construction, construction of housing, or other types of construction including commercial, manufacturing, airport operations and aircraft manufacturing, maintenance or repair, water, sewer, gas, electrical, oil refining, roads and highways, public transportation, solid waste collection and removal, internet and telecommunications systems (including the provision of essential global, national, and local infrastructure for computing services, business infrastructure, communication and web-based services).

You can view more information on the Houston order here.

All businesses that are not essential are to seize operations, or have employees work from home if able. Restaurants will remain open for takeout, delivery and drive through. Daycares that provide support for essential employees will remain open.

If someone in the household is diagnosed with COVID-19, the entire household is mandated to isolate and cannot go to work, even if they are an essential employee.

Stay at Home, Work Safe Order for Bexar County & San Antonio

As of 6:00 pm yesterday, March 23, 2020, Mayor Ron Nirenberg and Judge Nelson Wolff issued separate but joint Stay Home, Work Safe Orders to mitigate the spread of COVID-19. The Stay at Home, Work Safe Order is effective tonight at 11:59 PM, March 24, 2020, and will potentially last until April 9th, 2020.

Per the order, all businesses operating within Bexar County & the City of San Antonio, except those engaged in Exempted Activities or Exempted Businesses, are required to cease all activities at facilities located within the County. To the greatest extent possible, all Exempted Businesses and Exempted Activities shall comply with the Social Distancing Guidelines, including maintaining six-foot social distancing for both employees and the general public.

Per the order, Exempted Businesses include:

  • Services to Maintain Operations of Residences or Support Exempted Businesses:
    • Mail & shipping services
    • Plumbers, electricians, exterminators, moving services and other service providers who provide services to maintain the safety, sanitation, and operations of residences.
  • Infrastructure:
    • Businesses related to public works construction, construction of housing, commercial construction, airport operations, water, sewer, gas, electrical, oil refining, roads and highways, and public transportation.

You can view more info on the San Antonio order here.

Employers:

In an effort to navigate the next few weeks with the Coronavirus pandemic, already spreading across the United States, we have been receiving many questions and concerns from our customers about how to proceed with managing their employees.

I want to highlight 3 points on how to handle your relationship during these times of pandemic.

  • Point Number 1: If you have a paid suspension policy, a paid sick leave policy, or any other similar policy, and the employee asks for it, you should honor him. Let the employee take it.
  • Point number 2: If you have an employee who is not under any of those policies and you decide to let them go, you can do so. You have the option to fire your workers, although not ideal, they would be eligible to collect unemployment benefits and when the job returns to normal, you can rehire them.
  • Point number 3: If you are going to send an employee home, but not fire them, a situation like working from home or just pausing operations, in that situation you need to call us. Depending on the type of worker you have and how they are paid, there is a different answer for each classification of worker with whom you have contact.

Ultimately, we will keep up to date with all the news as it comes out, so any government-given regulations, be it from the state or the federal government, we will be following up on and reporting updates if any of those things change. For now, the laws remain the same as to how you should pay your employees. Currently, we’ve gathered the most important information you need to know about the new Coronavirus First Families Response law, and how you and your business should react.

On March 18, the US Government enacted the Families First Coronavirus Response Act. We’ve put together a summary of the Act as it pertains to your liability to your employees. Effective April 2 through December 31, the Act changes a company’s liability to its employees regarding paid leave in certain circumstances.

The Cromeens Law Firm is here to walk alongside you and guide you during this stressful time.

FMLA Expansion Act:

  • If an employee cannot work from home and needs to stay home to care for a child under 18, who cannot go to school or daycare, they are entitled to paid leave for up to 12 weeks at 2/3 pay.
    • Applies to an employee who has been employed for 30 days and to all employers with less than 500 employees.
    • Calculated at no less than 2/3 of their normal pay, but also no more than the $200/day or $10,000 overall.
  • The Department of Labor could issue regulations exempting small business of fewer than 50 employees from this expansion act, but as of now has not done so.
  • All other FMLA qualifying circumstances are governed by the original FMLA requirements and remains unpaid leave.

Sick Leave Act:

  • If an employee meets one of six categories and cannot work from home, the employee is entitled to 10 days of paid sick time, to be taken before any sick time related to a company policy is put into effect. The six categories are:
  1. Employee is subjected to a mandatory government quarantine
  2. Employee has been advised by a health care provider to self-quarantine
  3. Employee is experiencing Coronavirus symptoms and is seeking treatment
  4. Employee is caring for an individual who is subject to the first two categories listed
  5. Employee is caring for a child if the school/daycare is closed
  6. The employee is experiencing any other substantially similar conditions specified by the Secretary of Health and Human Services
  • Employees are qualified no matter how long they’ve been with the company and applies to employers who are qualified under the FLSA (15 or more employees).
  • Paid sick leave is calculated at the employee’s normal rate multiplied by hours normally worked each day during the two weeks (no more than 80 hours total) and capped as follows:
    • If the employee is at home for either Nos. 1, 2, or 3 above: $511 per day and $5,110 total
    • If the employee is at home for either Nos. 4, 5, or 6 above: $200 per day and $2,000 total
  • Penalties under this are equivalent to the FLSA penalties, which means full payment of wages for the two weeks, which would be automatically doubled, plus attorneys’ fees.

Helpful Tips:

  • You are entitled to ask for proof of the reasons the employee is seeking the paid leave/sick pay. Ask for a doctor’s note at the very least.
  • You can still lay off employees; however, before doing so, you need to call The Cromeens Law Firm to thoroughly evaluate any risks or liabilities.
  • Try and find ways for your employees to be able to work from home, if at all possible. It may be worth investing in electronics and technology for all your employees to continue working from home.

Each company and its workforce is unique and should be determined on a case-by-case basis by your friendly Cromeens Law Firm attorney. We’re here to help you work through this process. We can meet with you via phone and video calls to practice social distancing.

Active Projects and Force Majeure

We have been receiving many questions from our clients regarding the Coronavirus pandemic that is affecting us all, not only in our country but globally. One of the most common questions our customers ask is how to deal with delays caused by the Coronavirus pandemic, and also any contractual obligations they have to meet during that period.

In response to this, it is important to note that in your standard construction contracts you will have what is called a force majeure clause. What this clause does specifically is that it allows some relief from the responsibilities under your contract during a time of natural disaster or a pandemic. Specifically, there are three requirements that you must satisfy in order to have a Force Majeure.

  1. There must be an event that is beyond your control and that affects your ability to do your job. This event is a natural and/or unavoidable catastrophe that interrupts the expected course of events and restrict participants from fulfilling obligations.
  2. The event must be external to the parties and unforeseeable.
  3. It is necessary that you try and mitigate and reduce any damage that may occur due to this pandemic and/or event that occurs.

On this particular occasion, because we are experiencing required social isolation, this is affecting some of our contractors’ ability to get out and work. This would be a valid defense against any late cost overruns you may have or against any breach of contract threats you may have.

To effectively establish the force majeure clause, you must be sure to document all your efforts. On this particular occasion, because this pandemic is affecting the country as a whole, it may be very difficult for you to mitigate its damages, but you must document all of your efforts to cure. Your general mitigation would be to possibly find limited workers and use different distributors, however, because this is affecting the United States as a whole, you can almost be certain that Coronavirus would be considered Force Majeure by any competent court of law.

The Force Majeure clause prevents you from being responsible for any delay caused because you cannot keep your workers there on the construction site or any delay caused because you are practicing social isolation, as we all must do in these times.

In case you are working on a construction project without a contract, there are still defenses in the law that can help you. While we advise that for any construction work you do, you are under a contract, in the event you don’t have one, the law still offers you relief. For this, there is the doctrine of frustration and the doctrine of impossibility. These doctrines also follow the lines of the Force Majeure clause, there must be some form of external influence that prevents you from doing your job, and that exists outside your control.

If at any time you have questions or concerns regarding your potential liability risk due to Coronavirus or due to lack of work caused by social isolation, you can always contact our office. We offer contract review, and if you are facing conflicts or litigation regarding delays caused by the Coronavirus pandemic, give us a call, we are here to help you navigate these difficult times.

Follow us on social media for more COVID-19 updates. We will continue to post updates on how the Coronavirus may be affecting your business and what legal action you can take.

Stay at Home, Work Safe Order & Guidance for the Construction Industry for Travis County & Austin

The Travis County Order, Austin Order, and Austin Guidelines detail a list of construction projects that can continue to operate during the time the Orders are in place. While there is competing information between the three documents, and attorneys in this field, it seems that any construction project included in the Essential Businesses, Essential Government Functions, or Critical Infrastructure categories, can move forward as planned.

The City of Austin issued a document called “Guidance for the Construction Industry” (Austin Guidelines) late Tuesday evening, March 24, 2020, after Travis County issued a Stay Home, Work Safe Order (Travis Order). Travis County and the City of Austin’s Stay Home, Work Safe Order states that the construction industry is considered a portion of Critical Infrastructure. Here is a link to the City of Austin Stay Home, Work Safe Order (Austin Order).

The Austin Order specifically states that Critical Infrastructure includes “construction” and further, Section P within the Austin Order does not have language that prohibits construction outside the listed sectors, like public works, affordable housing, etc. Additionally, construction projects “that supports essential uses, including essential businesses, government functions, or critical infrastructure” are exempt from the Stay Home, Work Safe Order.

The Austin Guidelines, full document linked here, allow a project to move forward if construction “involves one of the specific types of essential and critical facilities listed in Exhibit B, Part 2.p.” This list includes “construction of facilities that are defined in the Order as Essential Businesses, Essential Government Functions, or Critical Infrastructure.”

“Essential Business” is defined as healthcare operations, stores that sell groceries and other essential supplies, social services and charitable organizations, news media, gas stations, and business needed for transportation, financial institutions, hardware and supply stores, laundry services, restaurants for consumption off-premises, supplies to work from home, businesses that supply essential businesses, critical infrastructure and essential government functions, transportation, home-based care services, residential facilities and shelter, hotels and motels, funeral services, educational institutions, and childcare facilities.

Lastly, the Austin Order exempts construction on “critical infrastructure.” This term refers to all industries and businesses included in the U.S. Department of Homeland Security Cyber and Infrastructure Security Agency’s (“CISA”) Essential Critical Infrastructure Workforce memorandum, dated March 19, 2020. Within the Essential Critical Infrastructure Workers sector are eight subsectors: entertainment and media, gaming, lodging, outdoor events, public assembly, real estate, retail, and sports leagues. The Austin Order seems to broaden the categories of projects that contractors may continue working on to include hotels, motels, shopping centers, apartment buildings, mixed-use facilities, and retail centers.

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