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PPP Loan Forgiveness changes coming as Senate passes House bill

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Michels & Hanley CPAs, LLP COVID-19 – PPP Loan Forgiveness changes coming as Senate passes House bill
June 4th, 2020 | Client Alert

The U.S. Senate passed the House version of Paycheck Protection Program (PPP) legislation last night, tripling the time allotted for small businesses and other PPP loan recipients to spend the funds and still qualify for forgiveness of the loans.

The bill passed in a unanimous voice vote hours after Wisconsin Sen. Ron Johnson initially blocked it. Among the key provisions is a change in the threshold for the amount of PPP funds required to be spent on payroll costs to qualify for forgiveness to 60% of the loan amount.

The Senate approval sends the House bill, called the Paycheck Protection Flexibility Act, to President Trump, who is expected to sign it.

The vote had to be unanimous because the Senate is not officially in session. That meant that any senator could force the matter to be delayed until the Senate returned to Washington with enough members for a quorum and a vote.

Leaders from both parties in the Senate pushed to pass the legislation on Wednesday as the clock on the initial eight-week window was nearly expired for the first recipients of PPP loans.

Following is a summary of the legislation’s main points compiled by the AICPA:

• PPP borrowers can choose to extend the eight-week period to 24 weeks, or they can keep the original eight-week period. This flexibility is designed to make it easier for more borrowers to reach full, or almost full, forgiveness.

• The payroll expenditure requirement drops to 60% from 75% but is now a cliff, meaning that borrowers must spend at least 60% on payroll or none of the loan will be forgiven. Currently, a borrower is required to reduce the amount eligible for forgiveness if less than 75% of eligible funds are used for payroll costs, but forgiveness isn’t eliminated if the 75% threshold isn’t met.

• Borrowers can use the 24-week period to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness. This must be done by Dec. 31, a change from the previous deadline of June 30.

• The legislation includes two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. Previous guidance already allowed borrowers to exclude from those calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. The new bill allows borrowers to adjust because they could not find qualified employees or were unable to restore business operations to Feb. 15, 2020, levels due to COVID-19 related operating restrictions.

• Borrowers now have five years to repay the loan instead of two. The interest rate remains at 1%.

• The bill allows businesses that took a PPP loan to also delay payment of their payroll taxes, which was prohibited under the CARES Act. If you have questions Michels & Hanley CPAs, LLP is here to assist.

The New Workplace: Part II – Moving Forward

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The New Workplace: Part II – Moving Forward
May 18th, 2020 | By Jules Halpern Associates | Employee Attendance, Employee Performance, Employee Schedules, Employer Liability, Employer Policies, Employment Law, Employment Trends, Human Resources, Management, Working from Home, Workplace Culture

In Part I of our “New Workplace” series we explored what employers need to do as they transition back to the workplace. With most states beginning the process of reopening, and the expiration of the New York PAUSE order on May 15, this article will examine employers’ responsibilities once they reopen, and what they need to do moving forward.

Reassure your Employees
These are uncertain times, there is no way around that. Many employees may feel anxious about returning to work. Employees’ health and safety are a top priority must be a top priority, and it is the employer’s responsibility to take steps so that their employees feel safe in the workplace.

In order to do this, employers need to regularly review the latest CDC, OSHA, and local government COVID-19 guidance. Follow this guidance to guarantee that your workplace is as safe as possible. Doing so will help to limit the spread of the virus.

New Workplace Protocols

Personal Protective Equipment
CDC guidance recommends that individuals wear face coverings to protect others. To keep the workplace as safe as possible, we advise employers to require face masks or cloth face coverings. Employers may want to consider other personal protective equipment (“PPE”) such as latex gloves to employees depending on the work environment. OSHA requires employers to provide any mandated PPE to employees. If an employee with a disability needs a reasonable accommodation under the ADA or state/local discrimination laws in relation to wearing PPE (e.g., non-latex gloves), you must provide these as well, absent the accommodation causing the organization an undue hardship.

If you have customers or visitors in the workplace, you may want to require them to wear appropriate PPE as well. Employers are not required to provide customers or visitors with PPE.

Health Screenings
Employers will also need to determine whether they will conduct health screenings, such as taking employees’ temperatures upon arrival to the workplace. Employers must keep in mind that not all individuals with COVID-19 run a fever. Therefore, temperature screening may not be an effective method to control the spread of the virus. If an employer decides to conduct any health screenings, it needs to apply the practices uniformly to avoid any potential discrimination claims. Additionally, employers must keep all records gathered from screening strictly confidential in order to comply with the Americans with Disabilities Act (“ADA”).

Social Distancing Plan
We also recommend that employers review their workplace layout to ensure employees can maintain adequate social distancing throughout the day. This includes considering whether signage, floor markings, or other precautions need to be added to the workplace. If possible, an employer can also open entrances and exits so that no one is touching doorknobs or handles. Rules can be established as to the number of passengers in building elevators at any one time.

Once you have created and written your new social distancing plan, distribute it to employees to ensure they have received and understand the strategy. Encourage follow-up questions and make sure that employees feel comfortable with the plan. Employers need to reevaluate the plan on a regular basis to maintain consistency with any updates to government guidance.

Staggered Schedules
Employers may also want to consider whether employees can return to work on staggered schedules to ensure social distancing and limit the number of people using mass transit at a given time. If you implement a staggered schedule, you need to be aware that this could raise wage and hour issues and affect an employee’s unemployment benefits.

If you bring back employees on a partial or staggered schedule, be sure that you do not make any promises, guarantees or representations to employees.

Plan for Potential Issues

COVID-19 Symptoms
Once the workplace reopens, employers need to have protocols in place to handle an employee who tests positive for COVID-19. If an employee arrives to work with symptoms of COVID-19, such as a fever, cough, or shortness of breath, or becomes sick during the day, that employee should immediately be separated from other employees and sent home. Encourage employees who feel sick to stay home and follow the appropriate call-in procedures to report their illness.

If an employee is sick with COVID-19 symptoms, urge them to seek medical attention and get tested. If the employee is confirmed to have COVID-19, employers should inform other employees of their possible exposure to COVID-19 in the workplace. However, employers must maintain strict confidentiality of the sick employee’s identity to avoid violating the ADA.

As soon as an employer receives confirmation of an employee’s positive test, we recommend that the employer ask the infected employee what colleagues they have had “close contact” with over the previous 14 days. The CDC defines a close contact as any person that had been within six feet of the infected employee for a prolonged period of time.

Any employee who had close contact with the sick employee needs to self-quarantine for 14 days to help prevent the spread of the virus. Employers need to consider whether they will allow these individuals to use paid time off. The quarantining employees may also be eligible for paid sick leave under the Families First Coronavirus Response Act if they exhibit symptoms and are seeking medical attention, or they are advised to self-quarantine by a doctor.

We recommend that employers establish a return-to-work protocol for employees that have tested positive for COVID-19, such as a doctor’s note clearing them for return.

Employee Anxieties
Employers need to be prepared for employees who express fear of exposure to the coronavirus. These employees may refuse to return to work or demand to work remotely. These anxieties are understandable given the uncertainty regarding the virus and its effects. Employers must decide how they will handle these employees.

In order to make employees feel more comfortable returning, employers can reassure employees that they are making every effort to keep the workplace safe and taking all the necessary precautions to protect employees. In addition, employers should inform employees that governmental guidelines are being closely followed. If an employee is in a vulnerable population or has a comorbidity and expresses anxiety about return to work, there may be discrimination issues that need to be analyzed before making a decision.

Employees also need to be prepared to address safety concerns from groups of employees. Keep in mind that employees’ concerted activity is protected under the National Labor Relations Act. Do not retaliate against employees who express safety concerns.

Prepare for a Second Wave
Many health experts believe a second wave of the coronavirus is likely in the fall. With that in mind, employers need to create a plan that will be used if there is a second wave of infections. This includes the ability to roll back into a remote work setup and how to handle another prolonged workplace closure. This plan can also be used for future pandemics or other emergencies.

Conclusion
The pre-pandemic workplace that we were accustomed to may never return. As reopening of the country continues, employers need to reimagine what the workplace will look like going forward. These considerations contain several complicated issues which require a measured decision-making process. These decisions are also very fact-specific for each employer. Please reach out to us so we can assist you in the process and help you avoid any potential legal pitfalls.

The New Workplace: Part I – Transitioning Back Post COVID-19

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News and Articles
The New Workplace: Part I – Transitioning  Back Post COVID-19
April 28th, 2020 | By Jules Halpern Associates  

As the country begins to look forward to the next phase of the coronavirus pandemic, many employers are wondering how their operations will need to adjust to the “new workplace.” COVID-19 is likely to have long-lasting effects on American life, including how we work. “The New Workplace,” is a two-part newsletter series that will examine what changes are likely and how employers can best handle this unprecedented territory.

When is the Right Time?
While state governments are going to make the call on when a reopening is appropriate, employers need to be aware of the considerations that will determine the timeline. Governors from several northeastern states, including Andrew Cuomo in New York, Phil Murphy in New Jersey, and Ned Lamont in Connecticut, have pledged to coordinate a regional reopening of the economy.

Governor Cuomo has discussed his criteria for reopening the state. During a press conference last week, Governor Cuomo said that once the rate of infections gets to an acceptable rate, a “phasing up” of businesses would occur similarly to how they shut down: by percentages. This means that initially, only 25% of the workforce would be allowed to return, then 50%, then 75%, until finally 100% of the workforce can return.

Governor Cuomo added that industries would be examined separately. Factors including the essential nature of the business and the risk of infection to employees would be assessed.

Employee safety needs to be a top priority during this transition back. Commuting is another factor that needs to be evaluated. If a large percentage of an employer’s workforce uses public transportation to get to work, flexible scheduling may be necessary. Split shifts can be used, where half of the workforce comes in for the first half of the day, while the other half works the second half of the day. Employee meal breaks may also be staggered to limit the number of workers in a break room at one time. The appropriate measures depend on what is practical for each employer.

Social distancing measures would also need to be thoroughly planned and enforced effectively. Industries where employees have in-person customer interaction, such as the retail industry, need to create practices which limit customer interaction. This includes curbside delivery or limits on the number of customers allowed into a store at one time.

Working Remotely
Governor Cuomo also said that in the wake of COVID-19, many workplaces need to be “reimagined.” For many employers, this may mean that a large percentage of employees, or even their entire workforce, works remotely.

If an employer shifts to telecommuting, there are several considerations to take into account. This includes a policy which outlines the employees’ rights and responsibilities, proper cybersecurity protections, and strong communication. For more information on how to enact strong telecommuting procedures, please check out our newsletter article on working from home.

Showing Empathy
The coronavirus has had devastating effects on the country’s workforces. American workers have filed 30 million initial unemployment claims since March 14, with that number expected to rise as the pandemic continues. The emotional, financial, and physical impact that this is taking on citizens cannot be understated.

With these impacts in mind, employers need to inspire their employees and boost morale when the time comes to return to work. As mentioned above, the health and safety of all employees needs to be the foremost concern. Return to work protocols must be thoroughly thought out. How will social distancing be maintained? How will you manage positive COVID-19 results? A well-executed plan can assuage many anxieties that employees have about returning to work.

Employers also can practice increased kindness and compassion for their employees’ concerns. This situation has reinforced how we all truly rely on each other in so many ways, especially to stay healthy. Listen to your employees worries and address them in a way that demonstrates empathy.

Addressing Furloughs
Many employers have had to make the difficult decision to furlough some or all of their employees while the shelter-in-place orders are in effect. Retaining as many employees as possible needs to be a top priority. Once these orders expire or are revoked, employers will have to determine which employees will return to work.

In making that determination, employers must be careful that they do not leave themselves open to discrimination claims. If employees return in waves, employers need to conduct a careful analysis of which employees are going to return first and for what business justifications. For example, if an employer brings back only young employees to start but keeps older employees on furlough in an effort to keep them safe, this could open the employer up to an age discrimination claim.

It is best practice for employers to consult their Human Resources department or employment attorney to ensure that the decisions are based on legitimate business reasons. If an employee brings a discrimination claim, an employer will need to prove that these decisions were not based on discriminatory or retaliatory reasons.

Many businesses will suffer great losses during the shutdown, and some employees who were initially furloughed will need to be laid off. It is crucial that employees openly communicate with these employees. Keep an honest and direct line of communications with employees, and if termination is necessary, let the employee know as soon as possible. Depending on the circumstances and nature of the financial losses, a reduction-in-force (“RIF”) may be necessary.

Analyzing Reductions-in-Force
If an employer is going to conduct mass layoffs, they will need to perform a RIF analysis. Any RIF must be carefully planned and executed. If a RIF is implemented improperly, an employer opens themselves up to discrimination claims, and potential negative effects on the remaining employees’ morale.

When performing a RIF analysis, employers need to choose objective criteria (e.g., seniority, performance) to determine who will be laid off. Using objective measures helps to diminish the potential for discrimination claims. Once an employer selects what criteria they are going to use, it needs to apply the criteria consistently across its workforce to determine who will be let go.

Even after an employer has determined which employees will be terminated using the objective criteria, that list should be analyzed to verify that the RIF does not have a disproportionate effect on employees in protected classes, such as race, gender, or age.

Employers also need to consider the Workers Adjustment Retraining and Notification (“WARN”) Act. Under the federal WARN Act, employers with 100 or more employees must provide employees, bargaining representatives, and local government officials with 60 days advanced written notice of a mass layoff or plant closing. The federal law defines a mass layoff as an employment loss of at least 33% of full-time employees and a minimum of 50 employees at a single site. Several states also have their own WARN laws. For example, the New York WARN Act applies to businesses with 50 of more full-time workers in New York State who eliminate as few as 25 employees at a single employment site. New York WARN normally requires 90 days advanced written notice.

However, most WARN laws do have notice exceptions for unforeseeable business circumstances. The unexpected economic downturn that resulted from the coronavirus does qualify as an unforeseeable business circumstance. This exception does not remove the notice requirement but requires businesses to provide the affected employees as much notice as practicable. Therefore, an employer who meets the WARN requirements needs to provide the terminated employees with as much advanced notice as they possibly can.

On April 17, 2020, Governor Cuomo issued an executive order that created another WARN exception for employers that receive funding under the Payment Protection Plan. Similar to the unforeseeable business circumstance exception, the new executive order does not relieve employers of the obligation to provide WARN notice but shortens the notice period if the employer is unable to give the requisite 90 days’ notice.

Conclusion
As the country slowly reopens from COVID-19 shutdowns, employers need to prepare for a workplace that has been fundamentally changed. During this time period, decisions must be carefully considered and implemented to avoid potential pitfalls. If you have any questions on reopening your business, please reach out to us so we can help. Also, be on the lookout for part two of our “New Workplace” series, which will explore how employers can move forward after reopening.

SBA Answers More Questions on PPP Loans and Forgiveness

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Michels & Hanley CPAs, LLP COVID-19 – PPP Loan Forgiveness – SBA Answers More Questions on PPP Loans and Forgiveness
5.26.20 | Client Alert
On Friday evening, May 22, the SBA issued additional guidance on Paycheck Protection Program (PPP) loan forgiveness, loan review procedures and related borrower and lender responsibilities. The article below provides information about the loan review procedures and related borrower and lender responsibilities, including our observations and related recommendations. Purpose of the Guidance With this interim final rule, the SBA contemporaneously issued interim final guidance on its process for reviewing all PPL applications and loan forgiveness applications, regardless of the date on which they were submitted. The goal of this notice is to provide borrowers a high degree of certainty about the SBA’s application review so they may take immediate steps to maximize their loan forgiveness. Continue reading: COVID 19 PPP loan forgiveness Answers

What do Schools Need to do to Safely Reopen?

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News and Articles What do Schools Need to do to Safely Reopen?
May 18th, 2020 | By Jules Halpern Associates |Education Law, Private Schools,Student Protection, Student Safety

As America continues with the process of slowly reopening during the coronavirus pandemic, questions have begun regarding the reopening of schools in the fall. Forty-seven states have shut down schools for the remainder of the academic year. Now these states must weigh their options for how and when they will reopen schools. This article will examine what schools need to do to reopen in the fall and address some concerns about returning to school during the pandemic.

Health and Hygiene
Similar to workplaces throughout the country, schools need to adopt and enforce heightened sanitation procedures. Children, and as a result, schools, are not known to stay clean for long periods of time.

In order to reopen schools, the most important factor will be frequent and widespread testing availability. If insufficient COVID-19 testing is available, it will make it difficult to identify illness in the school community, and therefore complicate the process on how to handle infections in the school community.

Additional hygiene considerations include wearing face masks, daily temperature checks, frequent sanitization of school facilities, regularly washing hands, and social distancing throughout the school day. However, enforcing mask wearing may be difficult, due to the ratio of students to faculty, and the need to have open dialogue in a learning environment.

A school’s ability to apply these measures will largely be based on their budgets. Many municipality budgets have been decimated by this pandemic, and it is unclear how many of these school districts will be able to handle the financial burden of retrofitting facilities for optimal hygiene and sanitation.

While initial research seemed to suggest that children were less affected by COVID-19, recent findings in New York have shown that children have developed a serious inflammatory condition that may be linked to the virus. Doctors have reported that more than 120 children in New York and 200 in other states have contracted what is being called multisystem inflammatory syndrome in children (“MIS-C”). On May 14, the CDC issued a health alert to physicians warning them of the dangers of the potentially deadly condition.

The discovery of MIS-C and its effects on children also complicates the reopening process. Are schools willing to put their students at risk of contracting MIS-C? Further, students with mild or asymptomatic cases can transmit the virus to at-risk students and faculty members. To reiterate, adequate testing and contact tracing is so critical to schools’ ability to reopen. This would allow schools to quickly detect an outbreak and limit the spread of the virus.

Smaller Class Sizes
In an effort to maintain social distancing, schools would need to consider downsizing the number of students per classroom. This may require schools to implement staggered schedules, where certain students attend school on alternate days. On their off days, students would engage in telelearning. An alternative schedule would include morning and afternoon shifts in schools.

By cutting class size in half, desks could be spaced six feet apart. Classrooms would also be retrofitted with sanitation stations, including disinfectant wipes and hand sanitizer. As mentioned earlier, the ability to execute these measures will depend largely on budgets.

Elementary School First
Some experts have suggested reopening elementary schools first. The rationale is that elementary classrooms have only one head teacher, whereas middle and high schools feature subject teachers and frequent classroom changes, which means more interaction and movement throughout the school.

However, young children are more likely to be unhygienic, frequently putting their hands in their mouths and touching their faces. This could lead to the rapid spread of the virus if a student becomes infected.

Extended Schedule
Due to the effects of the pandemic on the current schoolyear, which resulted in schools transitioning to telelearning, many schools have considered extending the next school. Due to telelearning, some students may be behind in the education process and would need a way to catch up. This may mean starting the schoolyear earlier or continuing through the summer of 2021 to allow more time for learning.

Flexible Attendance Policies
Once schools reopen, they need to be prepared for the possibility of mass student or staff absences. As a result, schools may need to provide more flexibility on requirements for the number of days students can be absent, certain graduation requirements, and staffing requirements.

Schools must also determine when school closures will be necessary based on a set percentage of staff and student absenteeism. Schools should follow state and local public health authority recommendations when making these determinations.

In addition, schools need to be prepared for a second wave of the virus in the fall. If extended school closures are once again necessary, schools must have a plan ready to reestablish telelearning protocols for students.

No Extracurriculars
Due to the continued necessity of social distancing, most extracurricular activities will have to be suspended indefinitely. This would particularly impact any activity that requires students to gather in large groups, including sporting events.

Challenges for Colleges
Some university administrators have pushed for reopening campuses in the fall. Close-knit college communities are an ideal place to spread a contagion. Colleges need to weigh the danger of potential outbreaks against the potential financial catastrophe that may result from keeping universities closed.

Remaining closed for the fall semester may cause some universities to lose as much as half of their revenue. Therefore, many colleges are developing plans for students to return to campus in the fall. But with students moving freely throughout campuses and interacting, how can universities ensure that this environment can remain safe?

Testing and contact tracing are once again the critical components to reopening, even more so at the university level. An outbreak in one corner of a university community can quickly become a campus-wide outbreak if left unmitigated. Contact tracing may be easier on college campuses, which require students to scan into various locations using ID cards. Universities can track which students have been where on campus, providing a clearly picture of what students and faculty may have been exposed to the virus.

One alternative to a return to regular college life is allowing some students to learn from home for another semester, with a tuition break. This will limit the number of students on campus and would provide less densely packed student housing.

Understand the Emotional Trauma
Developmental experts believe that the disruption to normal life caused by COVID-19 causes an adverse experience for children. Socialization is an important part of childhood development. School counselors say that the isolation caused by social distancing creates trauma. While children, particularly teenagers, spend a lot of time on social media, experts say that the face-to-face interaction of spending time with friends cannot be replaced.

When schools reopen, it is important for schools to provide mental health resources for students and to help them recover. A renewed emphasis on social and emotional learning may go a long way in helping students heal from this traumatic time.

Conclusion
As schools begin to contemplate the reopening process, it is important that they follow the appropriate guidance from public health authorities. This process will contain new challenges, including healthy and safety protocols, remedial academic support, and the possibility of a second wave of the virus. If you have any questions or need assistance throughout this process, please contact us.