On March 11, 2020, as a result of the COVID-19 pandemic, the Supreme Court of Florida issued its first “Administrative Order in Response to the Pandemic.” The Court directed all chief judges of district and circuit courts to take such mitigating measures as necessary to address the effects of COVID-19 on their respective courts, while keeping the courts open to the fullest extent consistent with public safety.
On March 13, 2020, the Supreme Court, in accordance with the declaration of a state of emergency in the State of Florida, issued an Order suspending grand jury proceedings, jury selection proceedings, and criminal and civil jury trials, as well as temporarily suspending procedural requirements and limitations that could hinder the efforts to mitigate the spread of COVID-19 through March 27, 2020 or as provided by subsequent order. The Order further authorized each chief judge of each judicial circuit to establish temporary procedures for the use of communications equipment to conduct proceedings electronically.
Several District Courts of Appeals in the State of Florida have issued Orders that closely mirror or expand on the Supreme Court’s March 13 Order. On April 6, 2020, the Florida Supreme Court extended its Orders relating to the COVID-19 pandemic through close of business on May 29, 2020.
Consult with HGRS LLP Florida attorneys to determine the effect of these orders as it applies to your particular case. For example, in the First District Court of Appeals of Florida (Escambia, Santa Rosa, Okaloosa, and Walton Counties), the Chief Judge suspended scheduling any trials in cases currently pending. However, Judges are conducting both evidentiary and non-evidentiary hearings via video or telephone conference.
This means that your case should not be delayed because of the pandemic. Our attorneys are continuing to advocate successfully for our clients via telephonic and videoconference court hearings, . For additional guidance, please contact our offices in Seagrove Beach and Destin, Florida.
Copies of the Applicable Orders are Provided below:
- Florida Supreme Court Administrative Order, AOSC20-12
- Florida Supreme Court Administrative Order, AOSC20-13
- Florida Supreme Court Administrative Order, AOSC20-23
For more information about Orders issued by Florida’s state courts, or about any of the new developments in employment-related laws as a result of the COVID-19 crisis, please refer to the HGRS LLP Coronavirus (COVID-19) Resource Center, at www.hgrslaw.com, or contact our firm at 850-213-0604.Read More
HGRS LLP has created a COVID-19 Resource Center to provide updates on the latest legal issues and other important developments related to the coronavirus (COVID-19) crisis. HGRS LLP is working to ensure its clients receive practical and timely guidance throughout this fluid and evolving crisis. See more …Read More
The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) has recently published several new guidelines, alerts, and interim enforcement rules to address workplace safety and wellness issues in the current COVID-19 crisis environment.
OSHA’s Interim Enforcement Response Plan for Handling COVID-19 Related Matters.
On April 13, 2020, OSHA published its “Interim Enforcement Response Plan for Coronavirus Disease 2019 (COVID-19),” which provides instructions and guidance to OSHA’s Area Offices and to its Compliance Safety and Health Officers (CSHOs) for handling COVID-19-related complaints, referrals, and severe illness reports.
The plan outlines procedures for how OSHA will address reports of workplace hazards related to COVID-19. Fatalities and imminent danger exposures related to COVID-19 will be prioritized for on-site inspections. The plan also outlines detailed procedures and sample documentation for CSHOs to use during COVID-19-related inspections.
The full plan is available here:
OSHA Reminds Employers About Whistleblower Protections.
On April 8, 2020, OSHA published a reminder to all employers that it is illegal to retaliate against workers because they report or complain about unsafe or unhealthful working conditions during the COVID-19 pandemic. Recent media coverage has shown thousands of employees across the country, in a variety of industries, protesting what they believe to be unsafe working conditions – these employees likely are protected by OSHA’s whistleblower provisions.
The notice reminded workers that, if they believe their employer is retaliating against them for reporting or complaining about unsafe working conditions, they may file a complaint with OSHA, either by telephone or by using OSHA’s online whistleblower complaint form. Illegal retaliation may include a variety of adverse personnel actions, such as terminations, demotions, denials of overtime or promotion, or reductions in pay or hours.
OSHA enforces the whistleblower provisions of over twenty federal statutes, protecting employees against retaliation for complaining about or reporting violations of those statutes. A full description of OSHA’s Whistleblower Protection Program is available here, and fact sheets for each of the various federal statutes with whistleblower provisions are available here.
A full copy of OSHA’s April 8 reminder is available here.
OSHA’s New OSHA Safety Poster to Address COVID-19 Hazards.
OSHA has published a new (non-mandatory) poster that lists steps that all workplaces can take to reduce the risk of exposure to COVID-19. The poster identifies ten infection prevention measures an employer can implement to protect its workers’ safety and health during the COVID-19 crisis. Suggested measures include: encouraging sick workers to stay home; establishing flexible worksites and staggered work shifts; discouraging workers from using other workers’ phones, desks and other work equipment; and using EPA-approved cleaning chemicals.
OSHA Issues Enforcement Guidance for the Recording of Workplace Illnesses Related to COVID-19.
On April 10, 2020, OSHA issued interim guidance to its Compliance Safety and Health Officers (CSHOs) for enforcing OSHA’s recordkeeping requirement (29 CFR Part 1904) as it relates to recording cases of COVID-19.
Under OSHA’s recordkeeping requirements, COVID-19 is a recordable illness, and employers are responsible for recording cases of COVID-19, if the case: (1) is confirmed as a COVID-19 illness; (2) is work-related, as defined by OSHA regulation 29 CFR 1904.5; and (3) involves one or more of the general recording criteria listed in OSHA regulation 29 CFR 1904.7, such as medical treatment beyond first aid or days away from work.
The interim guidance acknowledges that, in areas where there is “ongoing community transmission,” employers (other than those in the healthcare industry, emergency response organizations (e.g., emergency medical, firefighting, and law enforcement services), and correctional institutions) may have difficulty making determinations about whether a worker contracted COVID-19 due to a workplace exposure or elsewhere. Therefore, “until further notice,” OSHA will not enforce its recordkeeping requirements to require these employers to make work-relatedness determinations for COVID-19 cases, unless: (1) there is objective evidence that a COVID-19 case may be work-related; and (2) the evidence was reasonably available to the employer.
On the other hand, employers of workers in the healthcare industry, emergency response organizations, and correctional institutions must continue to make work-relatedness determinations pursuant to 29 CFR Part 1904.
This guidance is intended to be time-limited to the current public health crisis.
A full copy of the interim guidance is available here.
OSHA Issues Safety Alert for Manufacturing Employers.
On April 16, 2020, OSHA issued an Alert for employers in the manufacturing industry, listing recommended safety precautions employers can implement to help protect manufacturing workers from exposure to COVID-19. The Alert provides a list of specific tips, including cleaning protocols, usage of personal protective equipment (PPE), wearing of protective masks, social distancing, workplace restructuring, work shift adjustments, and similar measures.
OSHA also has published a more comprehensive Guidance on Preparing Workplaces for COVID-19, which more fully addresses the workplace hazards caused by COVID-19, and recommends various engineering, administrative, and work practice controls that may be implemented to minimize the risks faced by employees.
OSHA Issues Safety Alert for Retail Employers.
On April 8, 2020, OSHA issued an Alert for employers in the retail industry, listing recommended safety precautions that employers can implement to help protect retail workers from exposure to COVID-19. The Alert provides a list of specific tips, including cleaning protocols, usage of drive-through windows and curbside pick-up systems, wearing of protective masks, social distancing, workplace restructuring, and similar measures.
OSHA also has published a more comprehensive Guidance on Preparing Workplaces for COVID-19, which more fully addresses the workplace hazards caused by COVID-19, and recommends various engineering, administrative, and work practice controls that may be implemented to minimize the risks faced by employees.
OSHA Issues Guidance on Respiratory Protection During COVID-19 Crisis, and to Address the N95 Shortage.
On April 3, 2020, OSHA issued interim enforcement guidance to assist employers in rationing and reusing filtering respirators amid the ongoing shortages in the supply of disposable N95 filtering face piece respirators (N95 FFRs).
The guidelines direct that, due to the shortage of supplies of N95 FFRs, employers should reassess their engineering controls, work practices, and administrative controls in order to decrease the need for N95 respirators. If respiratory protection must be used, an employer may consider use of alternative classes of respirators that provide equal or greater protection compared to an N95 FFR, such as National Institute for Occupational Safety and Health (NIOSH)-approved, non-disposable, elastomeric respirators or powered, air-purifying respirators.
Among other things, the guidance provides that workers can reuse or continue using a respirator as long as the respirator retains its “structural and functional integrity,” and the filtering material is not “physically damaged, soiled, or contaminated.” Also, OSHA recommends “extended use” over “re-use” because of the risk of transmission when removing and replacing masks.
The guidance gives OSHA inspectors the discretion not to issue citations for violations of OSHA’s respirator use standard if an employer has attempted to find alternative masks, prioritized N95 mask use based on guidance from the CDC, provided surgical masks and eye protection, and taken “other feasible measures.”
This guidance is intended to be limited to the time period of the current COVID-19 crisis.
A complete copy of the guidelines are available here.Read More
Executive Order 3.14.20.01
On March 14, 2020, Governor Brian Kemp declared a Public Health State of Emergency in the State of Georgia due to the COVID-19 crisis. Pursuant to Georgia law, this declaration activated and consolidated in the Governor an extensive array of powers. It also suspended certain medical licensing procedures to expedite the ability of out-of-state healthcare professionals to legally operate within Georgia, and it relaxed certain trucking restrictions concerning load weight and driver rest times to minimize disruptions to the supply chain. The Governor’s declaration was confirmed in a special session of the legislature on March 16, 2020. On April 8, 2020, the State of Emergency was extended until May 13, 2020.
Executive Order 3.16.20.01
On March 16, 2020, Governor Brian Kemp ordered all public elementary, secondary, and post-secondary schools closed as of March 18, 2020. The school closures were extended on March 26, 2020 and eventually made permanent through the end of the 2019-2020 school year.
Executive Order 3.23.20.01
On March 23, 2020, Governor Brian Kemp ordered all “medically fragile” citizens to shelter-in-place. He also ordered all bars closed and prohibited any establishment from allowing groups of 10 or more people to gather within the establishment unless a distance of at least 6 feet between people could be maintained.
Executive Order 04.02.20.02
On April 2, 2020, Governor Brian Kemp ordered that all citizens and visitors of Georgia shelter-in-place. Pursuant to this Order, individuals should only leave their home to: conduct or participate in Essential Services; perform Necessary Travel; perform the Minimum Basic Operations for a business not classified as Critical Infrastructure; or engage in the work of Critical Infrastructure. By order issued on April 8, 2020, these restrictions were extended until April 30, 2020.
The April 2 Order clarified that Essential Services include (1) obtaining necessary supplies for family and household members, such as food; (2) seeking medical or other emergency services; and (3) engaging in outdoor exercise, so long as proper social distancing measures could be followed. The Order did not explicitly define what jobs or business were considered Critical Infrastructure. Instead, the Order relied on guidance from the Department of Homeland Security, which identified several categories of business as “Critical Infrastructure.” For assistance in determining whether your business qualifies as Critical Infrastructure, please do not hesitate to contact us for a more detailed analysis.
Copies of the Applicable Orders are Provided below:
For more information about the Georgia Governor’s emergency orders, or about any of the new developments in employment-related laws as a result of the COVID-19 crisis, please refer to the HGRS LLP Coronavirus (COVID-19) Resource Center, at www.hgrslaw.com, or contact our firm at (404) 442-8776.Read More
Georgia Supreme Court Declares Statewide Judicial Emergency to Address COVID-19
On March 14, 2020, as a result of the COVID-19 crisis, the Supreme Court of Georgia declared a Statewide Judicial Emergency. Under the Order, courts are to remain open only to address “essential functions,” and proceedings should be conducted via telephone or video conference as much as possible. Courts have been instructed to prioritize the following: (1) cases related to immediate liberty or safety concerns; (2) criminal court search warrants, initial appearances, and bond reviews; (3) domestic abuse protective orders; (4) juvenile court hearings; and (5) mental health commitment hearings.
Additionally, the Order suspended all jury trials and tolled filing requirements including statutes of limitations, discovery deadlines, and appellate deadlines. Several counties also have issued Orders mirroring, clarifying, and expanding on the statewide Order. On April 6, 2020, the Supreme Court Amended the Order to extend the Judicial Emergency through May 13, 2020.
On May 11, 2020, the Supreme Court again amended its Order and extended the Judicial Emergency through Friday June 12, 2020. The Court’s latest Amendment extended all the prior restrictions, but it granted individual Judges the ability to re-impose deadlines, except those related to juries and grand juries, on a case-by-case basis. However, any newly established deadlines must be in writing and consider both public and individual health concerns.
Federal District Courts in Georgia Issue General Orders to Address COVID-19
On March 16, 2020, the U.S. District Court for the Northern District of Georgia, which includes Atlanta and the surrounding area, issued a General Order concerning court operations to address the exigent circumstances created by COVID-19. The Order suspended all jury trials and all grand juries. It also encouraged individual judges to employ remote audio and visual capabilities as much as possible. The Order did not alter any pending deadlines in civil cases or suspend any statutes of limitations. The Order was amended on March 30, 2020, extending the new procedures through May 15, 2020. The Court has also implemented some restrictions on public access to the courthouses and in-person filings.
On March 20, 2020 the U.S. District Court for the Middle District of Georgia issued a General Order canceling all hearings in criminal cases except for those mandated by the U.S. Constitution, such as initial appearances. These cancellations are in place through May 16, 2020. On March 30, 2020, the Court entered a General Order expanding the use of video technology for remaining criminal hearings. At this time, the Court has not issued any orders altering any pending deadlines in civil cases. The Court has also implemented some restrictions on public access to the courthouses and in-person filings.
On March 17, 2020 the U.S. District Court for the Southern District of Georgia issued a General Order concerning Court operations under the current exigent circumstances. The Order limits entry into the courthouse for non-criminal matters, and it prohibits entry by individuals with certain travel history. On March 30, 2020, the Court entered an additional order expanding the use of video technology for certain criminal matters and granting significant discretion to individuals judges to manage their dockets as needed.
For more information about orders issued by Georgia’s state and federal courts, or about any of the new developments in employment-related laws as a result of the COVID-19 crisis, please refer to the HGRS LLP Coronavirus (COVID-19) Resource Center, at www.hgrslaw.com, or contact our firm at (404) 442-8776.Read More
Georgia Department of Labor Rule 300-2-4-.10 (“Mass Separation”) requires Georgia employers to provide certain notifications to the Department of Labor whenever a “mass separation” occurs.
A “mass separation” is when twenty-five (25) or more employees in one establishment are separated on the same day, for the same reason, and the separation is either (1) permanent, (2) for an indefinite period, or (3) for an expected duration of seven (7) or more days.
Within 48 hours of the mass separation, the employer must submit two notification forms to the nearest GA DOL Office:
For more information about Georgia’s Mass Separation rule, or about any of the new developments in employment-related laws as a result of the COVID-19 crisis, please refer to the HGRS LLP Coronavirus (COVID-19) Resource Center, at www.hgrslaw.com, or contact our firm at (404) 442-8776.Read More
In response to the recent increase in unemployment compensation claims and in preparation for the federal funding programs created by the Coronavirus Assistance, Recovery, and Economic Stimulus Act (CARES Act), the State of Georgia has implemented a handful of new emergency rules and procedures regarding unemployment compensation benefits.
Labor Commissioner Mark Butler recently stated: “We understand Georgia businesses and workers are anxious during the COVID-19 public health crisis about how to take care of themselves, their families, and their businesses. . . . We are making unprecedented modifications to policies to help all Georgians survive this economic hardship and get us all back to work.”
Below is a summary of recent developments in Georgia’s unemployment compensation program.
Increase in Number of Weeks for Unemployment Compensation
By Emergency Rule on March 26, 2020, the Georgia Labor Commissioner extended the length of time an individual can collect Georgia unemployment compensation benefits from 14 weeks to 26 weeks.
As a result, and in combination with the additional 13 weeks guaranteed by § 2107 of the federal CARES Act (“Pandemic Emergency Unemployment Compensation program” or “PEUC”), an individual in Georgia now may be eligible for up to 39 weeks of unemployment compensation. For more on the PEUC program, please see the related article on this webpage titled “Federal Government Gives Boost to Unemployment Compensation.”
New Maximum Allowable Pay That will Not Decrease Unemployment Compensation
By Emergency Rule on March 26, 2020, the Georgia Labor Commissioner declared that an individual’s first $300 of wages earned in a week (from any source) will not count against eligible unemployment benefits paid (i.e., the Weekly Benefits Amount, or “WBA”). The usual maximum amount is $50 per week. For example, if an individual is laid off, but finds a part-time job, he or she now can earn up to $300 each week and still receive the full unemployment WBA. Any additional income above $300 will reduce the WBA dollar-for-dollar.
As a result of this new rule, an unemployed individual in Georgia potentially can earn each week, at least through July 31, 2020: (1) a WBA of $365 (the maximum WBA in Georgia); (2) $300 in part-time wages, which do not reduce the maximum WBA; and (3) the supplemental $600 in federal compensation under § 2104 of the new CARES Act (“Federal Pandemic Unemployment Compensation,” or “FPUC”) – for a total weekly benefit of $1,265.00.
Note: For more on the FPUC program (the federal supplemental $600 per week), please see the related article on this webpage titled “Federal Government Gives Boost to Unemployment Compensation.”
Requirement for Employers to File Partial Claims on Behalf of Employees
By Emergency Rule on March 16, 2020, the Georgia Labor Commissioner will require an Employer to file a partial claim on behalf of any affected employee who is furloughed or subject to a reduction in work hours due to a partial or total company shutdown caused by the COVID-19 public health emergency. The purpose of the rule is to expedite partial claims. Filing by the employer eliminates the employer certification stage, thus significantly expediting the process and the issuance of payment.
Partial claims are filed online, for each applicable pay period and must be filed for both full-time and part-time employees. Details about the procedures for filing partial claims are on the Georgia Department of Labor website, available here.
Penalties may apply. An employer that does not file a partial claim under the emergency rule will be liable to the State of Georgia for the full amount of benefits paid to the employee.
Suspension of Work Search Requirements
By Emergency Rule on March 16, 2020, the Georgia Labor Commissioner temporarily suspended the usual work search and other in-person requirements through (at least) July 14, 2020, for all claimants. This rule likely will be extended by the Commissioner.
Employers’ Unemployment Insurance Taxes will Not be Increased due to Covid-19 Related Claims
By Emergency Rule on March 16, 2020, the Georgia Labor Commissioner declared that Employers will not be charged for COVID-19 related unemployment compensation claims. If an employee is receiving unemployment compensation due to any COVID-related claim, the benefits paid out will not adversely affect the employer’s future tax rate.
New Procedures for Pandemic Unemployment Assistance (“PUA”) Program
Section 2102 of the federal CARES Act creates the temporary “Pandemic Unemployment Assistance Program” (“PUA”) (effective through December 31, 2020), which will grant unemployment compensation coverage to many individuals who would not otherwise be eligible for such benefits (e.g., self-employed persons, independent contractors, gig workers, part-time employment seekers, those who lack sufficient work history, and those who have exhausted their unemployment benefits under existing programs). The Georgia DOL has modified its current online unemployment compensation application, adding new questions to identify those individuals who may be eligible for PUA. Detailed instructions for filing these types of claims are on the Georgia DOL website at https://dol.georgia.gov/pua.
To assist applicants in the claims process, the Georgia Department of Labor has implemented a new Claims Status Dashboard, which will allow an applicant to track the status of a claim online. Information about filing an unemployment compensation claim, details about how employers must file partial claims, and other resources regarding unemployment compensation are available on the front page of the Georgia DOL website, dol.ga.gov.
For more information about the new Georgia rules regarding unemployment benefits, or about any of the new developments in employment-related laws as a result of the COVID-19 crisis, please refer to the HGRS LLP Coronavirus (COVID-19) Resource Center, at www.hgrslaw.com, or contact our firm at (404) 442-8776.Read More
On April 9, 2020, the EEOC issued updated guidance regarding COVID-19 and the Americans with Disabilities Act (ADA) and the Rehabilitation Act of 1973 (the Rehabilitation Act). While these laws prohibit covered employers from discriminating against individuals due to a disability and limit an employer’s ability to make medical inquiries regarding employees and applicants, the EEOC’s guidance clarifies that neither the ADA nor the Rehabilitation Act interfere with or prevent employers from following guidelines and suggestions made by the CDC or state/local public health authorities regarding actions employers should take regarding COVID-19. It also provides several examples of what employers may or may not do when dealing with COVID-19 issues without violating federal discrimination laws.
Disability-Related Inquiries and Medical Exams.
While an employer is generally prohibited from making disability-related inquiries or conducting medical exams except in limited circumstances, during a pandemic, an employer may –
- Screen job applicants for symptoms of COVID-19 after making a conditional job offer, including taking the applicant’s temperature as part of a post-offer, pre-employment medical exam (provided that such medical exams are required for all entering the same type of job);
- Ask employees who call in sick or are entering the workplace if they are experiencing symptoms of COVID-19, as identified by public health authorities; and
- Measure employees’ body temperatures when entering the workplace or while at work in order to determine if they have a fever.
Actions to Prevent the Spread of COVID-19 in the Workplace.
If an employer determines that an applicant or employee has or may have COVID-19, the employer may –
- Delay the start date of an applicant, or, if the employer needed the applicant to start immediately, withdraw the job offer;
- Require an employee who is ill with COVID-19 symptoms to leave the workplace; and
- Require a return-to-work release from an employee who is diagnosed with or has presented symptoms of COVID-19.
While older individuals and pregnant individuals may be at greater risk for complications from COVID-19, an employer may not make an employment decision, such as a hiring decision, based on age and/or pregnancy. However, an employer may choose to allow such individuals to work remotely and/or ask if they would like to postpone a start date. An employer also must continue to provide reasonable accommodations to qualified individuals with disabilities, including individuals who may be at greater risk from COVID-19 due to a preexisting disability.
In addition to the guidance regarding ADA compliance during the COVID-19 crisis, the new EEOC publication (“What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws”) also provides guidance regarding employers’ obligations relating to the confidentiality of employee medical information, and tips for preventing pandemic-related harassment from occurring in the workplace.
Finally, the EEOC also has updated the guidance it originally issued in 2009 to deal with the H1N1 pandemic: “Pandemic Preparedness in the Workplace and the Americans with Disabilities Act,” to address COVID-19 issues. Other helpful EEOC resources are available here.
For more information about discrimination or harassment issues related to COVID-19, or about any of the new developments in employment-related laws as a result of the COVID-19 crisis, please refer to the HGRS LLP Coronavirus (COVID-19) Resource Center, at www.hgrslaw.com, or contact our firm at (404) 442-8776.Read More
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) temporarily adds a new product, titled the “Paycheck Protection Program,” (PPP) to the U.S. Small Business Administration’s (SBA’s) 7(a) Loan Program.
The PPP allocates $350 billion to help small businesses (under 500 employees) keep their workers employed amid the COVID-19 pandemic and economic downturn. The PPP provides 100% federally guaranteed loans to small businesses, and each loan is forgivable if the borrowing employer meets certain requirements, as explained below.
Who is eligible for a PPP loan?
Generally, small businesses, nonprofits, and other organizations with 500 or fewer U.S. employees are eligible.
Businesses in the accommodations and food services industries with more than one location are eligible if they have 500 or fewer employees per each physical location.
Sole proprietors, independent contractors, and self-employed individuals are also eligible.
The SBA, however, has advised that additional businesses may be ineligible based on the SBA’s existing Standard Operating Procedures for SBA lending (available here).
Potentially ineligible businesses include:
- Businesses principally engaged in lending, such as banks, life insurance companies, investment or finance companies, and bail bond companies.
- Passive businesses, such as developers or landlords that do not actively use their assets and principally generate income by renting space.
- Businesses engaged in legal gambling.
- Businesses engaged in any illegal activity, including marijuana-related businesses.
- Government-owned businesses.
- Religious organizations.
- Businesses with owners with at least 20% equity who are incarcerated, on probation/parole, or under indictment.
- “Adult” businesses.
- Businesses with deficient federal loans.
Are there other requirements to apply for a PPP loan?
Yes. As part of the application, the borrower must certify that:
- The business was in operation as of February 15, 2020 and had employees it paid.
- Current economic conditions make this loan necessary to support the borrower’s ongoing operations.
- The funds will be used to retain workers and maintain payroll, and pay mortgage interest, rent, or utilities.
- The borrower does not have an application already pending for a loan under this subsection.
- The borrower, from February 15, 2020 to December 31, 2020 has not and will not receive another loan under this program.
How much is the PPP loan?
The maximum loan amount is 2.5 times the 12-month average of the borrower’s monthly payroll costs but is capped at $10 million.
A different calculation applies for seasonal businesses. There are also adjustments if the borrower has outstanding SBA loans.
What is the interest rate on a PPP loan?
The interest rate will be 1%.
The CARES Act allowed the interest rates to be as high as 4%, but, as of April 3, 2020, the U.S. Department of the Treasury set the interest rate at 1%. The Treasury Department also mandated that all borrowers will receive the same loan terms.
How can the PPP loan be spent?
From February 15, 2020 to June 30, 2020, the money can be spent on:
- Payroll costs
- Costs related to continuing group health care benefits during paid sick, medical, or family leave
- Insurance premiums
- Mortgage interest
- Interests on debt obligations incurred before February 15, 2020
- Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020
The SBA is requiring that at least 75% of the PPP loan proceeds be used for payroll costs.
The CARES Act states that the PPP loan also can be used for any of the allowable uses of a Section 7(a) SBA loan (such as plant acquisition, construction, conversion, expansion, or the acquisition of land, material, supplies, equipment, and working capital). The SBA, however, is requiring that the PPP funds be used mainly for payroll costs.
What if PPP loans are used for other purposes?
According to the SBA, if a borrower uses PPP funds for unauthorized purposes, SBA will direct the borrower to repay those amounts. If the borrower knowingly used the funds for unauthorized purposes, the borrower (possibly including shareholders, partners, and members) will be subject to additional liability such as charges for fraud.
How much of the PPP loan is forgivable?
Potentially, the entire loan is forgivable.
To calculate the forgivable amount of the loan, add the costs incurred and payments made during the eight-weeks following origination of the loan for:
- Payroll costs
- Mortgage interest
The forgivable amount cannot exceed the principal of the loan.
In addition, the SBA has determined that at least 75 percent of the forgivable amount must be attributable to payroll costs. Because 80% of the maximum loan amount is based on two months’ worth of payroll costs, employers who continue to employ and pay their employees during the eight weeks after the loan is originated are likely to meet the SBA’s 75% requirements. Employers who reduce salary or wages or reduce the number of their employees during that eight-week period may not be able to reach the 75% threshold for payroll costs are part of the forgivable expenditures.
Are the allowable uses of a PPP loan different than how much of a PPP loan is forgivable?
Yes. How the loan is spent from February 15 to June 30, 2020 (the time period for allowable uses) is not necessarily the same as the amount that is forgivable. There are allowable uses of the loan money that are not forgivable, and the time period for using the money (February 15 to June 30, 2020) is different than the time period for calculating the forgivable amount (8 weeks after origination of the loan).
If the eight-week period for calculating the forgiveness amount extends beyond June 30, 2020, and you have not incurred expenses for the maximum forgivable amount by that day, the borrower will need to continue paying forgivable expenses with its own funds and not with the loan in order to maximize the forgivable amount of the loan.
What are payroll costs?
- Salary, wages, or commissions
- Payment for cash tips or equivalent
- Payment for vacation, parental, family, medical, or sick leave
- Allowance for dismissal or separation
- Payment required for the provision of group health care benefits, including insurance premiums
- Payment of retirement benefits
- Payment of state or local employment taxes
BUT payroll costs do not include:
- compensation to an employee in excess of an annual $100,000 salary
- compensation to an employee who resides outside of the U.S.
- compensation paid to independent contractors
Do payroll costs include paid sick leave for COVID-19 or expanded FMLA leave?
No. The CARES Act specifically exempts from payroll costs paid for sick and family leave for which a tax credit is allowed under the Families First Coronavirus Response Act.
Will lenders be paid a fee for making loans?
Yes. The SBA will pay lenders a percentage fee for processing PPP loans.
There is no fee for the borrower to apply for a PPP loan.
What happens if the borrower has, or in the future will, layoff or furlough some or all employees?
If the borrower lays off or furloughs employees prior to the making of the PPP loan, the borrower’s maximum loan amount will decrease because the borrower’s average monthly payroll costs will also have decreased.
In addition, the amount of loan forgiveness (as calculated above) will be decreased proportionally if the borrower’s number of full-time equivalent employees is reduced during the eight weeks after the loan origination compared to the number of employees during the last year.
But, if the reduction in the number of full-time equivalent employees occurs between February 15, 2020 and April 26, 2020 and that reduction is eliminated by June 30, 2020, the forgiveness amount will not be reduced.
The June 30, 2020 re-hire date does not change the requirement that 75% of the forgivable amount of the loan must be for payroll costs, even if the eight-week period for calculating the forgivable amount extends past June 30, 2020.
What happens if the borrower has, or in the future will, reduce compensation for some or all employees?
If the borrower decreases payroll costs prior to the making of its PPP loan, the maximum loan amount will decrease because the borrower’s average monthly payroll costs will also have decreased.
In addition, the forgivable amount of the loan can also be decreased proportionally if, during the eight weeks after the origination of the loan, the salary or wages of employees who made less than an annualized salary of $100,000 in 2019 are decreased by more than 25% (compared to the most recent full quarter in which the employee was employed).
But, if the above-described reduction in salary or wages beyond 25% occurs between February 15, 2020 and April 26, 2020 and is eliminated by June 30, 2020, this proportional reduction in the forgivable amount will not apply.
The June 30, 2020 date does not change the requirement that 75% of the forgivable amount of the loan must be for payroll costs, even if the eight-week period for calculating the forgiveness amount extends past June 30, 2020.
What documentation should a recipient of a PPP loan keep?
The borrower needs to keep documentation to establish that:
- The PPP funds were used for allowable expenses from February 15, 2020 to June 30, 2020; and
- The amount of costs incurred and payments made for forgivable expenses during the eight weeks after the origination of the PPP loan.
One solution to consider is to put loan proceeds in a separate operating account to track its use.
What else should borrowers consider when deciding whether to seek a PPP loan compared to alternative relief such as laying off or furloughing employees?
In making such a decision, you should consult with your accountant and/or financial advisor. If you are considering a Paycheck Protection Program loan, work with a reputable lender preferably with a long-standing relationship with the SBA.
Generally, the PPP makes sense for businesses that are continuing to operate but struggling to make ends meet and that need temporary relief. In order to maximize the amount of the loan, borrowers need to be prepared to expend current assets to keep employees employed (and compensated) while waiting for the loan. In order to maximize the forgiveness amount, borrowers may need to expend additional assets on payroll costs (and other forgivable costs) after June 30, 2020 without using the loan proceeds. At this point, we do not know when loans will be originated by the lenders, which could cause complications in the use and forgiveness of loan amounts.
Characteristics for good candidates for PPP:
- Revenues and collections are still strong.
- You have plenty of reserves to bankroll payroll for the next 60-90 days.
- It would be a competitive advantage to keep employees working, even if revenues are dropping off. For instance, to make internal improvements, retrain, and to keep highly desirable and hard to get people, etc.
- Your business is doing well now, but you believe it will slip off before June 30th.
Those who may want to consider layoff instead of PPP:
- Have sharply declining revenues
- Little or no reserves.
- Low wage or low skill workers who can easily be rehired.
- Lower wage workers would collect more from unemployment benefits.
Some Recent Client Questions We Have Received.
- Can my company reduce hours and headcount as long as we get back to full capacity by June 30?
Yes, the reductions to the forgiveness amount for (1) reduced number of employees and (2) reduced salary and wages do not apply if the reduced hours or headcount occur between February 15 and April 26 and are corrected by June 30. The company can pay employees down to 75% of their previous salary/wages (from the last full quarter) without penalty. But, in order to have the loan forgiven, the company still must have forgivable expenses (payroll, mortgage interest, rent, and utilities) during the eight-weeks after loan origination, of which 75% must be payroll costs. So, you are unlikely to be able to fully employ everyone just at the last minute and still maximize your forgivable amount.
- If we reduce wages/hours from the calculated previous year’s average, is it limited to a maximum 25% reduction? Is that per employee, or overall?
For any employee who made an annualized salary/wages of $100,000 or less during every pay period in 2019, you can reduce their salary/wages up to 25% (from their salary/wages in the most recent quarter) without penalty. Any amount reduced beyond 25% is deducted from the amount of loan forgiveness. This is an employee-by-employee calculation and reduction.
- If we reduce headcount, is there a limit on how many employees we can furlough?
For headcount, there is no limit to how many employees you can furlough to be eligible for a PPP loan. But, the forgiveness amount will be proportionally reduced by the percentage of full-time equivalent employees during the eight weeks after loan origination compared to historical averages of full-time equivalent employees.
- If an employee often earns overtime, is overtime calculated as part of the 75% of wages you have to pay them (to avoid a reduction in the forgivable amount)?
The CARES Act does not specifically mention whether overtime is included in the 75% of wages paid, but it appears to be included. The reduction to the forgiveness amount for reducing wages is based on a reduction in “total salary or wages.” Since overtime is a type of wages, it should be included in total wages.
- If we have to spend 75% of the loan on payroll, do we have to spend that in 2 months or just by June 30?
There are two 75% payroll costs requirements. First, 75% of the loan amount must be spent on payroll costs, and the loan can only be spent on the CARES Act allowable expenses (payroll, group health benefits, leave, insurance premiums, mortgage interest, rent, utilities, interest on debt) through June 30. Second, 75% of the forgivable amount, which is calculated during the eight weeks after loan origination (without respect to the June 30 date) must be for payroll costs. In all likelihood, these two requirements will be the same, but if there is a delay in originating the loan, such that the eight weeks following origination extend past June 30, there will be a difference. We have not seen the SBA address that possibility, and we believe the assumption is that the loans will be originated quickly.
For more information about the Paycheck Protection Program, or about any of the new developments in employment-related laws as a result of the COVID-19 crisis, please refer to the HGRS LLP Coronavirus (COVID-19) Resource Center, at www.hgrslaw.com, or contact our firm at (404) 442-8776.Read More
As part of its efforts to reduce the economic impact of the coronavirus (COVID-19) pandemic, the federal government has expanded unemployment benefits in several ways through two recently enacted statutes:
First, the Families First Coronavirus Response Act (enacted March 18, 2020) provided, among other things, an initial $1 billion in funds for state unemployment programs, and it ordered implementation of expedited processing of unemployment compensation claims.
Second, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) (enacted March 27, 2020) provided about $250 billion to expand unemployment compensation benefits. Specifically, the CARES Act:
- Provides for “Federal Pandemic Unemployment Compensation” in the amount of $600 weekly, in addition to regular state unemployment benefits;
- Extends the period of state unemployment benefits (typically limited to 26 weeks) by an additional 13 weeks; and
- Expands eligibility for those who normally are not eligible for unemployment benefits, such as self-employed individuals, independent contractors, those with limited work histories, and those unable to work due to certain COVID-19 related reasons.
Weekly Benefit Increase
Under the usual state unemployment compensation program, an applicant will receive a “Weekly Benefit Amount” (WBA) that is calculated by a formula that considers the individual’s compensation earnings over the past year. Each state uses its own formula, and the “maximum WBA” will vary from state to state. For example, in Georgia, the maximum WBA is $365.
Section 2104 of the new CARES Act (titled “Federal Pandemic Unemployment Compensation” or “FPUC”) authorizes an “Emergency Increase in Unemployment Compensation,” which will provide a supplemental $600.00 payment for each week of unemployment compensation through July 31, 2020. This amount will be added, each week, to an individual’s current, state-determined WBA. When the federal benefit is exhausted (July 31, 2020), the individual will revert back to his or her regular state-determined WBA.
Notably, the CARES Act does not require an applicant for unemployment benefits to have been forced into unemployment as a result of a COVID-19 circumstance. The Act only requires that, during the program period (now through July 31, 2020), the applicant qualifies under the applicable state rules. If the applicant qualifies for unemployment compensation, the $600 automatically will be added to each week’s WBA. If an employee was already (after January 27, 2020) on unemployment compensation prior to the COVID-19 situation, he or she will be eligible now to receive the additional $600 per month.
On April 4, the U.S. Department of Labor (DOL) issued Unemployment Insurance Program Letter (UIPL) 15-20, which provides detailed guidance for states on the administration of FPUC. The letter identifies the types of unemployment benefits an individual must qualify for under state rules in order to qualify for the weekly FPUC $600 benefit; the overall time schedule for the program; and other details about how the FPUC program should be administered. A copy is available here.
Temporary Federal Funding of First Week of UC Benefits; No Waiting Period
In most states, there is a one-week waiting period after an individual submits an application for unemployment compensation benefits. Thus, the first week of unemployment is typically unpaid.
Section 2105 of the CARES Act provides that the U.S. Treasury will fully reimburse states that eliminate the one-week waiting period and pay unemployment compensation to applicants for their first week of unemployment. All costs associated with this benefit are covered through December 31, 2020. Most states already have adopted this change.
Additional 13 Weeks of Unemployment Compensation
Section 2107 of the CARES Act (“Pandemic Emergency Unemployment Compensation” or “PEUC”), provides federal funding for an additional 13 weeks of unemployment compensation, through December 31, 2020, to individuals who have exhausted all rights to regular unemployment compensation under applicable state law for the 2020 benefit year. Thus, in a state where an applicant already is eligible for up to 26 weeks, he or she now may qualify for up to 39 weeks of unemployment compensation. During this period, the individual will continue to receive the usual state-determined WBA, plus (through July 31, 2020) the weekly $600.00 FPUC supplement.
Short-Time Compensation Payments (in States with Programs)
Section 2108 of the CARES Act provides federal funding for established “short-time compensation” (“STC”) or “workshare programs,” whereby an employer may reduce an employee’s hours instead of laying off the employee, and the employee will receive a pro-rated unemployment benefit. The Act provides that the U.S. Treasury will reimburse states for 100% of the costs incurred in providing this benefit through December 31, 2020.
An STC or workshare program allows an individual whose work hours have been reduced to collect a portion of unemployment compensation on top of his or her regular pay. These programs look at the number of hours worked (as opposed to total earnings) and can provide individuals with a pro rata share of weekly benefits (WBA) based on the reduction in weekly hours of work. The goal is to encourage an employer to avoid layoffs by reducing the number of regularly scheduled hours of work for all, or a group of, individuals during a business slowdown.
If a state does not already have a program, but implements one, it will receive 50% of the above funding. The employer will be responsible to fund the remaining cost. If, however, a participating state enacts an STC or workshare program that complies with Section 13-3306(v) of the Internal Revenue Code, then the employer will receive 100% reimbursement.
Increased Access to Unemployment Compensation
Section 2102 of the CARES Act creates the temporary “Pandemic Unemployment Assistance Program,” (“PUA”) (effective Jan. 27, 2020 through Dec. 31, 2020), which will grant unemployment compensation coverage to many individuals who would not otherwise be eligible for such benefits (e.g., self-employed persons, independent contractors, gig workers, part-time employment seekers, those who lack sufficient work history, and those who have exhausted their unemployment benefits under existing programs). These individuals will need to show that they are unemployed, partially unemployed, or unable to work because of one of several reasons enumerated in the CARES Act.
On April 5, the U.S. Department of Labor published Unemployment Insurance Program Letter (UIPL) 16-20, which provides additional guidance to the states on how to implement the Pandemic Unemployment Assistance (PUA) program. A copy is available here.
For more information about the federal legislation regarding new unemployment benefits and rules, or about any of the new developments in employment-related laws as a result of the COVID-19 crisis, please refer to the HGRS LLP Coronavirus (COVID-19) Resource Center, at www.hgrslaw.com, or contact our firm at (404) 442-8776.Read More