SS+D COVID-19 Response Team: Coronavirus Update March 19, 2020
March 19, 2020 | Sebaly Shillito + Dyer
FEDERAL UPDATE – PRESIDENT TRUMP SIGNS FAMILIES FIRST CORONAVIRUS RESPONSE ACT
Late yesterday, President Trump signed into law the Families First Coronavirus Response Act (H.R. 6201). The law also provides for hundreds of millions of dollars in new funds for nutritional programs like WIC and to support local food banks. It also requires health insurers to provide free COVID-19 testing.
Of special concern to employers and employees is that the new law contains two main provisions related to emergency leave, and applies to employers with fewer than 500 employees. They will go into effect on April 2, 2020.
Expansion of FMLA. The first emergency leave provision expands the Family Medical Leave Act. Employees will now be permitted to take up to 12-weeks of leave if they are unable to work (or telework) due to the need to care for a child because the child’s school or place of care has closed. The employee’s job must remain protected during the leave (except that employers with fewer than 25 employees do not need to protect the employee’s job). The employee’s leave may be unpaid for the first ten days, but the employer must pay the employee beginning on the 11th day of leave (up to a maximum of $200/day or $10,000 in the aggregate).
Paid Sick Leave. The second emergency leave provision relates to paid sick leave. If an employee is sick or quarantined due to COVID-19, experiencing symptoms of the disease and is seeking medical attention, or is caring for a child due to a school or child care provider closure, then the employee is entitled to paid sick leave. Full-time employees are entitled to 80 hours of leave. Part-time employees are entitled to the number of hours equal to the average number of hours they work in a two-week period.
Special Exemptions. The law does, however, allow the Secretary of Labor to exempt a very small business (fewer than 50 employees) from the above-mentioned requirements if compliance with those provisions would jeopardize the business’s ability to continue as a going concern. It’s unclear how very small businesses will be able to ask for the special exemption.
Tax Credits. Under the new law, employers will be entitled to a payroll tax credit that equals 100% of the wages paid by the employer under the FMLA expansion provisions. The law also allows employers a payroll tax credit equal to 100% of the wages paid by the employer pursuant to the required paid sick leave provisions.
We are continuing to work diligently to analyze and provide more specific information and guidance related to the Families First Coronavirus Response Act.
FEDERAL UPDATE – TRUMP ADMINISTRATION CLOSES U.S.-CANADA BORDER FOR “NON-ESSENTIAL TRAFFIC”
President Trump announced yesterday that the border between the U.S. and Canada is temporarily closed to “non-essential traffic,” but he said the closure will not affect trade.
FEDERAL UPDATE – WHITE HOUSE WORKING WITH CONGRESS ON “THIRD” EMERGENCY STIMULUS PACKAGE
The Senate is actively working on putting together a third emergency stimulus package. Senate Majority Leader Mitch McConnell spoke on the subject earlier today. He indicated that the Senate’s proposal would focus on four main areas:
- Small business loans – The third stimulus could allocate hundreds of billions of dollars for small business loans.
- Direct financial help for Americans – Talks have centered around the idea of sending $1,000 to each American, but some lawmakers are advocating for an earnings caps on who could get the stimulus check (~$75,000 for an individual).
- Help for specific impacted industries – Industries “of national importance” (like the airline industry) are likely to get assistance in the third stimulus bill.
- Boosting the public health response – Lawmakers are working with public health officials to determine what additional assistance they need at this time.
Negotiations are continuing. But McConnell said that he wanted to proceed at “warp speed” to get something passed.
FEDERAL UPDATE – PRESIDENT INVOKES DEFENSE PRODUCTION ACT
Yesterday, President Trump announced that he will invoke the Defense Production Act, which would allow the administration to force American industry (through something called a “rated order”) to manufacture medical supplies that are in short supply in the fight against the coronavirus pandemic. “There’s never been an instance like this where no matter what you have it’s not enough,” Trump said at a White House briefing with reporters. “If we need to use it, we’ll be using it at full speed ahead,” he said.
Of top concern to health workers in the U.S. is the shortage of N95 respirators, which are viewed as more effective at blocking viruses than the looser-fitting surgical masks.
While there is a current emphasis on medical supplies, the Defense Production Act authorizes action that is much broader in scope. It can require businesses to contract with the government to provide other kinds of necessary services, materials, and goods on the order of the president. The Act also prohibits hoarding for the purpose of price gouging of any materials the president deems to be scarce.
We are not aware of any rated orders being delivered to any manufacturers yet. We will continue to monitor the situation.
FEDERAL UPDATE – PRESIDENT TO REQUIRE HUD TO SUSPEND FORECLOSURES UNTIL APRIL
President Trump announced yesterday that the Department of Housing and Urban Development (HUD) is suspending all foreclosures and evictions until the end of April 2020.
FEDERAL UPDATE – HHS TO ISSUE REGULATIONS ALLOWING DOCTORS TO PRACTICE ACROSS STATE LINES
Vice President Mike Pence announced yesterday that the U.S. Department of Health and Human Services will issue a regulation allowing physicians and other medical professionals to practice across state lines to meet the needs of hospitals and other medical facilities. We’ve not seen any published regulations yet, but we will continue to monitor the situation.
FEDERAL UPDATE – WHITE HOUSE RECOMMENDS DELAYING ELECTIVE SURGERIES
Vice President Mike Pence announced yesterday that the Federal Government is recommending that physicians and hospitals across the nation delay elective procedures “to ensure that medical supplies and medical capacity go where they’re needed most.”
STATE UPDATE – DISASTER RELIEF SBA LOANS ARE COMING TO OHIO
Yesterday, Governor DeWine asked the SBA to make Ohio businesses eligible to participate in the Economic Injury Disaster Loan Program. The SBA Administrator approved the application this afternoon. The loans are available for all counties in Ohio.
Through the program, the SBA will be providing small businesses with loans of up to $2 million. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid because of the pandemic’s impact. The interest rate will be 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits will be 2.75%.
The SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay. Businesses can apply online, by mail or in-person at a disaster center. The SBA will review your credit, verify an estimate of the total loss and a loan officer will determine eligibility during the processing of an application. However, the SBA can make a loan while insurance recovery is pending. The SBA is seeking to arrive at a decision for each application within 2-3 weeks of the application being submitted. Upon approval, the SBA will provide closing documents to a business for execution. Once the SBA receives the signed closing documents then an initial disbursement of $25,000 for physical damage and $25,000 for economic injury will be made within 5 days.
A personal financing statement executed by each sole proprietor, general partner, or managing member of a limited liability company is required in addition to the application. Additional documents, such as federal income tax returns for each principal owning 20% or more of the business, each general partner or managing member, and each affiliate when any owner has more than a 50% ownership in the business, may also be required. You can apply at https://disasterloan.sba.gov/ela.
STATE UPDATE – OHIO ORDERS BMV, ADDITIONAL BUSINESSES CLOSED
Governor DeWine ordered Ohio BMV locations closed yesterday. But don’t worry too much about getting a ticket if you can’t renew your license; while driving with an expired license is still illegal, the governor asked the Ohio Highway Patrol to refrain from issuing tickets. In addition, he ordered the closure of barbershops, hair and nail salons, spas, and tattoo parlors. This comes on top of his recent order closing restaurants, bars, and gyms.
USEFUL RESOURCES TO “STAY IN THE KNOW”
We have identified some useful resources for you to stay abreast of federal, state, and local legislative measures being taken in connection with COVID-19. Information about various measures being taken by federal, state, and local branches of government can be found via the below links:
https://coronavirus.skoposlabs.com/
https://www.ncsl.org/research/health/state-action-on-coronavirus-covid-19.aspx
https://www.nga.org/coronavirus/#states
GENERAL STATUS UPDATE
As expected, the number of cases of coronavirus in the U.S. continues to rise. There are a total of 10,442 cases in the United States, according to the CDC. Of those, 150 people (most were elderly or had underlying health conditions) have died. The best way to stay healthy is to follow the guidance of the CDC and continue to wash your hands regularly and practice social distancing.
ABOUT THE SS+D COVID-19 RESPONSE TEAM
The SS+D COVID-19 Response Team was formed to provide clients, colleagues, and friends of the Firm updates for the foreseeable future on COVID-19 issues facing businesses, executives, and employees. Please let us know if there are any items/issues you would like for us to track or summarize.
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