Employment attorney Alan Crone of The Crone Law Firm in Memphis, TN discusses issues pertaining to recent developments in the COVID-19 law changes and the SBA Loan program.  Be sure to listen to the end as Alan answers listeners’ questions.

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The broadcast is now starting. All attendees are in listen only mode. Good afternoon folks. And welcome to this special webinar. Hosted by Peloma. The powerful, innovative legal marketing and management association. Today’s webinar is the second in our coronavirus survival webinars series. Today’s topic, COVID-19 employment law tips for law firms. Joining us as employment, lawyer, Alan crone of the crone law firm in Memphis,
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Tennessee. Before I turn over presentation to Ellen, just a few housekeeping items before I turn it over, all attendees are in listen mode. If you have a question for w for us, please submit it. Using the questions tab on your webinar software. We’ll read and answer the questions at the end of the presentation. If you’re experiencing audio difficulties as has happened the past several weeks with this software,
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please send us a chat and I will send you some alternative dial in arrangements. The webinar is being recorded. Playback of this webinar is going to be available at<inaudible> dot org slash Corona. Now folks, Ellen crone. Good afternoon, everybody. Uh, appreciate you attending this webinar and I hope I can, uh, I can, uh, give everybody some,
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some value here. Uh, please submit your questions as we go along. Uh, I have found as I’ve been cracking open, uh, the, um, the, uh, uh, new laws that the feds have, uh, have enacted particularly that, uh, they’re very, uh, they’re written very broadly. I think that’s, um, meant to,
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uh, uh, to create as many loopholes as possible. Uh, I think the basic idea here is to get people, uh, money, uh, whether it’s in the form of paid leave or unemployment benefits or, um, uh, loans, et cetera. So we’ll, we’re what I plan to talk about, uh, is, uh, the first talk about the federal,
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uh, the federal act that, uh, extends, uh, paid leave and family medical leave to, uh, folks that have a Corona virus, uh, issues. Then we’ll talk about, um, the, um, uh, the SBA, uh, loan, the payroll protection program, which many of you may be interested in? I will tell you.
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I know I certainly have been interested in it since I first heard about it. And we’ll talk a little bit about unemployment compensation, uh, both from an employee and an employee or a standpoint. And then finally, uh, talk a little bit about the OSHA guidelines. Uh, that’s been issued, uh, relative to a safe workplace under the, um,
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considering all of the ramifications of the, but the COVID virus and being an essential workplace. If you were in an essential workplace and you’re open and you have a, a brick and mortar, uh, central location, uh, many folks, uh, uh, do. And if you do then, um, uh, you may want to, uh,
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you may have some interest in, in that. Um, I apologize to everybody. I don’t have, uh, normally for something like this, I would have a PowerPoint to go along with it, but this thing has been moving so fast. I really haven’t had a chance. Um, I really haven’t had a chance to, to deal with, uh,
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with that. Um, alright. Without any further ado, let’s talk about the, um, the family’s first Corona virus response act. That was the bill signed into law by president Trump on March 18th, 2020. Uh, I believe it’s the, what they’re calling phase two of the coronavirus, uh, response phase one is the first SBA loan program. Now I’ll come back to that a little bit later,
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uh, but basically what the family’s first coronavirus response act did is that it, uh, changed, uh, and expanded, uh, paid leave and, uh, family medical leave, uh, both in terms of paid leave, uh, under the fair labor standards act and the family medical leave act. And one reason that that’s important is it gives the,
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uh, both of these acts, what I’ll call back office support in terms of enforcement, because it, uh, it incorporates the damages provisions and the attorney’s fees fee, shifting provision, and other kinds of, uh, procedural provisions into the new act by, by virtue of the fair labor standards act and the family medical leave act. So the first,
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the first, um, bit of expansion is the, um, uh, the FMLA leave entitlement expansion. And, uh, the, the act expanded the FMLA to include 12 weeks of FMLA leave for use of employees. Uh, who’ve been employed for 30 days or more, uh, and, uh, the first 10 days of this league, uh,
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can be unpaid. Uh, but employees who use other benefits, uh, can use other benefits to cover that time of the first 10 days leave following the first 10 days must be paid to the employee by the employer. Uh, the right must be two thirds. The employee’s regular rate of pay based on normally scheduled hours. Uh, the total paid leave is available to an employee it’s capped at $200 per day,
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and at $10,000 total, uh, this leap is only applicable to an employee if the employee requests leap in response to the following coronavirus C uh, COVID-19 related reasons. All right. So first thing is that this isn’t leave for any party, any purpose under the sun, it’s leave for specifically related to the coronavirus. Uh, and it’s, it’s done through the family medical leave act.
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This act applies to employee and employers that have 50 to 500 employees. So if you have less than 50 employees, you still have to make an application through the department of labor, uh, in order to be exempted from this, uh, act. And you have to show that there’s some economic harm, uh, related to your participation since you have less than 50 employees.
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And, um, now the bad news is, is that at least the last time I looked at this, which was early this morning, I did not see anything on the DOL website to tell you when and how, um, to, to make that, uh, application for it, for an exemption. So I would watch the department of labor website,
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just, uh, paranthetically I would say that’s a, that’s a good advice. Just generally speaking. One of the things that I would do, and I am doing as a business owner is unchecking my state department of labor website frequently, the, and the, um, uh, the national, the federal department of labor website for updates, uh, on all of these issues as they relate to employees.
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Okay. So, uh, this family medical leave, uh, applies to, um, uh, any individual who’s an employee. If the employee is unable to work or telework, so you can require folks to telework under this due to a need for leave to care for the son or daughter under the age of under a under age centered order of such employee,
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if the school or place of care has been closed, or if childcare provider for such son or daughter is unavailable due to a public health emergency. So this is, uh, essentially extendedly, um, it’s capped at $200 a day based on, on two thirds of their, uh, regular rate of pay. Uh, and the first 10 days can be unpaid,
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but after that, if there, if the schools are closed and that means that they can’t come into your place of work, uh, that, uh, they are entitled, you have, if you’re going to keep them on the payroll, you have to pay them $200, uh, up to $200 a day, depending upon what their, their regular rate of pay is.
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Now. Um, one thing that I think is, is evolving. Uh, and if people have questions about this, you can, you can call me or call somebody to, to work through these is I think it, it becomes an interesting, it becomes an interesting, um, exercise to determine what, uh, is your best course of action.
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And you may even want to, to have a little bit of dialogue about your, with your employees about what they would prefer in terms of furlough, or, um, they would rather, uh, get unemployment or get leave under this, this act. Um, but one strategy that a lot of people are using for folks that have, then I think is particularly applicable to law firms.
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Uh, Ryan is, um, uh, having people telework, I’ll tell you that, uh, in Tennessee, which is where I’m located, uh, Memphis, uh, had a safer at home order that came out about, I want to say, gosh, it seems like a month ago, but I bet it was only a week, week and a half ago.
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We had been working from home, uh, for several days before that, uh, we are an essential business as most of these state orders. I believe in even city orders, um, designate law firms as essential businesses. We made the decision very early on that we wanted people to tell a work, Hey, because I didn’t know, uh, what the future held in terms of being able to move around the city right now.
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That’s not a problem. And I think that’s not a problem, even in some of the worst hits it. Um, but I wanted us to be that if it became mandated, I wanted people to be very accustomed to working from home. And I wanted to work out those, those glitches and details. Man, I can tell you, the first two or three days were,
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um, we’re, we’re challenging a little painful, but we got through it. And I think most of you that have, have done that probably have had the same experience. So teleworking is a great way to, um, to comply with this, uh, and not have to pay unpaid leave to folks that, that, uh, otherwise are, uh,
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available to work. They just have their kids at home. The other part of, of the, uh, response act was emergency paid sick leave. And this is a little more comprehensive, a little more wide reaching and more challenging to deal with. But under the emergency paid, uh, sick leave act applies to all employees of employers with fewer than 500 employees down to that 50 employee,
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uh, level that we talked about before. Same a idea that you have to go and get a exemption. If you have less than 15 employees, the act requires employers to provide up to 80 hours of paid sick leave to full time employees. Uh, part time employees are afforded their average amount of hours work for a two week period. If the part time employee schedule varies,
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then the employer must use the average amount of hours work over six months to figure out what that leave is. If the employee has not worked that long employee must calculate wages based on the average number of hours the employee can reasonably expect to work, uh, during this time period in order to receive this benefit, the employee must request leave under the following circumstances.
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And again, I don’t want to bury the lead. Mmm. The, I want to talk a little bit about the, the amount that I’ll come back to the S to the qualifications, I’ll tell you that the qualifications all relate to, to the COVID-19 and not to, uh, other, uh, health conditions. Uh, if you have, if you have,
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uh, the, a size from where the FMLA applies, then, um, you, um, would just go normally under the FMLA for those, uh, types of situations. Um, all of these lists reasons that we’re going to get you require a full time rate of pay is defined by the fair labor standards act. So this part is enforceable under the fair labor standards act with the exception of,
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um, uh, the, the, the last three, which required two thirds of the employee’s regular rate of pay. Those are related to the childcare. Um, the first three have a cap of $511 per day, or $5,110 total. So it’s for 10 days and covered circumstances, four through six, again goes back to the emergency family leave, which is $200,
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uh, per day. Uh, employers cannot require the employee to use any other leave prior to using the emergency sick pay leave. So that’s a good, that’s a good, uh, that’s a good point. If you have PTO or you have sick time, or you can certainly offer your employees that, but anything that you had in place before this starts,
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this takes precedence over. So in other words, you have to offer them this, leave this paid leave first, and then they can exhaust, uh, the other, the other league. So how do I qualify? Okay. The first three I’m going to talk about are the, the requirements for the, um, for the $511 per day, the employee is subject to a federal state or local quarantine or isolation order related to COVID-19,
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that would prevent them from coming to work. Uh, so again, if they can tell commute, or they’re not prohibited from, uh, uh, performing an essential service to come to your office, then they can, uh, and then they’re not covered under this, but if there’s a federal state or local quarantine or isolation order that prohibits them from working,
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then they’d be entitled to the leap to the employee has advised by a healthcare provider to self quarantine due to concerns related to COVID-19 again, uh, I think you can require that written Mmm, that written advice to be given to you for documentation purposes, and then the, um, the employees experiencing symptoms of COVID 19 and seeking a medical diagnosis. Um,
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and, um, I think between two and three, that would cover, um, someone being sick themselves, someone in their household being sick, uh, or having come in contact with someone exposed to the virus. And as we, uh, continue down the, uh, the path that we’re we’re in right now, uh, I think that’s going to be more and more prevalent where people as the community spread,
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uh, heightens more and more people are going to be exposed to folks with symptoms or folks who’ve been diagnosed and are going to be required to, uh, self isolate. And when I say required, I mean required by a healthcare professional or a County health department, uh, to self isolate. And so that is going to make this leave kick in.
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And so for some of us, you know, we might be looking at this sort of thing happening, um, all the way through the end of the year, right now, the, this, these two acts expire at the end of the year, December 31st, 2020. So I don’t think this is just going to be limited to, uh, what’s hopefully the next two or three months of isolation during the surge,
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but could, uh, also continue, uh, as we experience, um, other waves or, uh, the community spread is less than, but still, uh, affects us. All right. So the, the four that, um, that require, um, the four that require the, the $200 per day is if the employee is caring for an individual who is subject to a federal state or local quarantine order,
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or the individual has been advised to self quarantine due to concerns related to COVID-19, uh, the employees caring for the employee, son or daughter, if the child’s school or childcare facility has been closed. That’s, we’ve talked about that before, or the employee is experiencing any other substantial similar condition specified by health and human services in consultation with the department of the treasury and the department of labor.
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So that’s kind of a catch all that. Um, you know, I think you’ve got to stay vigilant on that. And, uh, uh, as people request the leave, then you want to look and explore and see if, uh, uh, it’s pursuant to some, some order that would, um, that would kick in, uh, under that particular,
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um, under that particular, uh, criteria. Now, the nice thing about it is in an attempt to alleviate the burden to employers, because by providing the benefits, uh, prescribing under this, this act, uh, there, the federal government will provide tax credits to employers for the money that they spend out. According to the IRS employees receive 100% reimbursement for paid leave pursuant to the act,
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uh, in the form of tax credits, uh, health insurance costs are also included in the actual health. Any health insurance costs that you incur as a result of this are included. I would get with your tax professional to see if, um, all of that is you get a tax credit for just your general, uh, health insurance Mmm. Expenditures,
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even if it’s not directly related to, uh, to Corona. I think that’s going to be the case eligible employers are entitled to an additional tax credit, uh, based on the cost to maintain the employees, particular health insurance coverage during the leave period, these credits will not exceed the limit set by the act. These limits are provided in the previous section.
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It’s also worth noting that the requirements under the act are subject to a 30 day non-enforcement enforcement period for good faith compliance efforts. Um, there are some authorities out there who are saying that, uh, these, uh, leave requirements went into effect immediately. Uh, the, the, uh, the initial indication was that they weren’t going to go into effect until April,
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but, uh, if you’ve been, if you’ve had leave requests, uh, over the past couple of weeks, uh, there is authority out there that says that you, um, that you’re, that they’re entitled to receive the, the, uh, the leave, uh, upon passage and signing by the president, which is I said was March 18th.
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Uh, there are also individual tax credits available to, uh, individuals who are self employed. Uh, these individuals receive a credit for a hundred percent of the self employed individuals, sickly equivalent, plus 67% of the sick leave equivalent for taking care of sick family members, including children following the closing of their schools or daycare, a sick leave amounts must be the lesser of the individual’s average of self employment income,
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or $511 per day, up to 10 days, uh, for the individual sickness or $200 a day for up to 10 days to care for the sick, a family member or child. Um, so that’s one when you go to, so I would, I would, one thing I have done is, uh, I have had my, uh, legal administrator create a separate,
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uh, P and L entry account for, uh, COVID-19 and we’re, uh, we’re noting anything that we think is related to COVID-19 compliance in that account, that when we go to do our taxes at the end of the year, we’ll already have that segregated and can look to see how many of those expenditures we can either get, we can get a tax credit on or some other,
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uh, assistance. Um, so I think that’s, that’s good advice. And I would encourage everyone to do that. Mmm. Employers are allowed to take immediate advantages of these paid leave credits by retaining funds that they would normally use to pay payroll taxes, payroll taxes that are available for attention, include federal withholding, the employee share of social security, Medicaid taxes,
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Medicare taxes, and the employee share of social security and Medicare taxes with respect to all employees and event. Those funds are not enough to cover paid. Leave the employer may then ask the IRS for an expedited advance. The process for this advance will be released the week of March 23rd, 2020. So that should be out. Now. I haven’t gone back to look and see if that actually happened.
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Also, the, these credits are not available to employers who all were ready receiving IRC section 45 credits. So again, I would really, um, uh, dot my I’s and cross my T’s with regard to the tax information. Um, most, uh, a lot of accountants and law firms that do tax work. We have someone here who’s getting re getting right up to speed on all of this.
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Um, uh, the devil is of course in the details, but, um, you know, no matter what you think about it, and I know that there are a wide variety of opinions out there. Um, but the federal government is, uh, picking up the tab on all of this. And I guess we’ll, we’ll pay that Piper at some point down the road,
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but that is a as a society, but we’ll see, uh, in the short term, uh, how well it all works. Mmm. All right. We could talk a long time about this. Mmm. One thing I’ll say is personal respiratory protective devices are covered countermeasures under the act. Mmm. And, uh, you can get tax credit for,
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for purchasing those. All right. So that is, um, that’s what I’ve got on that act. That is the, um, uh, probably the most, uh, detailed and it, uh, it’s one I’ve gotten the most calls on now. Um, as we go through these, uh, the subsequent acts, uh, all have a requirement that in order to take advantage of them,
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you can’t be getting, um, any other benefits related to COVID. So, in other words, if you’re, if, if someone’s getting paid sick leave, they can’t get unemployment. If I’m, if you’re taking any of these deductions under the self employment, and you may not be able to include yourself in the, uh, uh, any there,
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you may not be able to get unemployment yourself, or you may not be able to include yourself in the, uh, payroll, uh, the payroll protection program. So these are all tools they’re not cumulative, just like you can’t use a hammer and a screwdriver at the same time. You really want to think through, uh, how you employ these tools to protect yourself and protect your employees.
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All right. So the cares act, which was passed and signed into law over the past weekend, uh, provides a number of things. One thing it provides is extended unemployment benefits, and I’ve gotten a lot of calls from small business people offer motors, um, because they’re, the, the concern has been, they don’t want people to, uh,
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uh, to leave and invoke these, uh, unemployment provisions, because there really are, um, very rich and they’re meant to be very rich, um, much richer than, um, and more lucrative than a traditional unemployment benefits. Now, having said all of that, I think when we go through and you’ll hear the, the basis on which people can get unemployment,
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um, I think they’ve taken care of that, but it’s, um, it all kind of bears watching. And when you put these cocktail of benefits together for people and explain them to people, um, you, you need to have a clear indication of what your plan is in order to retain in order to retain people. Um, now I’m gonna talk about the cares act.
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I’m gonna talk about the stimulus package. Uh, that’s all one in the same thing. So if you’ve been hearing about the stimulus package, that’s also known as the cares act, and it has a number of elements. One element in particular extents currently available unemployment benefits, 13 weeks were total 39 weeks and pays each qualified individual, uh, the additional $600 a week above and beyond what the currently available state benefits.
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So, um, if you’re not entitled to state benefits, then you get the $600 a week. If you’re entitled to state benefits, then you get your, um, state benefits plus the $600 a week. I think it’s a, um, a little bit of an open item on a state by state basis, whether or not, uh, the state will,
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um, voluntarily pay the unemployment benefits, um, to folks that or narrowly would not have, uh, would not have qualified. W what that means is as many of you may know, in order to qualify for unemployment, you have to have paid into the system and work as an employee for a particular period of time. Well, for this coronavirus response,
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unemployment benefits, uh, that’s all off the table. So if you’ve got a relatively recent employee or someone, an individual is self employed, an independent contractor or gig economy worker, which, uh, you know, is an Uber eats or Uber driver, or gets their work through a, uh, a, uh, an app, if you will.
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Uh, those people are now eligible for these federal unemployment benefits, which could last 39 weeks. So if you’re an eligible, uh, individual for these new and extended benefits, um, you qualify if the individual self certifies under penalty of perjury or about that in a minute, that they are otherwise able to, uh, uh, to work and available to work,
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but they are unemployed, partially unemployed are unable or unavailable to work. So that partially unemployed means that if you cut back significantly on, uh, folks, uh, time, and this is the case, uh, under state law, as it currently exists, then they can apply for a partial unemployment while they’re still working, uh, with you. Uh,
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and so if they, they qualify, then they would get whatever they were entitled to under state law. They were in your employee, but they also get the $600 per week. Now that’s $600 a week. Doesn’t matter how much they make. They make $800 a week. It’s $600 a week. If they make $200 a week, $400 a week,
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it’s $600 a week. Mmm. So it’s, it’s kind of a flat payment. That’s a, that’s meant to keep the economy going. So, uh, here are the here’s what qualifies you, if your individual’s place of business is closed as direct result of the COVID-19 public health emergency. So if it’s closed and you can’t go to work, Mmm.
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Then you qualify. If you’re open, uh, if you can tell commute or, or, and you work in a warehouse or you work in a place that’s open, then you’re not entitled to these benefits. The individual is diagnosed with COVID-19 or has experienced symptoms of COVID-19 and is seeking medical diagnosis. So that’s a separate qualification. Um, if the person is diagnosed,
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then they can get these unemployment benefits, or if they’re experiencing symptoms of COVID-19 and seeking a medical diagnosis, then they can receive the benefits while that while they’re seeking and the medical diagnosis. So, um, if, if on a Monday, Mmm I’m experiencing symptoms and I go, and I get a medical diagnosis, as soon as I get the medical diagnosis,
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then I’m, uh, in, in a negative. And, uh, in theory, I’m no longer entitled to these benefits. Um, now what’s interesting is if I have the symptoms and I seek the medical diagnosis and I can’t get it for a period of time Mmm. Arguably, that would be, uh, you’d be eligible and qualify until you,
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uh, received the diagnosis. Um, and I would say as, as kind of a separate matter, that’s probably not somebody that you want to have, um, you know, in your employment, certainly in your workforce at that point, uh, coming into work every day, you might be able to make a deal with them if they’re experiencing symptoms,
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but they’re still able to work again, if they’re able to work and available to work, uh, then they’re not entitled to these benefits and you can send it, continue to have them work. I think from a practical standpoint, that’s something that you want to negotiate on a, on a case by case basis. Uh, the individuals in the primary is the primary caregiver for a child or the person in the household who’s unable to in school or another facility that is closed as a result of,
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as a direct result of COVID-19 public health emergency and such school or facility care is required for the individual to work. Again, it kind of goes back to that leave requirement, if they can tell a work or that you can. Uh, I, in fact, I have a client who’s a, a daycare facility and they said, well, they can just bring their kids to our place.
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And we’ll, um, we will, um, uh, socially distance, uh, everybody, and, uh, uh, they can still continue to work. So again, it’s a, the threshold on all of this is, uh, they, if they can work and they’re available to work and, uh, this isn’t preventing them from work, uh,
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then these, this doesn’t kick in it. A member of the individual’s household has been diagnosed with COVID-19, they’re entitled to these benefits. The individual is providing care for a family member or a member of the individual’s household. Who’s been diagnosed. The individual has to quit his job as a direct result of COVID-19. That’s the biggest, uh, loophole I’ve seen.
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Um, the individual has to quit his job as a direct result of COVID-19. Uh, you may be thinking, Hey, crone, what does that mean? Uh, I don’t know. Uh, I’ve got folks looking into that and I think that’s going to be on. Yeah, I think that’s there to help on a case by case basis, uh,
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state agencies to make a determination, um, where the tie can go to the runner show, so to speak. Um, we’ll just have to see how that plays out the individual, providing care for a family member or a member of the individual’s household who’s been diagnosed. Uh, the individual can not reach her because I, healthcare provider as advisor to self quarantined,
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due to concerns, or the individual cannot reach her place of employment because of a quarantine and posed as a direct result of the COVID-19 public health emergency. So, um, that means, I think that what that means is, uh, if they’re otherwise able to work, but they just can’t travel because, uh, the national guard is industry and preventing people to travel,
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um, under whatever circumstance. And then the last one’s interesting is the individuals become the major breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19. And I think this presumably requires, um, uh, applies to someone who’s not an employee, but maybe it’s not been in the, in the, in the,
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the, the job market is not been in the workforce. It’s not self employed is not an independent contractor is not a gig economy worker, but their spouse or significant other or partner has died. And now they no longer have any income. This allows them to draw this unemployment, uh, without having a previous work history or previous business history. Uh,
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an individual is not qualified to receive any of these benefits if they have the ability to tell a work with pay, or the individual is receiving paid sick leave or other paid leave benefits, regardless of whether the individual meets any of the other qualifications. So again, if you’re already receiving help, uh, on an under another provision, you can’t take advantage of this.
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Um, and then finally, any individuals who lie or falsify their health conditions or any factual basis to qualify to receive these benefits when they sell certified, we’ll have to repay any benefits they receive. And they’re subject to prosecution. We’re making a false statement to obtain federal benefits under 18 USC, 1001, the penalty for violating this section includes fines, restitution,
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and imprisonment of up to five years in federal prison. Uh, now how, um, you know, how, uh, they, uh, how aggressive the us attorney’s offices are going to be to enforce that? I don’t know. Um, but I certainly would, uh, caution anyone, uh, against, um, violating or potentially violating federal criminal statute.
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So hopefully that’ll keep everybody somewhat honest, uh, in this, uh, endeavor, secretary of labor is expected to issue regulations to provide additional details and clarifications of how this program would be administered by the States as, as we go along. So, uh, I’m continuing to watch for those, uh, um, to continue to watch for those, um,
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uh, regulations that I’m going to update, uh, folks, uh, in it, if you’d like to get on my email list for this. Uh, my email address is, uh, a crone ACR, O N E at Chrome law firm PLC that’s P as in Paul, L as in Larry, C as in Chrome, Chrome law firm,
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plc.com. Uh, and so just email me and I’ll, uh, put you on my email list and you can, uh, get these updates. We try to do an update once a day, um, just pushing out a new information as it comes available. I’d like to give a special thanks to a Congressman and David<inaudible> and his staff for helping me in compiling this information.
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They were, they were very good to us early on in helping to, um, um, to deal with, um, uh, and this information is it was coming out of the, uh, uh, the fire hose that is, uh, uh, the federal act. Mmm. One thing I want to talk about, um, before we get to the SBA,
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well, let me talk about the SBA loans. I don’t want to run out of time without talking about those. Um, alright. There are two kinds of SBA loans, one that you can only get through the small business administration, and those are low interest loans. I think a three and a half percent, uh, is the, um, is the cap,
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uh, for those loans. Uh, those, those are not forgivable, uh, but those are loans that up to $2 million, uh, to help, uh, help with, uh, getting through this. In other words, the, the, um, uh, underwriting is much less, uh, is much less, uh, stringent. And,
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uh, the, uh, the reporting requirements, the underwriting requirements, the personal guarantee requirements, all those sorts of things are very, very much relaxed. And, um, and so, uh, uh, that, uh, is, uh, that is good and you can, uh, make those applications and, uh, directly through the small business administration,
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they’re taking those applications now and have been for some time. Um, but those are not the forgivable loans. We’ll talk about the forgivable loans. Uh, in a, in a minute, I got some, uh, advice from a banker who does a lot of SBA work, and I think it’s good advice that if you’re gonna do that, it’s probably a good idea to make those applications late at night or early in the morning,
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uh, because, uh, they, um, the website is, is, is getting stressed. And so the, uh, go with a less peak time, uh, that will help you get through that, but let’s talk about the paycheck protection, which was part of the cares act. Uh, and he is right in the wheelhouse of, of many of y’all and me,
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and probably a lot of, uh, your friends and clients. Um, yeah, the PPP gotta love the federal, uh, patient all four, uh, for anagrams provides for forgivable loans to small businesses companies with less than 500 employees at any given location. And that really, that part really does apply to certain industries where they’re there. I like the tourism,
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hospitality, that sort of thing, where they’re, um, they’re trying to expand the Mmm, the coverage, uh, to protect people’s paychecks without, uh, coming right out and saying it, okay, we’re going to give these loans to big operators, but basically what they’re looking at is for small businesses, 500 employees or less, uh, the,
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the act itself, as you can imagine, contains a lot of, uh, administrative parameters for implementation and oversight and administration. Uh, one that, that many of you may be interested in is there’s a conflict of interest provision that specifically was targeted at the president and his family, as well as members of Congress. Mmm. Uh, senators, uh,
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department heads, uh, highly ranking federal officials also can not take advantage of this. Mmm. So, uh, okay. So the first question is, okay, who’s eligible to get these loans, businesses companies, five Oh one C3 nonprofits,<inaudible> 19 veterans organizations, tribal business concerns with less than 500 employees are all eligible, including sole proprietors, independent contractors,
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and other self employed individuals. Uh, recipients must demonstrate that they were operational in February 15th, 2020, and had employees for whom we paid salaries and payroll taxes or independent contractors. So, uh, the baseline for all of this is going to be what was your payroll? Um, as a February 15th, 2020, uh, recipients must make a good thing certification that the loan is necessary due to the uncertainty of current economic conditions caused by COVID-19.
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And that it will use the funds to retain workers and maintain payroll lease and utility payments and are not receiving duplicate of funds for the same uses from another SBA program. That’s what I said before. Um, so for example, if you, uh, if you personally apply for unemployment as the self employed person, uh, you can’t go back. Um,
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I’m going to say you can’t go back and include yourself in this for purposes of, of the loan. Um, so what’s, what’s really kind of cool about it is the loans are forgivable to the extent that spend the money on payroll, uh, you rent Lisa’s mortgage payments. If you’re making mortgage payments on a, on a property that you’re using to operate out of,
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um, and utility payments, some other important features of the loans, the Mac loans max out at $10 million or two and a half times, the average monthly, your average monthly payroll, based on the prior year’s payroll, whichever is less, uh, proceeds can be used for payroll support, such as employees, salaries, wages paid sick or medical leave,
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insurance premiums, and mortgage rent, and utility payments. And again, I think you can mix and match that if you’re getting a tax credit for some of those things, and you could spend this money on, on other things. So, uh, again, it’s, um, uh, it’s an him important to really think this all through. And what makes the most financial sense for you?
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Um, forgiveness is driven by retention of employee head count, um, based on the February 15th, 20, 20 head count. Um, so the forgiveness will be reduced if you reduce your head count or you reduce your overall payroll during the loan period. So if you, if you, um, no cut people’s pay as a result, or you lay some folks off,
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then that’s gonna affect the amount of loan forgiveness that you can, um, that you can take advantage of. In other words, if a company reduces its head count or payroll, and the amount of loan eligible forgiveness is accordingly reduced. Mmm. Uh, conversely, if you retire workers, let’s say you let’s say between, uh, February 15th and now,
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or when you apply, you let some folks go or you furlough some folks or whatever, but you bring them back then, uh, then that will revive that part of the, uh, of the loan, uh that’s to encourage companies, to re hire folks that, uh, the feds would much rather these people be working, uh, than, um,
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getting unemployment. And they certainly would much rather than being get, get, getting their entire, a salary or at least close to it. Mmm. The loan period is February 15th, 2020 through June 30th, 2020. So that’s going to be the period of time that, that the, that they look at, um, loans will be available through certain approves community banks. That’s big because you don’t have to go through the SBA application is going to be diffused.
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Now, let me tell you what I have found out in talking with bankers, um, this week. Uh, I think there’s some going to be some confusion among bankers, uh, about, uh, how to underwrite these loans. You’ve got, there’s some community banks that have not, that are not having been in the SBA business. And I think they are,
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they are more conservative. And they’re going to look at these more as traditional loans. Um, at least initially then a bank that’s done a lot of SBA work, uh, because one of the things that, uh, is included in this act is they’re really not supposed to look at your, the whole idea is you can’t pay these loans back, you know,
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that, that, uh, you’re certifying that, that you’re, that your business is uncertain. Your business features uncertain without the loan. Um, the whole idea is, is that you’re, you’re doing this as a hedge against, uh, against that uncertainty. And so who the not even the strongest stuff is right now would be very, um, hard pressed to prove,
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uh, I guess, unless you’re in the PPE business or your grocery store, uh, you’re going to be in dire straits to prove that you’re a solid and solvent, um, the way a normal banker would have you do that. So, um, you may want to select your bank based on, um, you know, what their underwriting criteria is and how quickly they can turn this around.
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I suspect that the regulations that are come out are going to make that pretty clear in some of those banks that now maybe you’re thinking they’re going to be a little more conservative. Uh, I don’t think they’re going to have the ability to do that, but we’ll, we’ll see. Um, the maximum interest rate is 4%. We know prepayment fees or penalties.
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Uh, no collateral, a personal guarantee will be required. And the portions of the learn loan not forgiven. So you could take out a larger loan, um, and then you’re going to seek forgiveness on, uh, or maybe that doesn’t qualify for forgiveness. So whatever’s not forgiven will have a maturity period of not less, not more than 10 years,
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you’d have to work that out with your individual bank. Uh, and you can ask for, uh, deferred payments for six months to a year if you, um, if you choose. So that’s a way to, Mmm. And coupled with the prepayment, you know, you defer your payments for six months to a year. And, um, from a cashflow standpoint,
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you may be able to repay it before, uh, the payments kicked back in. Again, that’s a strategy that on a case by case basis, you’ll have to, you have to deal with as with most things, the devil is in the details. The secretary is expected, issue rules and regulations to two to three weeks to address the details and definitions of implementation,
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oversight and administration. Um, I would contact my banker and see if they’re going to participate. Uh, I think if you’ve got a good relationship with a banker, um, and they’ve already got a lot of your stuff, Oh man, when I say stuff, I said, of course it legal term for, uh, your financial information and, uh,
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tax returns and PNLs, and that sort of thing, if they’re going to need, if they’re going to need it, um, uh, and that they should not, your banker also should have, um, a lot of information on the details of how this is going to work. I know that here in Tennessee, the Tennessee bankers association, and has been having calls with the small business administration and a lot of their community banks,
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uh, to, uh, to kind of figure all this stuff out. Um, so, um, so that’s, that’s my report on the SBA loan program. I hope that’s been helpful. Um, now before we get to questions, I did want to talk a little bit about, uh, you go to OSHA’s website. Uh, they have a really good tool there,
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uh, for, um, uh, they have a really good, um, uh, guidance bulletin there on how to be a, a safe, uh, uh, and compliant, um, uh, workplace. And I think this is interesting, cause it’s going to be, uh, it’s gotta be a, a very, um, uh, there will be a lot of litigation,
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uh, over, um, over all of this. They’re going to be worker’s comp implications. Uh, there’s going to be a whole bunch of family medical leave act implications. Um, and then there may be some good old, plain tort liability for employers or other public accommodations that are essential and that are open, but that don’t, um, that don’t,
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uh, um, you know, take the proper precautions. You go to the, to the department, to OSHA’s website, they’ve got, they’ve got really good. Uh, we’ve got a really good hand, a handout on that. Mmm. Uh, and, and basically what it all boils down to. I think they, at the end of the day is reasonable person,
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reasonable business standard. And I would, uh, I think that’s another reason why I immediately went to tell a teleworking. I, if somebody, uh, uh, contracts the disease, I don’t want them, I don’t want us all to be a, a cluster. So hopefully that’s diffused some of this. We went immediately to a as I’m sure most of y’all did too.
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Um, uh, video, uh, consult. We’re doing all of our consultations by video. We’re doing all of that. We’re doing, we’ve done some mediations and done some video depositions by, by video, uh, and we’re keeping it. So we’re keeping the, uh, the, the, the case is moving, keeping the momentum moving. I’ve seen some indications that,
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uh, federal courts are Mmm. Requiring parties to take, uh, depositions by zoom or depositions by video conference one whenever possible. Uh, when possible. I think, again, that’s probably going to be a case by case, um, court by court determination, but, you know, from a law firm, I think those are things that can be done.
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Uh, our building, uh, sends a crew up once a day, or maybe even twice a day to, to sanitize. Uh, I’d have somebody, uh, if you do have a skeleton staff working at your law office Mmm. Wipe it down. Um, well at least the common areas, a couple of times a day, do the hand washing,
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keep the social distancing six feet apart. Uh, those, those types of things, uh, I noticed, uh, my, my grocery store, they erected plexi glass screens between, um, you know, like the sneeze guard between, uh, the checkout folks and the public, uh, and done that and other places where they have people out.
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So I think those are kind of common sense things that, uh, that, that we can all do. Uh, uh, we could probably do a whole webinar just on this issue, um, of, uh, of safety, uh, as it relates to, to, to workplaces. Um, but, um, I think that, that,
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that gives you some, uh, some indication, again, the folks that have already signed up and I’ve got, I’ve seen your emails, I’ll send you this bulletin that I prepared on, um, on, uh, on this issue. And again, my email address is a Chrome at, uh, Chrome law firm PLC, P as in Paul,
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L as in Larry, C as in Chrome cr.com. And I’ll be glad to send these out, and you’ll also get our, um, our bulletins on this. And, um, I’m certainly available, um, uh, to, to talk with anybody. If, if you, if you like, uh, we’re also offering some, some packages,
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a four grown, a virus, uh, policy implementation, and other things that we’re doing on a flat rate basis for, for folks that I’d be glad to make that available to anybody on the, on the call or anybody you want to refer to me. I sure appreciate it. Um, we tried to price them, uh, to be affordable,
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uh, and, uh, hopefully we’ll give him some value and it’s a way we’ve, we’ve seen to be, uh, be helpful, uh, and hopefully keep our lights on. So I appreciate it. Um, Eric, do we have any, any questions in the queue? We have several questions, actually. All right. Hit me. Jim asks,
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what are IRS chapters? 21, 22 and 24 costs not eligible for payroll. I’m not a tax lawyer nor do I play one on TV. I do not know. Um, if, uh, if you send me that in an email, I’ll get my tax guy to, uh, to answer that question for you. He also asks what’s the time period for computation of the loan amount.
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Uh, again, there’s, there’s no regs out. I think, um, the, well, I think the computation period is February 15th through June 30th of 2020. That’s the time period where they’re going to look to see what your, um, what’s your, uh, you know, what your baseline was and what your, um, um, actual expenses were.
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So, uh, if, if this thing goes past June 30th, I, uh, it would not surprise me if they passed an extension, um, you know, closer to the end of the period. All right. James asks, if you could clarify when employers need to honor the act, is it when the president signed the act or is it on April 2nd?
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I believe it is. Uh, I believe that the prevailing authority thinking now is that it is when the president signed the act, um, because the act is not, um, expressly state a Mmm, uh, uh, a date for, of enactment or effectiveness, and most statutory construction folks will tell you that that means it went into effect immediately.
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So I’ve been advising people that it, um, that it went into effect immediately. Alright. One more question. In New York, if unemployment for a person expired on March 8th, does the cares act, permit the person to reapply or something similar since it’s impossible to get another job at this time? Uh, I believe so. I believe that that you would get the additional 13 weeks of,
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um, now that’s an interesting, it’s an interesting question, right? Because if, if they were on unemployment for an unrelated reason, which presumably if they’ve expired, uh, that it would, um, so what it probably would do would extend the state benefits and if they could, they could show that they’re, that they weren’t getting work because of COVID then,
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um, then they might be, they might qualify for the federal, uh, $600 a week. Now I know it was Memphis, there are lots of open jobs. And so, uh, this has, this did not, um, abrogate the requirement of continuing to seek employment, all those other things. So exactly how all that’s going to work at an administrative level,
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uh, I think is somewhat up in the air and probably is going to vary from state to state as state, uh, commissioners and state agencies make those kinds of determinations. Could you review for a couple of listeners who I think missed it? Um, can you explain the loan period from February 15th through June 30th and explain the importance of that? Well, um,
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that’s okay. So, um, that’s the, is I understand that that’s going to be the period of time that, that you can apply these, these sorts of things. So in other words, Mmm, If you, you, um, if you get the loan, you look at February 5th, so you could go back, right? I mean,
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you could, you could decide, okay, I’m going to, I’m going to apply, uh, for forgiveness, for the, what I’ve spent from June 15th, you know, until you exhaust your forgiveness, or I’m going to pick a period of time between June 30th and backing out. So that that’s the period of time, both in terms of when you can claim the credit for the forgiveness.
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And the, the government is also going to look to see what you do within that period of time, um, relative to your head count. So I suspect that you’re not going to get notice of forgiveness until after June 30th. Um, I mean, that’s how I’m proceeding now. Uh, somebody else may know differently, but that’s, I’m expecting to hear about loan forgiveness,
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you know, in early July with what happened in the previous, the previous, uh, a time period. We have another question from a listener who has got a bit of an operational question. She’d like your opinion on with business slow. I do not need all my staff. One employee has requested to stay home with the child. Am I correct in thinking it’s best to allow her to go home and pay her for up to 12 weeks for the tax credit,
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rather than set her up as a remote user when she’s not needed Dry? I think that that’s a safe way to go. Alright, one more question, sorry. One moment. What would act as proof of retaining employees for the purpose of forgiveness? Uh, I, I would expect, um, whatever, uh, you know, it’s gotta to be proof of payment.
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So if you’re using a payroll service, uh, your payroll service will have record of that. Um, you know, I think, I think, I think there will be a number of different ways to prove that, but basically to me, proof, proof of payment proof that you actually made the payroll, um, payroll payments during the time period.
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I think it’s, it’s not going to be a prospective thing. In other words, I think you’ll get the loan. And then as you spend the money you’ll account for that money that you spin it, and then you apply for it for forgiveness on the backside of that. So if you’ve already got, let’s say you get two and a half months worth of loan,
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and you’ve already got enough to forgive whatever your loan was, then you’d go ahead and make application and you might get that forgiven. Mmm, no. Well, a short into the process. If you wait to use, you wait to see, okay, I’m going to wait and see if, um, I mean, wait and see what happens, uh,
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before I, uh, I allocate this then, um, you may wait until the end of the period to do it. I would imagine your bank is going to give you, uh, again, these regulations will, we’ll get better, uh, directional that, uh, in better detail on exactly how that’s going to work. And I’m sure that they will specify a specific,
01:00:07
01:00:30
uh, documents that are, you know, um, per se proof of, of those expenditures. But I would think if you’ve got a, if you’ve got a payroll Mmm verification from your payroll service that says, this is what was paid, and this is who it was paid to, that would be sufficient proof of employment. One listener asks. Um,
01:00:31
01:00:57
so I should not fill out the SBA application until the bank start doing PPP loans. I think I’d go ahead and fill it out. Um, I would go ahead and fill it out and, and, and we kind of go in tandem because you, um, you’re not, you, you may not need, you may need more than you can get a PPP loan for.
01:00:58
01:01:15
And you may decide that I don’t want the first loan or may repay it. You may get the money, then repay it quickly. Um, so I would not wait. I would go ahead and make happen. Patient, if you think that’s something you want to do. And, you know, again, this is not a legal issue, but it’s a,
01:01:15
01:01:36
it’s a business one. Um, I, you know, I don’t know about a lot of y’all asked her about the 2008. I had a law partner, uh, who I subsequently became a law partner with. Um, he was a good friend of mine. I called him the Bubba Gump shrimp of real estate lawyers because when all the other real estate lawyers were going out of business,
01:01:36
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uh, he used a lot of financial tools and stayed in business. And so when the real estate business started to come back a few years ago, he was right there waiting on him and I had not lost a beat. And I think that’s going to be what smart lawyers do is if we can, if we can survive the next couple, three months,
01:01:58
01:02:17
uh, even if we have to borrow some money to do it, um, there’s going to be a lot of work to do, and I would encourage everybody to continue to give value to your clients, let them know that you’re still in business. Let’s let the world know you’re still in business. Um, put out posts on Facebook that just say,
01:02:18
01:02:40
um, Hey, we’re here And we’re not going anywhere. We’re working remotely, whatever it is. Um, I think that’s the best business advice I’ve gotten. And I, I would share that with you. Alright, is, uh, Jennifer pool still on? She had several questions. I’d like to take you off mute so you can ask those directly.
01:02:42
01:03:14
Jennifer, are you there, Jennifer? Are you there? Well, I guess not, I’ll, I’ll read some, um, she asks, if you could go back over the two and a half time, average monthly payroll. Okay. Um, well basically let’s say your payroll, your average monthly payroll is, um, a hundred thousand dollars. Then you’d be able to get a forgiven.
01:03:14
01:03:36
You’d be able to get a loan under the PPP program for $250,000. And then you could decide how to allocate that. I mean, you wouldn’t have to use it all for payroll. You could use it for Mmm. For, uh, either you wouldn’t have to use it for two and a half months worth of payroll. You could use it for one month of payroll and rent and utilities,
01:03:37
01:03:57
um, et cetera. Uh, now again, if you reduce your payroll, then that might reduce, then that’s gonna reduce some of the forgiveness, a part of that. So you’re going to want to make sure you, um, you a, if you’re like me and you were a liberal arts major in college, and you’re a trial lawyer, and you were told there was going to be no math,
01:03:57
01:04:17
um, uh, associated with being a lawyer, then that’s where you really want to get, um, a, uh, a tax professional and accountant, uh, an LLM, uh, involved because, uh, I suspect, and we’re gearing up to do this, to do that here, uh, because I suspect that getting forgiveness is going to be more difficult and getting the money.
01:04:18
01:04:39
Uh, and I don’t mean that, uh, pejoratively too. Um, anybody in particular, I just think that, uh, the government’s going to want to make sure that if they’re forgiven the loans, that they’re forgiving it and they’re getting value out of it. So we make sure you dot your I’s and cross your T’s. One question about, um,
01:04:40
01:05:05
Eligibility requirements for federal loans, where could one go online to find the eligibility requirements? Uh, I would, I would first check with the small business administration. Um, and, um, yeah, I’ll check with the small business administration, has it on their website, a lot of congressmen have it on their website. Um, but you know, what,
01:05:05
01:05:29
what we talked about is not a whole lot more detail. There’s not a whole lot more detailed. I mean, you’re, you’re, you’re eligible. If you were in business on February 20 or February 15th, 2020, uh, then you’re in, you have less than 500 employees then, or less than 500 employees at any given location in certain industries, you’re going to be eligible.
01:05:32
01:05:58
We’ve gotten several questions from listeners who are asking about specifics, um, for including monthly payrolls, for folks who have over a hundred thousand dollars to make over a hundred thousand dollars. Uh, I’m glad that you asked that, um, it is capped at a hundred thousand dollars a year. So if you have folks that are making 120, 130 half a million dollars a year,
01:05:58
01:06:19
uh, I know particularly a lot of PR firms, uh, people are on a, people are on a, maybe on a draw or commission basis and they make really good money. Then you all, you can calculate them as, as a a hundred thousand dollars cap or if, or if you’re on the payroll as maybe CEO of the firm. Mmm.
01:06:20
01:06:46
And you’re, you’re pulling out, you know, 150,000 or more, um, in that capacity. Um, you, you would be capped at a hundred thousand dollars for purposes of calculating the, the 2.5 times. All right. Very good folks. We’ve run 10 minutes over. Thanks once again, to Alan for a great job. And for fielding those questions,
01:06:47
01:07:13
a reminder that a replay, if you’ve missed anything, or if you joined us late, a replay of this webinar will appear on the<inaudible> website@pilmma.org slash Corona. Alan, thank you very much. Any last thoughts? No, no. Just have I stay safe and, uh, I appreciate the opportunity to, to talk about this and I hope I’ve,
01:07:13
01:07:27
I’ve hoped I’ve helped some folks, um, because we all, we all need to chip in and help each other out. Very good. And with that folks, thank you. Join us next week for the third installment of this webinar series. We’ll see you then.

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