COVID-19 Toolkit for Small- and Medium-Sized Businesses
Navigate Your Toolkit Introduction ................................................................................................................................... 3 General Labor and Employment Law Issues ....................................................................... 4 Families First Coronavirus Response Act ............................................................................ 6 Fair Labor Standards Act ......................................................................................................... 10 Americans With Disabilities Act and Rehabilitation Act .............................................. 12 Occupational Safety and Health Act ................................................................................... 14 Health Insurance Portability and Accountability Act.................................................... 16 Is Your Business “Essential” Under Louisiana’s Stay-at-Home Order? .................... 18 Small Business Association Disaster Assistance ............................................................. 20 Disclaimer ..................................................................................................................................... 23
Get in Touch Baton Rouge Office 8440 Jefferson Highway Suite 301 Baton Rouge, LA 70809
New Orleans Office 1515 Poydras Street Suite 2330 New Orleans, LA 70112
Phone: (225) 929-7033 Fax: (225) 928-4925
Phone: (504) 566-1801 Fax: (504) 565-5626
Introduction This is a challenging time, but the attorneys at Roedel Parsons are ready to assist you and your business in navigating the COVID-19 crisis. Whether you’re faced with an employment-related issue, a construction law question, or something in between, we’re ready to help. In an effort to assist your small- or medium-sized business, Roedel Parsons has carefully crafted this toolkit with helpful information. Each section focuses on a different area of the law and potential COVID-19 implications. Although not an exhaustive resource, we hope it answers some frequently asked questions and eases your concerns during this public health emergency. Additionally, Roedel Parsons will be sending out special alerts, blog posts, and newsletters with particularly relevant information in short, digestible formats. And as the situation unfolds, this toolkit will remain continuously updated to provide you with up-to-date and timely information. Please know that the attorneys and staff of Roedel Parsons are here for you. Since 1988, our mission has remained the same: to meet the needs of those who experience the challenges, struggles, and successes of life. That mission remains unchanged today.
Get in Touch Baton Rouge Office 8440 Jefferson Highway Suite 301 Baton Rouge, LA 70809
New Orleans Office 1515 Poydras Street Suite 2330 New Orleans, LA 70112
Phone: (225) 929-7033 Fax: (225) 928-4925
Phone: (504) 566-1801 Fax: (504) 565-5626 3
General Labor and Employment Law Issues This section addresses general labor and employment law issues and the impact of COVID-19. Can my business discharge an employee for reasons other than those covered by the FFCRA? Generally speaking, yes. Under Louisiana law, the default rule is that every employment relationship is “at will.” This means that the employment is terminable at the will of either party at any time. The governor’s proclamations do not modify this rule. There are, however, some important exceptions. Termination cannot violate the constitutional rights of the employee or a specific statute. At-will employment can also be modified by a contractual agreement to work for a definite period of time. If such an agreement exists, then the employer must have “cause” to terminate the employment before the expiration of the term. Source: La. Civ. Code art 2747. What are my obligations with respect to wages upon termination of employment? Under Louisiana law, when an employee is discharged or voluntarily quits, amounts due under the terms of employment must be paid by the next regular pay day or within 15 days, whichever is sooner. “Terms of employment” includes more than just regular wages. It also includes vested vacation pay, earned commissions, bonuses, and bargained-for benefits under a collective bargaining agreement. Payment must be made in the place and manner in which it has been customarily paid during the employment. Because many places of businesses, however, are temporarily closed or operating during reduced hours, payment can also be made via U.S. mail. Source: La. R.S. 23:631. Can my business require employees to use vacation time or paid time off (“PTO”) if my business is closed due to the Stay-at-Home Order? Generally, yes, provided it is consistent with your business’s established policy or employment contract. In the absence of state law to the contrary, employers may require the use of vacation time or PTO and restrict its use. Where an employer offers a bona fide benefits plan or vacation time to its employees, there is no prohibition on an employer requiring that such accrued leave or vacation time be taken on a specific day(s). That said, however, please read the section below on the new Families First Coronavirus Response Act, which restricts employers’ ability to require employees qualifying for relief under the Act to forego vacation time or PTO.
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Sources: Can We Require an Employee to Use Paid Time Off (PTO) If He or She Hasn’t Requested it? Can We Limit When an Employee Can Use PTO?, SHRM; COVID-19 and the Fair Labor Standards Act Questions and Answers, U.S. DEP’T LAB.
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Families First Coronavirus Response Act The FFCRA entails a significant expansion to the Family and Medical Leave Act (“FMLA”) for coronavirus-related reasons. Here’s a breakdown of what the FFCRA provides for small- and medium-sized businesses. On March 18, 2020, the FFCRA became law, known as Public Law No. 116-127. The FFCRA becomes effective 15 days after enactment, or on April 2, 2020, and terminates on December 31, 2020. On March 20, 2020, the Internal Revenue Service (“IRS”), the U.S. Department of the Treasury (“Treasury”), and the U.S. Department of Labor (“DOL”) provided some preliminary guidance on the recently-enacted FFCRA, which amends and fundamentally expands the FMLA for small- and medium-sized businesses, defined as businesses with fewer than 500 employees. The IRS, Treasury, and DOL did this through IRS Notice IR-2020-57 (“Notice”). You can read the Notice and access additional information by clicking on this link to the IRS website. You can also read the full text of the FFRCA at this link. The FFCRA applies to small and medium sized businesses, defined as all American businesses or tax-exempt organizations with fewer than 500 employees that are required to provide emergency paid sick leave and emergency paid family and medical leave under the Act. The Act affords employees up to 80 hours of paid sick leave and expanded paid childcare leave when the employee’s children’s schools are closed, or childcare providers are unavailable, due to COVID-19. The Act also creates a refundable paid sick leave credit and paid childcare credit for eligible employers, as well as a break from payroll tax liability. Here are some key takeaways from the Notice and the new FFCRA: •
Does the FFCRA authorize paid sick leave for workers?
The FFCRA provides employees with paid leave either for the employee’s own health needs or to care for family members. More specifically: »
To be “quarantined” within the meaning of the FFCRA means the employee or other person is subject to a Federal, State, or local quarantine or isolation order related to COVID-19, or has been advised by a health care provider to selfquarantine due to concerns related to COVID-19;
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Full-time employees are entitled to paid sick leave for up to 80 hours at 100% of the employee’s pay where the employee is unable to work (or telework) because the employee requires sick leave due to that employee being quarantined or experiencing COVID-19 symptoms and seeking a medical diagnosis, and are entitled to sick leave for up to 80 hours at 2/3 of the employee’s pay if the 6
employee is unable to work (or telework) because the employee requires sick leave due to that employee having to care for an individual who is quarantined, and/or to care for the employee’s child or children whose school is closed or the childcare provider is unavailable as a result of COVID-19, and/or the employee is experiencing any other substantially similar condition specified by the U.S. Secretary of HHS; »
Part-time employees are also entitled to either 100% of the employee’s pay or 2/3 of the employee’s pay, depending on the purpose for the leave, same as a fulltime employee, but, instead of 80 hours of pay, the part-time employee’s pay is determined by the number of hours that such employee works, on average, over a two-week period;
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There are caps on the amount of paid sick leave employers must pay to full- and part-time employees, including $511.00 per day and $5,110.00 in the aggregate for paid sick leave for certain purposes (i.e., an employee that is quarantined or experiencing COVID-19 symptoms and seeking a medical diagnosis), and $200.00 per day and $2,000 in the aggregate for paid sick leave for other qualifying purposes (i.e., an employee caring for an individual who is quarantined, and/or for the employee’s child or children whose school is closed or the childcare provider is unavailable due to COVID-19, and/or experiencing any other substantially similar condition specified by the U.S. Secretary of HHS);
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In addition, employees may, in some instances, be entitled to up to an additional 10 weeks of expanded paid family and medical leave (which differs from paid sick leave) at 2/3 the employee’s pay if the employee is unable to work due to a need to care for a child whose school is closed or childcare provider is unavailable for reasons related to COVID-19, but this pay is capped at $200.00 per day and $10,000.00 in the aggregate;
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It does not matter how long the employee has been employed by the employer; the employee is entitled to paid sick leave for immediate use, however, in order to be entitled to the enhanced family and medical leave, the employee must have been employed by the employer for 30 calendar days prior to requesting leave; and,
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The Secretary of the DOL shall make publicly available within seven days of the enactment of the FFCRA a model notice required to be posted in conspicuous places on the employer’s premises regarding the requirements described in the FFCRA.
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What does the FFCRA provide to help employers? Enforcement and Penalties
First, a word of caution. Employers may not require an employee to use other paid leave provided by the employer to the employee before the employee uses the paid sick leave under the FFCRA. Nor may employers discharge, discipline or discriminate against an employee who takes leave in accordance with the FFCRA. Finally, employers found in violation of the FFCRA will be subject to the penalties and enforcement described in the Fair Labor Standards Act and the Family and Medical Leave Act. However, the DOL will observe a temporary period of non-enforcement for the first 30 days after the Act takes effect, so long as the employer has acted reasonably and in good faith to comply with the Act. Reimbursement Employers may receive reimbursement for paid leave pursuant to the FFCRA. More specifically: »
Employers may receive a refundable credit for sick leave at the employee’s regular rate of pay, up to $511.00 per day and $5,110.00 in the aggregate for a total of 10 days per quarter, for an employee who is unable to work because of COVID-19 quarantine or self-quarantine or who has COVID-19 symptoms and is seeking a medical diagnosis;
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Employers also receive a credit for sick leave for at 2/3 of the employee’s regular rate of pay, up to $200.00 per day and $2,000 in the aggregate for up to 10 days per quarter, for an employee who is caring for an individual who is quarantined, and/or for the employee’s child or children whose school is closed or the childcare provider is unavailable due to COVID-19, and/or experiencing any other substantially similar condition specified by the U.S. Secretary of HHS;
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Employers further receive, in addition to the sick leave credit, a refundable family and medical leave credit at 2/3 of the employee’s regular rate of pay, up to $200.00 per day and $10,000 in the aggregate, for an employee who is caring for a child because the child’s school or childcare facility is closed, or the childcare provider is unavailable due to COVID-19, and up to 10 weeks of qualifying leave can be counted towards the childcare leave credit; and
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Employers are further entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.
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Tax Relief Employers also will be able to obtain tax relief for 100% of the amounts of qualifying sick and family and medical leave that they paid. More specifically:
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Employers also will be able to retain the amount of payroll taxes equal to the amount of qualifying sick and family and medical leave that they paid, rather than depositing such amounts with the IRS;
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The payroll taxes that are available for such retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees;
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If there are not sufficient payroll taxes to cover the cost of providing qualified sick and childcare leave paid, employers will be allowed to file a request for an accelerated payment from the IRS, which should be processed in two weeks or less; and
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Employers will be able to claim the paid sick leave and paid childcare leave credits for qualifying leave that they provide to employees between the effective date of the FFCRA (April 2, 2020) and December 31, 2020.
Does the FFCRA offer any relief from its requirements for small businesses?
In cases where the viability of the business is threatened, employers with fewer than 50 employees are eligible for an exemption from the requirement to provide leave to an employee in order to care for a child whose school is closed, or childcare is unavailable. Additionally, employers that employ health care providers or emergency responders may elect to exclude such employees from the coverage of the FFCRA. More extensive guidance will be issued in the coming days.
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Fair Labor Standards Act The DOL has issued the following guidance concerning the impact of COVID-19 on the FLSA: My business has a shortage of workers due to COVID-19. Can my business use unpaid “volunteers” to help out? Generally speaking, no. The FLSA has stringent requirements with respect to the use of volunteers. In general, covered, nonexempt workers working for private, for-profit employers have to be paid at least the minimum wage and cannot volunteer their services. How many hours is an employer obligated to pay an hourly-paid employee who works a partial week because the employer’s business closed? The FLSA generally applies to hours actually worked. It does not require employers who are unable to provide work to non-exempt employees to pay them for hours the employees would have otherwise worked. What are an employer’s obligations to an employee who is under government-imposed quarantine? The Wage and Hour Division of the DOL encourages employers to be accommodating and flexible with workers impacted by government-imposed quarantines. For example, employers may offer alternative work arrangements, such as teleworking and additional paid time off. Can my business require an employee to perform work outside of the employee’s job description? Yes. The FLA does not limit the types of work employees age 18 or older may be required to perform. Can an employer encourage or require employees to telework (i.e., work from an alternative location such as home) as an infection-control strategy? Yes. An employer may encourage or require employees to telework as an infectioncontrol or prevention strategy. Telework may also be a reasonable accommodation. However, an employer cannot single out employees either to telework or to continue reporting to the workplace on a basis prohibited by any of the equal employment opportunity laws. Do employers have to pay employees their same hourly rate or salary if they work at home? If telework is being provided as a reasonable accommodation for a qualified individual with a disability, or if required by an employment or union contract, then yes. Otherwise:
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If this is not the case and you do not have a union contract or other employment contracts, under the FLSA employers generally have to pay employees only for the hours they actually work, whether at home or at the employer’s office. However, the FLSA requires employers to pay non-exempt workers at least the minimum wage for all hours worked, and at least time and one half the regular rate of pay for hours worked in excess of 40 in a workweek. Salaried exempt employees generally must receive their full salary in any week in which they perform any work, subject to certain very limited exceptions. If the government bars employees from working from their current place of business and requires them to work from home, will employers have to pay those employees who are unable to work from home? Under the FLSA, employees generally only have to pay employees for the hours they actually work, whether at home or from the employer’s office. However, employers must pay at least the minimum wage for all hours worked, and at least time and one half the regular rate of pay for hours worked in excess of 40 in a single workweek. Salaried exempt employees must receive their full salary in any week in which they perform any work, subject to certain exceptions. Source: COVID-19 and the Fair Labor Standards Act Questions and Answers, U.S. DEP’T LAB.
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Americans With Disabilities Act and Rehabilitation Act The Americans With Disabilities Act (“ADA”) and the Rehabilitation Act are both forms of federal equal employment opportunity laws that are particularly impacted by COVID-19. The Equal Employment Opportunity Commission (“EEOC”) enforces workplace anti-discrimination laws, including the ADA and the Rehabilitation Act. The ADA and Rehabilitation Act rules continue to apply, but they do not interfere with or prevent employers from following the guidelines and suggestions made by the CDC or state and local public health authorities about steps employers should take regarding COVID-19. The EEOC has provided the following guidance for employers related to the ADA and the Rehabilitation Act: How much information may an employer request from an employee who calls in sick, in order to protect the rest of its workplace during the COVID-19 pandemic? During a pandemic, ADA-covered employers may ask such employees if they are experiencing symptoms of the pandemic virus. For COVID-19, these include symptoms such as fever, chills, cough, shortness of breath, or sore throat. Employers must maintain all information about employee illness as a confidential medical record in compliance with the ADA. When may an ADA-covered employer take the body temperature of employees during the COVID-19 pandemic? Generally, measuring an employee’s body temperature is a medical examination. Because the CDC and state/local health authorities have acknowledged community spread of COVID-19 and issued attendant precautions, employers may measure employees’ body temperature. Please note, however, that some people with COVID-19 may not have a fever. Does the ADA allow employers to require employees to stay home if they have symptoms of COVID-19? Yes. The CDC states that employees who become ill with symptoms of COVID-19 should leave the workplace. The ADA does not interfere with employers following this advice. When employees return to work, does the ADA allow employers to require doctors’ notes certifying their fitness or duty? Yes. Such inquiries are permitted under the ADA either because they would not be disability-related, or, if the pandemic were truly severe, they would be justified under the ADA standards for disability-related inquiries of employees.
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If an employer is hiring, may it screen applicants for symptoms of COVID-19? Yes. An employer may screen job applicants for symptoms of COVID-19 after making a conditional job offer, as long as it does so for all entering employees in the same type of job. However, please note that inquiring into “conditions” (e.g., “Do you have COVID-19?”) may be prohibited under the ADA, while merely inquiring about “symptoms” is permissible. May an employer take an applicant’s temperature as part of a post-offer, preemployment medical exam? Yes. Any medical exams are permitted after an employer has made a conditional offer of employment. Please note, however, that some people with COVID-19 may not have a fever. May an employer delay the start date of an applicant who has COVID-10 or symptoms associated with the virus? Yes. According to current CDC guidelines, an individual who has COVID-19 or symptoms associated with the virus should not be in the workplace. May an employer withdraw a job offer when it needs the applicant to start immediately, but the individual has COVID-19 or symptoms related to it? Based on current CDC guidance, this individual cannot safely enter the workplace, and, therefore, the employer may withdraw the job offer. Source: What You Should Know About the ADA, the Rehabilitation Act, and COVID-19, U.S. EEOC (Mar. 19, 2020).
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Occupational Safety and Health Act Is your business providing its employees with a hazard-free workplace during the coronavirus pandemic? OSHA requires employers to comply with safety and health standards and regulations promulgated by OSHA or by a state with an OSHA-approved state plan. Additionally, the law requires employers to provide their employees with a workplace free from recognized health hazards likely to cause death or serious physical harm. According to the Occupational Safety and Health Administration, all employers can take the following steps to reduce workers’ risk of exposure to the coronavirus: •
Develop an infectious disease preparedness and response plan
If one does not already exist, OSHA encourages you to develop an infectious disease preparedness and response plan that can help guide protective actions against COVID-19. Plans should consider and address the levels of risk associated with various worksites and job tasks workers perform at those sites. •
Prepare to implement basic infection prevention measures
OSHA recommends that, as appropriate, all employers implement good hygiene and infection control practices, including, but not limited to: promote frequent and thorough hand washing; encourage workers to stay home if they are sick; encourage respiratory etiquette; and provide customers and the public with tissues and trash receptacles. •
Develop policies and procedures for prompt identification and isolation of sick people, if appropriate
According to OSHA, employers should develop policies and procedures to report when they are sick or experiencing symptoms of COVID-19. Where appropriate, employers should also develop policies and procedures for immediately isolating people who have signs or symptoms of COVID-19. •
Develop, implement, and communicate about workplace flexibilities and protections
The top recommendation from OSHA on this point is to actively encourage sick employees to stay home. Also, ensure that sick leave policies are flexible and consistent with public health guidance and that employees are aware of these policies.
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Implement workplace controls
It may not be possible to rely solely on workers to reduce their exposure to the virus. Instead, OSHA recommends implementing a hierarchy of controls to systematically remove the danger from the workplace, including: isolating employees from work-related hazards; changing work policies or procedures to reduce or minimize exposure to the hazard; implementing procedures for safe and proper work used to reduce the duration, frequency, or intensity of exposure to the hazard; and using personal protective equipment. •
Follow existing OSHA standards
Finally, employers should continue to follow existing OSHA standards. While there are no specific OSHA standards covering coronavirus exposure, some OSHA requirements may apply to preventing occupational exposure to the virus. For more information, please visit OSHA’s Guidance on Preparing Workplaces for COVID-19.
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Health Insurance Portability and Accountability Act Covered entities may not disclose protected health information (“PHI”) under HIPAA. Employers should remain mindful that employees’ medical information is confidential and should not be shared with others. If an employee tests positive or presumptively positive for COVID-19, the employer should not—under any circumstances—identify such employee. However, the employee can, and should, advise coworkers that an employee has tested positive, and should then follow the steps discussed above under the ADA and OSHA sections, including immediately physically separating the employee who has tested positive. As you know, patients’ medical and health information (called “Protected Health Information” or PHI) is protected by HIPAA. The COVID-19 outbreak is raising new questions about employees’ rights to privacy under HIPAA and the protection of coworkers, customers, and others. Here is a quick breakdown on how an employer can comply with HIPAA and still keep other employees, customers and other persons safe. •
HIPAA protects an employee’s PHI but is balanced to ensure that appropriate uses and disclosures of such information may be made—even without the employee’s consent—when necessary to treat the employee, to protect the nation’s public health, and for other critical purposes;
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More specifically, employers may disclose, without an employee’s authorization, PHI about the employee as necessary to treat the employee or treat a different patient, such as providing information to health care providers and first responders;
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Employers may also disclose, without an employee’s authorization, PHI about the employee to a public health authority, such as the Centers for Disease Control or a state or local health department that is authorized by law to collect or receive such information;
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Employers may also disclose, without an employee’s authorization, PHI about the employee at the direction of a public health authority to a foreign government agency that is acting in collaboration with the public health authority; and
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Finally, employers may disclose, without an employee’s authorization, PHI about the employee as necessary to persons at risk of contracting or spreading a disease or condition if other law, such as state law, authorizes the employer to notify such persons as necessary to prevent or control the spread of the disease or otherwise carry out public health interventions or investigations. 16
The employer that chooses to make any disclosure of PHI without the employee’s authorization must make reasonable efforts to limit the amount of information disclosed to that which is the “minimum necessary” to accomplish the purpose. For additional information, please visit this link.
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Is Your Business “Essential” Under Louisiana’s Stay-at-Home Order? Governor Edwards’ proclamation has major implications for businesses throughout the state. On March 22, 2020, Louisiana Governor John Bel Edwards issued Proclamation No. 33-JBE-2020, also known as the “Stay-at-Home Order.” The order is in effect from 5:00 p.m. March 23, 2020 until April 13, 2020. The major provisions of this order include a ban on all gatherings of 10 or more people, and a directive that all individuals in Louisiana stay at home unless performing an “essential activity.” Under the order, there are three categories of businesses: •
Category #1: Businesses ordered temporarily closed, including: o All restaurants (only to dine-in patrons; take-out and delivery services are still allowed); o All casinos; o All video poker establishments; o All movie theaters; o All bars; o All bowling alleys; o All fitness centers and gyms; o All places of public amusement, whether indoors or outdoors, including but not limited to: locations with amusement rides; carnivals; amusement parks; water parks; trampoline parks; aquariums; zoos; museums; arcades; fairs; pool halls; children’s play centers; playgrounds; theme parks; theaters, concert halls; music halls; adult entertainment venues; racetracks; and other similar businesses; o All personal care and grooming businesses, including but not limited to: barber shops; beauty salons; nail salons; spas; massage parlors; tattoo parlors; and other similar businesses; and o All malls, except for stores in a mall that have a direct outdoor entrance and exit that provide essential services and products as defined by CISA guidelines.
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Category #2: Businesses that provide essential functions or that are classified as “critical infrastructure sectors” by the Cybersecurity and Infrastructure Security Agency (“CISA”)
Employees are allowed to leave their homes to report to work if they are performing “essential worker functions,” as defined by CISA. CISA has identified 16 critical infrastructure sectors: 18
o o o o o o o o o o o o o o o o
Chemical Sector; Commercial Facilities Sector; Communications Sector; Critical Manufacturing Sector; Dams Sector; Defense Industrial Base Sector; Emergency Services Sector; Energy Sector; Financial Services Sector; Food and Agriculture Sector; Government Facilities Sector; Healthcare and Public Health Sector; Information Technology Sector; Nuclear Reactors, Materials, and Waste Sector; Transportation System Sector; and Water and Wastewater System Sector.
There are multiple subsectors within these sectors. Please visit the CISA website for more information. •
Category #3: Businesses that do not fall into either Category #1 or Category #2
If your business was not ordered temporarily closed and if your business does not fall within one of the CISA critical infrastructure sectors, the Stay-at-Home Order requires your business to: o Reduce operations; o Have minimal contact between essential employees and members of the public; o Observe proper social distancing (i.e., stay at least six feet away from other people); and o Follow the ban on gatherings of 10 or more people. If your business is an essential business and you would like us to prepare a “Critical Infrastructure Employee Travel Authorization Letter” for any of your employees, please contact one of our attorneys shown at the end of this Toolkit. To read the Stay-at-Home Order, click here.
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Small Business Association Disaster Assistance Congress recently passed a $2 trillion stimulus package, which we are currently studying in depth. This section was drafted on March 25, 2020. We are still studying the exact details of the stimulus package, so please look out for more information soon. SBA ECONOMIC INJURY DISASTER LOANS Last week, the SBA began receiving applications from Louisiana businesses for loans to address revenue losses related to COVID-19. These Economic Injury Disaster Loans (“EIDLs”) are working capital loans to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes meet their ordinary and necessary financial obligations that cannot be met as a direct result of the COVID-19 disaster. These loans are available for up to $2 million in assistance and are intended to assist through the disaster recovery period. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. EIDLs are not meant to replace lost profits or fund expansion. The stimulus package also states that if employers use the loan proceeds to pay payroll and other COVID-19-related costs (including continuation of group healthcare benefits during periods of employee leave) and maintain their payroll during the period of March 1, 2020 through June 20, 2020, the loans will be forgiven. This means that employers would have to retain their employees and pay them during this period. Here are some key facts regarding SBA’s disaster loans for COVID-19: Eligibility •
Credit History - Applicants must have a credit history acceptable to SBA.
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Repayment - Applicants must show the ability to repay the loan.
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Collateral - Collateral is required for all EIDL loans over $25,000. SBA takes real estate as collateral when it is available. SBA will not decline a loan for lack of collateral, but SBA will require the borrower to pledge collateral that is available.
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Insurance Requirements - SBA may require applicants to obtain and maintain appropriate insurance.
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Noncompliance - Applicants who have not complied with the terms of previous SBA loans may not be eligible. This includes borrowers who did not maintain required flood insurance and/or hazard insurance on previous SBA loans.
Loan Terms and Conditions •
Interest Rate - The interest rate is determined by formulas set by law and is fixed for the life of the loan. The maximum interest rate for this disaster is 3.75 percent.
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Loan Length - The law authorizes loan terms up to a maximum of 30 years. SBA will determine an appropriate installment payment based on the financial condition of each borrower, which in turn will determine the loan term.
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Loan Amount Limit - The law limits EIDLs to $2,000,000 for alleviating economic injury caused by the disaster. The actual amount of each loan is limited to the economic injury determined by SBA, less business interruption insurance and other recoveries up to the administrative lending limit. SBA also considers potential contributions that are available from the business and/or its owner(s) or affiliates. If a business is a major source of employment, SBA has the authority to waive the $2,000,000 statutory limit.
Filing Requirements •
Completed application (SBA Form 5).;
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Tax Information Authorization (IRS Form 4506T) for the applicant, principals and affiliates;
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Complete copies of the most recent Federal income tax returns for the applicant business; and an explanation if not available;
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Personal Financial Statement (SBA Form 413); and
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Schedule of Liabilities (SBA Form 2202).
For the complete rules on eligibility, terms, and permissible uses of SBA Disaster Loans, applicants can reference this document published by the SBA. Finally, applicants can apply for an SBA disaster loan online by clicking this link. AUTOMATIC DEFERMENT ON EXISTING SBA DISASTER LOANS Good news for small businesses with existing SBA disaster loans. On March 23, 2020 the SBA announced changes to help borrowers still paying back SBA loans from previous 21
disasters. By making this change, deferments through December 31, 2020, will be automatic. Now, borrowers of home and business disaster loans do not have to contact SBA to request deferment. Administrator Jovita Carranza explains: The SBA is looking at every option and taking every action to cut red tape to make it easier for small businesses to stay in business. Automatically deferring existing SBA disaster loans through the end of the year will help borrowers during this unprecedented time. Today’s announcement adds a list of growing actions the SBA is taking to support small businesses. These actions include making it easier for states and territories to request a declaration so small businesses statewide can now apply for economic injury disaster loans and changing the terms of new economic injury loans to allow for one-year deferments. We are working around the clock to find ways to assist small businesses and today’s action is one step in this process. This area of the law is undergoing rapid changes, especially as Congress and the Administration work to pass laws and enact new regulations. This section will be updated as new information becomes available.
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Disclaimer The information provided in this toolkit does not, and is not intended to, constitute legal advice. All information, content, and materials available in this toolkit are for general informational purposes only. Information in this toolkit may not constitute the most up-todate legal or other information. This toolkit contains links to third-party websites. Such links are only for the convenience of the reader. Roedel Parsons does not recommend or endorse the contents of such third-party websites. You should consult an attorney for advice regarding your individual situation. Contacting us does not create an attorney–client relationship. Please do not send any confidential information to us until such time as an attorney–client relationship has been established.
Get in Touch Baton Rouge Office 8440 Jefferson Highway Suite 301 Baton Rouge, LA 70809
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Phone: (225) 929-7033 Fax: (225) 928-4925
Phone: (504) 566-1801 Fax: (504) 565-5626
Larry Roedel Email: lroedel@roedelparsons.com Cell: (225) 315-0900
Wayne Fontana Email: wfontana@roedelparsons.com Cell: (504) 583-4114
Luke Piontek Email: lpiontek@roedelparsons.com Cell: (225) 936-0604
Charles Pisano Email: cpisano@roedelparsons.com Cell: (504) 621-2463
Brent Bourgeois Email: bbourgeois@roedelparsons.com Cell: (225) 324-8379
Skye Fantaci Email: sfantaci@roedelparsons.com Cell: (504) 256-2665
Bradley Guin Email: bguin@roedelparsons.com Cell: (318) 707-1122 Daniel Price Email: dprice@roedelparsons.com Cell: (337) 321-2631
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