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COVID-19 RESOURCES FOR EMPLOYERS & SMBs: Financing, Employment Laws, and New Developments

ABL will compile all COVID-19-related resources and information for California employers and small businesses here. As information and resources are updated, we will update this page and note the changes with corresponding dates. If you are an employee, see our additional resources page for employees here.

ABL attorneys are available for half-hour consultations about COVID-19-related issues. To book a meeting, click here: https://abl.as.me/covid19

Attorney Galia Schmidt is co-hosting a free weekly update + FAQ webinar with our friends at the SF LGBT center every Thursday at 1 PM. Info and register here:

LAST UPDATE: May 21, 2020

Resources for Financing (COVID-19):

  • –BEWARE SCAMS! Only apply for loans with reputable sources.
  • Paycheck Protection Program (PPP): Applications still being accepted and processed. Designed to keep people on payroll. Loan amount calculated based on 2.5 x average payroll costs from last year (different formulae for seasonal and businesses who hadn’t started yet). Loan forgivable if used for payroll, mortgage/rent, utilities (but non-payroll costs should only take up 25%) for 8 weeks after getting the money. If you cut salary more than 25% or fire people during or before the 8 weeks, that money is offset and not forgiven anymore. If you fired people or lowered salary already, can hire them back before June 30 and get the payroll forgiven. Anything that isn’t forgiven must be paid back within 2 years at 1% interest, payment deferred for 6 months (but interest still accrues). No collateral or personal guarantee required. Apply at SBA-approved lenders (most banks). If you already applied for an EIDL loan, can refi it into a PPP, and may have to if you used it for payroll. Contact an expert if you need help calculating payroll for your application; some payroll services such as ADP and Gusto have their own reports that will give you your numbers.
  • Economic Injury Disaster Loan (EIDL):  Applications for EIDL are now closed, except for certain agricultural businesses. If you applied before April 15, they are still processing applications first-come first-served. Designed to help small biz cover operating expenses. Must be in disaster-impacted area (all of California counts). Must document specific injury cased by COVID. Can also have PPP, but must use funds for different things. Private for-profit businesses interest rate 3.75% (nonprofit 2.75%) paid out over up to 30 years (low monthly payments); first payment deferred up to 12 months. No personal guarantee required for loans under $200,000; no collateral required for loans under $25,000, but nobody will be rejected for inability to put up collateral. Can be used to pay for fixed expenses (debt, accounts payable, payroll, owner salary, utilities, mortgage/rent, extraordinary expenses caused by the disaster).
  • –EIDL also comes with up to $10,000 grant: (supposedly) given to you within three days of application for EIDL loan; given whether you’re eligible/accept the loan or not. Amount of grant is $1,000 per employee you had on Jan 31, up to $10,000. Does not have to be paid back if used on the approved operating expenses. If you also are getting a PPP, this will be subtracted from the forgivable PPP amount.
  • –SBA Debt Relief Program: for loans other than PPP such as preexisting EIDL loans (such as for CA wildfires), traditional 7(a) SBA loans, 504 loans, or microloans, and for 7(a) loans taken out until Sept 27 2020, you can get all principal, interest, and fees paid in full for up to 6 months. Apply with the lender with which you have the loan.
  • –California bridge loans: April 2, Gov Newsom announced (a) $50 million allocation for loan guarantees to small businesses to help eliminate barriers to capital for people who don’t qualify for federal funds, including low wealth and undocumented; (b) small businesses can defer sales taxes up to $50,000 for up to 12 months
  • –Consider selling gift cards to get a boost of cash. If you already have an ecommerce site, it may be easy to add gift card sales. If not, check out https://www.giftcardsforsmallbusinesses.com/, a local business owner (James at Last Minute Gear in San Francisco) who set up an easy way for other local businesses to sell gift cards online without paying extra fees.
  • EDD is now accepting applications for self-employed people via their Pandemic Unemployment Assistance program. Info here. If you’re self-employed, or if you are a contractor and may have been misclassified (and were actually an employee under the law), you may also/instead be eligible for Unemployment Insurance and/or State Disability Insurance using the normal application. More information and apply with the EDD.
  • –Additional business loan programs that existed pre-pandemic:
    • –California financing resources:
      • -Ibank: small business loan program (includes disaster relief), and jump start program; more money is being funneled here to provide additional funding for these loans
      • -CalCAP disaster benefits
    • –SBA loans
  • –Additional pre-existing programs to help support staff:
  • –See our Employee Resources page for info about student loan breaks
  • –A good FAQ on business interruption insurance

Tax Credits/Breaks:

  • Tax credits quarterly, offset against federal payroll taxes, to help cover costs of new federal sick leave and FMLA requirements (below).
  • –CARES Act: Employers eligible for 50% refundable payroll tax credit on wages paid up to $10,000 per employee during the crisis, available to those disrupted by shutdowns or had a decrease in gross receipts of 50%+ over last year. Update 4/2 – this isn’t available if you also take out a PPP.
  • –Check with your accountant to learn more about payroll tax credits from the paycheck protection program (including delay of fed payroll tax, but not available if also PPP); social security payroll tax payments may be delayed until 2021; net operating losses may be carried back 5 years; may be able to claim larger refundable tax credits for AMT and carryforwards; net interest deduction limitations expanded
  • –For all businesses and individuals: California and federal tax payment and filing deadline extended to July 15.
  • –Quarterly payments that would have been due in April have been deferred 90 days

Legal Obligations of Employers (operations; rent):

  • –California state is lifting some restrictions. There’s industry-specific guidance about reopening here, and a good FAQ here. If your local restrictions are more restrictive, abide by those.

Legal Obligations of Employers (employees):

California laws:

  • –Paid sick leave: all California employers were already obligated to provide paid sick leave to employees. This paid sick leave must be paid out for employees who get sick. Applies to all employees who have been working longer than 90 days. Cannot require written request; cannot require that the worker find a replacement in order to take leave. Must allow use of sick leave to stay home for preventative care, including self-isolation, and caring for or self-isolation of family member. See the Labor Board FAQ for detailed information on sick leave: https://www.dir.ca.gov/dlse/2019-Novel-Coronavirus.htm
  • –Must allow employees to take paid family leave if caring for a sick family member. Gives up to six weeks of partial wage replacement; paid for by state disability insurance program (so no out of pocket for employer). Employees apply through CA EDD. No job protection required.
  • –State payroll taxes may be deferred (without penalty or interest) if unable to pay based on compliance with public health requirements for COVID. Apply via the EDD. Most payroll services now have mechanisms to help you do this.
  • –If you’re having employees work from home, have a good written telecommuting policy that addresses worker safety, timekeeping, breaks, and overtime
  • –If you’re cutting pay, give workers a new Wage Notice
  • –Employment lawyer and friend of ABL Karen Sloat has sample employment forms, including notices and telecommuting policies, on her website for free! http://karensloatlaw.com/resources/
  • –CA executive order requires employers in essential sectors to allow workers to wash hands at least every 30 minutes or as needed.
  • Alameda County order, and other local orders around the state, require employees to wear masks whenever customers are present or other people are nearby, or if in a location where others are commonly present such as a reception area or restroom. Employees must refuse service to customers who are not wearing a mask. Here is a sample sign for notifying customers of their obligation to wear a mask.
  • –If a worker gets sick with coronavirus and had worked on-site in the prior 14 days, there is now a rebuttable presumption that the company’s workers comp insurance will cover expenses of the illness.

Federal laws:

  • –Additional paid sick leave (Families First Act): additional 80 hours (for full time worker; other calculations for part time, intermittent) paid sick leave must be given on top of whatever paid sick leave already required by state/city; applies to all employers with fewer than 500 employees. Covers when can’t work because of (a) isolation order, (b) advised by health care provider to self-quarantine, (c) experiencing COVID symptoms and seeking diagnosis, (d) caring for someone under isolation order advised by government or health care provider, (e) caring for child if school/daycare closed, or (f) other “substantially similar condition.” Pay regular rate for first three reasons, 2/3 rate for the last three, with caps. Can be paid out in shorter increments including hours, but talk to an employment lawyer as there are rules about how to do this.
  • –Expansion of FMLA job-protected leave (Families First Act) up to 12 weeks; limited non-paid days to 10; employer pays 2/3 rest of benefit period; may require job restoration. No exceptions for small businesses yet, but may be in the pipeline. Only applies for workers who have to stay home to care for a child because school/daycare closed.
  • –Might be able to get an exemption to either above if fewer than 50 workers and payment would jeopardize the business, but this isn’t guaranteed.
  • –You must post notice to your employees about these expanded benefits. Electronic notice (like email or posting on internal/external website) is fine, as is mail. Poster here: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf

Miscellaneous employment and operations laws:

  • –DHS relaxed I-9 inspection rules until May 19 or within 3 days of the end of national emergency (whichever is first), no longer have to review I-9 in person. Still have to inspect 2 documents over video/fax/email and get copies within 3 business days. Enter “COVID-19” as reason for physical inspection delay in Section 2. Inspect in person when they return to work, and update Section 2.
  • –Businesses with an ABC license: the ABC has relaxed certain license limitations to help sales during this time. For more info on what you’re allowed to do based on your license type: https://www.abc.ca.gov/notice-of-regulatory-relief/
  •  –The CA WARN Act, which lays out specific requirements for things like notice if certain employers are going to engage in mass layoffs, has been suspended temporarily. But there may still be requirements you need to abide by. If you’re in a position where you may need to lay off many employees, contact a lawyer for guidance. The federal WARN act is still in effect but does provide exemptions which may apply.
  • –Make sure you’re not violating rules that protect employees’ medical privacy. You are likely allowed to take temperature before allowing people to work; you may be allowed to require testing for COVID-19. Contact us for help about what you’re allowed to ask about, or ask them to do (like medical testing).
  • –If you lay someone off, you are obligated to give them their final paycheck, including any accrued vacation/PTO, on their final day. You do not have to pay out accrued sick leave.

Links to Resources:

FAQs:

  • Can my employees apply for unemployment insurance? Will my EDD UI payments go up?
    • Yes, employees will be able to receive state unemployment benefits if their work hours are cut or eliminated, even if temporarily. No provisions have been made so far to prevent increases in your insurance payments due to this increase in unemployment payouts, but the state is aware of this issue and hopefully will make provisions.
  • As a business owner/freelancer/self-employed person, am I eligible to receive state disability insurance or relief under paid family leave?
    • Unfortunately, probably not. However, if you have opted in to paying for SDI, or you pay yourself as an employee of your business (including paying full payroll taxes), contact an employment attorney to see if you may be eligible. If you were working as a contractor, you may have been misclassified and may be eligible. You also may be eligible if you were paid as an employee in the last 5-18 months.
  • I don’t want to fire anyone, but I have to cut costs to get through this. Is it okay if I cut work hours down to a three or four day workweek?
    • Yes, but talk to an attorney to make sure you comply with all relevant employment rules. The main concerns are:
      • For exempt workers: ensure that any pay cut still pays above the California minimum wage for exempt workers ($54,080/yr for employers with 26+ employees, or $49,920/yr for fewer than 26). Make sure your workers are properly classified as exempt. If you’re cutting hours, you may need to reclassify some workers as part-time, which may affect their benefits; review your employee handbook and insurance policies to make sure you comply with your own benefit options.
      • If you close your business mid-week and some work has been done by an exempt worker, you may be responsible for paying out the full week of work. Talk to an attorney to determine your obligations for your individual circumstance.
      • For non-exempt workers: if more hours are being worked in a day, make sure you’re complying with all required meal breaks, rest breaks, and overtime rules.
      • Note that all workers may be eligible for unemployment insurance pay, even if they’re still working partial hours for you.
      • Make sure you provide all legally required notice when pay is being adjusted. A lawyer can help you with this.
  • I am classified as an independent contractor, but I suspect I have been misclassified and am actually an employee under the law. Am I eligible for unemployment insurance?
    • If you were truly misclassified, you might be eligible for UI and/or other benefits. Please talk to a lawyer to discuss. Even if you weren’t misclassified, UI will now become available to contractors; see the links about PUA above.
  • Do I have to close my business due to the Shelter in Place? Is my business an essential business?
    • Contact a business or employment lawyer to help you review your local requirements.
  • What do I do if I can’t pay the rent for my business space?
    • California-wide delay on evictions caused by lack of funds due to Coronavirus.
    • Some cities (including SF, Oakland, LA) have additional moratoriums for residential and/or commercial. Most allow temporary delay in payment with specific notice to the landlord; payment still due later. Nonpayment must be due to financial hardship caused by COVID-19. Bay Area info here.  Statewide commercial info here.
    • Lawyers Committee For Civil Rights is providing attorney matching services to link you up with pro bono help with negotiating your commercial lease, and other issues.
  • What do I need to do to comply with employment laws if my workers are working from home?
    • Have a clear and written telecommuting policy that addresses worker safety, timekeeping, overtime, and breaks. Contact us if you need help drafting your policy.

 

 

Photo by Jon Tyson on Unsplash