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Update to the Paycheck Protection Program Provides Flexibility to Borrowers

July 7, 2020

Dear Clients, Colleagues, and Friends: As we have reported in recent newsletters, the Paycheck Protection Program (“PPP”), brought upon by the CARES Act, helps small businesses by keeping employees on the payroll through this difficult time. Please see our previous entries for PPP details. Today’s significant update is that the U.S. Congress drafted changes to the PPP giving borrowers more flexibility in terms of loan forgiveness. It passed Congress almost unanimously. The key update with this new bill is that borrowers now have 24 weeks rather than eight weeks to use the funds from the date it is funded. The issue solved here is that many employers could not use the PPP funds within that initial eight week period because their employees filed for unemployment insurance benefits and were resisting returning to the office (especially due to the extra $600 per week provided by the federal government). We received daily calls and emails from clients asking what they can do when employees refuse to return to work as they are making more on unemployment than when they are employed. This update will give those employers more time to use the PPP funds. Now, employers will not be penalized when an employee refuses to return to work when it comes time for the forgiveness calculation. Another important update with this bill is the reduction from 75% to 60% that the loan proceeds must be used on payroll with respect to loan forgiveness. Now, this new amount gives employers more flexibility on how to use the money to keep their business afloat. More of the funds can be used towards rent and utilities. In addition, the businesses have a longer time period to keep the loan as it is now five years instead of the original two years. The interest rate remains at 1%. Although these changes are beneficial, we would still like to see more updates. For instance, we would like to see clearer guidance on how to obtain forgiveness, especially for smaller loans. We would also like to see forgiveness extended to other categories that are required to keep the business viable – other than payroll, rent, and utilities – such as marketing, paying for those who make more than $100,000 annually and helping sole proprietors and independent contractors with additional guidance. As we receive additional information, we will keep you updated. In the interim, feel free to call or email us with any questions.

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Top Five Items California Employers Should Consider When Re-Opening Their Offices

July 7, 2020

Dear Clients, Colleagues, and Friends: Each day, we receive many questions from clients about steps employers should take when returning to the workplace. Although each scenario is unique, there are common themes that we receive as well as guidelines that we recommend. First, upon deciding to return to the office, employers should perform a risk assessment to see if the business establishment is ready for a return. This means before opening its doors to the public, the business should purchase the proper amount of sanitizer, masks, hand-wipes, and line up other relevant protections. Next, the employer should carefully plan how many employees will be initially invited, whether clients will be permitted and how many, and how often the business will be thoroughly cleaned and/or sanitized other than the routine cleaning services provided by the landlord. Please note that this is an evolving area and guidelines frequently change. Employment – Employers should review local ordinances as well as city, county, and state orders for guidelines and best practices. For Los Angeles County, employers should review such resources as the Mayor’s Office’s Orders (https://www.lamayor.org/COVID19Orders) and Toolkits for Business (https://corona-virus.la/Business). Moreover, employers should consider having employees fill out questionnaires about potential exposure and symptoms before returning to the office. There are permitted and prohibited questions and these should be reviewed by your legal counsel. Certain cities and counties also have specific requirements regarding face covering and other protective measures. Phased return to work can also present potential discrimination claims. It is best to first to ask employees to voluntarily return to work. Then, employers can invite certain individuals or departments gradually. Employers should keep these questionnaires in the employee’s confidential file since these are confidential medical records. When considering who will return to the office, gauge whether the individual must work in the office or if he/she could complete the work from home. Make sure you do not single anyone out due to his/her age or due to any other protected category (gender, ethnicity, race, religion, disability, etc.). However, if there are employees who fall into high-risk areas, you can ask the employees to contact you or your HR person to seek out a reasonable accommodation. The key here is to engage in an interactive process. Employees do not have the right not to return to work because he/she is scared or he/she is making more money under unemployment. Instead, he/she must have a reasonable belief of death or serious injury if required to return to the office. For employees who are afraid to return to the office because of a medical condition such as anxiety or underlying medical condition, employers must have reasonable accommodation in place (and can even require that the employee provide medical documentation). Employers may ask the employee what the concerns are and then address the concerns through accommodations to alleviate the concerns. If this does not work, and the reasonable accommodation still does not resolve the issue, the employer should consider reassigning the employee to a different, less exposed, position. However, at the end of the day, the employer may have to consider termination if it is a […]

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Client E-Alert: COVID-19

April 3, 2020

Dear Clients and Friends: Citron & Deutsch will continue to provide uninterrupted legal services during these unprecedented times. Our office is set up for remote operations and the team here meets by video conference every morning at 7:30 to go over assignments, emergencies, and client needs. We are having estate plan interviews and documentation by phone, and when needed, signings in the office. We have been using Zoom very effectively to videoconference instead of physical meetings this past week. Even when no one is manning the office, during office hours someone will be answering the phone remotely and we will put you in contact with the appropriate team member. Please feel free to call or email. Not quite business as usual, and we will work to support you every way we can. Our attorneys are also monitoring the new business, tax, and employment laws to ensure you are kept current on today’s changing workplace environment. Please note the following and let us know if you have any questions: Effective April 2, 2020, the Families First Coronavirus Response Act provides employers with less than 500 employees with a tax credit of up to $511 per employee per day for 10 workdays for eligible employees who must take time off if they are ill, quarantined, or seeking diagnosis or preventative care for coronavirus, and up to $200 per day for employees who take time off to care for family members. There are exceptions allowing employers to exclude employees from taking time off if they are health care providers or emergency responders and for employers with less than 50 employees if it would jeopardize the viability of the business as a going concern. Emergency Family and Medical Leave expands your rights to care for children who are out of school or where their place of care has closed where you may take up to 12 weeks of leave (The new law includes all employers with 500 or less employees). Income Tax Filing Deadline Moved to July 15, 2020. Our thoughts and prayers are with those affected by this pandemic. As always, we are all in this together, and will continue to work with you to get through this extraordinary time period. Citron & Deutsch

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Actions to Take During This Crisis

April 2, 2020

With all these changes in life going on, there are aggressive actions that you can you take to protect yourself, and your family, your friends, and your employees. Here are some ideas: Review your leases for a Force Majeure clause (a provision in commercial contracts that excuses the renter from performing when certain situations arise beyond the renter’s control making performance impractical, inadvisable, unreasonably expensive, illegal or impossible). Please note that these clauses often require special notices or timing. Then, contact your landlord in writing, to notify him/her of this situation and your inability to perform. Landlords must work with their tenants in a reasonable way. Contact the lender on your business or home loan to negotiate abeyance or delayed payments. Don’t wait for the government to mandate it. Many loan contracts receive such treatment due to a doctrine called Frustration of Purpose. In such a case, the purpose of the contract was frustrated by an event (pandemic) that would excuse its performance. For example, if your business was ordered to close as a non-essential business, you can argue that the reason for entering into the loan was to operate the business – which is no longer possible. Review and determine how to handle your accounts receivable and accounts payable. Work to make your cash flow match up with revised commitments. Contact the finance company carrying your car loan. Similar to the above, you may not be able to pay your car payments or even use the car. Therefore, you should be relieved from your payment obligations – even temporarily. If you plan to reduce staff, be sure to catch up on the latest employment support plans being made available by the Federal, state and local governments. Furlough versus termination versus reduction of work time have very different consequences. Go through all of last month’s business and personal bills and see which can be reduced or eliminated. You will be surprised at how many things can be changed without dramatically impacting your employee benefits or work and personal lifestyle. Make sure all of your assets are in the name of your family trust, both for you and for your employees. If something happens to you or your spouse/significant other, or an employee, the costs and time involved in settling the estate can be prohibitive. If all of your assets are in your trust, the transition is usually seamless. Also make sure your health care directives are up to date with the right decision-makers named. In the meantime, make sure that you are doing the best you can to be positive and aggressively pursuing solutions for yourself, your family, your friends and your employees

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