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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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Client Alert – New California Employment And Sexual Harassment Prevention Training Requirements

April 2, 2020

As many of you know, California’s new AB5 Law is in full swing. It has taken California, and especially Los Angeles based small businesses, by storm forcing many of these businesses to employ workers who were previously classified as independent contractors. To alleviate some of the burden, our attorneys have compiled all of the required (and optional) steps and documents to comply with state and federal employment laws. We call it the “2020 California Employer Compliance Kit” and is available upon request. Who Must Comply? The presumption is that all workers are employees. This means that any new worker that a California business aims to bring on board will be presumed to be an employee unless the employer can prove all of the following (in other words, to classify someone as an independent contractor, the business must prove all three of the following tests): (1) Worker is free from control and direction while performing his/her work (2) Worker performs work that is outside the usual course of your business (3) Worker is customarily engaged in an independently established trade, occupation, or business of same nature (with preferably other clients and having a license to perform the services). If you cannot satisfy all of the above tests, and therefore must classify the worker as an independent contractor, you must have all of the employment requirements in place to protect your business from stiff penalties. Some of the most common requirements include Wage and Hour laws, but do not neglect others such as an employee handbook, overtime/medical leave policies/procedures, offer letter with at-will language, training and posting requirements, etc. Please note that there are exceptions to AB5 that are buried within the law. Call us with any specific questions. Sexual Harassment Prevention Training Requirement In addition, another new law that affects small businesses is the Sexual Harassment Prevention Training requirement also effective January 1, 2020. Any business with five or more employees, including temporary or seasonal employees, must provide sexual harassment prevention training within 30 days of hire or within 100 hours worked if the employee will work for less than six months. The law requires at least two hours of training for supervisors and at least one hour of training to all non supervisory employees. Compliance is required by January 1, 2020 and once every two years thereafter.

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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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What California Employers Should Know to Comply with the New Coronavirus Emergency Paid Leave Laws

March 23, 2020

By: Ofer Barlev On Wednesday, the President signed the emergency paid leave law after it expeditiously moved from the U.S. House of Representatives to the Senate without much opposition.  The legislation provides much-needed help to those affected by the crisis.  Aside from providing free testing for the Coronavirus, the new law provides paid sick leave and paid family leave for workers.  In addition, the Treasury Department will also propose a direct cash payment to taxpayers, $300 billion in small business loans, $50 billion for the airline industry, and $150 billion to other distressed industries. The new law’s Paid Sick Leave component will require employers with fewer than 500 employees to provide their employees with two weeks (10 work days) of emergency paid sick leave pay resulting from Coronavirus absences.  If the employee is part-time, the wages paid will equal the number of hours the employee works on an average two-week period.  The employers may not require their employees to first exhaust other forms of paid leave (such as sick leave or paid time off) before allocating this Coronavirus paid sick leave. There are specific payment structures and caps attached to the law that must be examined for each situation.  Importantly, the law does not carry-over and will terminate on December 31, 2020.   Please note, the law allows the Secretary of Labor to exempt health care providers, emergency responders, and employers with less than 50 employees.  Such entities must wait until the Secretary of Labor provides this exemption through additional regulations. Posting Requirements, Compliance, and Caps The law also requires employers to post a notice in the workplace of the paid sick leave rights (and the Secretary will provide language for the notice within seven days).  If employers fail to comply with this new law, they will be subject to penalties similar to those issued for minimum wage violations.  Any employer who provides the paid sick leave wages to its employees due to the Coronavirus will receive payroll tax credits quarterly if they are above the required Social Security taxes the employer ordinarily owes.   The paid sick leave wages are capped at $511 per day (or $200 per day if the leave is to care for a child or family member) for up to 10 days per employee in each calendar quarter. Employers who must also offer emergency Family and Medical Leave Act (“FMLA”) wages would be entitled to tax credits equal to the entire amount paid per calendar quarter.  Such Emergency FMLA tax credits are capped at $200 per day for each individual up to $10,000 in the aggregate per calendar quarter.  Please note that regular FMLA applies to private employers with 50 or more employees and the employees are eligible (eligibility for benefits requires that the worker has worked for the employer for at least 12 months, has worked at least 1,250 service hours for the employer during the 12-month period immediately preceding the leave, and works at a location with at least 50 employees that is within 75 miles.)  California’s Family Rights Act provides additional protections. If the Employer Closes the Office, What Legal Requirements Must be Followed? If […]

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Protecting your Separate Property

February 25, 2020

Often, we have clients who desire to protect their separate property before a marriage, or their gifts from parents later in life. One way to do this is with a prenuptial or postnuptial agreement. These agreements are difficult to do, for all of the obvious reasons. Another way to maintain separate property is to create Separate Property trusts to hold assets that are separate property. Separate property assets are those assets that you owned before marriage and have not been commingled, and also any inheritance that is received as separate property. This can be accomplished as a part of overall estate planning using a three-trust setup, two Separate Property Trusts and a Community Property Trust to hold jointly owned assets. The benefit is that the Separate Property trust assets are not subject to division in the event of a dissolution of the marriage. The income and value from the assets may be used to determine the ability to pay spousal and child support, but the assets continue to be separate property. In this trust, you can still fulfill your bequests upon passing. Usually, the desire is to give the assets to your surviving spouse and/or your children, but it could also be to share certain Separate Property Assets with others. An added benefit is that separate property of one spouse is not liable for the obligations of the other spouse. It can be quite effective for asset protection. Also, Community Property may be converted to Separate Property with a fair and equitable Transmutation Agreement between the parties. If you are married, at some point before passing away, it is advisable to place all of your accumulated assets into the Community Trust in order to obtain a full step-up in basis on the entire value of the property upon the passing of the first spouse. Similarly, if property is held in Joint Tenancy, it is advisable to change title to the Community Trust to obtain the full step-up in basis upon the passing of the first spouse. With a full step-up in basis, the surviving spouse can sell the property, after the first passing, for its value at the date of death without paying income taxes on the sale.

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