PB&L Webinar with FOBA on April 2, 2020

1. parsonsbehle.com
CORONAVIRUS AID, RELIEF AND ECONOMIC SECURTY (CARES)
ACT & FAMILIES FIRST CORONOVIRUS REPONSE ACT : WHAT
THE ACTS MEAN TO YOUR BUSINESS AND HOW TO RESPOND
April 2, 2020

2. 2
Webinar Format
 All Lines Muted
 Please Use Chat Function to Submit Questions
 Webinar Will Be Recorded
 Slides Will Be Shared With All Participants

3. 3
Sean Monson
FMLA Amendments
Susan Motschiedler
Sick Leave Under
Response Act
Ross Keogh
CARES Act
Fundamentals &
Loan Forgiveness
Presenters
Christina Jepson
Terminations in the COVID-19 Crisis:
WARN Act and Other Considerations
Mark Wagner
CARES Act
Unemployment
Insurance

4. 4
Presenter Contact Information
 Ross Keogh – RKeogh@parsonsbehle.com
 Mark Wagner – MWagner@parsonsbehle.com
 Sean Monson – SMonson@parsonsbehle.com
 Susan Motschiedler – SMotschiedler@parsonsbehle.com
 Christina Jepson – CJepson@parsonsbehle.com

5. 5
Things are changing rapidly. We are working extremely hard to keep
up with all that is happening. This webinar is based on available
information as of April 2, 2020, but everyone must understand that this
webinar is not a substitute for legal advice. If there are questions about
the information contained in the presentation and how it applies to your
business, then you should contact your legal counsel. This
presentation is not intended and will not serve as a substitute for legal
counsel on these issues. Given the complexity and rapidly changing
landscape, you must consult with your legal counsel on these issues.
Disclaimer

6. CARES Act Fundamentals
& Loan Forgiveness
Ross P. Keogh

7. 7
CARES Act—the four legs of the table
 $2.2 trillion in spending
 Direct taxpayer subsidies ($1,200 payments), and
unemployment support
 $500 billion in Treasury directed intervention funds
 $349 billion through SBA 7(a) loan program for Paycheck
Protection Program (PPP) loan
 Various tax changes and appropriations

8. 8
$349 Billion in Loans to Small Businesses –
the “Paycheck Protection Program”
 Utilizes the SBA 7(a) Loan Program framework
 Any business with <500 employees that was operating before
2/15/2020 is eligible
 Expands eligibility to include: non-profits (501(c)(3)), tribally
owned businesses, certain self-employed individuals, and
independent contractors.
 No personal guaranty required
 Extensive Deferral and Forgiveness (more to follow)
 Cap of 4% interest, with ten year amm.
 $10,000,000 cap

9. 9
Calculating eligible loan amount
 Average monthly payroll * 2.5
 E.g.: 10 people at $2,500 = $25,000
 $100k annual cap per employee on eligible payroll
 Deferral of 6 months with interest subsidies also available

10. 10
Forgiveness
 Loan proceeds must be spent on: payroll costs, interest of any
covered mortgage obligations, rent obligations, and utilities (if
committed before 2/15/2020).
 Only the amount spent on the above during the 8 weeks
following origination is eligible for forgiveness
 Proportional reductions for pay reductions > 25% or workforce
reductions
 Can rehire
 No cancelation of debt income
 Lender discretion to grant and certifications required

11. 11
SBA Payment of Your 504 or 7(A) Loan
 The SBA will make 6 months of payments on your behalf
o Excludes EIDL and PPP Loans
o Starts with next payment due date for 6 months
• If loan is already deferred starts at end of deferment
 Also applies to loans made within 6 months of enactment of
CARES Act
 Available to all 7(a) and 504 Borrowers as impact is
presumed.
 $17 billion expected subsidy

12. 12
Payroll Tax Credit
 Credit is not available if you have a PPP loan
 Available in two circumstances:
o Organizations suffering a partial or full shutdown (by Shutdown Order).
o Organizations whose gross receipts decline more than 50% as compared to
same quarter last year. Tax credit ends in quarter gross receipts exceed 80%.
 Credit Amount
o Fewer than 100 employees: all wages paid in quarter subject to gross receipts
decline, or all wages paid during shutdown order.
o 100 or more employees: only wages paid to employees that were not providing
service eligible for credit.

13. 13
Payroll Tax Credit
 Credit is immediately refundable as an overpayment of Employment
Taxes.
 Limited to $5,000 credit per employee ($10,000 in wages).
 Healthcare expenses are qualified wages.
 Nonprofits may also utilize.

14. 14
Tax Free Payments on Student Loans
 Allows employers to make payments on an employee’s
student loan or to make payment to an employee that the
employee uses to make a payment on the student loan.
 Tax free to Employee.
 Could reduce salary (so long as not more than 25%- PPP
loan issues) and still pay the employee the same after tax
amount.

15. 15
Disaster Relief Payments
 The March 13, 2020 national emergency declaration triggered 26
USC § 139
 Qualified disaster payments to individuals are now exempt from
gross income
 The provision is extremely broad, allowing employers to
reimburse employees for “reasonable” expenses associated with
the pandemic.
 Example include: costs to set up and maintain a home office,
medical expenses, housing, increased childcare expenses,
expenses to maintain social distancing, alternative commuting,
expenses associated with working from home.

16. 16
Additional tax provisions of immediate interest.
 RMDs from IRAs can be suspended.
 NOLs can be carried back five years, start in 2018.
 Effective in 2018 tax year, immediately depreciate improvements to the
interior portion of a commercial building.
 Employer’s side of social security (6.2%) can be delayed. 50% to
12/31/2021 and 50% to 12/31/2022. In lieu of SBA loan forgiveness.
 Business interest deduction cap increased to 50%.

17. Thank you
Ross P. Keogh
406.206.9710
rkeogh@parsonsbehle.com

18. CARES Act Unemployment Insurance
Mark A. Wagner

19. 19
CARES Act, Division A, Title II, Subtitle A:
“Relief for Workers Affected by Coronavirus Act
1. Federal funding for UC to self-employed workers
adversely impacted by COVID-19 if not otherwise covered
by state UC laws or if state UC benefits already
exhausted.
2. Federal-state agreements funnel assistance to individuals
through existing state UC programs.
 Benefits begin after agreement entered into.
 No one-week waiting period.

20. 20
CARES Act, Division A, Title II, Subtitle A:
“Relief for Workers Affected by Coronavirus Act
 Up to four months of federal payments of $600 per individual per
week in addition to otherwise applicable state entitlement.
o Not pro-rated.
o Only through July 31, 2020.
 Additional 13 weeks of UC benefits at applicable state levels, up to
December 31, 2020.
 Opportunity for states to enter agreements with feds for funding for
state-enacted “short-time compensation” programs to subsidize
employees who have hours reduced in lieu of a layoff. Feds fund
delta between reduced hour payments and the UC benefit.

21. Thank you
Mark A. Wagner
801.536.6776
mwagner@parsonsbehle.com

22. FMLA Amendments
Sean A. Monson

23. 23
“Regular” FMLA Leave “COVID – 19” FMLA Leave
Employers
Covered
Employers who employ 50 or more
employees within a 75 mile radius
Employers who employ fewer than 500
employees – Secretary of Labor may exempt
employers who employ 50 or fewer
employees
Eligible
Employees
Worked for 1,250 hours during the previous
12 months
Worked for 30 days
Potential exception for employees who are
health care providers and first responders
Triggering
Events
Birth or adoption of child
Serious health condition of employee
Serious health condition of family member
Serious health condition = overnight
hospitalization or 3 days incapacitated
requiring visits with doctor and follow up care
“[E]mployee is unable to work (or telework)
due to a need for leave to care for [a] son or
daughter under 18 years of age of such
employee if the school or place of care has
been closed, or the child care provider of
such son or daughter is unavailable, due to a
public health emergency.”
A “public health emergency” means an
emergency with respect to COVID – 19
declared by a Federal, State or local
authority.

24. 24
“Regular” FMLA Leave “COVID – 19” FMLA Leave
Benefits Up to 12 weeks of unpaid leave
10 days of unpaid leave
2/3 of employee’s regular rate of pay up
through the end of a 12 week period
Calculated based on “the number of hours
the employee would normally be scheduled
to work”
If the employee’s hours vary week to week,
calculate an average based on prior 6
months
Capped at $200 a day or $10,000 in the
aggregate per employee
PTO During
Leave
Employer can force employee to use accrued
PTO during leave period
No change

25. Thank you
Sean A. Monson
801.536.6714
smonson@parsonsbehle.com

26. Sick Leave Under Response Act
Susan Baird Motschiedler

27. 27
Response Act Sick Leave
 Entitlement Begins April 1, 2020 and Ends December 31, 2020.
 Applies to Employers with 500 or fewer employees.
 Employers with fewer than 50 employees can deny an employee Paid Sick Leave if:
o (1) cost of leave exceeds available business revenue and would cause the small
employer to cease operating at a minimal capacity;
o (2) the absence of the employee would pose a substantial risk to the financial
health or operational capacity of the small employer because of the employee’s
specialized skills, knowledge of the business, or responsibilities; or
o (3) the small employer cannot find enough other workers who are able, willing,
and qualified available to perform the labor or services the employee or
employees requesting leave provide, and these labor or services are needed for
the small employer to operate at a minimal capacity.

28. 28
Response Act Sick Leave
 For profits and non profits are employers under the Resonse Act
 Excludes health care providers and emergency responders from the
definition of “employers” under the Response Act.
o The Highest Official in a state may identify additional categories of exempted
emergency responders
 The Response Act permits employers of health care providers and
emergency responders to opt out if the Secretary does not issue
regulations excluding them.

29. 29
Employee Eligibility
 Full and Part Time Employees are Eligible
 Applies to Full and Part Time Employees Unable to Work
(Including Telework) Because They:
o Are in a federal, state or local quarantine order related to COVID-
19
o Have been advised by a health care provider to self-quarantine
due to COVID-19 concerns
o Are experiencing symptoms of COVID-19
OR

30. 30
Employee Eligibility
o Are caring for someone who:
• is subject to a federal, state or local quarantine order related to COVID-19, or
• has been advised by a health care provider to self-quarantine due to COVID-
19 concerns
o Are caring for the employee’s child if the child’s school or care has
been closed or the child’s care provider is unavailable due to
COVID-19 concerns, or
o Are experiencing “any other substantially similar condition”
specified by the Secretary of Health and Human Services in
consultation with the Secretary of the Treasury and the Secretary
of Labor

31. 31
Employee Eligibility
 No COVID-19 Sick Leave Under these Circumstances:
o Business closed voluntarily
o Business closed by government
• Non essential business under a shelter in place order
• Less Restrictive Order
– Restaurants
– Nail and Hair Salons
– Personal Services
o Work otherwise not available – furlough, layoff, termination, etc.

32. 32
Sick Leave Benefit Amount
 Hours of Paid Leave Vary by Full- or Part- Time:
o Full-time employees are entitled to up to 80 hours of pay.
o Part-time employees are entitled to the average number of hours
the employee works over a two-week period.
o Payments to part-time employees who work variable schedules
week-to-week will be based on a six-month average or, for
employees who did not work the prior six-month period, based on
the employee’s contract or stated number of hours upon hire.

33. 33
Sick Leave Benefit Amount
 Amount of Paid Leave Varies:
o Employees who are themselves sick and are quarantined are
entitled to 100 percent of the regular rate of pay they would have
earned for working normally-scheduled hours up to 80 hours and is
capped at $511 a day and $5,100 in the aggregate.
• Amount is based on the 2019 social security wage base--$132,900.
o Employees who are caring for another qualified person are entitled
to two-thirds of the regular rate of pay they would have earned for
working normally scheduled hours, capped at $200 a day and
$2,000 in the aggregate.

34. 34
Sick Leave Benefit Amount
 Amount Under Multi-Employer Bargaining Agreements:
o An individual employer who is a signatory to a multi-employer
bargaining agreement may, consistent with such agreement, fulfill
sick-pay obligations by making contributions to a multi-employer
fund, plan or program based on the number of hours worked by the
employee for the individual employer.

35. 35
Miscellaneous Provisions
 Employers may not require that employees use any other paid leave
provided by the employers before using the Sick Leave required by the
Response Act.
 Employees seeking sick time benefits under the Response Act need not
find a replacement to cover the missed hours.
 May Be Taken Intermittently only for childcare reasons
o Purpose of COVID-19 Sick Leave is to prevent spread of disease
 Sick Leave does not roll over at the end of this year and is not payable
on termination of employment.
 Employers must post a notice of rights under the Response Act.

36. 36
Miscellaneous Provisions
 The Response Act provides for penalties under the Fair Labor Standards
Act for noncompliance.
 There is a 30-day enforcement grace period, during which time the
Department of Labor will offer guidance.
 Employers must keep documentation regarding sick leave for 4 years
o Reason(s) for leave
o Whether granted or denied
o Any documentation
o Must document oral conversations

37. Tax Credits Under Response Act
Susan B. Motschiedler

38. 38
The Tax Credits in General
Two separate tax credits for paid leave to employers provided
under the Response Act starting April 1, 2020:
 Paid Sick Leave, § 7001
o $200 (for care of others)/$511(quarantine) per day limitation per employee.
o 10 days/80 hour per employee cap.
 FMLA Leave, § 7003
o $200 per day and $10,000 maximum per employee

39. 39
Additional Details on the Tax Credit
 Public employers are not eligible for either credit.
 All payments are exempt from social security and Medicare withholdings
by employee and employer.
 An employer that has a qualified health plan can offset properly
allocated expenses caused by the Response Act to that plan and take
either credit.
 Treasury likely to take significant latitude in interpreting and applying the
rule.

40. 40
How Employers Get the Credit
 Employer’s will be able to take the credit to offset the following mandatory
payroll contributions:
o The Employer’s side of Social Security and Medicare
o The Employee’s side of Social Security and Medicare
o The Employee’s federal tax withholdings.
 Employers will also be able to request accelerated payment now and these
requests are expected to be processed in less than two weeks.
 The credits are refundable.

41. Thank you
Susan Baird Motschiedler
801.536.6923
smotschiedler@parsonsbehle.com

42. Terminations and Furloughs in the
COVID-19 Crisis:
WARN Act and Other Considerations
Christina M. Jepson

43. 43
WARN Act
 The Worker Adjustment and Retraining Notification Act
(WARN Act), 29 USC § 2101-2109 requires 60 days notice
of a reduction in force in certain circumstances
o Applies to large companies
o Applies to large reductions
o Exceptions that may apply now

44. 44
WARN Act – Employers Affected
Only applies to large employers
o 100 or more full time employees (employees who work
an average of 20 or more hours per week) or
o 100 or more employees (including part time employees)
who in the aggregate work at least 4,000 hours per week
Counting employees can be tricky—If you are close
consult with counsel

45. 45
WARN Act – Reductions At Issue
Only applies to large reductions in force, two kinds
o A “plant closing” or
o A “mass layoff”

46. 46
WARN Act – Plant Closing
 “Plant closing” is a permanent or temporary shutdown in
which at least 50 employees experience an “employment
loss”
 A permanent or temporary shutdown of
o Single employment site
o Operating unit
o Facility

47. 47
WARN Act – Mass Layoff
 A “mass layoff” is a RIF in which
o At least 500 employees at a single job site experience an
“employment loss” or
o 50 to 499 employees experience an “employment loss” if they
makeup at least one-third of the employer’s work force
 If less than 50 employees experience an “employment
loss”, then it is not a “mass layoff”

48. 48
WARN Act – Employment Loss
 What is an “employment loss”
o An employment termination other than a discharge for cause,
voluntary department, or retirement or
o A layoff (not termination) exceeding 6 consecutive months or
o A reduction in hours of more than 50% during each month of any
6-month period

49. 49
WARN Act – Series of RIFS
 The WARN Act has a 90-day look back and look-forward
provision
o Even if you terminate smaller groups of employees in a series of
terminations, the WARN Act could be eventually triggered
o You must aggregate the number of employees affected by plant
closings or mass layoffs in a 90-day period by looking 90 days
back and 90 days ahead from the expected date the employment
losses will occur to take into account both planned and completed
employment losses
o The math can be tricky--consult counsel

50. 50
WARN Act – Notice Requirements
 What must a company do if the WARN Act is triggered?
o The employer must give written notice at least 60 days in
advance of the plant closing or mass layoff to:
• The union representative of each affected employee (if applicable);
• Each affected employee not represented by a union;
• The state dislocated worker unit or office;
• The chief elected official of the unit of local government where the layoff or
plant closing will occur; and
• The federal government if foreign nationals working on certain visas are
laid off. Consult immigration counsel.
 29 U.S.C. § 2102(a); 20 C.F.R. § 639.6

51. 51
WARN Act – Violations
 An employer that violates the WARN Act's notice
requirements is liable to each qualifying employee for:
o Back pay for each day of the violation, at the higher of the average
regular rate received during the last three years of employment or
the final regular rate received;
o Benefits under an employee benefit plan, including the cost of
medical expenses incurred during the employment loss that would
have been covered if the closure or layoff had not occurred; and
o Attorney fees

52. 52
WARN Act – Violations
 An employer that fails to provide the requisite notice to the
unit of local government is subject to a civil penalty of up to
$500 for each day of violation, unless the employer satisfies
its liability to employees by paying them within three weeks
after the closing or layoff.
29 U.S.C. § 2104.

53. 53
WARN Act – COVID-19 Shutdown
 Strong argument that the WARN Act would not apply
because the employer would have no choice and no
opportunity to give the required notice
 The WARN Act applies only if the employer takes action to
cause a triggering employment loss
 However, an employer should still give as much notice as
possible
 Update employee contact information now

54. 54
WARN Act – Exceptions
 The length of the 60-day notice period can be reduced in
three exceptional circumstances involving:
o A faltering company
o An unforeseeable business circumstances
o A natural disaster

55. 55
WARN Act – Unforeseeable Business
Circumstances Exception
 The WARN Act allows employers to order a plant closing or mass
layoff before the conclusion of the 60-day warning period where the
closing or layoff “is caused by business circumstances that were not
reasonably foreseeable as of the time that notice would have been
required.” 29 U.S.C. § 2102(b)(2)(A).
 “Caused by some sudden, dramatic, and unexpected action or
condition outside the employer’s control.’” 20 C.F.R. § 639.9(b)(1))
 Employer must still “give as much notice as is practicable and at
that time shall give a brief statement of the basis for reducing the
notification period.” 29 U.S.C. § 2102(b)(3); 20 C.F.R. § 639.9.

56. 56
WARN Act – Unforeseeable Business
Circumstances Exception
 Examples of potentially qualifying circumstances include a
o Principal client’s sudden and unexpected termination of a major
contract with the employer
o An unanticipated and dramatic major economic downturn
o A government ordered closing of an employment site that occurs
without prior notice
20 C.F.R. § 639.9(b)(1)
 Consult with counsel about putting together a case for the
exception—attorney-client privilege

57. 57
WARN Act– Unforeseeable Business
Circumstances Exception
 If an employer’s initial layoff is less than 6 months, but
extends to beyond six months, there is a special notice
reduction rule for extensions of layoffs that are the result of
a business circumstance that was not reasonably
foreseeable at the time the initial layoff commenced
 If that special rule applies, the employer can provide
shortened notice at the time the need for the extension
became reasonably foreseeable and avoid WARN Act
liability altogether. 20 C.F.R. § 639.4(b).

58. 58
WARN Act – Natural Disaster Exception
 The WARN Act also does not require 60-days’ notice for employment
losses that are the direct result of “natural disasters”
 Defined as “floods, earthquakes, droughts, storms, tidal waves or
tsunamis, and similar effects of nature”
 Employer is required to provide as much notice as is practicable,
containing as much of the required information as is available in the
circumstances of the disaster, whether in advance or after the fact
 There is an argument that the COVID-19 pandemic qualifies as a
“natural disaster” if it forces a plant closing or mass layoff
 Consult counsel regarding whether your particular circumstances
apply and to construct an argument—attorney-client privilege

59. 59
What if WARN Act Does Not Apply?
 There other laws that may apply
 Some states have mini-WARN statutes or other layoff
statutes that provide additional requirements on
employers—Utah does not
 Some states with mini-WARN statutes—California,
Connecticut, D.C., Georgia, Hawaii, Illinois, Iowa, Maine,
New Hampshire, New Jersey, New York, Tennessee,
Vermont, Wisconsin
 However, in these times you literally need to check
everyday and consult with counsel

60. 60
Other Issues
 Even if the Warn Act does not apply and mini-Warn State
laws do not apply, there are several issues you must
address in any RIF
o Ensure that the process is not discriminatory and does not have a discriminatory
impact, if avoidable
o Minimize the risk of a claim of discrimination from one of the terminated employees
o Form a diverse committee to choose who is selected for layoff and ensure that the
workers selected are selected based on objective criteria and not for discriminatory
reasons—DOCUMENT THE PROCESS
o Once the employees are selected, you need to analyze the group for discriminatory
impact
o Work with your outside or in-house legal counsel to analyze these issues—Attorney-
Client privilege

61. 61
Other Issues
 Determine if any of the affected employees have engaged in
any protected activities under state or federal law
o Harassment or discrimination complaints
o Notifying OSHA of a perceived health or safety violation
o Workers’ compensation claims
o FMLA claims, ADA issues, and other health issues
 Consult with legal counsel before making any final
determinations—Attorney client privilege

62. 62
Other Issues
 Determine if any of the employees who are being
considered for the RIF have employment agreements that
may impact their terminations
o Guaranteed terms of employment
o For cause
o Provisions for specific severance
 Consult any collective bargaining agreements
 If you provide severance, use legally compliant severance
release agreements

63. 63
Other Issues
 Determine if the terminated employees are entitled to any
other pay and benefits
o Company severance plan
o Pay out of accrued time off—look at your polices and state law
o State laws may also mandate when you must pay terminated
employees
o COBRA notices

64. 64
Other Issues
 Benefits you may not be obligated to provide but may want
to provide
o Contact information for unemployment and other assistance
programs
o Counseling
o Information meetings (virtual)
 Check with your health insurance carrier regarding the
ability to keep employees on insurance

65. Thank you and be safe
Christina M. Jepson
801.536.6820
cjepson@parsonsbehle.com

66. Q & A
Mark A. Wagner

67. 67
Things are changing rapidly. We are working extremely hard to keep
up with all that is happening. This webinar is based on available
information as of April 2, 2020, but everyone must understand that this
webinar is not a substitute for legal advice. If there are questions about
the information contained in the presentation and how it applies to your
business, then you should contact your legal counsel. This
presentation is not intended and will not serve as a substitute for legal
counsel on these issues. Given the complexity and rapidly changing
landscape, you must consult with your legal counsel on these issues.
Disclaimer

68. Thank you