With all of the laws, orders and regulations being passed, adopted or issued to address the crisis occasioned by the COVID-19 pandemic, I thought it might be helpful to provide a summary of many recent local (Los Angeles), California and federal passed, issued or proposed government actions granting relief and stimulus to businesses, employers and property owners.
I. Los Angeles City Orders
- On March 23, 2020, the Mayor of the City of Los Angeles issued an order expanding the protection against evictions for residential tenants who are able to show an inability to pay rent due to circumstances related to the COVID-19 pandemic. (https://www.lamayor.org/sites/g/files/wph446/f/page/file/March232020OrderEllisalcoholparking_0.pdf.)
- On March 17, 2020, the Mayor had issued an order protecting those commercial tenants from eviction who are “able to show an inability to pay rent due to circumstances related to the COVID-19 pandemic. These circumstances include loss of business income due to a COVID-19 related workplace closure, child care expenditures due to school closures, health care expenses related to being ill with COVID-19 or caring for a member of the tenant’s household who is ill with COVID-19, or reasonable expenditures that stem from government-ordered emergency measures.” (https://www.lamayor.org/mayor-garcetti-orders-moratorium-commercial-evictions-related-novel-coronavirus.)
II. Relief for Borrowers
Federal and state banking regulators have encouraged financial institutions to work with borrowers to address loan modifications that may be necessitated by the COVID-19 pandemic. On March 22, 2020, the federal regulatory agencies and state banking regulators issued an Interagency Statement encouraging and effectively making it easier for banks to reach short term modifications with borrowers who were current on their loans before the COVID-19 crisis began. (https://www.fdic.gov/news/news/press/2020/pr20038a.pdf?source=govdelivery&utm_medium=email&utm_source=govdelivery.)
III. California Order
CA Executive Order N-31-20 (https://www.gov.ca.gov/wp-content/uploads/2020/03/3.17.20-EO-motor.pdf) temporarily suspends the 60-day notice requirement under the California WARN Act (Lab. Code § 1400, et seq.) for employers that give written notice to employees and meet other conditions. The Executive Order gives relief to California employers who had (or have) to take action to lay off employees or suspend operations because of the impact of the COVID-19 crisis, but would not have been able to do so under the California WARN Act, which does not contain the exception for “unforeseen business circumstances” included in the federal WARN Act. The California Department of Industrial Relations, Division of Labor Standards Enforcement and the Employment Development Department (EDD) issued guidance about this change, which explains the conditions an employer must meet to qualify for the temporary suspension, the manner in which notice must be sent, and applicability of the California WARN Act in general. (https://www.dir.ca.gov/dlse/WARN-FAQs.html.)
IV. Federal Legislation
A. The Coronavirus Aid Relief, and Economic Security Act
On March 25, 2020, the U.S. Senate unanimously passed and sent to the House of Representatives H.R. 748, the “Coronavirus Aid, Relief, and Economic Security Act’’ or the ‘‘CARES Act,” to provide massive financial relief and stimulus to stem the financial crisis caused by the COVID-19 crisis. The House is expected to pass the bill in short order, and the President has pledged to sign it. Included in the Senate bill, in addition to direct payments to income-qualified individuals, are the following provisions:
- Expanded Unemployment Benefits. The legislation provides for a $600 per week increase in unemployment compensation insurance benefits (funded by the federal government), which currently average $300 per week. The increased benefit lasts for up to four months. It also expands unemployment benefits to people whose employment may not have been terminated but who cannot work as a result of coronavirus, either because they are sick, quarantined or need to take care of a child forced to stay home from school, and to people who are self-employed or are independent contractors working in the gig economy.
- Grants, loans and loan guarantees for businesses. The CARES Act authorizes grants, loans and loan guarantees for large businesses in “severely distressed industries,” including $25 billion in grants and $25 billion in loans to the passenger airlines, $17 billion to companies deemed critical to national security (read Boeing), and $425 billion for other businesses, cities and states, allocated through a funding mechanism established by the Federal Reserve. Grants or loans from the $425 billion fund come with restrictions: They may not be used for salary increases for executives of firms receiving the funds or for stock buybacks that primarily benefit company shareholders. The legislation includes oversight measures for the fund, including a congressional oversight panel and a new inspector general to examine decisions made by the Treasury Department. And allocations from the fund may not be used to benefit the President, Vice President, Cabinet members, Members of Congress, or their family members. Allocations to “mid-sized businesses” with 500 to 10,000 employees are conditioned upon a pledge of neutrality in any union organizing efforts during the life of the loan. Zero-interest loans of up to $10 million per business for businesses with fewer than 500 employees will be available through lenders (banks and credit unions) certified by the Small Business Administration. Such loans will be convertible to grants if used for employee salaries, rent, paid leave, utility payments, health insurance premiums or other business necessities or worker protections.
- Other breaks for businesses. Under the legislation, businesses will be able to delay payment of the 6.2 percent payroll tax on wages over the following two years, with the first half due at the end of 2021, and the second half due at the end of 2022. Other business tax breaks include an increase from 30 percent to 50 percent of the amount firms may deduct off their interest, delays in corporate and business taxes, and a change in the tax law to permit the hospitality industry to expense immediately the costs of building improvements.
B. The Family First Coronavirus Response Act
HR6201, the Family First Coronavirus Response Act, which was adopted on March 18, 2020, applies to employers of fewer than 500 employees and covers employees who have worked for their current employer for at least 30 days. The Department of Labor is tasked with issuing regulations to grant relief to employers of 50 or fewer employees if compliance with the Act would jeopardize the viability of the business. The FFCRA includes the following provisions:
- The Act has many sections but the provisions relevant to most employers are found in an amendment to the Family Medical Leave Act, which will be in effect through December 31, 2020, and by a new “Emergency Paid Sick Leave Act”. These two provision fit together as pieces of a whole, which allows up to 12 weeks of paid leave (subject to modest dollar and other limits) for affected employees.
- Payroll Tax Credits for Employers. Employers that are required to pay benefits to covered employees, as explained below, are allowed reimbursement of the amounts paid, up to the dollar limits for such benefits as set by the Act, by means of a refundable tax credit against payroll taxes as claimed on the employer’s quarterly tax return. Employers may obtain help with cash flow by accessing employment taxes that have been withheld as set aside for deposit with the IRS.
- FMLA Amendments. The FMLA amendments pertain only to employees who are caring for a son or daughter if the school or place of care for the child has been closed, or the child care provider of the child is unavailable, due to COVID-19 precautions. These circumstances are added to all other occasions for leave under the FMLA, while the Act is in effect. The first 10 days of such leave may be unpaid, though any eligible employee may use other available paid leave during this initial 10 days. The balance of the 12 weeks family leave may be paid at the rate of up to two-thirds of the employee’s regular pay for the number of hours per week the employee usually works, subject to a cap of $200 per day and $10,000 in total.
- Emergency Paid Sick Leave. This “first two weeks of compensation” is broader in coverage than the FMLA provision. It provides for pay at the employee’s regular rate, subject to $511/day (and $5,110 in the aggregate) cap, if the employee:(a) is subject to a quarantine or isolation order; (b) has been advised to self-quarantine; or (c) is experiencing symptoms; or for pay at two-thirds of the employee’s regular rate, subject to a $200/day (and $2,000 in the aggregate) cap, if the employee (d) is on leave to care for an individual who is subject to an isolation order or is a quarantined employee; or (e) is on leave to care for a son or daughter if the school or place of care for the child has been closed or the child care provider of the child is unavailable, due to COVID-19 precautions.