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Summary of March 27 VBA call

Nearly 100 Virginia lawyers registered to take part in the second weekly VBA conference call, March 27, to discuss how lawyers and law offices are navigating the COVID-19 outbreak.

The link to the summary of the first week's call can be found here. Additional resources and these summaries can be found on the VBA's COVID-19 Resources page, which is also linked at the top of this page.

As mentioned in that summary, the information here does not render legal advice. It summarizes an information exchange.

Three primary issues were explained in the call:

  • the proposed (at the time of the call) federal stimulus plan, which the U.S. House of Representatives approved later in the day, and its impact on clients and attorney offices,
  • the Families First Coronavirus Response Act, and
  • an update on virtual depositions.

VBA President Alison M. McKee moderated, beginning the call with the VBA’s efforts in the past week, including:

  1. Contacting state officials on behalf of municipal leaders for clarification on FOIA and public meetings laws in an era of social distancing. Attorney General Mark Herring issued an opinion, which was included in the VBA’s COVID-19 Resources page.
  2. Outreach to state officials to encourage that the definition of “essential services” include legal offices. Gov. Ralph Northam’s Executive Order 53, issued March 23, encouraged teleworking for all businesses in Virginia but permitted some employers to remain open when social distancing and increased sanitation recommendations could be followed.
  3. Action on the part of some of the VBA’s substantive law sections to address issues that have arisen, such as the Elder Law and Special Needs Section looking into virtual notaries for legal documents, and the Health Law Section efforts to match suppliers of medical supplies and workers with those in need.

“When called into service, the VBA steps up,” McKee said.

Federal Stimulus, or CARES (Coronavirus Aid, Relief, and Economic Security) Act

Paycheck Protection Program

This 880-page bill would provide $350 billion in small business loans to keep employees on the payroll.

The Paycheck Protection Program would assist qualifying businesses with 500 or fewer employees through forgivable loans 2.5 times the average monthly payroll for the 12 months prior to obtaining the loan up to a maximum of $10 million, provided employers can show that at the end of four months the money was used for payroll for employees earning less than $100,000 a year, utilities, rent and debt service. Employers would see no fees on setting up the loans and no loan payments during this time.
Law firms are eligible. It also applies to sole proprietors and contract workers. Nonprofits organized under IRS section 501(c)(3) qualify. Underwriting is very liberal.

Employers who already laid off workers can bring them back and still qualify for assistance, so long as they do so by June 30, 2020. Employers who join the program and do lay off workers or reduce their salaries by more than 25% will have a portion of the forgiveness convert to a loan at 4% interest. The portion that will not be forgiven is related to the business’ reduction in force or salaries.

Look for guidelines to come out March 31 from the U.S. Treasury Department. The administration anticipates that loans could start being written April 3.

Expect banks and credit unions to be overwhelmed when loan applications can be made. Contact your banker if you are interested in pursuing a loan to indicate your interest and determine how you or your clients can get in line.
This assistance falls under the Small Business Administration’s 7(a) program and follows some of the same guidelines. But the Payroll Protection Program does not preclude employers from also seeking low-interest SBA economic injury disaster assistance loans. Those loans are a separate program from the federal stimulus plan. Businesses can do both. Look for guidance on converting a disaster loan to the Paycheck Protection Program. The cap on this assistance through both programs is $10 million.

Guidance is needed on whether businesses that filed for bankruptcy protection or may soon file for bankruptcy are eligible for the program.

Tax consequences

Individuals earning less than $75,000 a year would receive a check for $1,200. The check amount decreases eventually to zero on a scale for those earning more than $75,000. Married couples filing jointly and earning less than $150,00 would get a check for $2,400. An additional $500 would be sent for each child. Income levels would be based on adjusted gross income from 2018 tax returns.

The IRS moved the 2019 tax filing and payment deadline from April 15 to July 15 for individuals and corporations, with no penalties or interest due.

The stimulus proposes an employee retention tax credit for employers with 100 or fewer employees that fully or partially suspended operations because of a government order. The credit would amount to 50 percent of qualified wages paid after March 12, 2020, through Dec. 31, 2020, in each calendar quarter. The credit would cap at $10,000 per employee for all quarters. Legislation also would allow deferral of payment on payroll taxes.

Families First Coronavirus Response Act

Steve Brown, Chair of the VBA’s Labor and Employment Section from IslerDare, spoke about the FFCRA and his firm has posted a 10-page FFCRA user’s guide with FAQs on the Firm’s COVID-19 webpage. A number of VBA member law firms also have COVID-19 resources on their websites and we ask that members review these helpful publications.

During the call, there was a detailed discussion about the FFCRA’s effective date based on the discrepancy between the announcement by the Treasury, IRS and DOL on March 20, 2020, that employers could apply for tax credits last Friday and the DOL’s guidance on March 24, 2020, that the effective date is April 1, 2020.

A link to the March 20, 2020, announcement is at https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus and the link to the March 24, 2020, guidance is at https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

If employers provide paid sick time or leave under the emergency FMLA between March 20, 2020 and March 24, 2020, they may have the ability to claim that they should be able to take the tax credit. There was a discussion about a possible drafting error that we hope is cleared up in the regulations in April.

The FFCRA makes it unlawful for an employer to discharge, discipline, or in any other manner discriminate against an employee who takes paid sick time and it prevents retaliation against the employee. This is problematic because the employee does not need to prove that the discharge or discipline by the employer is tied to the taking of paid sick time. The employee also does not need to prove a causal connection between taking paid sick leave and any alleged retaliation. See Section 5104 of the FFCRA.

SEC. 5104 PROHIBITED ACTS.

It shall be unlawful for any employer to discharge, discipline, or in any other manner discriminate against any employee who

(1) takes leave in accordance with this Act; and

(2) has filed any complaint or instituted or caused to be instituted any proceeding under or related to this Act (including a proceeding that seeks enforcement of this Act), or has testified or is about to testify in any such proceeding.

The Department of Labor has ordered that posters about employees’ rights be displayed in office areas where workers will see it within 7 days from April 1, 2020. Employers should ensure that employees working remotely receive the poster. An FAQ also is available. Both are posted on elsewhere on this webpage. Some attorneys noted a typographic error and factual issues with the poster. The hope is that DOL will fix the poster before next week.

Virtual Depositions

A past president of the Virginia Trial Lawyers Association who addressed the VTLA’s virtual conference March 26 on depositions the Virginia way said that court reporters who are certified can remotely record a deponent’s testimony without having to be in the room with that person. This ability was permitted in Virginia about a year and a half ago.



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