Below please find League Business Leaders Network member Saul Ewing Arnstein & Lehr’s COVID-19 weekly digest, which includes our analysis of the most current legal developments related to this pandemic. To receive regular updates, news and information related to COVID-19, please register here.
- Tax Relief for the “Accidental” U.S. Tax Resident
In late April, the Treasury Department and the Internal Revenue Service issued much anticipated relief and guidance for those non-U.S. individuals and businesses in the U.S. affected by travel disruptions arising from the COVID-19 emergency. The global outbreak significantly limited the ability of many individuals to leave the U.S. due to canceled flights, transportation disruptions, shelter-in-place orders, quarantines, border closures and fear of traveling due to recommendations to implement social distancing.
- Employee Retention Tax Credits: Health Care Costs are “Qualified Wages” Even if Employees are Not Paid
CARES Act Provisions
Under provisions of the CARES Act, employers are permitted to take a refundable tax credit against the employer share of Social Security taxes in the amount of 50% of the “qualified wages” with respect to each employee, up to $10,000. The maximum employee retention tax credit is therefore $5,000 per employee. Under revised IRS guidance issued May 7, 2020, FAQs 64 and 65, qualified wages include health care costs, even if the employer is not continuing to pay wages and compensation to that employee. An employer can obtain the credit through offset against the employer’s income tax withholding and employer and employee payroll tax deposit amounts. Any remaining credit is refundable.
- OSHA Issues New Enforcement Response Plan for COVID-19 With Guidance on Its Use of the General Duty Clause for Enforcement
On May 19, 2020, OSHA announced its Updated Interim Enforcement Response Plan for COVID-19 (“Updated Plan”). On May 26, 2020, OSHA will rescind its April 13, 2020 Interim Enforcement Response Plan and the new Updated Plan will go into effect, which is time-limited to the current COVID-19 health crisis. As non-essential businesses re-open, OSHA is returning to its inspection planning policy prior to the start of the COVID-19 pandemic in areas where community spread is decreasing, but will continue to prioritize COVID-19 cases. Also, facilities having high and very high-exposure risk jobs, such as hospitals, emergency medical centers, and emergency response facilities, will frequently be the focus of inspection activities in response to COVID-19-related complaints and employer-reported illnesses. The Updated Plan additionally highlights that OSHA will rely on the Occupational Health and Safety Act’s general duty clause to enforce violations if employers do not comply with COVID-19 mitigation measures.
- Struggling Businesses Get Some Relief From Net Operating Loss Provisions in the CARES Act
In an effort to provide additional liquidity for struggling businesses, the federal Coronavirus Aid, Relief and Economic Security Act (“CARES Act“) has loosened the restrictions on the use of net operating loss carryovers. These provisions are intended to provide businesses with needed liquidity in a time of crisis and constrained cash flow.
- IRS Explains CARES Act Retirement Plan Loan and Distributions Provisions
CARES Act Provisions
Section 2202 of the CARES Act includes certain provisions relating to COVID-19 distributions from defined contribution plans (including 403(b) programs), and COVID-19 related loans. In Informal Guidance, the IRS has confirmed that it is optional to include these provisions in your plan. See, Coronavirus-related relief for retirement plans and IRAs questions and answers.
- SBA Releases Application Form for PPP Loan Forgiveness
CARES Act Provisions
On Friday, May 15, the Small Business Administration released its application and instructions for forgiveness of Paycheck Protection Program (“PPP”) loans. Loan forgiveness is the next big question facing small businesses as many businesses applied for PPP loans assuming they would be fully forgiven. In broad strokes, PPP loans will be entirely forgiven if (i) the entire loan amount is used for qualified costs (payroll, mortgage interest payments, rent or lease payments and utility payments); (ii) of the qualified costs, 75 percent of that amount is payroll costs; (iii) the average number of full-time equivalent (“FTE”) employees during the eight-week covered period following receipt of the loan is not less than the average number of FTE employees during the applicable prior reference period; and (iv) the employer did not reduce the compensation of employees making less than $100,000 by more than 25 percent. If any of these four requirements are not met then there will be a reduction in the amount of the loan that is forgiven.
- COBRA, CLAIMS AND COVID-19
There is new COBRA guidance that applies to ALL GROUP HEALTH PLANS subject to federal COBRA. (See our recent client alert). Rules and FAQs were issued jointly by the IRS and DOL that reflect the COVID-19 environment and the possibility that qualified beneficiaries may not timely elect COBRA or pay COBRA premiums. This guidance essentially “stays” or “tolls” the timelines for COBRA elections for the period starting March 1, 2020 and ending 60 days after the date the President declares that the COVID-19 national emergency has ended. In the meantime, even if COBRA is not elected and/or COBRA premiums are not paid, group health care coverage for these qualified beneficiaries cannot be terminated. In separate guidance plan administrators have been given additional time to issue COBRA notices and election forms
Industry and State Specific Guidance
- New Jersey Re-Opens Construction Sites and Other Non-Essential Retail Businesses Subject to Social-Distancing Policies
New Jersey / Labor and Employment
On May 13, 2020 Governor Phil Murphy signed an Executive Order (EO-142) which, among other things, permits the resumption of nonessential construction and allows curbside pickup at nonessential retail businesses. However, as to be expected, things are hardly back to “business as usual,” and the Executive Order sets out significant measures that businesses are required to take to maintain proper social distancing protocols. The construction and nonessential retail provisions will take effect at 6 a.m. on Monday, May 18th.
- Pennsylvania and New Jersey Updates for Health Care Providers Providing Non-Urgent and Elective Care
Pennsylvania / Health Care
As states begin the process of “reopening,” Pennsylvania and New Jersey have taken important steps that directly affect physicians.
- Minnesota COVID-19 Update— May 18, 2020
This update provides a quick-reference summary of major Minnesota state and local government actions taken in response to the novel COVID-19 outbreak that may be pertinent to Minnesota clients’ business operations. We will seek to update the summary for major events as the state and local response unfolds.
- Key Health Care Legal and Business Issues in the Transitional/Post-COVID-19 World
The health care world – in fact, THE WORLD – has changed significantly since March with the onset of COVID-19. As we collectively work to return to a “new normal,” the health care delivery system will be one of the key industries that will and must adapt to survive. Below, our health care lawyers and lawyers who are members of our COVID-19 Task Force share predictions about the future in the new COVID-19 environment and the legal and business issues that will need to be addressed.