News, Articles & Updates

Federal Relief Bill Information – 3.23.2020

On March 18, 2020, President Trump signed into law H.R. 621, which provides crucial relief to employees and their families who are forced to take leave from work due to being infected by COVID-19, those who have to care for loved ones infected by COVID-19, and those who have to care for children who must remain home due to COVID-19 related school and child care closures.

H.R. 621 also provides tax credits to employers and self-employed individuals in order to offset the burden of providing paid leave. Below please find summaries of the Emergency Family and Medical Leave Expansion Act of 2020 and the Emergency Paid Sick Leave Act of 2020, which are the provisions in H.R. 621 that provide for paid employee leave due to incidents related to the COVID-19 pandemic. Emergency Family and Medical Leave Expansion Act of 2020

This is essentially a temporary expansion of the eligibility requirements for existing FMLA provisions.

Eligibility

  • Applies to companies with more than 50 employees.
  • Covers employees forced to take leave to either care for a family member infected with COVID-19 or children under the age of 18 who are home due to COVID-19 related school or childcare closures.

Requirements

  • Employees are required to provide the employer with notice of leave as soon as practicable.
  • The first ten days of leave are unpaid under this provision. However, employees on leave would likely receive pay under the simultaneously-enacted Emergency Paid Sick Leave Act (discussed below). Otherwise, employees may either elect to use employer provided sick leave, vacation time, PTO, or go unpaid for the first ten (10) days of the leave.
  • Employers are required to pay 2/3 of the employee’s regular pay rate for every day the employee remains on leave after the first ten (10) days. If the employee works an irregular schedule, the employer is required to pay the employee for the average number of hours worked per day over the six (6) months immediately preceding the employee’s leave. If the employee did not work over the previous six months, the employer is required to pay the employee based on the number of hours the employee reasonably expected to work per day upon being hired.
  • Note that the new law relaxes the existing FMLA reinstatement requirements, if the employee’s position is eliminated due to a change in economic or operating conditions attributed to the public health emergency.

Applicable Tax Credits

  • Employers may credit against their quarterly payroll taxes 100% of the family leave wages paid to employees under the Emergency Family and Medical Leave Expansion Act with the following limitations:
    • credits are limited to $200 in wages per employee per day; and
    • the aggregate amount of the credit that can be taken with respect to all calendar quarters is $10,000.

Emergency Paid Sick Leave Act of 2020
Please be advised that the Emergency Paid Sick Leave Act of 2020 goes into effect on Thursday, April 2, 2020, fifteen (15) days after the bill was signed by the President and sunsets December 31, 2020.

Eligibility

  • Employers with fewer than 500 employees are covered under the Emergency Paid Sick Leave Act of 2020.
  • Employers are required to provide each employee paid sick time if the employee is unable to work (or telecommute) due to the employee:
    • being subject to federal, state, or local quarantine or isolation order due to COVID-19;
    • advised by a healthcare provider to self-quarantine due to COVID-19 related concerns;
    • the employee is experiencing symptoms of COVID-19 and is seeking a diagnosis;
    • the employee is caring for someone who is under quarantine due to COVID-19 concerns or who has been ordered to isolate by the government due to COVID-19 concerns;
    • the employee is caring for a son or daughter, if the son or daughter’s school or regular child care provider is closed or unavailable due to COVID-19 precautions; or
    • the employee is 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.

Requirements

  • Full-time employees are entitled to eighty (80) hours of paid sick leave.
  • Part-time employees are entitled to paid sick leave equal to the total number of hours that the employee works on average in a 2-week period.
  • Paid sick time provided under this Act shall cease immediately up the employee’s next scheduled work shift following the termination for the employee’s need for sick leave.
  • Employers cannot force employees to use other paid leave provided by the employer or another source before using leave provided under this Act. Thus, in the event of a protracted shutdown, employees should first be paid sick leave under this Act, followed by sick leave required by any local ordinance (e.g., San Francisco OLSE regulations), and then the employee’s own accrued sick time, if any.

Employers cannot terminate employees for using paid sick leave under this Act.

Limitations on Paid Sick Time

  • Employers may pay up to $511 per day ($5,110 in the aggregate) to employees who are subject to a government mandated quarantine, the employee is advised by a health care provider to self-quarantine, or the employee is experiencing symptoms of COVID-19 and is seeking a diagnosis.
  • Employers may pay up to $200 per day ($2,000 in the aggregate) for employees who are caring for children home due to school and child care facility closures attributed to COVID-19, the employee is caring for someone who is quarantined due to COVID-19 concerns or who has been ordered to isolate by the government due to COVID-19 concerns, or the employee is 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.

Applicable Tax Credits

  • Employers may credit against their quarterly payroll taxes 100% of the family leave wages paid to employees under the Emergency Paid Sick Leave Act with the following limitations:
    • credits are limited to $200 in wages per employee per day, or $511 if the employee is subject to a government mandated quarantine, the employee is advised by a health care provider to self-quarantine, or the employee is experiencing symptoms of COVID-19 and is seeking a diagnosis; and
    • the aggregate number of days taken into account for any calendar quarter shall not exceed the excess of ten (10) over the aggregate number of days so taken into account for the preceding calendar quarters.

Tax Credit Relief Available to Self-Employed Individuals
H.R. 621 also provides tax credits to self-employed individuals who are unable to provide services due to COVID-19. These tax credits are available under Emergency Family and Medical Leave Expansion Act of 2020 and the Emergency Paid Sick Leave Act of 2020.

Emergency Family and Medical Leave Expansion Act of 2020

  • Self-employed individuals may utilize a tax credit against any self-employment taxes owed if the self-employed individual took leave they would have qualified to receive pay for under this Act if they were an employee. The amount of the credit is determined by the product of
    • The number of days in the tax year, not to exceed 50, that the individual is unable to provide services due to having to care for a family member infected with COVID-19 or a child under 18 who is home due to school or child care closures attributed to COVID-19; multiplied by the lesser of
    • $200; or
    • 67% of the average daily self-employment income for the applicable tax year. The average daily self-employment income is determined by dividing the net earnings of the self-employed person for the applicable taxable year by two hundred sixty 260.

Emergency Paid Sick Leave Act of 2020

  • Self-employed individuals may utilize a tax credit against any self-employment taxes owed if the self-employed individual took leave they would have qualified to receive pay for under this Act if they were an employee. The amount of the credit is determined by:
    • the lesser of $200 per day (or $511 per day if the employee is subject to a government mandated quarantine, the employee is advised by a health care provider to self-quarantine, or the employee is experiencing symptoms of COVID-19 and is seeking a diagnosis);
    •  or 67% of the average daily self-employment income for the applicable tax year. The average daily self-employment income is determined by dividing the net earnings of the self-employed person for the applicable taxable year by two hundred sixty (260).
  • The maximum number of days the self-employed person can take into account for the purposes of the tax credit are ten (10) days over the number of days the self-employed person was unable to perform services in the preceding tax year.

Please reach out with any questions or concerns about the resources highlighted in this email. We will continue to provide you with updates and resources to get you through this challenging time. Please be advised that this email was prepared for information purposes only. This email does not constitute legal advice.

Please contact The Mitzel Group if you have any specific questions regarding your business and the COVID-19 pandemic response.

 

Information on COVID-19 Relief Loans – 3.19.2020

While necessary to stop the spread of COVID-19, the shelter-in-place measures are already having a devastating impact on businesses who rely on people gathering in public, customers coming into a physical location, or employees working together in-person. Businesses such as restaurants, event planners, and fitness studios are closing their doors due to these restrictions. In attempt to mitigate impact, loan programs for small businesses are being offered by federal, state, and local agencies to provide relief for businesses losing revenue due to the COVID-19 pandemic. Below, please find information on loan programs available to businesses located in California.

Small Business Administration (SBA) Disaster Relief Loans
The SBA is a federal agency that provides both educational and financial resources for small businesses. During disasters such as a fire or flood, the SBA provides Disaster Relief Loans for impacted businesses in amounts ranging between $5,000 and $2,000,000. In response to the COVID-19 pandemic, the SBA is providing disaster relief loans to small businesses experiencing a temporary reduction in revenue due to COVID-19. The federal government will be dedicating $250 billion for disaster relief loans in response to COVID-19.

Loan Features

  • Businesses may receive loans for amounts ranging between $5,000 and $2,000,000.
  • Small business interest rate: 3.75%
  • Non-profit interest rate: 2.75%
  • Loan repayment may be structured over 30 years.
  • Repayment to be deferred for 5 months after approval of the loan.
  • Funds may be used for all operating expenses.

Disaster Relief Loan Eligibility

  • Your business must qualify as a small business. Business size standards are based on industry. You may check to see if your business qualifies as a small business by visiting https://www.sba.gov/federal-contracting/contracting-guide/size-standards.
  • Your business has experienced a loss or is projected to experience a temporary loss between January 31, 2020 and December 15, 2020 due to the COVID-19 pandemic.
  • Your business has not yet received disaster relief from another public or private lender.
  • Any person or entity with an ownership stake of 20% or more will be required to provide a personal guarantee for the loan.
  • Your business is currently borrowing less than $5,000,000 from the SBA.
  • Your business must demonstrate that it can repay the debt.

Application Requirements

An SBA loan may be applied for online or by completing a hard copy application form. To apply online, please visit https://disasterloan.sba.gov/ela/Account/Login. To access the hard copy application form, please visit https://disasterloan.sba.gov/ela/Documents/Disaster%20Business%20Loan%20Application%20(SBA%20Form%205).aspx.
The following documentation must accompany your application for a Disaster Relief Loan:

  • IRS Form 4506T must be completed for each applicant and each of the applicant’s principals owning 20% or more of the business, each general partner or managing member, and any owner who holds more than 50% of an affiliated business. For Form 4506T, please visit https://www.irs.gov/pub/irs-pdf/f4506t.pdf.
  • At least 3 years of complete federal business income tax returns for the applicant business. If tax returns are not available, an explanation of why the returns are not available may be submitted with profit & loss statements for the last 3 years as a substitute.
  • A Personal Financial Statement (SBA Form 413) must be completed by the applicant, each principal owning 20% or more of the applicant business, each general partner, and each managing member. For SBA Form 413, please visit https://www.sba.gov/sites/default/files/forms/SBA_Form_413_7a-504-SBG.pdf.
  • A schedule of all liabilities and fixed debt. SBA Form 2202 may be used to create this schedule and can be found at https://www.sba.gov/document/sba-form-2202-schedule-liabilities.

Timeline

  • Due to expected high volume of loan applications, processing times are expected to be 4-8 weeks.
  • Once a loan application is approved, funds will be released within approximately 2-3 weeks.
  • SBA will offer a more streamlined application process for loan applications under $25,000.

Limitations

SBA loans are not available for businesses that are speculative in nature or any businesses that violates federal laws, such as cannabis businesses.

California Disaster Assistance Loan Guarantee
In addition to the SBA, California’s Small Business Finance Center (SBCF) partners with privately held financial institutions to guarantee small business loans to help mitigate losses caused by disasters such as the COVID-19 pandemic. These loans are made available when the governor declares a state of emergency. These loans are available to businesses with a maximum 750 employees.

Program Features

  • SBCF will guarantee 90% of any small business loan amount up to $2,500,000.
  • SBCF will guarantee loans with up to a 7-year term.
  • Funds may be used for repairing or replacing real property, fixtures, machinery, inventory, equipment, and leased improvements.
  • Interest rates are negotiated between the applicant and the lender.

For more information about the California Disaster Assistance Loan Guarantee, please visit the Northern California Small Business Development Corporation website at https://nor-calfdc.org/.

San Francisco COVID-19 Small Business Resiliency Fund
The City of San Francisco has partnered with the Northeast Community Federal Credit Union to provide relief for San Francisco small businesses experiencing losses in revenue due to COVID-19. San Francisco will provide $10,000 loans businesses can use to pay for employee salaries and rent.

Loan Eligibility

  • Businesses with 1-5 employees.
  • Demonstrating a loss of revenue of 25% or more.
  • Have less than $2,500,000 in gross receipts.
  • Engaged in activities that are regulated by the City and County of San Francisco and have a license/permit associated to that regulation.

Application Requirements

Please reach out with any questions or concerns about the resources highlighted in this email. We will continue to provide you with updates and resources to get you through this challenging time.

Message From Your Mitzel Group Team – 3.17.2020

During this time when we know a lot of our clients and friends are experiencing high levels of anxiety and stress, The Mitzel Group is open and here to help.  Our operations continue to run uninterrupted. We are all working from home with cloud capabilities and we have secure communication infrastructure in place.  Due to high demand for our counsel and strategies, we may need a little extra time to get back to you.   Please be assured that we are as available to you as before via email, phone or video call. We are doing our best to support as quickly and efficiently as possible.  Please feel free to call or email our entire team and whoever has the quickest availability will respond.

We are all sending you our thoughts and positive energy as we work as a community to handle these tough issues and remain positive and united.  We look forward to connecting.

Thank you in advance for your patience.

Warmly,
Krista & Lisa

Legal Team emails:
Krista Mitzel:  kmitzel@mitzelgroup.com
Lisa Liu:  lisaliu@mitzelgroup.com
William Metke:  wmetke@mitzelgroup.com
Stephanie Margossian:  smargossian@mitzelgroup.com
Sara Shok:  sshok@mitzelgroup.com
Ernie Mejia:  emejia@mitzelgroup.com

Operations & Administrative:
Amber Gates:  agates@mitzelgroup.com
Christianne Bua:  cbua@mitzelgroup.com

EMPLOYER PAYS RECORD FINE FOR FRAUDULENT IMMIGRATION PRACTICES

Asplundh Tree Expert Co., a national tree-trimming company, will pay a record fine of $95 million after pleading guilty to a scheme involving immigration fraud.  The $95 million payment represents the largest fine ever levied in an immigration case.  In addition to the fine, Asplundh agreed to abide by an Administrative Compliance Agreement as set forth by U.S. Immigration and Customs Enforcement (ICE).

According to court documents, Asplundh hired and rehired employees throughout the United States after accepting identification and work authorization documents it knew to be false. Managers relied on word-of-mouth referrals rather than an established application process in order to avoid having to properly verify employees. An ICE investigation revealed that the company also decentralized its hiring so that higher-level management could remain willfully blind to the company’s unlawful hiring practices.

Since learning of the federal investigation in 2015, Asplundh states it has hired compliance specialists, implemented a photo ID system, investigated every complaint about unauthorized workers, and taken other steps to eliminate its past practices. These additional compliance measures, in addition to the company’s $95 million fine, are sure to weigh heavily on the company as a going concern.

The Asplundh fines and agreement serve as a reminder of all employers to review their hiring practices and remain vigilant against fraudulent employee documents.  Employers should be sure they are aware of I-9 employee verification requirements and ensure their managers and supervisors understand the risks involved in hiring employees without proper work authorization.  To discuss Form I-9 and employee verification requirements in more detail, or to request a Form I-9 training and audit with one of our immigration specialists, please contact The Mitzel Group.

 

 

SAN FRANCISCO PASSES “LACTATION IN THE WORKPLACE ORDINANCE”

On June 30, 2017, San Francisco enacted the “Lactation in the Workplace Ordinance” to take effect January 1, 2018.  The ordinance applies to all full- and part-time employees working within the geographic boundaries of San Francisco.

Current Requirements Under Federal and State Law
Current federal and California laws require employers to provide a reasonable amount of break time to accommodate employees as they express breast milk, along wih a location, other than a restroom, that is shielded from view and in close proximity to the workplace.

Expanded San Francisco Requirements
The San Francisco ordinance extends federal and California requirements by mandating that the lactation location be safe, clean, and free of toxic or hazardous materials, and contain a surface to place a breast pump, a place to sit, and access to electricity.  The room may be used for other purposes, but employers must notify employees that lactation takes precedence over other uses for the room.   Employers must also provide access to a refrigerator and sink with running water in close proximity to the employee’s worksite.

The San Francisco ordinance imposes an additional notice requirement. Employers must devise a written lactation accommodation policy that includes the following:

  • A statement of the employee’s right to request lactation accommodation;
  • A process for requesting an accommodation that requires the employers to engage in the interactive process and respond to any request in 5 business days;
  • A statement explaining that the employer must provide a written response to the employee if the employee’s accommodation cannot be met that explains the basis for denial of the request; and
  • Notice that retaliation in response to a request is prohibited.

Employers must keep a record of all employee requests for lactation accommodation for three years from the date of the request.

Exemption for Employers
Employers can claim an exemption from the San Francisco ordinance if compliance would pose an “undue hardship” to the employer, such as requiring significant expense, additional construction, or significantly diminishing the employer’s workspace.  Eligibility for this exemption takes into consideration the employer’s size, financial resources, and business structure.

San Francisco employers should be prepared to provide lactation accommodations beginning January 1, 2018.  Please contact your team at the Mitzel Group for additional information.

LABOR DEPARTMENT ANNOUNCES PLANS TO RESCIND TIP-POOLING RESTRICTIONS

On Friday, July 21, 2017, the U.S. Department of Labor announced plans to rescind the controversial tip-pooling restrictions imposed on employers in 2011.  The announcement has potential to significantly impact hospitality employers throughout California.

Background

Under the Fair Labor Standards Act, hospitality employers may pay wait staff a lower wage so long as they receive enough tips to bring their hourly rate to the $7.25 federal minimum wage.  While banned in California, this option, known as a “tip credit,” allows employers to pay wages as low as $2.13 per hour so long as the employee receives at least $5.12 in tips.  If the employee does not earn at least $7.25 after factoring tips, the employer must pay the difference; if there are more than enough tips, the employee keeps the excess.

2011 Tip-Pooling Restrictions

The current tip-pooling restrictions were enacted by the Obama administration in 2011.  The rules established that tips are the property of employees and cannot be distributed to other workers or by the employer, even if the employer does not take a tip credit and pays tipped employees the full minimum wage.  Several circuit courts  have struck down these restrictions, holding that they do not apply to employers who pay employees at least the $7.25 minimum wage.  Employers in these circuit jurisdictions have thus been permitted to retain employee tips and distribute them to back-of-house employees who do not otherwise receive tips.  Such tip-pooling arrangements are designed to make pay more equitable throughout a restaurant.

The Ninth Circuit, holding jurisdiction over California, has disagreed; hospitality employers throughout the state have thus remained subject to the tip-pooling restrictions and have had no control over employee tips.  In effect, back-of-house staff have been excluded from tip pooling arrangements.

Effect of the July 21, 2017 Announcement

The announcement by the U.S. Department of Labor on July 21, 2017 to rescind the tip-pooling restrictions thus is significant to California employers and others throughout the Ninth Circuit.  If the Department proceeds as planned, California hospitality employers may exercise control over employee tips and arrange tip pooling that benefits back-of-house staff.

Hospitality employers should understand that the announcement does not have any legal effect; the restrictions remain in place until further action is taken by the U.S. Department of Labor.  Nonetheless, given the split amongst circuit courts, employers should expect the Department to act quickly.

Mitzel Group attorneys will monitor developments in this regard and update employers of any further changes.  Please contact us with any questions.

U.S. CITIZENSHIP AND IMMIGRATION SERVICES ISSUES NEW FORM I-9

On Monday, July 17, 2017, U.S. Citizenship and Immigration Services (USCIS) issued a new Form I-9 and accompanying instructions.  The new form replaces the Form I-9 issued on November 14, 2016 and becomes mandatory for all employers on September 18, 2017. 

Employers should note that the fillable portions of the new form have not changed. Rather, the new form differs from the last version in regards to page 3, List C, setting forth documents that establish employment authorization.  The new form has added “Consular Report of Birth Abroad (Form FS-240)” as an additional acceptable document under List C.  All List C documents were thereafter renumbered except for the Social Security Card.

The form instructions have also changed the name of the Office of Special Counsel for Immigration-Related Unfair Employment Practices (“OSC”) to the “Immigrant and Employee Rights Section (IER).”  This agency investigates and prosecutes unfair documentary practices and retaliation that may occur during the I-9 completion process.  The agency renamed itself to avoid confusion with another federal government agency.

Employers should complete Form I-9 following the same rules and timelines as before.  For answers to additional questions, or to schedule an I-9 training with one of our immigration experts, please contact the Mitzel Group.

SAN FRANCISCO PASSES ORDINANCE BANNING SALARY HISTORY INQUIRIES

On July 21, 2017, San Francisco Mayor Ed Lee signed an ordinance banning employers from asking job applicants about their salary histories.  The new ordinance is scheduled to take effect on July 1, 2018.

The “Pay in Parity Ordinance” applies to all employers registered to do business in the city. It applies to applicants applying for jobs that will be performed in San Francisco and whose application, in whole or in part, will be solicited, received, processed or considered in the city.  “Applicants” include any individual who applies for temporary, seasonal, part-time work or for work through a temporary agency.

The ordinance prohibits employers from

  • Directly or indirectly inquiring about an applicant’s salary history
  • Considering or relying on an applicant’s salary history when making hiring decisions and salary offers
  • Refusing to hire or retaliating against an applicant for not disclosing his/her salary
  • Releasing the salary of any current or former employee to a prospective employer without the employee’s written authorization.

The ordinance does not prohibit an applicant from “voluntarily and without prompting” disclosing salary history. In such instances, an employer may consider salary information when making employment decisions (while also keeping in mind that, under California’s Equal Pay Act, salary history cannot be used as sole justification for pay differentials amongst genders or races for substantially similar work).

The ordinance is intended to narrow the wage gap between men and women by eliminating consideration of prior salaries that may reflect historical inequities.  In addition to prohibiting salary history questions, the ordinance also requires employers to post a notice advising employees of their rights.  Failure to abide by the ordinance will subject the employer to fines and other penalties.

The ordinance is part of a growing trend across the country and mirrors a current state proposal under consideration by the California legislature. Attorneys at the Mitzel Group will monitor any amendments to the ordinance and statewide trends.  We encourage you to contact us with any questions.

U.S. DEPARTMENT OF LABOR EXPECTED TO INCREASE INVESTIGATIONS RELATED TO H-1B AND H-2A VISA PROGRAMS

Following a recent announcement from the U.S. Department of Labor, investigations and audits of foreign worker programs such as H-1B and H-2A visas are likely to increase. The announcement states that the Department “will focus on preventing visa program abuse and take every available legal action against those who abuse these programs.”

Expected enforcement measures include:

  • Increased scrutiny by the Department’s Wage and Hour Division
  • Changes to the Labor Condition Application targeted at identifying fraud and abuse
  • Review of investigatory forms to better identify systematic violations and potential fraud
  • Increased coordination between the Employment and Training Division, the Wage and Hour Division, and the Office of the Solicitor to avoid duplication of efforts and maximize the efficiency of the Department’s activities regarding the visa programs.

To protect themselves in the event of an audit or investigation, employers should continue to keep well-organized and thorough records of all foreign worker applications and employment.  Mitzel Group attorneys are available to answer any questions employers have regarding foreign worker visas.

 

INCREASES TO MINIMUM WAGE FOR SAN FRANCISCO AND NEARBY CITIES EFFECTIVE 7/1/2017

The city of San Francisco and several nearby localities will face a scheduled minimum wage increase on July 1, 2017. Affected employers should ensure their payroll administrators are aware of these increases and amend their payroll schedules accordingly.  Employers should also amend any separate policies or pay scales, such as travel pay, that are based upon the minimum wage.

Below is a table of the expected minimum wage increases.  Please reach out to your Mitzel Group employment expert for additional information.

Locality Current Minimum Wage New Minimum Wage Effective July 1, 2017
San Francisco $13.00 $14.00
Berkeley $12.53 $13.75
Emeryville (employers with 56+ employees) $14.82 $15.20
Emeryville (employers with 55 or fewer employees) $13.00 $12.00
San Jose $10.50 $12.00