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As this relentlessly awful year mercifully draws to a close, a light at the end of our pandemic tunnel is rapidly approaching. COVID-19 vaccines are poised for approval, and it is expected that distribution will begin in earnest shortly. But no matter how much and how confidently the FDA and other health experts proclaim these vaccines to be safe and effective, there are large numbers of Americans who say they won’t get the shot when it becomes available. The most recent Gallup poll found that only 63 percent of Americans say they are willing to be inoculated against the disease. Many of those who don’t want to get vaccinated will soon find out that they work for an employer who feels differently. Those employers may also tell them that they either need to get the vaccine or need to find a new job. And, in most cases, employers may be well within their rights to terminate employees who refuse to take the COVID-19 vaccine. Mandatory Vaccinations Are Not New Companies that have spent the better part of the year – and lots of money - trying to keep their workplaces COVID-free see the vaccine as the apex of those efforts. With a fully vaccinated workforce, business owners can operate without disruption and provide employees, customers, clients, and patients with confidence and peace of mind. But all of those benefits of the vaccine only accrue to fully vaccinated workforces. So, many companies may mandate that employees get their shot as a condition of continued employment. By doing so, they are following a legally sound path that predates the current pandemic. Well before anyone had heard of coronavirus, plenty of employers, primarily in the health care sector, required employees to get the flu vaccine and vaccinations against other infectious diseases. Most public school districts also require proof of vaccinations before a student can enroll and attend classes. Since most employees in Illinois work on an “at-will” basis, they can face termination for almost any reason not expressly prohibited by federal, state, or local laws. Generally, no law stands in the way of an employer requiring the COVID-19 vaccine for its workers. ADA and Religious Exceptions However, employers who make vaccines mandatory need to be mindful that employees with legitimate health or religious concerns about the vaccine may be protected from termination and other adverse employment actions if they refuse the shot. But these exceptions don’t necessarily apply just because someone doesn’t believe in vaccines generally (“anti-vaxers”) or thinks that forcing them to get vaccination is an infringement on their liberties. Employees who have a disability recognized under the Americans with Disabilities Act (ADA) that prevents them from taking the coronavirus vaccine cannot be forced to get the vaccine, so long as their exemption does not impose an “undue hardship” on the employer. Such disabilities in this context may include a compromised immune system or an allergy to an ingredient in the vaccine. While there has been no definitive guidance on the subject, one could credibly argue that an employee’s refusal to get vaccinated is an “undue hardship” if it places the health and safety of other employees and visitors at increase risk of infection. Even in such cases, however, an employer may need to make a “reasonable accommodation” for the employee, such as allowing them to work from home. Similarly, the anti-discrimination provisions of Title VII of the Civil Rights Act of 1964 may protect a worker if their “sincerely-held religious beliefs” preclude them from getting a vaccination. Such beliefs do not include political or personal views. The burden is on the employee to demonstrate the legitimacy of their religious objections to the vaccine. More Than Legal Issues To Consider Even when an employer is within their legal rights to require employees to get the COVID-19 vaccine, other considerations may weigh against such a mandate. For example, they may need protection against an employee who has an adverse reaction, even if they signed a waiver upon receiving the shot. A vaccination requirement may also get an adverse reaction from employees generally as well as the general public if it seems heavy-handed and overreaching. Of course, those that decide against a mandate face risks if someone does contract the coronavirus in the workplace and sues. Please Contact Grogan Hesse & Uditsky With All Of Your COVID-Related Employment Questions If you have questions or concerns about how to handle vaccinations or other employment issues related to COVID-19, please call us at (630) 833-5533 or contact us online to arrange for a consultation.
The Paycheck Protection Program (PPP) is back , offering a second round of loan forgiveness to new borrowers and qualified second-time PPP borrowers. The second round of PPP loans has earmarked up to $284 billion to support business owners' payroll costs and other eligible expenses through March 31, 2021. Loans will be available to first-time participants on Monday, January 11, and existing PPP participants on Wednesday, January 13. First Draw PPP Loan Eligibility Borrowers that did not participate in the first round are generally eligible for a First Draw PPP Loan if they were in operation on February 15, 2020, and fall into one of the following categories: Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans. Eligible self-employed individuals (including sole proprietors and independent contractors). Non-profit organizations, including churches. Accommodation and food services operations with no more than 500 employees per location. Sec. 501(c)(6) business leagues with no more than 300 employees that do not receive more than 15% of its income from lobbying. Qualifying news organizations with 500 or fewer employees per location. Second Draw PPP Loan Eligibility Existing PPP participants are generally eligible for a Second Draw PPP Loan if the borrower: Used or will have used its First Draw PPP Loan as authorized. Has no more than 300 employees. Can prove it has suffered at least a 25% reduction in gross income between the same quarters in 2019 and 2020. Our team is committed to monitoring new developments with the PPP and providing you with the information you need. It is essential that your small business consults with knowledgeable corporate attorneys , financial advisors, and accountants on your PPP eligibility and forgiveness applications. If you have any questions about the new eligibility requirements or any other issues involving the PPP, please feel free to call or email us.
Many businesses that received Paycheck Protection Program (“PPP”) funds are coming to the end of their respective eight-week time periods (“Expenditure Period”) during which they must use the PPP funds to obtain forgiveness under the CARES Act. Unfortunately, many of these businesses have found it difficult to reopen and remain fully operational throughout the Expenditure Period and consequently to meet spending thresholds necessary to obtain full forgiveness. Luckily for these businesses, some much needed flexibility is on its way. Paycheck Protection Program Flexibility Act On June 5th, the Paycheck Protection Program Flexibility Act (“PPPFA”) was signed into law. The PPPFA made the following changes relevant to PPP loan forgiveness: Extends the Expenditure Period from eight weeks to the earlier of twenty-four weeks from the date of the loan origination or December 31, 2020. Reduces the required payroll spending amount to a minimum of 60% on payroll instead of the current 75% minimum requirement. This would allow businesses to use the remaining 40% of the PPP funds on rent and other operational items as needed. Extends the deadline for workers to be able to be rehired to December 31, 2020 instead of the current cutoff of June 30, 2020. Extends the PPP loan to a five-year term instead of the current two-year term. As any amendments governing the use and repayment of PPP loans may be vital to a small business’ ability to continue to operate and successfully plan for the future, our team will continue to keep you up to date on the on-going developments. As always, it is important to consult with informed attorneys, financial advisors, bankers and accountants on how best to use your PPP funds. Should you have any questions, don’t hesitate to call or email us.
Yesterday, in an update to its PPP FAQ, the SBA clarified its review of the “good faith” certification required in applying for PPP loans. As PPP applicants are aware, to apply for PPP loans, an applicant must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” For most applicants, COVID-19’s ramifications made this statement a no-brainer. But many left wondering how the SBA would police this clause. After all, borrowers are relying on PPP loan forgiveness if they properly use their loan proceeds. There is concern that the SBA’s review of the good faith certification could thwart borrowers’ forgiveness goal even if they used their loans for payroll and other areas acceptable for forgiveness. The SBA’s announcement gave reason to alleviate that concern for some borrowers. In Question 46 of its PPP FAQ (found here in its entirety), the SBA states that borrowers with an original principal amount of less than $2 million will be deemed to have made the required good faith certification. In the legal world, statements deemed to be true are facts for all intents and purposes. This clarification likely means that the SBA won’t even spend the time reviewing good faith certifications for loans under $2 million. Keep in mind, however, that the $2 million threshold applies to applicants taken together with their affiliates. If your total loan amount falls under $2 million, then you’ll have the benefit of this safe harbor. For borrowers with loans greater than $2 million, you won’t have this safe harbor but that doesn’t mean you couldn’t have made a good faith certification. Your cases will be reviewed under their individual circumstances. In effect, today’s announcement changed little in advising how the SBA will review loans over $2 million. There remains uncertainty as to what the audit process for this good faith certification will look like and whether borrowers will have an opportunity to appeal, but if your loan is under $2 million you can breathe a small sigh of relief in knowing the certification you made in your application won’t be scrutinized. If you have any questions on this latest announcement or just want guidance on the PPP in general, give us a call. We’ll keep you updated as more clarification comes out.
If my tenant won’t pay, what are my options? Prior to COVID-19 pandemic, landlords understood how to handle a defaulting tenant. But the legal landscape (along with everything else) is now in a constant state of flux, with legislators navigating through issues concerning health, economy and justice. In this article I’ll offer some clarification on landlord-tenant laws in light of the pandemic, focusing on commercial lease agreements. A theme in the varying messages from our federal and state governments is that creditors need to relax when it comes to debt repayments. That sentiment carried into Illinois’ and other states’ messages addressing rent. Governor Pritzker, for instance, ceased eviction proceedings for residential properties. Tenants of the Chicago Housing Authority are relieved of their rent payments, at least until the end of the month. And Chicago’s mayor, Lori Lightfoot, urged private landlords to offer the same reprieve. Yet commercial properties are conspicuously absent from the recent press. Does that mean that commercial landlords can evict a defaulting tenant? No, at least not in Cook County. Legal eviction relies on an operational court system. Due to the pandemic, courts are closed apart from emergency motions. And evictions fall short of meeting that “emergency” threshold. The chief judge of Cook County has a moratorium on evictions, and the Cook County sheriff won’t enforce eviction orders. Neither the chief judge nor sheriff distinguished between residential and commercial leases when making their announcements, so the effect is that all evictions must cease for a while. Note, however, that ceasing evictions does not equate to ceasing rental obligations. Commercial leases are akin to business transactions between sophisticated parties. They are founded in contract law, giving the commercial lease agreement more control over resolving disputes than residential leases which have statutory and other equitable protections for tenants. Therefore, commercial landlords still have the right to enforce the lease obligations despite the pandemic. Although the courts are closed, the case filing system is not. Commercial landlords can still file suit for breach of lease. Those lawsuits can be served on tenants through special process servers. Once served, tenants must still respond to the complaint within the statutory timelines. Filing and serving a lawsuit can afford the commercial landlord some leverage to negotiate now, or it can be queued for when the courts reopen if negotiations fail. The decision to sue should never be taken lightly, and should be especially scrutinized given the hardships many are facing with the pandemic. Negotiation between landlord and tenant should be the first option in resolving commercial lease disputes. But if those talks don’t pan out, litigation remains a viable option. Landlords must still follow their contract terms when initiating dispute resolution. If properly handled, commercial landlords can seek monetary damages (which typically include their attorneys’ fees) and, eventually, an eviction. If you have questions about handling a dispute with a commercial tenant or enforcing obligations under a commercial lease, talk to me or one of the experienced attorneys at GHU.
The Coronavirus Aid, Relief, and Economic Relief (“CARES”) Act was passed on March 25, 2020 in order to provide, amongst other things, much needed and immediate assistance to businesses impacted by the COVID-19 pandemic. Under the CARES Act, the Small Business Administration (“SBA”) is authorized to temporarily guarantee loans under a new SBA (7(a) loan program, otherwise known as the Paycheck Protection Program (“PPP”). If used correctly and in accordance with the CARES Act guidelines, these PPP loans are potentially eligible for complete and tax-free forgiveness. PPP loan amounts are forgivable to the extent that such funds are used to pay forgivable expenses as delineated in the CARES Act (“Qualified Expenses”) within eight weeks after the PPP loan is disbursed (“Expenditure Period”). Any of the PPP loan funds that are not used on Qualified Expenses during the Expenditure Period must be paid back within two years. Please note that the CARES Act provides that PPP funds will be forgiven on a covered loan in an amount equal to the sum of the payroll costs incurred and payments made during the Expenditure Period. At this time it is not known whether the costs and payments eligible for forgiveness include funds paid during the Expenditure Period or funds that were both paid and incurred during the Expenditure Period. Accordingly, until the SBA provides more definitive guidance on this, borrowers should only use PPP funds for the payment of expenses incurred and paid during the Expenditure Period. Now that the $349 billion in funds from the initial round of the PPP have been exhausted, and businesses await the second round of PPP funding (approximately $310 billion), what can PPP borrowers expect to be forgiven as Qualified Expenses? Here are some of the most common questions, and our answers, regarding the PPP loans: 1) Rent Payments a. Any rent payments under a lease that is in effect before February 15, 2020 will qualify as a Qualified Expense. b. There is currently no guidance whether rent prepayments, past-due rent payments or late fees under a lease are Qualified Expenses. 2) Utilities a. Utility payments are Qualified Expenses and include electricity, gas, and water. b. Internet, telephone and transportation utilities are also most likely covered as Qualified Expenses, however, further SBA guidance is needed on these items in order to know for sure. 3) Mortgage Payments a. Principal payments or prepayments are not Qualified Expenses. b. Any mortgage interest incurred on or before February 15, 2020 is a Qualified Expense. 4) How Much of the PPP Funds Need to be Spent on Payroll? a. At least 75% of the PPP funds need to be spent on payroll costs. b. Payroll costs include the following: (a) salaries, commission, wages or other similar compensation up to an annualized amount of $100,000 per employee; (b) tips; (c) paid vacation, sick, medical and family leave; (d) severance pay; (e) group health insurance expenses; (f) state or local payroll tax; or (g) retirement benefits. c. Payroll costs do not include the following: (a) payments for emergency paid sick leave or expanded family and medical leaves; or (b) federal pay roll tax expenses. 5) Are Employee Bonuses and Raises Included as Qualified Expenses? a. It is not entirely clear whether raises or bonuses paid to employees will be considered Qualified Expenses. Any borrower using PPP funds to pay employees bonuses or raises should only do so as the borrower would otherwise do in the ordinary course of its business. Additionally, it is important to keep in mind the $100,000 compensation threshold when giving bonuses and raises. 6) Are Compensation Payments to Shareholders, Members or Other Owners of Borrowers Covered as Qualified Expenses? a. Distributions to shareholders, members or other owners of borrowers that are not payments for work performed by such shareholders, members or other owners would not be considered a Qualified Expense. b. Payments to shareholders, members or other owners who perform work for the borrower may be included in payroll costs as a Qualified Expense. 7) What Will Reduce PPP Loan Forgiveness Amount? a. The PPP loan forgiveness amount will be reduced by (a) the reduction in the borrower’s average number of full-time equivalent employees (“Employees”), and (b) reduction in Employees’ salaries. b. The PPP will compare the borrower’s average number of Employees during the Expenditure Period against the number of Employees during borrower’s choice of either the period from (i) February 15, 2019 until June 30, 2019; or (ii) January 1, 2020 until February 29, 2020. If there is a decrease in the number of borrower’s Employee’s during the Expenditure Period compared to the applicable base period, the PPP loan forgiveness amount will be reduced in proportion to such decrease. c. The PPP loan forgiveness amount will be reduced dollar for dollar for a reduction of more than 25% in the total compensation of any employee during the Expenditure Period as compared to the most recent quarter that the employee was employed prior to the Expenditure Period. Please note that this will not apply to employees who made more than $100,000 in 2019. 8) Can Rehiring Employees Eliminate Loan Forgiveness Reduction Amounts? a. Yes. If a borrower’s reduction in Employees occurred between February 15, 2020 and April 26, 2020 and the borrower eliminates that reduction in Employees by June 30, 2020 (either by rehiring Employees or hiring new Employees), then the Employee reduction will not be used in determining the loan forgiveness amount. 9) Can I Restore an Employee’s Salary to Eliminate Loan Forgiveness Reduction Amounts? a. Yes. If an employee’s total compensation is reduced more than 25% but such employee’s salary reduction is eliminated by June 30, 2020, then the salary reduction will not be used in determining the loan forgiveness amount. While we await further guidance from the SBA on what will and will not be forgiven under the PPP loans, it is important to be aware of what you are using your PPP loan funds for and why. As the PPP loan forgiveness rules can be complex and vague, it is important to consult with informed attorneys, financial advisors, bankers and accountants on how best to proceed. Our team is keeping up to date on these on-going developments and will be sure to advise you accordingly. Should you have any questions, don’t hesitate to call or email us.
