As businesses begin to open their doors again, there are many questions, including legal liability risks, that come with reopening in light of COVID-19. As of May 22, a large national firm has identified nearly 2,300 COVID-19 related claims, a clear sign this risk is not “hypothetical.”
So far, we have general guidelines from the federal government, but the states have been tasked with the final decision on reopening requirements and regulations, which makes it difficult because they will vary state-by-state.
In South Carolina, most restaurants, gyms, salons, and other close-contact businesses were allowed to reopen last week, but were given eight pages of suggested guidelines. In contrast, North Carolina allowed restaurants and personal care services, like hair salons, to reopen, but has provided a lengthy list of businesses that must remain closed, like bars, nightclubs, indoor fitness facilities, public playgrounds and indoor entertainment facilities, like movie theaters and bowling.
Further, NC requires that customer occupancy be limited to 50% of the fire capacity. Georgia has the most liberal position, as it allowed all businesses to reopen in late April.
In deciding to reopen, businesses must balance the need to generate revenue with the need to protect the health of employees and clients. If someone claims to have contracted COVID-19 due to acts or omissions of the business, employment claims, Workers’ Compensation claims, personal injury claims, and potentially wrongful death claims can be implicated.
The mitigation of this risk, based upon the differing regulations and guidelines, has to be determined on a state-by-state basis. “In South Carolina, a COVID-19 Workers’ Compensation claim is likely to be diverted to the Worker’s Compensation system, which can limit exposure for the business. This may not be true for other states,” says Casey Martens, an employment lawyer for the Kim & Lahey Law Firm.
“Failure to follow basic guidelines, such as the CDC’s, could result in negligence claims, such as the business breaching its duty to provide a safe work environment, or failure to provide proper equipment,” says Martens, “These risks are increased for businesses that rely upon close customer contact, like restaurants, salons, retail and other businesses with frequent customer interactions. The risk to the business is not just from the customer, but from the employee as well.”
There is also a risk associated with a business’s reputation and customer confidence in the business. “A business’s brand is one of its most valuable assets,” says Douglas Kim of the Kim & Lahey Law Firm. “For example, the most valuable brand in the United States is reported to be Apple at $316 billion, followed by Google at $313 billion.” So, understanding the significant risk of a negative news article reporting an employee or client contracting COVID-19 in your establishment should not be underestimated as businesses consider reopening.
Reopening is not a simple or risk-free endeavor: it requires weighing multiple factors on deciding when and how to reopen. Factors to consider include the applicable guidelines from federal, state, and local regulatory and health organizations (e.g. from the CDC to the Greenville City Council). Guidelines and safety protocols vary from business to business and state to state, and failure to follow them can significantly increase the risk to businesses. Business owners should also keep in mind that regulations, protocols and guidelines are constantly changing. It is important to be aware of all updates, and to communicate them to employees to give them the assurance and impression of compliance.
- First Response Training International is offering free training on everything from how a virus spreads to utilizing personal protective equipment (PPE) and even documentation and cleaning procedures.
- For updated information regarding reopening in South Carolina after COVID-19, visit the accelerateSC website.
- Download the South Carolina Chamber’s new guide for employers operating during the pandemic: Business in the Era of COVID-19: A Guide for Moving Your Business Forward.
US Senate Expected to Close the Deal Today
The SC Chamber of Commerce has released a statement informing business owners that US Senate Democrats and Republicans are close to a deal for additional funding for the Paycheck Protection Program (PPP). The package, expected to be passed today in the Senate by unanimous consent, will likely allocate close to $400 billion total including funding for:
- Economic Injury Disaster Loans (EIDL)
- Hospital assistance
- COVID-19 testing
- Approval of 1,661,367 loans
- Approval of $342.3 billion in loans (does not reflect the amount required for reimbursement to lenders per statute within the CARES Act.
- 4,975 lenders have processed approved loans
- Overall average loan size is $206,000
Top five sectors receiving loans:
- Construction (13.12%)
- Professional, Scientific, and Technical Services (12.65%)
- Manufacturing (11.96%)
- Health Care and Social Assistance (11.65%)
- Accommodation and Food Services (8.91%)
In South Carolina:
- Approval of 22,933 loans have been approved
- Approval of $3.81 billion in loans
We understand many of you are trying to figure out how to best protect your family and business during this difficult time. Many of you are now eligible for relief. We stand by our clients and are here to help you determine your best strategy.
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) is the largest federal relief package in history and provides financial support and tax incentives for small businesses.
What types of loans are available?
There is a forgiveness structure that can effectively turn a portion of the PPP loan into a grant and you may be eligible for a $10,000 emergency grant by applying for the EIDL.
It is important to determine which loan is right for your business. We can guide you through the process to help you achieve the best outcome.
We offer a consultation service that covers the following:
- Business Assessment
- Loan Strategy Discussion
- Review Required Document Checklist
- Business Documentation Review
- Loan Application ReviewSBA Emergency Loan Comparison-Final
Email Attorney Jason Rosen for more information: email@example.com.
- A small business with fewer than 500 employees
- A small business that otherwise meets the SBA’s size standard
- A 501(c)(3) with fewer than 500 employees
- An individual who operates as a sole proprietor
- An individual who operates as an independent contractor
- An individual who is self-employed who regularly carries on any trade or business
- A Tribal business concern that meets the SBA size standard
- A 501(c)(19) Veterans Organization that meets the SBA size standard
In addition, some special rules may make you eligible:
- If you are in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis
- If you are operating as a franchise or receive financial assistance from an approved Small Business Investment Company the normal affiliation rules do not apply
REMEMBER: The 500-employee threshold includes all employees: full-time, part-time, and any other status.
What documentation may you need?
While our firm is awaiting further guidance from the federal government regarding the loan application process, collecting the documents below is a good place to start. Insufficient documentation could delay the loan application. This list may change as more information becomes available.
- 2019 IRS Quarterly 940, 941 or 944 payroll tax reports
- Payroll reports for a twelve-month period (ending on your most recent payroll date), which will show the following information:
Gross wages for each employee, including officer(s) if paid W-2 wages.
Paid time off for each employee
Vacation pay for each employee
Family medical leave pay for each employee
State and local taxes assessed on an employee’s compensation
- 1099s for independent contractors for 2019
- Documentation showing total of all health insurance premiums paid by the company owner(s) under a group health plan. Include all employees and the company owners.
- Document the sum of all retirement plan funding that was paid by the company owner(s) (do not include funding that came from employees out of their paycheck deferrals). Include all employees and the company owners. Also include 401K plans, Simple IRA, SEP IRA’s.
- Company bylaws or operating agreement
Temporary and permanent layoff and termination decisions are a difficult reality for many in the business community now. State agencies and the federal government are adjusting employment laws in response to the COVID-19 pandemic. If layoffs and terminations are your next moves, be sure to consider new laws that might affect those decisions.
Employers Allowed to File Unemployment Claims
The SC Department of Employment and Workforce is allowing employers who have to temporarily lay off workers to file claims for unemployment insurance benefits on their workers’ behalves, for up to six weeks. Doing this serves two purposes: (1) it exempts your employees from SCDEW’s typical work search requirement during the six weeks; and (2) your workers will be ready to get right back to work once you reopen for business. The claim must be submitted after the week of layoff is over, but within 14 days of the claim week ending date. Applications are available on SCDEW’s website.
New Federal Leave Laws In Effect
The “Families First Coronavirus Response Act” (FFCRA”) went into effect April 1, 2020, and effects many employees’ rights to leave. At bottom, the FFCRA requires covered employers to grant two weeks of paid sick leave to qualifying employees, and potentially an additional ten weeks of paid leave (the first ten days of which is unpaid) for employees caring for minor children whose schools or childcare facilities/ caregivers are closed or unavailable due to COVID-19. Whether your business qualifies as a “covered employer,” and whether specific employees qualify for the Act’s relief are fact-specific. As such, you should consult with an employment attorney about how the FFCRA may be implicated in your termination/ lay-off decisions.
We’re happy to help ease your burden during this difficult time. If you have questions about how these new laws may affect your business and your decisions about employees, please contact Attorney Casey Martens at firstname.lastname@example.org.
The United States Patent and Trademark Office (USPTO) issued a notice on March 16th to offer relief for certain inventors and entrepreneurs who were affected by the Coronavirus outbreak. The notice states the USPTO “considers the effects of the Coronavirus outbreak that began in approximately January 2020, to be an extraordinary situation within the meaning of 37 CPR 1.183 and 37 CPR 2.146 for affected patent and trademark applicants, patentees, reexamination parties, and trademark owners.”
Patent applicants will be able to file a petition to revive and the PTO will waive the fee for those who were unable to “timely reply to an Office communication due to the effects of the coronavirus outbreak, which resulted in the application being held abandoned or the reexamination prosecution terminated or limited.”
The petition to revive must include a copy of the notice and a statement that “the delay in filing the reply required to the outstanding Office communication was because the practitioner, applicant, or at least one inventor, was personally affected by the Coronavirus outbreak such that they were unable to file a timely reply.” The petition must be filed no later than six months after the date the application became abandoned or the reexamination prosecution was terminated or limited in order to be entitled to a waiver of the petition fee under 37 CPR 1. l 7(m).
The USPTO is also waiving fees for trademark applications and registrations that were abandoned or canceled/expired due to inability to timely respond to a trademark-related Office communication as a result of the effects of the Coronavirus outbreak, however, the petition must be filed no later than two months of the issue date of the notice of abandonment or cancellation. Download the full notice: coronavirus_relief_ognotice_031620201.
Questions or concerns about your Patents or Trademarks? Call us at 864-973-6688 for a consultation.