March, 2020 | Fraser Blog

Act Fast For Emergency Small Business Relief From the MEDC

Time is of the essence for Michigan small businesses affected by COVID-19 to apply for loans and grants being made available through the Michigan Economic Development Corporation (MEDC).

As part of the state’s economic response to the COVID-19 crisis, the MEDC made available $20 million in small business loans and grants through its State of Michigan Small Business Relief Program. The Program is equally divided between a $10 million grant program and a $10 million loan facility.

For the grant program, the MEDC has partnered with Local Economic Development Organizations (LEDO) in 15 regions of the state to administer the grants. In the greater Lansing area the LEDO is the Lansing Economic Area Partnership (LEAP).

LEAP has been allocated $600,000 of grant funds and will be making sixty $10,000 grants to Greater Lansing’s small businesses affected by the coronavirus outbreak. Eligible businesses are those with fewer than 50 employees. Grant application forms and processes for selection and administration can be found on LEAP’s website.

Time is of the essence as the grant application period ends at 11:59 p.m. on Tuesday, March 31, 2020. Awardees are expected to be notified on April 6 with the money delivered on April 8.

The same application process for the grant program is being used for the $10 million small business loan program. The loan applications and requests will be referred by the LEDO – LEAP in the greater Lansing area to the MEDC, which will take loan requests to lender partners or to the Michigan Strategic Fund.

Interested small businesses are urged to visit the Lansing Economic Area Partnership (LEAP) website at http://www.purelansing.com/businessrelief for more information and applications.

We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.

FFCRA: DOL Latest Guidance Alters Action Plans of Many Employers

After the passage of the Families First Coronavirus Response Act (FFCRA) and the initial round of Department of Labor (DOL) guidance issued last week, employers began developing action plans on how to deal with their workforce amid a continually changing landscape, including numerous State orders requiring schools and businesses to close and for individuals to “stay at home.”

The Emergency FMLA Expansion Act and the Emergency Paid Sick Leave Act (Acts) are being carefully considered, and employers are preparing to offer these benefits to employees in numerous situations. For more detailed information on these Acts, which are set forth under the FFCRA, please see our previous Client Alert.

However, late last week, the DOL updated its initial list of 14 FAQs with an additional 23 new questions and answers. The updated DOL guidance can be found here: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions. Moreover, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on Friday which modifies certain provisions of the FFCRA. These matters are set forth below.

EPSLA: Worksites Closing Due to Shelter In Place Orders Will Not Qualify for Paid Sick Leave

Under the Emergency Paid Sick Leave Act (EPSLA), one of the reasons an employer must provide employees with paid sick time is if they are unable to work (or telework) due to a need for leave because:

The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;

With respect to recent “shelter in place” or “stay at home” orders issued by certain States, employers were preparing to offer leave when sending their employees home. However, late last week in its updated list of FAQs, the DOL clarified that if an employer closes its worksite and/or sends employees home for lack of work, even if due to State directives, paid sick leave will not be warranted.

Questions and Answers #23 and 24 state that if an employer closes its worksite, either before or after April 1, 2020 when the Acts become effective, leave under the Acts is not warranted during the period of closure. Significantly, it goes on to state:

This is true whether your employer closes your worksite for lack of business or because it is required to close pursuant to a Federal, State, or local directive.

Instead, employees are encouraged to contact their State workforce agency or unemployment insurance office to answer questions about eligibility.

Question and Answer #25 also states that paid sick leave or expanded family and medical leave already being provided will stop as of the date the employer closes its worksite.

Moreover, the DOL guidance addresses circumstances of employers who remain open but furlough employees due to lack of work. That also does not qualify under the Acts. See Question and Answer #26:

If my employer is open, but furloughs me on or after April 1, 2020 (the effective date of the FFCRA), can I receive paid sick leave or expanded family and medical leave?

No. If your employer furloughs you because it does not have enough work or business for you, you are not entitled to then take paid sick leave or expanded family and medical leave. However, you may be eligible for unemployment insurance benefits. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.

Question and Answer #27 addresses what happens if a worksite closes and then later reopens. Leave may only be available when the worksite is open.

Question and Answer #28 discusses availability of leave for reduced hours. Again, not having enough work for an employee to do does not qualify; however, an employee who is unable to work his/her full schedule due to a COVID-19 qualifying reasons is entitled to leave under the Acts.

Employees Must be Unable to Conduct Work that Employers Have for Them To Do

The DOL guidance states that the employer must have work for employees to do, and the employee must be unable to work or telework for one of the COVID-19 specified reasons to be entitled to leave under the Acts. See Question and Answer #18:

What does it mean to be unable to work, including telework for COVID-19 related reasons?

You are unable to work if your employer has work for you and one of the COVID-19 qualifying reasons set forth in the FFCRA prevents you from being able to perform that work, either under normal circumstances at your normal worksite or by means of telework.

If you and your employer agree that you will work your normal number of hours, but outside of your normally scheduled hours (for instance early in the morning or late at night), then you are able to work and leave is not necessary unless a COVID-19 qualifying reason prevents you from working that schedule.

Documentation Requirements for Leave Taken Under the Acts

While the Acts did not list any documentation or substantiation requirements for entitled leaves, the DOL provides guidance in Question and Answer #15:

What records do I need to keep when my employee takes paid sick leave or expanded family and medical leave?

If one of your employees takes paid sick leave under the Emergency Paid Sick Leave Act, you must require your employee to provide you with appropriate documentation in support of the reason for the leave, including: the employee’s name, qualifying reason for requesting leave, statement that the employee is unable to work, including telework, for that reason, and the date(s) for which leave is requested. Documentation of the reason for the leave will also be necessary, such as the source of any quarantine or isolation order, or the name of the health care provider who has advised you to self-quarantine. For example, this documentation may include a copy of the Federal, State or local quarantine or isolation order related to COVID-19 applicable to the employee or written documentation by a health care provider advising the employee to self-quarantine due to concerns related to COVID-19. If you intend to claim a tax credit under the FFCRA for your payment of the sick leave wages, you should retain this documentation in your records. You should consult Internal Revenue Service (IRS) applicable forms, instructions, and information for the procedures that must be followed to claim a tax credit, including any needed substantiation to be retained to support the credit.

If one of your employees takes expanded family and medical leave to care for his or her child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19, under the Emergency Family and Medical Leave Expansion Act, you must require your employee to provide you with appropriate documentation in support of such leave, just as you would for conventional FMLA leave requests. For example, this could include a notice that has been posted on a government, school, or day care website, or published in a newspaper, or an email from an employee or official of the school, place of care, or child care provider. This requirement also applies when the first two weeks of unpaid leave run concurrently with paid sick leave taken for the same reason. If you intend to claim a tax credit under the FFCRA for the expanded family and medical leave, you should retain this documentation in your records. You should consult IRS applicable forms, instructions, and information for the procedures that must be followed to claim a tax credit, including any needed substantiation to be retained to support the credit.

Question and Answer #16 sets forth the records that an employee must provide an employer.

Other DOL FAQ Highlights

The updated FAQs address numerous other circumstances, including:

Intermittent leaves under the Acts while teleworking
Intermittent leaves under the Acts while working at employer’s worksite
Continuation of group health plan coverage
Interaction of employer paid time off policies with leave rights under the Acts
Unavailability of tax credits for amounts employers pay in excess of the Acts’ requirements
Whether leaves under the Acts can be taken in conjunction with unemployment insurance
How employers who are part of a multiemployer collective bargaining agreement can satisfy their obligations under the Acts

Again, for the full DOL questions and answers, please see: https://www.dol.gov/agencies/whd/pandemic/ffcra-questions.

How the CARES Act Affects Leave Entitlements under the FFCRA

The FFCRA was also modified slightly by the CARES Act, which was enacted on Friday, March 27, 2020. Changes include:

Under the FMLA Expansion Act, employees who have been employed for at least 30 calendar days by the employer are eligible for the leave if they have a qualifying need related to a public health emergency. The CARES Act adds a provision for rehired employees, including in the definition of “eligible employee” the following:
- an employee who was laid off by that employer not earlier than March 1, 2020, had worked for the employer for not less than 30 of the last 60 calendar days prior to the employee’s layoff, and was rehired by the employer.
With respect to tax credits under the FMLA Expansion Act and the Emergency Paid Sick Leave Act, the CARES Act amends the FFCRA to provide for advancing credits, up to the amount of the tax credit allowed, calculated through the end of the most recent payroll period in the quarter. Forms and instructions regarding this advanced credit will be forthcoming.

FFCRA Poster Reminder

The DOL also updated its questions and answers regarding the FFCRA poster requirements. Specifically, it added guidance clarifying that the notice must be “posted” by April 1, 2020. See https://www.dol.gov/agencies/whd/pandemic/ffcra-poster-questions.

Again, the poster can be found here: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf.

As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

CARES Act Relaxes Rules Regarding 2020 Retirement Plan Distributions

On Friday, the House of Representatives passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) in dramatic fashion, with several members racing back to Washington after Representative Thomas Massie threatened to demand a recorded vote. The legislation (which had been previously passed on a unanimous vote by the Senate earlier in the week) was signed by President Trump shortly thereafter.

The CARES Act is the third extensive—roughly $2 trillion dollar—emergency relief package with numerous components designed to mitigate the rapid and sudden fallout from the COVID-19 pandemic. Among its 880 pages are a few changes that loosen the requirements applicable to distributions from retirement plans for 2020:

Retirement plans may permit individuals to take a “coronavirus-related distribution” of up to $100,000 in 2020, which will be exempt from the 10% early distribution penalty. In addition, individuals taking such distributions may pay tax on them ratably over three years and may repay them within a three-year period. Individuals will be eligible for such a distribution if they (or their spouse or dependent) test positive, or if they experience adverse financial consequences as a result of COVID-19 due to being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care, or closing or reducing hours of a business owned or operated by the individual (a “qualified individual”). A plan administrator may rely on a participant’s certification that he or she is a qualified individual. Plans that may offer these distributions include qualified defined contribution plans, 403(b) plans, governmental 457(b) plans, and IRAs. Although more clarification would be welcome, these rules are structured similarly to the new “qualified birth or adoption” rules under the recently-passed SECURE Act. As such, the availability of these distributions appears to be an optional plan provision.
With respect to participant loans taken within 180 days following passage of the CARES Act, the limits on permissible plan loans has been increased from $50,000 to $100,000 and from half of the participant’s vested account balance to the entire vested account balance. In addition, with respect to any qualified individual (as defined in the previous bullet) with an outstanding loan, any payments due during the remainder of 2020 are delayed by one year. It is our understanding that offering loans up to the increased limits is optional (as is offering loans at all); whether plan sponsors will be required to offer delayed repayment to affected individuals is less clear, but this aspect is likely mandatory.
Required minimum distributions (RMDs) are waived for 2020. This includes individuals who attained age 70½ in 2019 and did not take their first RMD prior to January 1, 2020. Impacted plans again include qualified defined contribution plans, 403(b) plans, governmental 457(b) plans, and IRAs. Though more guidance is needed on implementation, we expect this temporary waiver to operate similarly to the 2009 waiver under WRERA. If that is the case, plan sponsors would be able to determine whether they would offer the 2020 RMD waiver, and if so, what the default will be (i.e., to receive or not receive an RMD).

The CARES Act includes a delayed amendment deadline for the above changes set at the last day of the plan year beginning on or after January 1, 2022 (i.e., December 31, 2022 for calendar year plans). Governmental plans have two additional years.

Along with the above changes, the CARES Act contains some funding relief for sponsors of qualified defined benefit plans. Specifically, the Act delays minimum funding contributions otherwise due during calendar year 2020 until January 1, 2021 (though delayed contributions will be subject to an interest adjustment). In addition, the CARES Act permits plan sponsors to elect to treat the AFTAP for the last plan year ending before January 1, 2020 as the AFTAP for plan years which include calendar year 2020. This will help many plans avoid funding-based benefit limitations (including the inability to pay lump sums) that might otherwise come into play.
Finally, the CARES Act provides authority for the DOL to delay ERISA filing deadlines due to public health emergencies. Though the Act itself does not provide any delay, we anticipate that forthcoming DOL guidance will do so.

If you have any questions on how the CARES Act (or any other COVID-19 developments) may impact your organization’s retirement plans, please contact Brian Gallagher at bgallagher@fraserlawfirm.com.

Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.

Pharmacists Allowed to Dispense Emergency Prescription Refills Under EO 2020-25

On March 25, 2020, amid the Coronavirus (COVID-19) outbreak, Governor Whitmer signed Executive Order 2020-25 to address the critical need to pharmacy services. This Executive Order gave pharmacists the authority to dispense up to a sixty (60) day supply of emergency prescription refills to patients. This Executive Order, which took effect immediately, only applies to non-controlled substances and can only be dispensed if, “in the pharmacist’s professional judgment, failure to refill the prescription might interrupt the patient’s ongoing care and have a significant adverse effect on the patient’s well-being.” When dispensing this medication, your pharmacist must tell you that he or she is doing so pursuant to this Executive Order.

This Executive Order also requires insurers to cover these emergency prescription refills and gives pharmacists the discretion to substitute therapeutically equivalent medications without prescriber approval if there are critical shortages. The pharmacist must inform the patient of any substitution.

Pharmacists are also allowed to dispense COVID-19 treatments according to government-related protocols established by the Center for Disease Control and Prevention, National Institute of Health, or Department of Health and Human Services under this Executive Order.

Fraser Trebilcock Attorney Amanda S. Wolanin specializes her practice in business and tax law, bankruptcy, family law, estate planning, litigation, and real estate law. You can reach her at (517) 377-0897, or at awolanin@fraserlawfirm.com.

Michigan Supreme Court Extends Civil and Probate Filing Deadlines Due to COVID-19

On Monday, March 23, 2020, the Michigan Supreme Court issued Administrative Order 2020-3, which extended “all deadlines pertaining to case initiation and the filing of initial responsive pleadings in civil and probate matters during the state of emergency declared by the Governor related to COVID-19.”

For all deadlines that are applicable to the commencement of a civil or probate case, “including but not limited to the deadline for the initial filing of a pleading under MCR 2.110 or a motion raising a defense or an objection to an initial pleading under MCR 2.116, and any statutory prerequisites to the filing of such a pleading or motion, any day that falls during the state of emergency declared by the Governor related to COVID-19 is not included for purposes of MCR 1.108(1).” Since this Order focuses on extending deadlines for “initial” filings, scheduling orders for the vast majority of cases will not be altered.

In sum, this Administrative Order extends all deadlines pertaining to case initiation and the filing of initial responsive pleadings in civil and probate matters during the state of emergency declared by Governor Gretchen Whitmer on March 10, 2020 related to COVID-19. Again, this Order will likely only have an impact on newer cases where initial pleadings still need to be filed. Cases with a scheduling order in place will likely proceed according to the deadlines already imposed.

This Order does not preclude a court from ordering an expedited response to a complaint or motion in order to hear and resolve an emergency matter that requires immediate attention. This Order also does not prohibit or restrict litigants from initiating a proceeding whenever the litigant so chooses.

In addition, this Order requires that courts have a system in place to allow filings without face-to-face contact to ensure that routine matters can continue via electronic or other means without any unnecessary delay.

As always, the attorneys at Fraser Trebilcock remain ready and able to serve. Please contact your legal counsel if you have questions regarding the status of your case or if you would like further information describing how deadlines may be effected by this Order.

CARES Act Payroll/Loan Program Preview

This summary discusses some key provisions of the Senate Bill version of the “CARES Act,” S.B. 3548, as applicable to employers and small businesses. In many ways this legislative package, if passed, will supersede or provide assistance to employers well exceeding prior state and federal enactments.

This blog is intended to provide generalized information for planning purposes rather than details of the implementation of the legislatively-created benefits, many of which must necessarily remain to be developed at the state and federal levels.

$350 Billion Loan Program

The core of the CARES legislative program, if passed more or less in its current state, is a $350 billion loan program intended to encourage small businesses not to lay off their employees, to preserve consumer demand and allow those businesses better to “snap back” following the current crisis. This aspect of the package falls under the CARES Act Payroll Protection Title of the omnibus package.

Loaned funds used for payroll, rent, mortgage interest, and utility payments would be forgiven if certain conditions are met. Importantly, the principal amount of loaned funds used for approved purposes is to be forgiven if the borrower maintains its pre-crisis full-time workforce as of the date of the loan; interest, capped at 4%, will remain payable.

The program will be administered by the Small Business Administration and will adopt existing SBA loan program policies. Loan eligibility standards and application requirements will be significantly loosened.

CARES would allow a 50% refundable payroll tax credit on worker wages paid during the crisis. Additional tax law adjustments will liberalize net operating loss-reduction rules, allowing greater offset of business income.

Sole proprietors and other self-employed workers could be eligible for the expanded unemployment-insurance benefits the bill provides. At the present, “gig economy” workers appear not to be eligible for these expanded benefits. The loans will be available to companies with 500 or fewer employees.

Businesses can receive loans up to $10 million, based on how much the company paid its employees between Jan. 1 and Feb. 29. The loans will carry an interest rate up to 4%.

Fraser Trebilcock Shareholder Dave Houston has over 40 years of experience representing employers in planning, counseling, and litigating virtually all employment claims and disputes including labor relations (NLRB and MERC), wage and overtime, and employment discrimination, and negotiation of union contracts. He has authored numerous publications regarding employment issues. You can reach him at 517.377.0855 or dhouston@fraserlawfirm.com.

CARES Act Provides for Direct Relief Payments to Michiganders

The Federal government would make direct cash relief payments to individuals who meet certain qualifications if the U.S. House approves and the President signs the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), passed by the Senate late Wednesday. For most Michiganders, the money is to arrive from the IRS likely in April via direct deposit, or later if mailed.

Individuals earning up to $75,000 a year will be eligible to receive a $1,200 payment. Payment amounts begin phasing out for individuals making more than $75,000 and are eliminated for individuals making more than $99,000 a year (the payment amount falls by $5 for every $100 in income above $75,000).

Married couples are eligible to receive $2,400 as long as their adjusted gross income is under $150,000 a year. Again, above this amount of income, payments are phased out and eliminated for couples earning more than $198,000. Married couples will receive an additional $500 for every child.

Michiganders who file as a “head of household” (typically single parents with children) are eligible for $1,200 payment, but the income threshold and final phase out is higher (up to $112,500 with payment being phased out on those heads of household earning more than $136,500). As with single and married couples, heads of household will also receive an additional $500 per child.

Individuals on Social Security are eligible to receive a Coronavirus relief payment as long as their total income does not exceed the limit. Low-income Michiganders on Social Security who typically do not need to file a tax return, will receive a payment as long as they received a SSA-1099 form (the Social Security benefit statement). These payments will be made via the usual way that these individuals receive their Social Security payment.

Identifying eligible recipients and disbursing payments falls on the IRS. The IRS will use the most recent tax return information on file, either an individual already filed a 2019 tax return (the one most people are working on now), or the 2018 tax return if no 2019 tax return is on file. The IRS will also use the direct deposit information from the individual’s or couple’s 2019 return to send payments directly to their bank account. If no direct deposit details are disclosed on the return, the IRS will mail a physical check.

The Coronavirus relief payment is not taxable by the IRS (the state and local units have not addressed this as of yet). That said, there is a catch. Under the legislation, it is the individual’s or couple’s 2020 income that qualifies them for the payment. Of course, no one knows their total 2020 income yet, so the IRS is using tax return data from 2019 and 2018 to determine eligibility, amount, and payment. Therefore for some individuals and families, they may have to pay back some of the payment if their income for 2020 turns out to be more than the qualifying amount. Repayment will be determined and adjusted on the taxpayer’s 2020 income tax return and satisfied on April 15, 2020.

FFCRA: Required Employer Actions By April 1, 2020

Under newly issued guidance, the Department of Labor (DOL) has set the effective date of the FMLA Expansion Act and Emergency Paid Sick Leave Act (Acts) as April 1, 2020. This is one day earlier than anticipated. Employers must comply with these new laws from April 1 to December 31, 2020. For more information on these Acts, which are set forth under the Families First Coronavirus Response Act (FFCRA), please see our previous Client Alert.

Updated FFCRA Guidance

DOL News Release

Along with the updated guidance, the DOL issued a News Release outlining the compliance information being issued. See https://www.dol.gov/newsroom/releases/whd/whd20200324

As expected, the News Release verified that more guidance would be forthcoming:

The guidance announced today is just the first round of information and compliance assistance to come from WHD.

DOL Question and Answer

Additionally, the Wage and Hour Division of the DOL issued updates in a Question and Answer format. See https://www.dol.gov/agencies/whd/pandemic/ffcra-questions. Highlights include the following information:

That the Acts are effective April 1, 2020 and are not retroactive.
How employers with fewer than 500 employees are impacted.
- Two or more employers will be combined under the Fair Labor Standards Act (FLSA) joint employer test or the Family and Medical Leave Act (FMLA) integrated employer test.
That the Acts do not apply to private employers with 500 or more employees.
That small business exemptions will be addressed in forthcoming regulations.
How to count hours worked by a part-time employee, how to count overtime hours, and how to calculate the rate of pay.

DOL Fact Sheet for Employers

The following fact sheet for employers was also provided: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave

Nonenforcement Policy

The DOL issued Field Assistance Bulletin No. 2020-1 setting forth its nonenforcement policy for good-faith compliance with the Acts. Importantly, the nonenforcement policy will stem from March 18 through April 17, 2020. However, the DOL intends on fully enforcing the Acts and any violations thereunder after this stay is lifted. The Bulletin states, in pertinent part:

Enforcement Guidance
The Department will not bring enforcement actions against any public or private employer for violations of the Act occurring within 30 days of the enactment of the FFCRA, i.e. March 18 through April 17, 2020, provided that the employer has made reasonable, good faith efforts to comply with the Act. For purposes of this non-enforcement position, an employer who is found to have violated the FFCRA acts “reasonably” and “in good faith” when all of the following facts are present:

The employer remedies any violations, including by making all affected employees whole as soon as practicable. As explained in a Joint Statement by the Department, the Treasury Department and the Internal Revenue Service (IRS) issued on March 20, 2020, this program is designed to ensure that all covered employers have access to sufficient resources to pay required sick leave and family leave wages.

The violations of the Act were not “willful” based on the criteria set forth in McLaughlin v. Richland Shoe, 486 U.S. 128, 133 (1988) (the employer “either knew or showed reckless disregard for the matter of whether its conduct was prohibited…”).

The Department receives a written commitment from the employer to comply with the Act in the future.

If the public or private employer either (i) violates the Act willfully, (ii) fails to provide a written commitment to future compliance with the Act, or (iii) fails to remedy the violation upon notification by Department, the employee seeking payment, or a representative of that employee, including by making all affected employees whole as soon as practicable, the Department reserves its right to exercise its enforcement authority.

After April 17, 2020, this limited stay of enforcement will be lifted, and the Department will fully enforce violations of the Act, as appropriate and consistent with the law.
***
For purposes of this non-enforcement policy, employers who are eligible for tax credits but who have insufficient cash flow should make payment of sick leave or family leave wages as soon as possible, but not later than seven 7 calendar days after the employer has withdrawn an amount equal to the required paid sick leave and expanded family and medical leave wages from the employer’s Federal payroll tax deposits or, to the extent such deposits are not sufficient, has received a refund of the credit amount from the IRS to cover the required wages.

FFCRA Poster

Furthermore, the DOL has just released the required notice for employers to post. The poster can be found here: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf

Accompanying FAQs answer some important questions. See https://www.dol.gov/agencies/whd/pandemic/ffcra-poster-questions. Highlights include:

The Acts require that the FFCRA notice must be posted in a conspicuous place on the employers premises where employees can see it. However, for employees who are teleworking, employers can meet these requirements by mailing or emailing the notice. The employer could also post the notice on an employee information internal or external website.
There is no requirement to post the notice in multiple languages (although the DOL is working on translations).
Laid off employees are not entitled to the notice. It only must be provided to current employees, which includes newly hired employees. Again, the Acts are effective from April 1 through December 31, 2020, so the notice requirements apply to any new employees hired within this time period.
Small employers under 50 employees must also post the notice, even if they intend on claiming an exemption.
This notice is issued on March 25, 2020. Employers are advised to check the following website for updates: https://www.dol.gov/agencies/whd

Interaction with State Law

Finally, employers should also keep in mind the interaction of the Emergency Paid Sick Leave Law with their own paid time off policies and state law requirements.

For example, employers with employees in Michigan must take into consideration Michigan’s Paid Medical Leave Act. One of the qualifying reasons for leave under this law is the “closure of the eligible employee’s primary workplace by order of a public official due to a public health emergency…” Unless the business is deemed essential under Michigan’s Executive Order 2020-21 and therefore allowed to stay open, the Michigan Paid Medical Leave Act will likely apply.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Client Alert: COVID-19 Related Guidance and Effect on Group Health Plans

The government is quickly issuing guidance to address the overwhelming concerns over the coronavirus pandemic and to cover testing and treatment of COVID-19. Below are highlights involving recent changes affecting group health plans.

FFCRA’s Health Provisions

This past Wednesday, March 18, 2020, the Families First Coronavirus Response Act (“FFCRA”) was signed into law. In part, the FFCRA requires coverage of testing for COVID-19. Specifically, group health plans (including grandfathered plans) and health insurance issuers offering group or individual health insurance coverage must provide coverage, without cost sharing or prior authorization or medical management requirements, for the following items and services:

Certain diagnostic products for the detection of SARS-CoV-2 or the diagnosis of the virus causing COVID-19 approved or authorized under certain provisions of the Federal Food, Drug and Cosmetic Act; and
Items and services furnished to an individual during health care provider office visits, urgent care and emergency room visits relating to furnishing or administration of the above diagnostic products or to evaluate that such individual needs the product.

These requirements are effective on March 18, 2020 for services and items furnished on or after March 18, 2020.

High Deductible Health Plans, HSAs, and COVID-19

The IRS has issued Notice 2020-15 to address concerns over medical expenses and testing relating to COVID-19. The link to the Notice can be found here: https://www.irs.gov/pub/irs-drop/n-20-15.pdf

Specifically, the Notice provides that a qualifying high deductible health plan (“HDHP”) with accompanying health savings accounts (“HSAs”) will not lose its qualifying HDHP status if it provides health benefits associated with testing for and treatment of COVID-19 prior to the deductible being met. IRS Notice 2020-15 states, in relevant part:

Part of the response to COVID-19 is removing barriers to testing for and treatment of COVID-19. Due to the nature of this public health emergency, and to avoid administrative delays or financial disincentives that might otherwise impede testing for and treatment of COVID-19 for participants in HDHPs, this notice provides that all medical care services received and items purchased associated with testing for and treatment of COVID-19 that are provided by a health plan without a deductible, or with a deductible below the minimum annual deductible otherwise required under section 223(c)(2)(A) for an HDHP, will be disregarded for purposes of determining the status of the plan as an HDHP.

Therefore, an employee participating in such a HDHP will not be disqualified from contributing to HSAs merely because the plan provided no or low-deductible health benefits for testing and treatment of COVID-19.

Catastrophic Plans and COVID-19

The Department of Health and Human Services (“HHS”) has issued guidance stating that, although catastrophic plans may not provide coverage of essential health benefits before the deductible being met (except as otherwise required), it will not take enforcement action against any health insurance issuer that does so for the purposes of diagnosing and/or treating COVID-19:

To facilitate the nation’s response to COVID-19, until further notice, HHS will not take enforcement action against any health insurance issuer that amends its catastrophic plans to provide pre-deductible coverage for services associated with the diagnosis and/or treatment of COVID-19.

Please see https://www.cms.gov/CCIIO/Resources/Files/Catastrophic-Coverage-of-COVID-19.pdf.

Needless to say, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Navigating Executive Order No. 2020-19 (“Order 19”); The Eviction and Land Contract Forfeiture Moratorium

UPDATE: On Monday, April 20, 2020, Governor Gretchen Whitmer signed Executive Order 2020-54, extending the duration of relief in prior Order 2020-19 through May 15, 2020.

With Executive Order 2020-54, Governor Whitmer enacted a “temporary prohibition against entry to premises for the purpose of removing or excluding a tenant or mobile home owner from their home,” which can fairly be described as an “eviction moratorium.”

This is a brief summary and does not constitute legal advice. We encourage you to review our new blog which analyzes Executive Order 2020-54, by following the link here.

On Friday, March 20, 2020, Governor Whitmer signed an executive order enacting a “temporary prohibition against entry to premises for the purpose of removing or excluding a tenant or mobile home owner from their home,” which can fairly be described as an “eviction moratorium.” It is in place until the end of the night on Friday, April 17, 2020, which effectively means that it is in place until Monday, April 20, unless it is amended, extended or repealed.

It prohibits landlords and land contract vendors from evicting tenants or vendees for about one month; nominally until midnight on Friday April 17, 2020, but practically until the following Monday, April 20. It also prohibits personal delivery of Notices to Quit and other forfeiture notices, but does not prevent them entirely. It has provisions that apply to court officers as well. It is both detailed and summarized below.

Legal Basis: Like all the COVID-19 executive orders, Order 19 follows the March 10, 2020 Executive Order 2020-4, which declared a state of emergency across Michigan. It cites Michigan’s Constitution (Const 1963, art 5, sec 1) (vesting executive power in the governor) for support, along with Michigan’s 1976 Emergency Management Act, codified at MCL 30.401-421, and its 1945-era Emergency Powers of the Governor Act, codified at MCL 10.31-33 (please see links below to these statutes). Order 19 states:

“[t]he current state of emergency would be exacerbated by the additional threats to the public health related to removing or excluding people from their residences during the COVID-19 pandemic. To reduce the spread of COVID-19, protect the public health, and provide essential protections to vulnerable Michiganders, it is reasonable and necessary to provide temporary relief from certain eviction-related requirements.”

In sum, the Governor has determined that the personal interactions necessitated by the eviction process, and the possibility of people being put out “on the street”, so to speak, presents avoidable risks. Thus, the landlords of Michigan and those who sold residential property on land contract are being called on to contribute resources to the public good. At the time of writing and publication of this article, this contribution is uncompensated. Without addressing or resolving those issues, this article simply identifies what is prohibited and places those prohibitions into the context of the ordinary procedures for evictions or summary land contract forfeitures.

Prohibited Acts: Order 19 prohibits or regulates the following, described as numbered under the Order itself. The terms of Order 19 are summarized here:

No person shall remove or exclude a residential tenant, people holding under that tenant (such as roommates, family members, and likely any other hangers-on), land contract vendees (buyers) or those holding under those vendees from the residential premises in question until 11:59 pm on April 17. This does not apply if the “tenant, vendee, or person holding under them poses a substantial risk to another person or an imminent and severe risk to property. This order should be broadly construed to effectuate that purpose.”

In other terms, regardless of where one was at in an eviction or land contract forfeiture process, actual removal or execution on a Writ of Restitution or other eviction order is stayed, barring exception. The “severe risk” exception is discussed briefly in the “What This Means” section below.

“This order does not affect the inherent power of a judge to order equitable relief.”

It is uncertain at this time whether this section intends to create a judicial carve out that would allow the equitable relief of eviction in circumstances not contemplated under Order 19, or whether this is a statement intended to limit the scope of Order 19 and prevent it from being mis-applied in commercial or other contexts. The later seems more likely, but this section is open to some interpretation.

This section, translated, provides that tenants and vendees still have to pay, and will still owe money for the time they occupy the property in question. In addition, landlords and vendors still have to issue notices to quit (and by extension, other forfeiture notices) consistent with MCL 600.5716 and MCL 600.5718. However, such notices cannot be personally delivered during the moratorium period – they must be mailed or e-served if allowed under the applicable lease.

It is highly unlikely that any judge will construe this section to prohibit a landlord or vendor from knocking on a tenant’s door to conduct other business, to check on a tenant, or to provide assistance to a tenant. The landlord just cannot knock on a tenant’s door to deliver the “bad news” of a notice to quit. The damages to the landlord continue to accrue, however.

Further, no person may enter residential property to remove a tenant, vendee or anyone claiming under them, even if they have already obtained a Writ of Restitution or other eviction order. Like Section 1 above, there is an exception where the tenant, vendee, or person holding under them poses a substantial risk to another person or an imminent and severe risk to property.

This is largely a re-hash of Section 1: if no person can remove or evict under Section 1, it follows that no person may enter a rental unit or residential property subject to a land contract for those purposes.

There is a moratorium preventing any court officer, sheriff or deputy from serving process (i.e., new lawsuits) that seek eviction of forfeiture as a remedy.

This section governs law enforcement, as opposed to the landlords or land contract vendors. It does not, on its face, bar lawsuits only seeking money damages. Assuming your local district court will take the filing and issue process (which remains uncertain at this time), one may theoretically initial a new contract-based suit for money damages and seek to amend to add an eviction remedy when the moratorium is lifted.

“[N]o person may deny a mobile home owner access to their mobile home, except when the mobile home owner’s tenancy has been terminated because the mobile home owner poses a substantial risk to another person or an imminent and severe risk to property.”

This section basically brings mobile home parks under the same prohibitions applicable to residential landlords and land contract vendors.

For 30 days after the restrictions in sections 1 through 6 expire, courts have latitude to adjourn proceedings, toll redemption periods, toll limitations periods, and extend deadlines.

This appears to be a “housekeeping” section granting court latitude with scheduling that likely already would be found to exist under Michigan’s rules of Court and revised Judicature Act.

As used in this order, all terms have the meaning provided by the Revised Judicature Act.

This unifies Order 19 with existing statutes that the Courts and your attorney will already be familiar with.

A willful violation of this order is a misdemeanor.

This section requires little or no translation.

A copy of this order will be transmitted to the State Court Administrative Office.

This is a mechanical section that will mean little to landlords or land contract vendors.

What This Means: Landlords and those who sold residential property on land contract must either challenge the legality of Order 19, or wait out all evictions until it expires or is amended to allow evictions.

Order 19 excepts situations where a tenant is creating substantial risk to another person or an imminent and severe risk to property. While Order 19 is silent as to what those situations are, the case-by-case determinations that a court might make in that regard will be governed and informed by existing statute and common law. Owing to the numerous pronouncements in Order 19 regarding the necessity for people to shelter in place, along with the “Stay At Home” Order issued March 23, 2020, it seems clear that having a tenant or vendee with COVID-19 will not likely be deemed an exception, unless that person is taking assaultive or offensive actions to spread it to others in the building. If you are confronted with that situation, nothing in Order 19 prevents a landlord from calling the police along with pursuing legal remedies.

Landlords may still mail and e-mail notices to quit, notices to terminate tenancies and related land contract forfeiture notices, but they cannot be personally delivered. There is a chance that the 30 day notice to terminate tenancy may be timely enforced, but (barring a court order striking or modifying Order 19), enforcement of a notice to quit for non-payment will be delayed. Order 19 does not technically prohibit a contract-based lawsuit against a tenant or vendee for money damages, but your counsel may advise that, in these uncertain times, such a suit may be of limited utility, unless it is later amended to add the eviction remedy.

In the meantime, Michigan’s prohibitions against landlord self-help and retaliatory eviction remain in place. While it was never a good time for landlords to take certain matters into their own hands before the current state of emergency, now is an even worse time to do so. It is anticipated that courts would treat lockouts or landlord utility shutoffs or service denials harshly at this time. It is unknown whether courts would likewise be lenient with landlords regarding repair issues at this time, but there are good arguments to support a rule of reason in that regard.

In Conclusion: Every situation is different. This general discussion cannot be used as a substitute for legal advice, pursuant to an established attorney-client relationship. Thus, contact your legal counsel or the undersigned if you have questions. The attorneys at Fraser Trebilcock remain ready and able to serve.

Michigan Constitution of 1963:

Emergency Management Act:

Emergency Powers of Governor Act:

Jared Roberts is a shareholder at Fraser Trebilcock who works in real estate litigation and transactions, among other areas of the law. Jared also “walks the walk” as a landlord and owner of residential rental properties and apartments in Downtown Lansing. He may be reached at jroberts@fraserlawfirm.com and (517) 482-0887.