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Category: Coronavirus

COVID-19 Economic Relief and the Employee Retention Credit

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December 23, 2020

December 23, 2020

*On Sunday, December 27, President Trump signed the Consolidated Appropriations Act, 2021 (the Act). The Act contains numerous individual, business, payroll, and disaster-related tax provisions that relate to the COVID-19 pandemic. The Act extended and made several changes to the employee retention credit, which we discussed below. the Act’s extension of and changes to the employee retention credit take effect from January 1, 2021.

In response to the economic downturn at the beginning of the coronavirus pandemic, Congress passed an employee retention credit under Section 2301 of the CARES Act. The employee retention credit is a refundable employment tax credit for qualified wages paid from March 13, 2020, through December 31, 2020, by eligible employers.

The credit amount is 50% of qualified wages, taking into account up to $10,000 of qualified wages, yielding a maximum credit of $5,000 per employee. The wages eligible for the credit depend on an employer’s average number of full-time employees in 2019. Under the credit as originally enacted, an eligible employer with more than 100 full-time employees could only take into account the wages paid to employees who were not providing services during the period the employer is eligible for the credit. But, for eligible employers with 100 or fewer full-time employees, all wages paid during the period an employer is eligible for the credit are taken into account. The definition of eligible wages depends, in part, on the average number of full-time employees employed by an eligible employer during 2019.

IRS guidance provides that a full-time employee means an employee who, with respect to any calendar month in 2019, had an average of at least 30 hours of service per week or 130 hours of service in the month, as determined in accordance with Section 4980H. See IRS, COVID-19-Related Employee Retention Credits: Determining Qualified Wages FAQ number 49. The guidance does not specifically address whether employers must include full-time equivalents for determining whether the employers averaged more than 100 full-time employees in 2019.

Several commentators have reported that the IRS guidance differs from the interpretation of the Joint Committee on Taxation. In its report on the CARES Act’s tax provisions, the Joint Committee on Taxation said that full-time employees must include full-time equivalents. See Description of the Tax Provisions of Public Law 116-136, JCX-12E-20 (April 23, 2020), n. 145. The Joint Committee based its interpretation on the language of the CARES Act, which refers to the “average number of full-time employees (within the meaning of section 4980H of the Internal Revenue Code of 1986).” Section 4980H specifically includes full-time equivalents in its definition of full-time employees for purposes of determining whether an employer is a large employer. 26 U.S.C. § 4980H(c)(2)(E).

Importantly, the IRS guidance was not published in the Internal Revenue Bulletin, and the guidance specifically states that it may not be relied upon as legal authority and cannot be used to support a legal argument in a court case. The IRS guidance may not be binding, but it is persuasive and is a good indication of how the IRS will treat taxpayers who apply for the credit. But, there is an argument that the interpretation of the Joint Committee on Taxation is more persuasive than the IRS guidance. The Supreme Court has ruled that, when a federal agency’s interpretation of law is not published under certain specific procedures, the agency’s interpretation is entitled to respect. U.S. v. Mead Corp., 533 U.S. 218 (2001). But, the agency’s interpretation does not control and a court could ultimately side with the Joint Committee on Taxation in interpreting the requirements of the employee retention credit.

On December 21, 2020, however, Congress passed the Consolidated Appropriations Act, 2021 (the “Act”). Among other things, the Act made several changes to the employee retention credit. The Act extends the employee retention credit to July 1, 2021, meaning that an eligible employer can take the credit for wages paid between January 1, 2021, and July 1, 2021. The Act also increases the credit percentage from 50% to 70% and the per-employee limitation from $10,000 for all quarters to $10,000 for any quarter during the extension period. And, the Act modifies the threshold for treatment as a large employer, increasing the threshold to 500 full-time employees. But, the foregoing amendments to the CARES Act apply only to calendar quarters beginning after December 31, 2020. Consequently, the originally-enacted maximum credit and qualified wages definitions apply between March 13, 2020, and December 31, 2020. If President Trump signs the Act, a business with up to 500 full-time and full-time equivalent equivalents could be eligible for the extended employee retention credit.

But, President Trump recently expressed dissatisfaction with the Act and several of its provisions. There is a possibility that President Trump will veto the Act. We are watching out for any changes and will update accordingly.

Mike Sorice is an associate in the Columbus, Ohio office of Walter | Haverfield. He assists closely-held businesses with business succession planning, mergers and acquisitions, and tax planning. Mike can be reached at 614-246-2262 or msorice@walterhav.com. 

Vince Nardone is Partner-in-Charge of Walter | Haverfield’s Columbus office. He serves as a business advisor to owners and executives of closely-held businesses, counseling them on business planning, tax planning and controversy, cash-flow analysis, succession planning, and legal issues that may arise in business operations. Vince can be reached at 614-246-2264 or vnardone@walterhav.com.

FFCRA Is Set to Expire on December 31, 2020


December 14, 2020

December 14, 2020 

In March, Congress enacted the Families First Coronavirus Response Act (“FFCRA”) in response to the spread of the novel coronavirus and the illness it causes, COVID-19. Generally, the FFCRA requires public employers and private employers with fewer than 500 employees to offer employees two types of paid leave benefits for certain reasons related to COVID-19: (1) up to 80 hours of emergency paid sick Leave (“EPSL”) and (2) up to 12 weeks of expanded family medical leave (“EFML”).

When Congress passed the FFCRA, it set the paid sick leave entitlements to expire on December 31, 2020. Although COVID-19 cases are on the rise in the United States, and a recent study suggested that FFCRA paid sick leave has been effective in reducing COVID cases by nearly 400 cases per day, it is uncertain whether Congress will pass a bill extending the paid sick leave provisions of the FFCRA.

In May, the U.S. House of Representatives passed H.R. 6800 (“The Heroes Act”), which sought to extend paid sick leave under the FFCRA until the end of 2021. However, the U.S. Senate has not considered the Heroes Act or proposed any other bill to do so. Because there has been an absence of congressional action, employers should begin planning as the FFCRA will expire at the end of the year.  Below are some key takeaways regarding what the FFCRA expiration might mean for your organization:

  1. Employees will not be entitled to receive EPSL or EFMLA after December 31, 2020.

Employers should communicate to employees that paid sick leave under the FFCRA will not be available after December 31, 2020. Employers should, however, continue to allow eligible employees to take paid sick leave under the FFCRA through and including December 31, 2020.

  1. Private employers will not receive tax credits after December 31, 2020.

While employers may continue to offer COVID-19-related paid sick leave programs past the FFCRA expiration date, eligible employers that do so will not receive tax credits from the federal government.

  1. Employee balances of EPSL and EFML will expire after December 31, 2020.

On January 1, 2021, employees will lose any balance of unused EPSL and EFML. Employees are not entitled to a “payout” of unused paid sick leave under the FFCRA.

We will continue to monitor whether Congress passes a bill to extend the paid leave provisions of the FFCRA. However, in the meantime, employers need to prepare to update their leave policies and practices. The attorneys at Walter | Haverfield are here to help you navigate your obligations under local, state, and federal laws.

Elizabeth Bolduc is an attorney at Walter | Haverfield who focuses her practice on labor and employment law. She can be reached at ebolduc@walterhav.com or at 216-658-6218.

Bar and Restaurant Assistance Fund: Permit Holders Encouraged to Apply by Dec. 18, 2020


November 25, 2020

John Neal

November 25, 2020    

The state of Ohio has created a $38.7 million fund to help provide relief for bars and restaurants that have taken a significant hit during the COVID-19 pandemic. The program, funded by the CARES Act, will provide $2,500 grants to eligible liquor permit holders in the state. Permit holders are encouraged to apply by December 18 to ensure the funding request can be processed before the application closes on December 30, 2020.

The application for the Bar and Restaurant Assistance Fund is available here. To apply, businesses are required to establish a registration ID with the state of Ohio, which provides users with secure access to assistance services and programs. Licensees must present their FEIN or SSN, liquor permit number and address for each unique location at time of application. To be considered eligible to receive relief, businesses must have had an active on-premise permit as of close-of-business on October 23, 2020. The business does not have to be currently open but must have an active liquor license. You can check the status of your liquor permit here. If it’s active, it will be listed as “issued.”

Multiple permit holders are eligible for the $2,500 grant for each liquor permit held.

Eligibility requires a permit in good standing, essentially meaning there are no tax delinquencies or violations pending. The Department of Taxation will confirm all entries. Once money is received, per CARES Act stipulation, businesses are to use the funds on COVID-related expenses due to business interruptions caused by the ongoing pandemic.

Permit holders may apply for the liquor assistance funding as well as the Small Business Relief Grant. Funding for the program is contingent on approval by the Ohio Controlling Board. The Ohio Department of Administrative Services will be sending checks to permit holders as soon as applications are processed.

If you have additional questions regarding the recommended practices of Ohio restaurants and bars, please reach out to us here. We are happy to help.

John N. Neal is head of the Walter | Haverfield Hospitality and Liquor Control team. He can be reached at jneal@walterhav.com or at 216-619-7866.

 

Amended House Bill 404: Open Meetings, Local CARES Act Redistribution, License Deadlines and More


November 23, 2020

Lisa-WoloszynekNovember 23, 2020

When House Bill (“HB”) 197 went into effect last spring, during the initial phase of the coronavirus (“COVID-19”) pandemic, it provided relief to Ohio school districts in many important areas of school functions.  HB 197 provisions are set to sunset on December 1, 2020 while school districts continue to face the COVID-19 pandemic, state of emergency, and related challenges.

However, the Ohio House and Senate recently passed HB 404 with substantial revisions (originated to address an exception of the Open Meetings Act for institute of higher education) to provide a continuance of essential operations and extend many of the HB 197 provisions into the summer of 2021.  Once signed by Governor DeWine, HB 404 will become effective immediately.

The points below summarize the provisions of the HB 404, which affect K-12 schools in Ohio:

  • Open Meetings
    • Extends until July 1, 2021, the temporary authorization for Board meetings and hearings to be held and attended via electronic technology, as summarized in a previous Walter | Haverfield client alert.
  • Licensure
    • Licenses and certificates issued by ODE, which expire on or before April 1, 2021, will remain valid until July 1, 2021.
  • Evaluations
    • Performance evaluations for teachers, school counselors, administrators, and superintendents may be suspended by the school board for the 2020-2021 school year, if the evaluation has not already been completed for this year and the school board determines it would impossible or impracticable to complete it.  The board may collaborate with bargaining units to make this determination.  If evaluations are suspended, an employee shall be deemed not have been evaluated for purposes of section 3319.11 of the Revised Code.  However, the legislation specifies that a board is not precluded from using an evaluation completed prior to the effective date of HB 404 for employment decisions.
    • Extends the prohibition against using value-added data, other high-quality/metric student data, or academic growth data to evaluate positive student outcomes attributable to a teacher, principal, or school counselor while conducting performance evaluations.
      • Specifies that a teacher who does not have a student growth measure as part of an evaluation for the 2020-2021 school year must remain at the same point in the teacher’s evaluation cycle, and retain the same evaluation rating, for the 2021-2022 school year as for the 2019-2020 school year. This is in addition to teachers remaining at the same point in the teacher’s evaluation cycle and at the same rating for the 2020-2021 school year, which is already included under current law.
    • Extends the authority for a school district that did not participate in the teacher evaluation pilot program established for the 2019-2020 school year to continue evaluating teachers on two-year or three-year evaluation cycles, even if the district completes an evaluation for those teachers in the 2020-2021 school year without using a student growth measure.
  • State-Mandated Testing & Health Screenings
    • A school district may administer, but may not be penalized for failing to administer to a “qualifying student,” the kindergarten readiness assessment, any diagnostic assessments, or the third-grade English language arts achievement assessment during the fall of 2020.
    • A school must conduct the required health screenings for kindergarten and first-grade students who have not received those screenings for the 2020-2021 school year by the time HB 404 goes into effect. The school may forego the screenings until it can be safely conducted for a “qualifying student” and may not be penalized for failing to conduct such health screening prior to November 1, 2020.  But, if the health screening is requested by a parent, it must then be conducted.
    • For purposes of the above state testing and health screening provisions, a student is a “qualifying student” if:
      • The student is being quarantined;
      • The student, or a member of the student’s family, is medically compromised and the student cannot attend school (or another physical location outside of the home) for the testing/screening;
      • The student resides in an area that is subject to a stay-at-home order issued by the Governor, the Department of Health, or a local board of health; or
      • The student is receiving instruction primarily through a remote learning model up through the deadline for the assessment/screening and it cannot be administered remotely.
    • College Credit Plus
      • Extends the Chancellor of Higher Education’s authority, in consultation with the Superintendent of Public Instruction, to extend, waive, or modify requirements of the College Credit Plus Program for the 2020-2021 and 2021-2022 school years, if necessary in response to COVID-19.
    • Seamless Summer Food Program Regulation
      • Extends the Director of Agriculture’s temporary authority to exempt a school from regulation as a food processing establishment until July 1, 2021, if the school:
        • Has been issued a food service operation license; or
        • Is transporting food only for purposes of the Seamless Summer Option Program or the Summer Food Service Program administered by the U.S.D.A.

Feel free to reach out to any Walter | Haverfield Education attorney here with questions regarding options for your board. We are happy to help with any challenges your district may be experiencing.

Lisa Woloszynek is an attorney at Walter | Haverfield who focuses her practice on education law. She can be reached at lwoloszynek@walterhav.com and at 216-619-7835.

 

 

 

Ohio Implements 21-Day Overnight Curfew


November 20, 2020

Darrell ClayNovember 20, 2020 

In a continuing battle to reduce the exponential growth of coronavirus infections in Ohio, Governor Mike DeWine recently announced Ohio’s adoption of an overnight daily curfew, effective on Thursday, November 19, 2020. The mandate, in the form of an order from the Director of the Ohio Department of Health, will be in place for at least 21 days.

At a news conference earlier in the week during which he discussed the planned curfew, the Governor stated: “The curfew is aimed at helping to reduce the number of person-to-person contacts because the only way the virus lives is when it goes from one person to another. We have to flatten this curve again and get this under control.” According to the Governor, the overnight curfew was deemed to be “the most impactful option with the least disruption.”

The order, which was not posted to the State’s coronavirus website until a few hours before the curfew first took effect, is entitled “Director’s Stay At Home Tonight Order.” It cites the fact that every Ohio county currently qualifies as a “high incidence” county, necessitating “immediate action” intended to “slow the spread while keeping Ohio’s economy functioning.”

While the curfew is in effect, all Ohio citizens are ordered to remain in their place of residence from 10:00 p.m. until 5:00 a.m., except as otherwise permitted by the order. “Residence” is defined to include the obvious – homes, apartments, and condominiums – but also places like college dormitories, hotels, “shared rental units,” and shelters. Persons whose residence is unsafe, such as domestic violence victims, are permitted and encouraged to leave their home in favor of a safer alternative.

The curfew has several broad categories of exceptions. First, it does not apply to religious observances or any First Amendment protected activity, including the work of the media.

Second, the curfew does not restrict any travel in or out of Ohio. This includes travel required by court order, “including to transport children pursuant to a custody agreement,” for early arrival for security purposes (think, get to the airport early), or to obtain fuel.

Third, the curfew does not apply to persons leaving their place of residence to engage in any of the following categories of “Essential Activities”:

  • for health and safety reasons, including visiting a hospital, emergency department, urgent care clinic, or pharmacy;
  • to obtain or deliver necessary services and supplies, including food and beverages (that “may be obtained only for consumption off-premises, through such means as in-house delivery, third-party delivery, drive-through, curbside pick-up, and carry-out”);
  • for necessary social services, which shall be broadly construed to ensure no limitation on delivering services to those in need;
  • for work, including volunteer activities;
  • to take care of or transport family members, friends, or pets in another household; and
  • for performing or accessing government services, including law enforcement and other first responders.

Although the Order was issued by the State Department of Health, any questions regarding its provisions should be directed to local health departments. Also, for communities that have adopted measures more restrictive than the overnight curfew, those provisions take precedence.

The curfew remains in effect until December 10, 2020, unless modified (or extended) by further order.

If you have questions, please reach out to us here. We are happy to help.

Darrell A. Clay is a partner at  Walter | Haverfield who focuses his practice on labor and employment and litigation. He can be reached at dclay@walterhav.com or at 216.928.2896.

Paycheck Protection Program: IRS Confirms Expenses Are Not Deductible

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November 19, 2020

November 19, 2020

Our firm continues to stay on top of the Paycheck Protection Program (PPP) and its impact on our business clients, and individual owners of flow-through entities. With some very timely guidance, the U.S. Treasury Department and IRS released direction clarifying the tax treatment of expenses where a PPP loan has not been forgiven by the end of the year, which is most of our clients.

Background Information on PPP

On March 13, 2020, President Trump declared the ongoing Coronavirus Disease 2019 (“COVID-19”) pandemic of sufficient severity and magnitude to warrant an emergency declaration for all states, territories, and the District of Columbia. With the COVID-19 emergency, many small businesses nationwide were experiencing economic hardship as a direct result of the federal, state, tribal, and local public health measures that were being taken to minimize the public’s exposure to the virus. These measures, some of which were government-mandated, have been implemented nationwide and include the closures of restaurants, bars, and gyms. In some cases, other measures such as stay-at-home orders were implemented, resulting in a dramatic decrease in economic activity as the public avoided malls, retail stores, and other businesses.

On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) (Pub. L. 116-136) to provide emergency assistance and health care response for individuals, families, and businesses affected by the coronavirus pandemic. The SBA received funding and authority through the CARES Act to modify existing loan programs and establish a new loan program to assist small businesses nationwide adversely impacted by the COVID-19 emergency.

Section 1102 of the CARES Act temporarily permitted the SBA to guarantee 100 percent of 7(a) loans under a new program titled the “Paycheck Protection Program.” Under the PPP, the borrower must use loan proceeds for certain qualifying expenses, including payroll costs, payments of covered rent obligations, and covered utility payments. Section 1106 of the CARES Act provided for forgiveness of up to the full principal amount of qualifying loans guaranteed under the PPP.

On April 24, 2020, the President signed the Paycheck Protection Program and Health Care Enhancement Act (Pub. L. 116-139), which provided additional funding and authority for the PPP. On June 5, 2020, the President signed the Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act) (Pub. L. 116-142), which changed provisions of the PPP relating to the maturity of PPP loans, the deferral of PPP loan payments, and the forgiveness of PPP loans. On July 4, 2020, the President signed into law S. 4116, which reauthorized lending under the PPP through August 8, 2020 (Pub. L. 116-147).

Deductible or Not Deductible, that is the Question?

According to the IRS, since businesses are not taxed on the proceeds of a forgiven PPP loan, the qualifying expenses are not deductible. The IRS rationalizes this position by claiming that this results in neither a tax benefit nor tax harm since the taxpayer has not paid anything out of pocket.

In its recent ruling, the IRS ultimately concluded that if a business reasonably believes that a PPP loan will be forgiven in the future, qualifying expenses related to the loan are not deductible, whether the business has filed for forgiveness or not. Therefore, the IRS encourages businesses to file for forgiveness as soon as possible.

According to the IRS, in the case where a PPP loan was expected to be forgiven, and it is not, businesses will be able to deduct those expenses in the future.

Conclusion

In sum, although this guidance represents much-needed guidance and clarity, it was not unexpected. We have been advising our clients for some time to ensure they are planning for the expectation that certain expenses paid related to the PPP will not be deductible and therefore will result in an increase in tax liability. But, let’s also remember that each of the businesses and their owners benefited tremendously from the use of the PPP loan proceeds. We are working diligently to stay on top of these changes, and will follow-up on any additional guidance.

We would encourage you to review the IRS Revenue Ruling here.

Mike Sorice is a law clerk in the Columbus, Ohio office of Walter | Haverfield. He recently graduated from the Ohio State University Moritz College of Law.

Vince Nardone is Partner-in-Charge of Walter | Haverfield’s Columbus office. He serves as a business advisor to owners and executives of closely-held businesses, counseling them on business planning, tax planning and controversy, cash-flow analysis, succession planning, and legal issues that may arise in business operations. Vince can be reached at 614-246-2264 or vnardone@walterhav.com.

House Bill 404 Extends Temporary Virtual Meeting Authority


Megan GreulichNovember 19, 2020 

With today’s passage of Ohio House Bill (“HB”) 404, the legislature officially has extended the effectiveness of the HB 197 provisions granting authority to public bodies to hold and attend meetings and conduct and attend hearings by means of teleconference, video conference, or any other similar electronic technology while remaining compliant with Ohio’s Open Meetings Act (“OMA”). The HB 197 language was set to sunset on December 1, 2020, but HB 404 extends the temporary virtual meeting authority until July 1, 2021. Once signed by Governor DeWine, the bill will become effective immediately.

In addition to the extension of the virtual meeting option, it also is important to note that the Director of the Ohio Department of Health’s November 16, 2020 “Revised Order to Limit and/or Prohibit Mass Gatherings in the State of Ohio with Exceptions,” which became effective on November 17, 2020, specifically provides that the 10-person mass gathering limitation does not apply to governmental meetings, including meetings required to be open to the public pursuant to RC 121.22. This means that boards of education are exempt from the mass gathering limitation and may carry out in-person meetings in excess of that limitation.

The legislation and Health Director’s order ensure that public bodies will continue to have options for meeting their OMA obligations at least through the end of June. In light of the recent surge in COVID-19 cases across the state, and the stay at home advisories that have been issued by some county boards of health, school boards should consider the feasibility of meeting in person and ensure necessary precautions if choosing to do so. Please feel free to contact any Walter | Haverfield attorney with questions regarding the status of OMA compliance and specific options for your board.

We are happy to help with any challenges your district may be experiencing. Please reach out to us here.

Megan Greulich is an attorney at Walter | Haverfield who focuses her practice on education law. She can be reached at mgreulich@walterhav.com or at 614-246-2263.

Federal District Court Dismisses Class Action Against All U.S. School Districts


November 18, 2020

Miriam PearlmutterNovember 18, 2020

A New York federal district court recently dismissed a class action lawsuit alleging every school district in the country conspired to deny services to special education students during the COVID-19 pandemic.  The court concluded it lacked authority to consider claims about districts outside of New York, and even claims subject to review had to go through the local administrative process first.

In this much-talked-about complaint, a group of parents claimed that all school districts in the United States violated special education law by ending in-person instruction due to the pandemic.  They further contended the districts conspired to commit fraud by taking federal funds for special education services they never intended to provide.  Chief Judge Colleen McMahon dismissed this theory outright, noting the pandemic took the entire world by surprise, and conspiracy or fraud claims were completely implausible. The court further explained that remote learning does not constitute a change of placement under guidance from the federal Department of Education.  Systemic decisions affecting all students do not implicate special education regulations, the court emphasized, and parental consent, accordingly, is not required to implement virtual or remote learning.  The court allowed students to pursue individual complaints against their school districts, but noted that parents must follow their state’s administrative process in pursuing such claims.

Not only is this holding an important win for school districts, the decision also forecasts how other courts and agencies may analyze future special education claims arising from COVID-19 closures. Nevertheless, school administrators should keep in mind that special education students are entitled to a free appropriate public education (“FAPE”) regardless of whether districts determine to provide instruction to all students remotely or in-person. No coronavirus-related exemptions are available for deadlines prescribed by special education law, for example, and school districts must be careful to complete evaluations and annual reviews in a timely manner.  Although documenting FAPE is always important, a detailed record of specially-designed instruction and related services is even more critical during these uncertain times. Providing special education services might look different in 2020, but school districts remain obligated to offer FAPE and comply with all IEP requirements.

We are happy to help with any challenges your district may be experiencing.  Please reach out to us here.

Miriam Pearlmutter is an attorney at Walter | Haverfield who focuses her practice on education law. She can be reached at mpearlmutter@walterhav.com or at 216-619-7861.

Ohio Re-Tightens Restrictions on Mass Gatherings


November 17, 2020

Darrell Clay

November 17, 2020 

Like many other states, Ohio has recently been experiencing a significant uptick in community spread of COVID-19. To combat this, Ohio’s Governor Mike DeWine, in conjunction with the Director of the Ohio Department of Health, has announced a series of revised public health orders. Most recently, the Director issued a revised order that limits and/or prohibits mass gatherings in the state, with exceptions.

Effective Tuesday, November 17, 2020, the order again bans all public and private gatherings of more than 10 people. As first announced in a March 14, 2020 public health order, mass gatherings were defined as events in which 100 or more persons were together in a single indoor space at the same time. Three days later, an amended order re-defined mass gatherings as events bringing together 50 or more persons in a single indoor space at the same time. Finally, the April 2, 2020 Director’s amended stay at home order prohibited gatherings of more than 10 people.

The new order also places specific restrictions on wedding ceremonies and funeral observances (though both are explicitly permitted to continue). For example, the order prohibits socializing or other activities occurring “in open congregate areas.” It also bans dancing, except for “traditional wedding reception events such as first dance.” No more than 10 people, all of whom must be from the same household, can be seated at the same table, and guests must remain seated at all times. Self-serve buffets and bar areas are forbidden. Unless actively eating or drinking, masks are to be worn at all times.

The new order also does not apply to religious observances or to any First Amendment protected speech. The latter includes “petition or referendum circulators and any activity by the Media.” Finally, the new order does not supersede other specific Department of Health orders relating to restaurants, bars, banquet and catering facilities.

Violation of an Ohio Department of Health order is a second-degree misdemeanor, punishable by up to 90 days in jail and a fine not to exceed $750.

Local communities are also stepping up their own limits on mass gatherings, in some cases in a manner more restrictive than the State. For example, at its meeting on Tuesday, November 16, 2020, the Akron City Council adopted a Private Gathering Ordinance. Effective immediately, it prohibits gatherings of more than 6 persons who do not live in the same household. Small gatherings of less than 6 persons not from the same household are permitted only when masks are worn if congregating indoors. (Exceptions are provided for those with a medical condition, while eating, for persons under age 10, and if outside while maintaining 6-foot social distancing.)

Violations of the Akron ordinance may result in a civil penalty of $250, though the ordinance stresses that “enforcement will focus on education and voluntary compliance whenever possible.” The ordinance expires after 30 days, unless further extended by the Akron City Council.

Similar local bans on mass gatherings are in place in Oxford, Kent, Cuyahoga County, and elsewhere.

As Thanksgiving rapidly approaches, individuals and businesses who are contemplating hosting traditional holiday dinners should carefully review and comply with all applicable state and local restrictions on mass gatherings.

If you have questions, please reach out to us here. We are happy to help.

Darrell A. Clay is a partner at  Walter | Haverfield who focuses his practice on labor and employment and litigation. He can be reached at dclay@walterhav.com or at 216.928.2896.

Ohio Updates Requirements for Mask-Wearing Order


November 16, 2020

Darrell Clay

November 16, 2020 

In an effort to blunt the recent, rapid upswing in coronavirus infections throughout the State of Ohio, on Friday, November 13, 2020, the Department of Health issued an order updating requirements for the wearing of facial coverings, first issued in July.  The new order places additional mandates on retail establishments that offer goods in person to the public, and is intended effort to enhance compliance with the original mask-wearing order.

That order, issued in July, mandated that Ohioans must wear a mask when they are in any non-residential indoor location; or outdoors and not able to maintain six-foot social distancing requirements; and when waiting for, riding, driving, or operating public transportation, including taxis, car service, or ride-sharing services. Exceptions were made for children under age 10, those with medical conditions or disabilities, persons located indoors when separated by at least six feet from all other persons, and when actively engaged in exercise at a gym or other indoor facility.

The updated order continues all of the requirements of the July order, including specifically mandating that all persons wear a facial covering when they are “in or on the premises of a Retailer.” It also continues to require compliance with a May 29, 2020 order requiring that retailers adhere to capacity limits to ensure physical separation, provide ready access to hand sanitizer, require routine disinfection of high-contact surfaces, and use one-way directional signage if necessary to achieve physical distancing.

Under the new order, retailers also must now post “clearly visible signage” at all entrances, reminding customers of the requirement to wear a facial covering “at all times when in or on the Retail Premises.” The required signage is available to download for free at this link.

Retailers “shall ensure compliance with this Order at all locations,” by designating an “on-site compliance officer” at each location who is to “ensure compliance with this Order.” The Order does not specify how the Designated Compliance Officer must do so, but does indicate that retail employees need not place themselves in jeopardy or at risk of harm to ensure customer compliance.

Violations of the order result in immediate closure of the retail premises for up to 24 hours. This is intended to allow any coronavirus droplets to dissipate. Closure orders must be preceded by an initial warning to the retailer. The order places enforcement in the hands of the Ohio Bureau of Workers’ Compensation Retail Compliance Unit, local health departments, and local law enforcement officers, but also encourages citizens observing violations to contact the Ohio Department of Health.

The new order does not apply to businesses that are subject to other specific orders. This includes restaurants, bars, banquet and catering facilities; hair salons, day spas, nail salons, barber shops, tattoo parlors, body piercing locations, and tanning facilities; and gyms, dance instruction studios, and other personal fitness venues.

Finally, the new order specifically requires that a facial covering “fully cover” the wearer’s nose, mouth, and chin. It also explains that the covering should be “comfortable” so that it does not have to be adjusted frequently “so as to avoid touching the face.”

The new order takes effect on 12:01 a.m. on Monday, November 16, 2020, and remains in effect unless the State of Emergency caused by the coronavirus pandemic is lifted.

If you have questions, please reach out to us here. We are happy to help.

Darrell A. Clay is a partner at  Walter | Haverfield who focuses his practice on labor and employment and litigation. He can be reached at dclay@walterhav.com or at 216.928.2896.

Paycheck Protection Program Loan Necessity Questionnaire

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November 4, 2020

November 4, 2020

The Small Business Association (the “SBA”) has begun requesting new and additional information from borrowers of Paycheck Protection Program (“PPP”) loans of $2 million or more, specifically related to the good faith certification. Prior to and since applying for the PPP, borrowers have been concerned about the certification that they were making or have made to obtain the PPP proceeds. The certification required borrowers to confirm: “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” The certification is actually a slight paraphrase of the statute’s good faith certification requirement, “that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient.”

We have been communicating with borrowers for some time to ensure that they have the proper documentation to support their good faith certification, just in case the SBA or IRS comes calling. Well, here is the first indication that the certification may be scrutinized. The category of borrowers that this may impact includes a borrower and any affiliates of the borrower with combined PPP loan totals of at least $2 million.  The SBA is using a new information request form, the Paycheck Protection Program Loan Necessity Questionnaire (the “Necessity Questionnaire”), to request the information from borrowers.

The Necessity Questionnaire for for-profit entities contains two sections, a Business Activity Assessment, and a Liquidity Assessment. The Business Activity Assessment includes questions regarding the borrower’s gross revenue for periods in 2019 and 2020, whether or not the borrower was subject to a governmental shutdown or other government order, whether or not the borrower has changed or altered its operations since March 2020, and whether or not the borrower has begun any new capital improvement projects since March 2020.  The Liquidity Assessment includes questions regarding the borrower’s cash holdings at the time of the PPP loan application, capital distributions made after March 2020, payments of outstanding debt after March 2020, compensation payments to highly-compensated employees after March 2020, the shareholder’s equity value at the time of the PPP loan application, the ownership structure of borrower’s entity, and whether or not the borrower received any other funds from any other governmental program.

Currently, the SBA is not requiring all PPP borrowers of $2 million or more to complete the Necessity Questionnaire.  If the SBA selects a PPP borrower to complete the Necessity Questionnaire, the PPP borrower will receive a copy of the Necessity Questionnaire directly from the lender servicing their PPP loan.  The PPP borrower will then have ten days to complete the Necessity Questionnaire and return it to the lender for submission to the SBA.  A failure to complete the Necessity Questionnaire could cause the SBA to determine that the borrower was ineligible for the PPP loan or any PPP loan forgiveness.

Nardone comment: We strongly encourage borrowers that are requested to complete the Necessity Questionnaire to work with legal counsel to ensure they have all required documentation, and that all information submitted with the Necessity Questionnaire is complete, accurate, and vetted for unintended consequences. This is not something that you should complete without appropriate oversight and counsel.

The SBA has indicated the purpose of the Necessity Questionnaire is to obtain information from a borrower that supports the good-faith certification made by the borrower on the PPP loan application.  The SBA will use the information provided by the borrower on the Necessity Questionnaire to confirm that the PPP loan was necessary due to the borrower’s economic uncertainty.  The SBA has specified that a request to complete the Necessity Questionnaire should not be considered a challenge to a borrower’s good-faith certification.

The lenders that we work with have indicated PPP borrowers should not proactively complete the Necessity Questionnaire, and should wait until they are contacted by their lenders or the SBA to complete the Necessity Questionnaire.  Please contact us if you have questions regarding the Necessity Questionnaire, or if you have received a request to complete the Necessity Questionnaire from your lender.

To the extent you are interested in reviewing the forms, there are two versions of the form; Form 3509 for for-profit borrowers, and Form 3510 for non-profit borrowers.  The Form 3509 can be found here, and the Form 3510 can be found here.

Kari Heinze is an associate in Walter | Haverfield’s Columbus office. She focuses her practice on business services within the healthcare and dental practice arena. Kari can be reached at kheinze@walterhav.com or at 614-246-2266.  

Vince Nardone is Partner-in-Charge of Walter | Haverfield’s Columbus office. He serves as a business advisor to owners and executives of closely-held businesses, counseling them on business planning, tax planning and controversy, cash-flow analysis, succession planning, and legal issues that may arise in business operations. Vince can be reached at 614-246-2264 or vnardone@walterhav.com.

New Ohio Small Business Relief Grant Program Created to Help Small Businesses Harmed by the Effects of COVID-19

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October 28, 2020

October 28, 2020

Ohio Governor Mike DeWine recently designated $125 million in funding received from the federal CARES Act for a small business relief grant program (the “Grant Program”). The Grant Program will provide $10,000 grants to Ohio small businesses that have been negatively impacted by the effects of COVID-19. The Grant Program will help businesses pay for a variety of expenses, including mortgage expenses, salaries, wages, or compensation for employees, and other COVID-related expenses. The Grant Program will begin accepting applications from eligible small businesses on November 2, 2020.

The Grant Program will certainly help Ohio small businesses that are hurting because of COVID-19. But, it is critical that grant applicants follow the Grant Program’s terms and conditions, including conditions related to eligibility, use of funds, and maintenance of records. Otherwise, the State of Ohio can deny grant applications or claw back any funds it distributes.

Only eligible businesses can receive funding from the Grant Program and must meet all of the criteria listed in the application. Eligible businesses can only use the Grant Program funds for certain COVID-related expenses. In addition, businesses that receive funds from the Grant Program must keep records of the specific eligible expenses they incurred for five years from the final expenditure of received funds. For more on the eligibility requirements, use of funds requirements, or the maintenance of records requirements, please visit the Grant Program website terms and conditions section here.

Businesses can start applying for Grant Program funds online here starting November 2, 2020, at 10:00 AM with a new or existing OH|ID. Applicants must provide certain required information during the application process. A list of the required information is available on the Grant Program website here.

Businesses that want to apply for Grant Program funds should start assembling the required documentation now, as the funds will be distributed on a first-come, first-served basis. We would be happy to help small business owners through the process of applying for funds, documenting the use of funds, and complying with the Grant Program’s terms and conditions.

Mike Sorice is a law clerk in the Columbus, Ohio office of Walter | Haverfield. He recently graduated from the Ohio State University Moritz College of Law.

Vince Nardone is Partner-in-Charge of Walter | Haverfield’s Columbus office. He serves as a business advisor to owners and executives of closely-held businesses, counseling them on business planning, tax planning and controversy, cash-flow analysis, succession planning, and legal issues that may arise in business operations.