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Local Governments Face First Amendment Challenges to Coronavirus Emergency Orders

Posted on: March 27th, 2020

By: Andy Treese

Can the government ban public gatherings, church services, political rallies, or protests during a global pandemic? The question isn’t hypothetical. Federal, state and local officials across the United States are struggling to prepare appropriate emergency orders targeted at slowing the spread of coronavirus. Some jurisdictions have banned gatherings of various sizes altogether, while others have banned a variety of assemblies with carveouts for essential services, religious gatherings and for other reasons.

Not everyone is complying with emergency orders, however. In Louisiana, a large Church reportedly continues to hold services with more than 1,000 attendees, defying the governor’s order banning gatherings of more than 50 people. Church officials have suggested the ban violates First Amendment protections of free exercise and freedom of assembly. That may or may not be correct, but few local governments want to find themselves at the tip of the spear of a costly constitutional challenge while trying to handle an emergency.

First Amendment challenges to coronavirus emergency orders may be unavoidable, but local governments may wish to consider a few key principles when preparing or amending them:

  • Content-neutral limitations on assembly are far more likely to survive constitutional scrutiny than limitations based on the purpose/content of an assembly. The Supreme Court has permitted state and local governments to impose content-neutral restrictions on the time, manner and place of assembly, provided the restrictions further an important governmental interest and leave open alternative means of communication. Content-based restrictions will be subject to the far more rigorous strict scrutiny standard, i.e. whether the order is narrowly tailored to further a compelling governmental interest. The Supreme Court, however, has recognized a state’s police power to promote public health by quarantine or mandatory vaccination since the 1800s. This interest seems even more compelling given the emergent nature of the pandemic response, and even courts applying strict scrutiny might be inclined to uphold thoughtful, well-reasoned bans on assembly.
  • Consider whether your order can (or should) be tailored to exclude application to protected speech. Several state and local bodies/executives have enacted orders containing exceptions for protected forms of speech or assembly such as church services. These exceptions seem likely to preclude facial constitutional challenges. Whether or not they reflect sound policy, of course, is a decision to be made by each jurisdiction.
  • Think now about the arguments that will be made later. Whatever degree of scrutiny will ultimately apply to your order, spend time identifying its time, place and manner restrictions. Does the order prohibit mass gatherings everywhere, or only where social distancing cannot be accomplished consistently with medical guidance? Does your order have an expiration date (perhaps subject to renewal) or is it indefinite? Are alternative forms of expression available and adequate? What guidance was considered when crafting your jurisdiction’s order? Consider whether to itemize these issues in the prefatory recitals of your order – or to document them elsewhere for future reference. Also, context is critical and a decision that seems reasonable based on today’s information may seem unreasonable later. If you rely on external guidance from the CDC, state or local health authorities, consider making hard copies or electronic copies organized by date, because that guidance is likely to change over time.
  • Finally, remember the power of qualified immunity. Governmental officials struggling to craft an appropriate response to the coronavirus outbreak should not have to worry about personal financial liability for their choices. Qualified immunity affords protection officials from individual capacity suits, even where they violate a plaintiff’s constitutional rights unless they violate clearly established law. Local officials will also be entitled to invoke various immunities from state law claims, though the nature and scope of immunity vary from state to state.

The local government team at Freeman Mathis & Gary will continue to monitor emerging constitutional issues arising from governmental response to the coronavirus outbreak.

Additional information:

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues on a regular basis.  On April 2, we will discuss the impact of Coronavirus on law enforcement.  Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

Disclaimer

Posted on: March 27th, 2020

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you. We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests. We cannot respond to all unsolicited requests for representation. If you need legal advice, please contact an attorney and enter into a valid, written attorney- client relationship. See also our terms of service for this website.** 

U.S. Department of Labor Issues Guidance on the Families First Coronavirus Response Act Before Legislation Goes into Effect on April 1, 2020

Posted on: March 25th, 2020

By: Robert Young

In the time since the President signed the Families First Coronavirus Response Act (FFCRA or the Act) into law a few days ago, employers have asked many questions about how the new legislation will affect them once it goes into effect. To answer these questions, the U.S. Department of Labor (DOL) Wage and Hour Division (WHD) recently issued its first round of published guidance for employers.

The DOL guidance addresses critical questions employers may face in response to the (i) Emergency Family and Medical Leave (FML) Expansion Act, which adds a basis for FMLA leave related to employees whose children’s schools closed due to an emergency order, and (ii) Emergency Paid Sick Leave Act, which requires emergency paid sick leave for certain COVID-19 related absences, in addition to any PTO that the employer already provides.

DOL Guidance for the Emergency Family and Medical Leave Expansion Act and the Emergency Paid Sick Leave Act

In addition to providing a detailed overview of which employers and employees are covered and the duration of leave and calculation of pay under the FFCRA (explained in depth here), the WHD guidance provided answers to several previously unanswered questions. The latest guidance provides as follows:

Effective Date:

  • The FFCRA’s paid leave provisions are effective on April 1, 2020, not April 2, 2020 as previously indicated, and apply to leave taken between April 1, 2020 and December 31, 2020.
  • The FFCRA is not retroactive. Leave eligibility begins April 1, 2020. Therefore, if an employer is currently offering an employee paid sick time due to COVID-19 concerns, these employees would be still be eligible for 80 hours of emergency paid sick leave as of April 1, 2020.

FFCRA Coverage:

  • Covered employees who qualify towards the 500-employee threshold under the FFCRA include:
    • All full-time and part-time employees within the United States, including any State of the United States, the District of Columbia, or any Territory or possession of the United States;
    • Employees on leave;
    • Temporary employees who are jointly employed by the employer and another employer (regardless of which employer maintains the employee’s payroll); and
    • Day laborers supplied by a temporary agency (regardless of whether the employer is the temporary agency itself or the client firm of the temporary agency, as long as there is a continuing employment relationship).
  • For purposes of calculating the 500-employee threshold:
    • The number of employees is determined on the date the employee takes leave.
    • A corporation (including its separate establishments or divisions) is a single employer and its employees must each be counted towards the 500-employee threshold.
    • If two entities are found to be joint employers under the FLSA, all of their common employees must be counted in determining whether paid sick leave must be provided under the Emergency Paid Sick Leave Act and expanded family and medical leave must be provided under the Emergency FML Expansion Act.
    • For purposes of the Emergency FML Expansion Act, if two entities are an integrated employer under the FMLA, then employees of all entities making up the integrated employer will be counted in determining employer coverage for purposes of expanded family and medical leave.
    • Independent contractors are not covered for purposes of the 500-employee threshold.
  • Small businesses with fewer than 50 employees will be required to document why they meet certain criteria set forth by the DOL to qualify for an exemption to the FFCRA, which will be established by the DOL in a forthcoming regulation. We will update you when this regulation is published.

Interaction of the Emergency FML Expansion Act and Paid Sick Leave Act:

  • An employee may be eligible for both types of leave, but only for a total of twelve weeks of paid leave.
  • Employees who qualify under the Emergency FML Expansion Act may use 80 hours of paid sick leave under the Emergency Paid Sick Leave Act for the first ten workdays. After the first ten workdays have elapsed, a covered employee will receive 2/3 of his/her regular rate of pay for the hours he/she would have been scheduled to work in the subsequent ten weeks under the Emergency FML Expansion Act.
  • Importantly, an employee can only receive the additional ten weeks of expanded family and medical leave under the Emergency FML Expansion Act for leave to care for a child whose school or place of care is closed or if child care provider is unavailable, due to COVID-19 related reasons.

The published guidance includes a Fact Sheet for Employers (linked here), Fact Sheet for Employees (linked here), and a Questions and Answers document (linked here). The DOL stated it will provide a workplace poster required for most employers later this week, as well as additional facts sheets and guidance. We will update you when the DOL issues this information.

Additional Information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Labor & Employment, Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce educational content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

Coverage for unclean hands? Plaintiffs Say Manufacturer Misrepresented Sanitizer’s Effect on Coronavirus

Posted on: March 25th, 2020

By: Renata Hoddinott and Barry Miller

On March 23 FMG presented the webinar Navigating Coverage Issues Arising from COVID-19. Presenters Marc Shrake, Erin Lamb, and Barry Miller discussed four lawsuits that already have been filed alleging claims related to coronavirus.
A few additional cases bear mentioning, and there will be many more to come.

In class action David v. Vi-Jon, Inc.¸ 20-CV0424, S.D. Cal. March 5, 2020 , a putative class alleges that Germ-X, a Vi-Jon product, is “advertised, marketed and sold as a Product that will prevent or reduce infection from the flu and other viruses, including the coronavirus.”

The David Complaint notes that on January 17, 2020, the Food and Drug Administration issued a warning letter to Purell regarding advertising that its hand sanitizer could prevent infection from flu and other viruses. The FDA letter says nothing about coronavirus, which given its date is not surprising. But it does chastise the maker of Purell for its advertising and social media posts that “clearly indicate your suggestion that PURELL® Healthcare Advanced Hand Sanitizers are intended for reducing or preventing disease from the Ebola virus, norovirus, and influenza.” Because Germ-X’s formula is nearly identical to Purell, the David Complaint states that the FDA letter applies equally to Vi-Jon.

Vi-Jon was already the subject of a class action suit filed a month earlier alleging similar promises that its product would prevent the transmission of flu also were misleading. The putative class in Sibley et al v. Vi-Jon, Inc., Case No. 20-cv951, N.D. Cal., February 7, 2020 also alleges the FDA letter to Purell should apply to Vi-Jon.

David alleges (¶ 50) that—by stating that Germ-X kills 99.9 percent of germs—Vi-Jon implies that Germ-X kills 99.9 percent of viruses and bacteria, preventing and reducing illness. Sibley, in turn, alleges that consumers were misled about the effectiveness of alcohol-based hand sanitizer and that Vi-Jon duped consumers into thinking their product (Germ-X) would fight the flu virus despite no clinical studies showing alcohol-based sanitizers reducing instances of the flu. Similarly, the January 17 FDA letter states that the agency “is currently not aware of any adequate and well-controlled studies demonstrating that killing or decreasing the number of bacteria or viruses on the skin by a certain magnitude produces a corresponding clinical reduction in infection or disease caused by such bacteria or virus.”

Both lawsuits allege claims under California consumer protection laws prohibiting false advertising and unfair competition. The David lawsuit adds common law claims for negligent misrepresentation and intentional misrepresentation.

False advertising may raise issues under Coverage B (“Personal and Advertising Injury”) under the standard Commercial General Liability Policy. Under the CGL definitions “Personal and Advertising Injury” only occurs if an enumerated “offense” is alleged or proved. In the ISO form those offenses are:

  • False arrest, detention or imprisonment;
  • Malicious prosecution;
  • The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a  room,  dwelling  or  premises  that  a  person occupies,  committed  by  or  on  behalf  of  its owner, landlord or lessor;
  • Oral or  written  publication,  in  any  manner, of material  that  slanders  or  libels  a  person  or organization   or   disparages a person’s  or organization’s goods, products or services;
  • Oral or  written  publication, in any manner, of material that violates a person’s right of privacy;
  • The use  of  another’s  advertising  idea  in  your “advertisement”; or
  • Infringing upon another’s copyright, trade dress or slogan in your “advertisement”.

None of these enumerated offenses expressly include false advertising or misrepresentations to consumers.

Coverage A is triggered by allegations of “Bodily Injury” to a third person or “Property Damage” suffered by a third person. The Complaints do not appear to allege bodily injury. In fact, the only specific damage claimed is that the class would not have bought Germ-X but for the advertising or representations of Vi-Jon. Thus, they allege, Vi-Jon holds money that should belong to the class. But the taking of money without right does not constitute “property damage” in many states, including California.

Another case worth reading is Welch Foods, Inc. v. Nat’l Union Fire Ins. Co., No. 09-12087-RWZ, 2010 U.S. Dist. LEXIS 110004 (D. Mass. Oct. 1, 2010) where a competitor alleged that Welch’s pomegranate juice was made mostly from apples. The court found no coverage for false and misleading advertising under three different policies and four different coverages:

  • There was no coverage under the GL for advertising injury.
  • A “Media Wrongful Act” coverage did not apply because (among other reasons) it covered “errors or omissions” in publications or broadcasts, and the complaint alleged intentionally false advertising.
  • “Professional Services Wrongful Act” coverage did not apply because there were no allegations that the advertiser was engaged in professional services, or that such coverage applies to claims from competitors.
  • A policy providing coverage for claims arising from an alleged “Wrongful Act” defined wrongful act to include a “misleading statement.” While the allegations may have fallen within that insuring agreement, the policy contained an exclusion for claims arising out of unfair competition or deceptive trade practices, among other business practices. Because the Complaint alleged such practices the exclusion applied.

Both Germ-X lawsuits, as well as any further actions that may be filed in the coming weeks and months, merit continued monitoring to see if coverage issues arise under these kinds of policies or others.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

UPDATE: City of Atlanta’s COVID-19 Shut-Down Order Revised to Allow All Construction to Proceed

Posted on: March 25th, 2020

By: Jake Carroll

The Associated General Contractors of Georgia, Inc. reports that a corrected executive order has been issued by The Office of Mayor Keisha Lance Bottoms designating all construction as “Essential Infrastructure.” The original executive order limited “Essential Infrastructure” to public works construction projects . The revision allows all construction projects to move forward within the jurisdictional limits of the City of Atlanta.

 Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

 

City of Atlanta’s COVID-19 Shut-Down Order Impacts Certain Construction Projects

Posted on: March 24th, 2020

By: Jake Carroll

Executive Order Number 2020-21 (“Shut-Down Order”) was issued by Kiesha Lance Bottoms, the Mayor of Atlanta, on March 23, 2020 at 8:49PM. Atlanta’s Shut-Down Order is more restrictive than similar orders seen in Florida (with broader exceptions for construction) and  California (allowed some construction to proceed).

Key Terms:

  • Jurisdiction: Order only applies to projects within the jurisdictional limits of Atlanta.
  • Date and Time of Effect: March 24, 2020 at Midnight.

Impact on Construction Projects: shutters construction projects that are not deemed “Essential Infrastructure” or “Essential Business” as defined by or enumerated in the Order.

  • Essential Infrastructure” is limited to projects for public works construction, airport operations, public transportation, utilities, and telecommunications, etc.  It generally does not capture more commercial construction, like warehousing or housing.
  • Essential Businesses” provides additional categories related to construction, including:
    • Healthcare operations and infrastructure;
    • Businesses that provide shelter for economically disadvantaged individuals (affordable housing projects may qualify);
    • Educational facilities; and
    • Residential facilities and shelters for seniors, adults or children.
  • General commercial construction projects like hotels, apartments and warehouses likely do not qualify.

Further Considerations:

  • Construction Industry Stakeholders should review FMG’s COVID-19: Commons Issues in Construction Contracts
  • Contractors should evaluate all existing construction contracts within the City’s jurisdiction, to determine what their rights and obligations are, including notice requirements.
  • Developers should evaluate whether they have any recourse under existing insurance policies, including business interruption and builder’s risk. Typically these policies are not implicated absent direct physical damage to property, but the results depend on the specifics of each policy.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

Facing Increased Cyber Threats Against Legal and Accounting Professionals During the COVID-19 Pandemic

Posted on: March 24th, 2020

By: Renata Hoddinott

Millions around the world have had their daily routines disrupted and a wide variety of companies are participating in the largest “work from home” mobilization in history. While the ability for professionals to work remotely is key to business continuity in the midst of this pandemic, in doing so, firms and professionals have open their networks to unprecedented exposure.

Bad actors are capitalizing on the intense focus on COVID-19 panic and fear and security professionals have already noted an increase in malicious schemes. Those include phishing emails framed as alerts regarding the coronavirus outbreak containing attachments purportedly with information about COVID-19 and how to protect against the virus. When people are already stressed, fearful, and desperate for the most up-to-date information to protect themselves and loved ones, there is a significant risk to the security of any network.

Another prevalent threat for professionals, and particularly for CPAs, is in the realm of wire transfer requests. These types of scams are on the rise and can be very convincing, duping even the most cyber-savvy of professionals. Bad actors often begin well in advance of an attack by laying in wait and collecting information over an extended period. When the opportunity presents itself, such as now, these criminals use that information to launch convincing wire transfer requests. They can be framed as emails from “clients” requesting emergency funding and providing fraudulent wire instructions. CPAs often find themselves on the front lines against these malicious schemes and need to remain diligent and exercise extreme caution when responding to any requests. With professionals working remotely it can be more difficult to ensure a request is valid, but it is vital for requests to be double and triple checked and validated directly by phone or video to ensure accuracy before a single dollar is transferred.

Now is the time for all professionals to be vigilant about the cyber dangers. An unprecedented number of professionals are accessing company networks remotely and continuing to service clients including handling sensitive and confidential client data. In an office environment, when a threat is detected, IT can immediately quarantine and disconnect the compromised device and conduct an investigation of the company network. Now, however, employees may be connecting to firms’ servers from their own perhaps less secure networks and IT professionals are not on-site in those locations to troubleshoot issues and contain threats more easily. Failure to appropriately protect the sensitive and confidential data of clients may be the cause of malpractice claims in certain circumstances.

Firms should ensure IT security professionals are accessible to remote working professionals and able to isolate remote devices when necessary and limit the potential damage to the firm’s network through that compromised device. Now more than ever firms and professionals must remain diligent and prepared against new risks of fraud and cyber-attacks. Keeping mindful of cyber threats in the midst of this crisis is critical to ensuring ongoing success.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce educational content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

IRS and DOL Announce Employers Can Take Immediate Advantage of Tax Credit Offsets Under the Families First Coronavirus Response Act

Posted on: March 23rd, 2020

By: Jeffrey A. Hord

On Friday, the Internal Revenue Service and U.S. Department of Labor issued an announcement regarding the timing of reimbursement by the federal government to employers for paid emergency leave and expanded FMLA leave required under the new Families First Coronavirus Response Act (“FFCRA”). This guidance (available here) represents an important step towards providing employers with greater clarity as to how and when their businesses can obtain tax relief relating to the cost of providing Coronavirus-related leave to employees.

As we covered in this Blog last week, the FFCRA requires private employers with fewer than 500 employees to provide paid sick leave and paid family leave for certain individuals impacted by the COVID-19 pandemic. Understandably, small businesses have been extremely anxious about the financial burden of complying with these new requirements, particularly during this time of economic uncertainty and unrest. For this reason, the FFCRA created a series of refundable tax credits for employers providing paid emergency sick leave or paid FMLA leave.  As written, however, the FFCRA left unanswered many key questions regarding the process for obtaining these credits, the timing of subsequent reimbursement, and so on.

In Friday’s announcement, the DOL and IRS made clear that employers can begin to “take immediate advantage” of these tax credits by retaining and accessing funds that they would otherwise pay to the IRS in payroll taxes. Here are some of the “key takeaways” highlighted in the announcement:

  • Complete Coverage
    • The tax relief provisions of the FFCRA are intended to provide “dollar-for-dollar,” 100% reimbursement for Coronavirus-related employee leave.
      • Health insurance costs are also included in the credit: the amount of the credit is increased by the employer’s “Qualified Health Plan Expenses” that are allocable to the qualified sick leave wages.
    • Employers face no payroll tax liability.
  • Prompt Recoupment of Employer Costs
    • Employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS.
      • Payroll taxes available for retention include withheld federal income taxes and both the employer and employee shares of Social Security and Medicare taxes.
    • In other words, any taxes held in escrow for payment on FICA, Social Security and Medicare taxes now could be used to pay employees taking paid leave under the new law.
    • If these retained payroll taxes are not enough to cover the cost of leave paid out to employees, employers will be able file a request for an accelerated payment from the IRS.
      • The turnaround time for such requests is expected to be “two weeks or less.”
  • Relaxed Compliance
    • The Department of Labor is issuing a “temporary non-enforcement policy that provides a period of time for employers to come into compliance with the Act.”
      • Under this policy, DOL will not bring an enforcement action against any employer for violations of the FFCRA until May 2, 2020—thirty (30) days after its effective date—so long as the employer has “acted reasonably and in good faith” to comply.
        • According to DOL, “good faith” exists when: (i) violations are remedied and the employee is made whole as soon as practicable by the employer, (ii) the violations were not willful, and (iii) the employer submits a written commitment to comply in the future.
  • Small Business Protection
    • Businesses with fewer than 50 employees are eligible for an exemption from the leave requirements relating to school closings and/or unavailable child care.
      • As with the exemptions set forth in Sections 3102 and 5111 of the FFCRA, the employer must show that compliance would “jeopardize the viability of the business as a going concern”; i.e., the ability of the business to remain open and continue operating.
      • DOL will be providing emergency guidance establishing simple and clear criteria defining the circumstances that will meet the standard of “jeopardy to the viability of an employer’s business as a going concern.”
    • While not referenced in Friday’s announcement, small business (with fewer than 50 employees) are already exempt from civil liability in an FMLA lawsuit relating to the FFCRA’s expanded family leave provisions.[1]

This announcement is sure to give some comfort to employers worried about how they would cover paid leave mandates without knowing when they might be reimbursed for those substantial costs. Cash flow concerns have already caused many businesses to make difficult furlough and termination decisions; hopefully, this guidance will help employers navigate through this unprecedented time.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Labor & Employment, Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

 **DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce educational content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

[1] See Emergency Family and Medical Leave Expansion Act, Section 3104.

FCC Confirms COVID-19 Pandemic Constitutes Emergency Under TCPA

Posted on: March 23rd, 2020

By: Matthew Foree

The Federal Communications Commission (“FCC”) has just issued a Declaratory Ruling confirming that the coronavirus pandemic constitutes an emergency under the Telephone Consumer Protection Act (“TCPA”). The Declaratory Ruling can be found here. Consequently, “hospitals, healthcare providers, state and local health officials, and other government officials may lawfully communicate information about the novel coronavirus as well as mitigation measures without violating federal law.”

The TCPA prohibits autodialed, pre-recorded, or artificial voice calls to wireless telephone numbers, with certain exceptions. The TCPA expressly exempts calls made for emergency purposes. The FCC’s rules define “emergency purposes” to mean “calls made necessary in any situation affecting the health and safety of consumers.” The exception is intended for “instances [that] pose significant risks to public health and safety, and [where] the use of prerecorded message calls could speed the dissemination of information regarding . . . potentially hazardous conditions to the public.”

The FCC recognized that a critical component of the nation’s efforts to address and contain the pandemic is the ability of healthcare and public safety organizations to communicate effectively with the public.  Therefore, it found that the current pandemic constitutes an imminent health risk to the public.  The FCC found that in determining whether a call relating to the pandemic qualifies as a call made for an emergency purpose, it looks to (1) the identity of the caller and (2) the content of the call. Under the first prong, “the caller must be from a hospital, or be a healthcare provider, state or local health official, or other government official as well as a person under the express direction a such an organization and acting on its behalf.” Under the second prong, “the content of the call must be solely informational, made necessary because of the COVID-19 outbreak, and directly related to the imminent health or safety risk arising out of the COFIC-19 outbreak.”

The FCC gave multiple examples of calls that would fall within the emergency exception. For example, “a call originating from a hospital that provides vital and time-sensitive health and safety information that citizens welcome, expect, and rely upon to make decisions to slow the spread of the COVID-19 disease would fall squarely within an emergency purpose.” The FCC also recognized that calls that contain advertising or telemarketing of services do not constitute calls for an emergency purpose. Furthermore, calls made to collect a debt, even if it arises from related healthcare treatment, are not made for an emergency purpose. Such calls still require the prior express consent of called party.

Finally, the FCC recognized that consumers have already received telemarketing and fraudulent robocalls related to the pandemic, including scam text messages and calls offering home testing kits and promoting bogus cures. The FCC stated that it would be vigilant in monitoring complaints about these calls and would not hesitate to enforce its rules when appropriate.

If you have any questions about the FCC’s Declaratory Ruling, or any obligations under the TCPA during this time, please do not hesitate to contact Matt Foree at [email protected].

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce educational content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

Business Continuity Plans in the Age of Coronavirus

Posted on: March 23rd, 2020

By: Jennifer Weatherup

As the Coronavirus, or COVID-19, has caused unprecedented disruptions, including a precipitous decline in the stock market, it is increasingly important for broker-dealers to prepare plans which will allow them to fulfill their responsibilities to customers and continue operations under difficult circumstances. More specifically, broker-dealers should ensure that their business continuity plans allow their businesses to persist in the event of a pandemic such as the Coronavirus. To this end, the Financial Industry Regulatory Authority requires its members to plan ahead in order to meet customer needs in the event of an emergency.  Specifically, FINRA mandates that all broker-dealers “ must create and maintain a written business continuity plan identifying procedures relating to an emergency or significant business disruption… reasonably designed to enable the member to meet its existing obligations to customers [and] address the member’s existing relationships with other broker-dealers and counter-parties.” (FINRA Rule 4370(a).) FINRA further requires that members update their continuity plans in the event of material changes to their operation, and conduct an annual review to identify whether the plan must be modified. (FINRA Rule 4370(b).)

In response to the Coronavirus crisis, FINRA released Regulatory Notice 20-08, “Pandemic-Related Business Continuity Planning, Guidance and Regulatory Relief” on March 9, 2020. This Notice reiterates broker-dealers’ responsibilities under Rule 4370, and recommends that members include pandemic preparedness in their business continuity plans, and evaluate whether their current plans “are sufficiently flexible to address a wide range of possible effects in the event of a pandemic in the United States [including] staff absenteeism, use of remote offices or telework arrangements, travel or transportation limitations and technology interruptions or slowdowns.”  Notably, FINRA recommends that member firms’ business continuity plans include plans to employ remote offices or telework arrangements during a pandemic. In order to ensure that the use of remote work arrangements does not undermine firms’ abilities to satisfy their other professional duties, FINRA also recommends that firms which permit remote work arrangements consider strategies for exercising sufficient supervision over employees who are working remotely, and test the extensive use of telework arrangements by employees before remote work arrangements are broadly implemented at a member firm. FINRA identified other potential issues which could arise in the event of a pandemic, and which should be addressed in a business continuity plan, including the following: increased risk of cybersecurity breaches, emergency office relocations, increased customer call volumes, and challenges in making timely regulatory filings.

As the Coronavirus pandemic has already affected operations, member firms should make it a priority to carefully review their business continuity plans to ensure that they adequately address the potential effects of the Coronavirus; without adequate plans in place, member firms may not only find themselves unable to satisfy obligations to customers, but may face regulatory scrutiny once this crisis is behind us.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

COVID-19: Common Issues in Construction Contracts.

Posted on: March 23rd, 2020

By: Catherine Bednar, Jake Carroll and Ben Dunlap

On March 17, 2020, Boston became the first U.S city to order a halt to work on all construction sites due to the coronavirus, shutting down work two weeks. Since then, other states and cities have issued shutdown orders due to the pandemic, varying significantly in their scope and impact on the construction industry.  Pennsylvania’s governor ordered a shutdown of all “non-life sustaining business”, including both residential and nonresidential building construction in that list.  In contrast, California issued a statewide “stay-home” order which initially appeared to encompass the construction industry, but a day later issued a list of “Essential Critical Infrastructure Workers” which exempted construction workers from the order, including housing construction. Georgia’s governor lifted certain time restrictions for owners to retain private inspectors to approve plats and perform building inspections for code compliance. In some areas, it is anticipated that construction workers may be moved from their previous assignments to new priority projects, such as temporary hospitals.

Regardless of jurisdiction, it is inevitable that the construction industry will be significantly impacted by the current pandemic, whether due to government-ordered shutdowns, supply chain delays, the absence of sick or quarantined employees, or other business interruptions. The legal consequences and available remedies will depend upon the individual contracts governing a particular construction project.  The following is an overview of some relevant contract provisions and remedies which may come into play on construction projects affected by the present crisis.  In particular, parties to a construction contract may benefit from invoking contract remedies that preserve their ability to successfully complete the project in the future, rather than unilaterally terminating the agreement when performance is impeded due to difficult and unforeseen circumstances.

Potential Claims for Delay Damages and Liquidated Damages:  An immediate concern of owners, contractors and subcontractors is the potential for delay-related claims, including those based on liquidated damages clauses in construction contracts triggered by delays in project completion. A liquidated damages clause specifies the amount of money that must be paid as damages for failure to perform under a contract. Some construction contracts contain “no damage for delay” provisions which can prevent a party from recovering time-related costs when the project is delayed. The potential for delay damages or liquidated damages depends upon the contract language.

As discussed below, some contracts contain force majeure clauses that may excuse delays based on a construction ban or generally caused by the coronavirus pandemic. Others contain extension of time clauses that govern whether and how delay damages will be calculated.  Alternatively, parties to a construction contract may be able to suspend work, terminate the contract for convenience, or enter into a forbearance agreement to avoid or mitigate these damages.

Overhead and Mobilization Costs: Aside from direct delay damages, state and local government bans and other impacts of the pandemic will likely result in increased project costs as leased equipment sits idle and crews eventually have to be remobilized to continue their work when the bans are lifted. Contractual parties may dispute who should bear the added cost of extending equipment leases through the period of the moratorium or remobilizing crews and equipment to sites. The costs of securing construction sites at the beginning of the ban and of preparing sites for continuation of work at the end of the moratorium – as well as maintenance of skeleton crews – may also be substantial, and parties should consider how such costs should be allocated under the contract.

Force Majeure Clauses: Some construction contracts contain a force majeure clause, which serves as a defense against non-performance due to factors beyond the breaching party’s control. A force majeure clause may excuse performance altogether or may provide for an extension of time to perform. Force majeure clauses may specifically reference emergencies declared by the state or federal government, prolonged shortages of supplies, or may more generally refer to extreme and unusual events amounting to an Act of God. Whether the coronavirus pandemic triggers a force majeure clause depends on the contract language and applicable law.

Extension and Suspension of Work Clauses: Many construction contracts provide for parties to request extensions of time to complete performance, while other contracts permit suspension of work or production for a defined or indefinite time. The contract should dictate the procedures for the schedule change: many contracts require that the contractor notify the owner of a delay beyond the contractor’s control and make a written request for an extension of time, while others provide that additional time may be requested through change orders. Both extensions and suspensions of work allow the Project schedule to be revised once the parties determine an extension or suspension is warranted. Still, the language of the contract would determine what, if any remedies are available to the contracting parties, such as recovery of re-mobilization and extended duration costs.

Termination for Convenience Clauses: Typically, a general contractor or owner can terminate the contract “for convenience”—for any reason. In these scenarios, the general contractor or owner would likely be required to pay for work completed or produced before the termination, but typically not unearned profits on work not performed. Such clause would result in an orderly and fairer termination of the contract. Termination of a contract is a drastic remedy, and should not be undertaken lightly. Should a termination be deemed as “wrongful,” the terminating party could be liable for additional damages, including attorneys’ fees, lost profits, and interest of any amounts outstanding.

Forbearance Agreements: a forbearance agreement is a contractual agreement that can address delays or non-performance without resorting to termination or default. In the commercial lending industry, forbearance agreements can extend the time for a borrower to make payments on a construction loan. Construction companies should keep in mind that forbearance agreements are not limited to financing contracts, and can also be used to postpone termination of a construction contract. Under such an agreement, for example, an owner might refrain from declaring the contractor in default or terminating the construction contract, provided that the contractor meet certain agreed-upon milestones. Or, the owner might simply agree to toll any claims of breach against the contractor for non-performance during the construction ban and for a period of time thereafter.

Insurance and Financing: In addition, project-related insurance policies may need to be extended, resulting in higher costs. For project owners and developers, construction delays caused by COVID-19 may lead to added financing and carrying costs. Parties to construction contracts should work to ensure they continue to meet the contract’s insurance requirements.  Parties to construction costs will also be well-served by identifying added costs and seeking solutions early.

Surety Bonds: Keep in mind that many surety bonds require that notice of a change to a Project’s costs or duration must be timely given to the obligated surety. Failure to comply with such requirements could serve as a defense to payment or performance by the Surety at a later date.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

 **DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

COVID-19 Prompts Georgia to Adopt Emergency Rules on Unemployment that Penalize Employer Non-Compliance

Posted on: March 23rd, 2020

By: Andrew Kim

In response to COVID-19, on March 16, 2020, the Georgia Department of Labor adopted emergency rules making it a requirement for employers affected by COVID-19 to file partial unemployment claims on behalf of their employees. Barring subsequent action from the Georgia Department of Labor, these emergency rules will remain in effect for 120 days.

Emergency Rule: Mandatory Filing for Employers

Emergency Rule 300-2-4-0.5, containing Rule 300-2-4-.09(1), requires employers affected by COVID-19 to file partial unemployment claims on behalf of their employees.  For Partial Unemployment Claims filed on or after March 15, 2020, Employers must do the following:

  • File all partial unemployment claims online via the Georgia Department of Labor’s Employer Portal;
  • File partial claims with respect to any week during which an employee works less than full-time due to a partial or total company shutdown caused by the COVID-19 public health emergency.

For any violation of these requirements, the employer must pay the Commissioner the full amount of benefits paid to the employee.

Excluded Employees

Based on the Georgia Department of Labor’s guidance, employers do not need to submit partial claims for employees who:

  • Will be paid for the temporary layoff period (e.g., paid salary, paid sick leave, paid vacation or paid family leave);
  • Are or were on scheduled leave prior to the layoff period (e.g., leave of absence or medical leave);
  • Were employed a temporary agency and are currently working at your place of business;
  • Were employed in another state in the last 18 months (those employees should be directed to apply for unemployment benefits online);
  • Were employed with the federal government or on active military service in the last 18 months (those employees should be directed to apply for unemployment benefits online).

Filing Partial Claims Online

 

To file a partial claim online, an Employer must be a registered user that has administrator or user privileges permitting them to submit partial claims through the Employer Portal.  Employers who are registered but are not permitted to file partial claims are directed to contact their Employer Portal administrator for assistance. Employers that are not registered on the Employer Portal must establish an Employer Administrator Account.

Steps to file partial claim on the Employer Portal:

  • Log into the Employer Portal
  • Select the employer account number under Registered Account
  • Select the File Partial Claims link under Common Links
  • Follow the on-screen instructions

Considerations When Filing:

The Georgia Department of Labor provides several points to consider when filing:

  • Employers must file a partial claim for each pay period. A week of partial unemployment consists of an employer’s established pay period week.
  • Once a pay period is established, it should remain the same.
  • Accurately report the employee’s name, social security number (SSN), and date of birth. They must match the Social Security Administration’s records.
  • There must be seven (7) days between payment week ending dates.
  • Do NOT submit claims until after the week ending date on the claim. The Georgia Department of Labor (GDOL) cannot accept claims filed prior to the week ending date on the claim.
  • Report any vacation pay, holiday pay, and/or earnings during the week in which it was earned, NOT during the week it was paid to the employee.
  • Report any additional income employees are receiving to the GDOL, except Social Security benefits, jury duty income, and pay for weekend military reserve duty.

Emergency Rule: Waiver of Work Search Requirements

Emergency rule 300-2-0.4, containing Rule 300-2-4-02., has waived all work search requirements for claims filed on or after March 14, 2020. This rule remains in effect until either the Governor declares the Public Health State of Emergency over or 120 days from the adoption of the emergency rule.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce educational content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

Coronavirus Paid Leave Laws Pass, Set To Become Effective Within 15 Days

Posted on: March 23rd, 2020

Coronavirus Paid Leave Laws Pass, Set To Become Effective Within 15 Days

By: Justin Boron

The President yesterday evening signed The Families First Coronavirus Response Act into law after Congress passed it with overwhelming bipartisan support. The legislation drastically alters medical and sick leave requirements by requiring employers to pay employees during certain kinds of absences related to the Coronavirus crisis.

The House’s March 16, 2020 version of the bill cleared the Senate without amendment. You can find the bill here and our initial analysis here. In this update, we are providing an outline of issues that could come up for an employer considering a leave request under these new laws. The law is set to take effect within 15 days, and the Secretary of Labor is required to issue guidelines to assist employers in calculating the amount of paid sick time during that time period. We will update you when the Secretary provides further guidance.

  1. Emergency Family and Medical Leave Expansion Act.

The Emergency Family Medical Leave Expansion Act adds a basis for FMLA leave related to employees whose children’s schools closed due to an emergency order. At the outset, it is important to note that the pre-existing, FMLA leave bases remain in place, so employers will need to apply their pre-existing FMLA policies to leave requests and consider whether the employee would qualify under the non-Coronavirus bases for FMLA leave, which can be found here.

The following issues are likely to arise when an employer receives an emergency family medical leave request:

  1. Have you employed less than 500 employees? (See 29 CFR 825.105 for the FMLA’s general rules on counting employees for coverage, available here). If so, the employer is covered under the FML Expansion Act.[1]

Exception: If you employ fewer than 50 employees, the FML Expansion Act requires your compliance, but you are immune from civil liability for violations of it.[2]

  1. Is the employee eligible? The employee has been employed 30 days by the employer,[3] and the employee cannot work or telework; the employee has a childcare need; and the child’s school or daycare is closed due to an emergency declared by federal, state, or local authority for Coronavirus (or childcare provider is unavailable).[4] If so, then the eligibility requirements for employees will be met.

Exception: If you are an employer of a “health care provider,” then you may elect to exclude an employee from application of the new emergency FMLA leave provisions.[5] For the definition of health care provider, see 29 CFR 825.102 available here.

  1. The FML Expansion Act does not address certification but the definition of “qualifying need related to a public health emergency” makes the request verifiable based on publicly available information.
  1. If each element above is met, then the employer must provide:
  • An initial 10 days of unpaid leave during which the employee may elect to use PTO or sick pay provided under the Emergency Paid Sick Leave Act.
  • After the initial 10 days, 10 weeks and four days of paid leave at 2/3 of employee’s regular rate of pay and the number of hours the employee is regularly scheduled to work, but this paid leave will be no more than $200 per day and $10,000 in the aggregate.[6] See section 110 (b)(2)(C) for employee’s with variable schedules.

Exception: Employers that have multi-employer collective bargaining agreements are addressed specially in Section 3103 of the FML Expansion Act.

  1. At the end of the 12-week FMLA emergency leave, the employee’s right to be restored to the employee’s position is the same as under pre-existing FMLA rules unless the employer has less than 25 employees and meets certain economic hardship requirements in section 110(d) of the FMLA, as amended.
  1. Emergency Paid Sick Leave Act

The Emergency Paid Sick Leave Act requires emergency paid sick leave for certain Coronavirus related absences that is in addition to any PTO that the employer already provides. It is important to note that the FML Expansion Act is not co-extensive with the Emergency Sick Leave Act, so sick pay requests will need to be evaluated separately from emergency family leave requests.

The following issues are likely to arise when an employer considers an emergency sick leave request:

  1. Is the employer subject to the Emergency Paid Sick Leave Act? A private employer is a “covered employer” if it is engaged in commerce and employs less than 500 employees. A public agency or entity other than a private employer is a “covered employer” if it employs one or more employees. It includes an employer acting directly or indirectly in the interest of employer and any successor-in-interest companies.[7]
  1. Is the employee eligible? An employee is unable to work or telework because the employee:
  • is subject to a Federal, State, or local quarantine or isolation order related to COVID–19;
  • has been advised by a health care provider to self-quarantine due to concerns related to COVID–19;
  • is experiencing symptoms of COVID–19 and seeking a medical diagnosis;
  • is caring for an individual who is subject to a governmental quarantine order or who has been advised by a health care provider to self-quarantine;
  • is caring for a son or daughter of the employee if the school or place of care of the son or daughter has been closed, or the childcare provider of such son or daughter is unavailable, due to COVID–19 precautions; OR
  • is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.[8]

Note that the definition of an employee of a public agency has special requirements under 29 U.S.C. 203(e)(2). The definition also includes other types of government employees specified in Section 5110 of the Emergency Sick Leave Act.

Exception: If you are an employer of a “health care provider,” then you may elect to exclude an employee from application of the Emergency Paid Sick Leave provisions.[9] For the definition of health care provider, see 29 CFR 825.102 available here.

Exception: Employers that have multi-employer collective bargaining agreements are addressed specially in Section 5106 of the Emergency Paid Sick Leave Act.

  1. If the first two elements are met, the employer must provide paid sick time in addition to paid leave provided by the employer as follows:
  • For full-time employees, 80 hours
  • For part-time employees, a number of hours equal to the number of hours that such employee works, on average, over a 2-week period,

The sick leave must be paid in the following amounts:

  • The highest amount based on (i) the regular rate of pay as defined by the FLSA or (ii) minimum wage in effect for the federal, state, and locality for an employee who is
    • is subject to a Federal, State, or local quarantine or isolation order related to COVID–19;
    • has been advised by a health care provider to self-quarantine due to concerns related to COVID–19; OR
    • is experiencing symptoms of COVID–19 and seeking a medical diagnosis.
But the amount cannot exceed $511 per day and $5,110 in the aggregate for an employee using paid leave for these reasons.
  • Two-thirds of the highest amount based on (i) the regular rate of pay as defined by the FLSA or (ii) minimum wage in effect for the federal, state, and locality for an employee who is
    • is caring for an individual who is subject to a governmental quarantine order or who has been advised by a health care provider to self-quarantine;
    • is caring for a son or daughter of the employee if the school or place of care of the son or daughter has been closed, or the childcare provider of such son or daughter is unavailable, due to COVID–19 precautions; OR
    • is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
But the amount cannot exceed $200 per day and $2,000 in the aggregate for an employee using leave for these reasons.[10]
Note that an employee may elect to use this sick time before other PTO and sick leave provided by the employer. Also, the employer may not require the employee to use other PTO and sick leave before the emergency sick leave under the new law.[11]
  1. Paid sick time terminates beginning with the employee’s next scheduled workshift immediately following the termination of the need for emergency paid sick time under the new law.[12]

Note that the employee must use paid sick time during 2020, and it does not carry over to next year. Additionally, the employer is not required to pay the employee for unused emergency sick time if employment ends.[13]

If an employer fails to provide the emergency sick leave required by the new law or who terminates an employee for taking the emergency sick leave, the employer is subject to civil liability and penalties under the FLSA.[14]

  1. Tax Credits For Paid Emergency Leave Under The FML Expansion Act And The Emergency Sick Leave Act

For each calendar quarter, an employer is entitled to a tax credit against the employer-paid excise taxes on payroll in Section 3111(a) or Section 3221(a) of the Internal Revenue Code of 1986 for the full amount of the amounts required to be paid under the FML Expansion Act or the Emergency Paid Sick Leave Act.

But there are caveats to how and the amount of the credits that may be taken that could result in the full value of the credit not being applied until the employer files its tax return. The new tax credit law requires the Secretary of Labor to issue regulations for implementation of the tax credits.

 **DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  
We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

[1] Sections 101(4)(A)(i), 110(a)(1)(B) of the FMLA.
[2] Section 3104 of the FML Expansion Act.
[3] Sections 101(4)(A)(i), 110(a)(1)(A) of the FMLA.
[4] Section 3102 of the FML Expansion Act.
[5] Section 3105 of FML Expansion Act.
[6] Section 110(b) of the FMLA, as amended.
[7] Section 5110(2) of the Emergency Paid Sick Leave Act.
[8] Section 5102(a) of the Emergency Paid Sick Leave Act.
[9] Section 5102(a) of the Emergency Paid Sick Leave Act.
[10] Section 5110(5) of the Emergency Paid Sick Leave Act.
[11] Section 5102(e) of the Emergency Paid Sick Leave Act.
[12] Section 5102(c) of the Emergency Paid Sick Leave Act.
[13] Section 5102(b) of the Emergency Paid Sick Leave Act.
[14] Section 5105) of the Emergency Paid Sick Leave Act.

California Department of Insurance Orders All California Health Insurers to Submit Filing and to Ensure Services to Insureds Displaced by COVID-19

Posted on: March 20th, 2020

By: Kristin Ingulsrud

California Insurance Code section 10112.95(a) provides that insureds displaced by a declared state of emergency shall have access to medically necessary health care services.  In light of Governor Gavin Newsom’s state of emergency proclamation and the continued escalation of the COVID-19 outbreak, California’s Department of Insurance (DOI) issued its “COVID-19 State of Emergency Notification Filing Requirements” on March 18.

Given that the COVID-19 outbreak has the immediate potential to inhibit insureds’ ability to access medical care, all health insurers operating in California must submit a notification describing the insurer’s communication with potentially impacted insureds and summarizing how the insurer will ensure that the health care needs of its insureds are met.

Under the DOI’s order the required notification must address numerous items, including removing barriers to access prescription drugs by home delivery, waiving refill limitations, and other similar measures.

Insurers must also have a plan to maximize the use of telehealth where appropriate.  Insurers must provide a toll-free telephone number to facilitate communication with insureds regarding care options.

Moreover, insurers must also demonstrate their contingency plan to continue operations should its staff be subject to shelter-in-place orders.

The order also requires insurers to detail how they are complying with the Department’s March 5 order concerning waiving co-pays for COVID-19 screening and testing.

The required notification must be filed by close of business Friday, March 20.

The complete order can be found on the Insurance Department’s website at http://www.insurance.ca.gov/0250-insurers/0300-insurers/0200-bulletins/bulletin-notices-commiss-opinion/upload/CDI-Emergency-Notification-Filing-Requirements-COVID-19-3-18-2020.pdf.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

California Department of Insurance Issues COVID-19 Bulletins Addressing (i) 60-Day Grace Period for Premiums; Expiration of Drivers Licenses; (ii) Alternative Payment Methods; and (iii) Accounting for Extraordinary Circumstances in Evaluating Claims Handling

Posted on: March 20th, 2020

By: Zach Moura

California Insurance Commissioner Ricardo Lara issued three notices to insurers on March 18, 2020 related to the novel coronavirus disease (COVID-19), all aimed at ameliorating the pandemic’s impact on the both insurers and insureds.

The first notice is addressed to all insurance companies and other licensees. The Commissioner recognizes that the COVID-19 outbreak is creating extraordinary circumstances that impact the ability of insurers to conduct insurance-related business. The Department of Insurance (DOI) intends to take those extraordinary circumstances, and resulting business disruptions, into account when evaluating insurer compliance with legal and commercial obligations during the COVID-19 outbreak. The Commissioner also encourages all companies to take steps to maintain their ability to process and pay insurance claims, and to provide other requisite consumer services, in “a reasonable and timely manner.”

The Commissioner’s second notice addresses a request that “all admitted and nonadmitted insurance companies that provide any insurance coverage in California including, life, health, auto, property, casualty, and other types of insurance” provide their insureds with at least a 60-day grace period to pay insurance premiums. The Commissioner wants to avoid cancellation of policies for “nonpayment of premium during this challenging time due to circumstances beyond the control of the insured.”

The Commissioner also requests that agents, brokers, and any other licensees who accept premium payments on behalf of insurers take steps to ensure that customers have the ability to make prompt insurance payments, including through arranging for online payment to eliminate in-person payment methods, to protect the safety of both workers and customers.

Commissioner Lara’s third COVID-19 notice follows on the California Department of Motor Vehicles’ request to California law enforcement that it exercise discretion in the enforcement of driver’s license and vehicle registration expirations for 60 days beginning March 16, 2020. The Commissioner encourages insurers to refrain from using the expiration of policyholders’ driver’s licenses or vehicle registrations during those same 60 days for any of the following reasons:

  • To affect a driver’s ability to secure and maintain auto insurance coverage;
  • To affect a driver’s eligibility for a Good Driver discount;
  • To determine eligibility for a California Low Cost Automobile policy;
  • To impact the rates charged to any driver.

The notice will be reevaluated at the end of the 60-day period, or May 15, 2020.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce educational content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

HHS Waives Some HIPAA Sanctions During the Coronavirus Pandemic

Posted on: March 20th, 2020

By: David Cole

The HHS Office for Civil Rights (OCR) issued two important bulletins this week in response to the coronavirus pandemic. Each one announced that OCR will temporarily waive certain sanctions and penalties for noncompliance with HIPAA Rules to help deliver care to people in need.

Limited Waiver for Privacy Rule Requirements

First, OCR issued a Limited Waiver of HIPAA Sanctions and Penalties for not complying with certain parts of the Privacy Rule. Specifically, the Waiver says that healthcare providers will not be sanctioned or penalized for not complying with the following usual requirements:

  • The requirement to obtain a patient’s consent before speaking with family members or friends involved in the patient’s care;
  • The requirement to honor a request to opt-out of the facility directory;
  • The requirement to distribute a Notice of Privacy Practices;
  • The patient’s right to request privacy restrictions; and
  • The patient’s right to request confidential communications.

The Waiver became effective on March 15, 2020, but currently only applies (1) in the emergency area identified in the public health emergency declaration; (2) to hospitals that have instituted a disaster protocol; and (3) for up to 72 hours from the time the hospital implements its disaster protocol. It is unclear if OCR will extend the time for this Waiver given the widespread and potentially prolonged nature of the coronavirus outbreak. A copy of the bulletin is available here.

Video Technology Allowed for Telemedicine

Second, OCR issued a Notification of Enforcement Discretion allowing healthcare providers to use “any non-public facing remote communication product that is available” to communicate with patients to provide telehealth during the coronavirus national emergency. As examples, OCR said it will allow healthcare providers to use video chat application like Apple FaceTime, Facebook Messenger, Google Hangouts, or Skype, to provide telehealth without risk of penalty for noncompliance with HIPAA Rules. However, Facebook Live, Twitch, TikTok, and other similar public-facing video applications are not allowed. Healthcare providers are still expected to enter into Business Associate Agreements with the technology companies providing the video communication services, but OCR says it will not impose penalties for failing to do so during the time of the national emergency. A copy of the Notice is available here.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce educational content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

U.S. Department of Labor Issues COVID-19 Guidance on FLSA and FMLA

Posted on: March 20th, 2020

By: Catherine Scott

As the federal government continues to grapple with questions from employers regarding COVID-19, the federal agencies have begun to roll out new guidance. The latest comes from the U.S. Department of Labor (DOL), which has issued guidance for employers seeking answers concerning their obligations pursuant to the Fair Labor Standards Act (FLSA) and Family and Medical Leave Act (FMLA).

DOL Guidance for FLSA

The FLSA provides rules and regulations concerning how employees must be paid, including the payment of wages and overtime. Employers around the country have wrestled with whether they can reduce salary and/or hours or furlough or lay off employees as the economy slows down due to COVID-19 and whether employees are required to be paid and in what manner.

The DOL has answered several frequently asked questions concerning these issues. The latest guidance provides as follows:

  • For non-exempt, hourly employees, employers can reduce their hours and/or pay, so long as minimum wage and overtime requirements are met. Non-exempt, hourly employees also can be placed on an unpaid leave of absence or furlough or be laid off due to an economic slowdown;
  • For exempt employees, employers are generally required to pay these employees their full weekly salary if any work is done during the workweek (subject to exceptions, such as when the employer is open for business and an employee, who has no PTO remaining or hasn’t qualified, misses an entire day of work).  Of course, exempt employees can be required to use any accrued, unused vacation or paid time off under the FLSA for any missed time so long as they are still being paid their salary.
  • All employees must generally be paid for telework performed at home, subject to the limitations described above;
  • Employees of private organizations are generally not allowed to volunteer their normal services without pay, subject to a few limited exceptions. Employees may volunteer for public organizations without pay if they (a) perform such services for civic, charitable or humanitarian reasons without promise, expectation, or receipt of compensation; (b) offer their services freely and without coercion, direct or implied; and, (c) are not otherwise employed by the same public agency to perform the same services as those for which they propose to volunteer.

Pay issues can be complicated and very fact-specific (and state-specific) so if you have a question about furloughs, layoffs, or schedule or compensation reductions (whether temporarily or permanently), please contact us so we can assess the individual factual and legal circumstances of your situation.

DOL Guidance for FMLA

Similarly, employers have wrestled with their obligations under the FMLA and whether they must provide job-protected leave to employees who need time away for a qualifying reason.  Initially, it is important to understand that any employer that has between 50 – 500 employees should first familiarize itself with the Families First Coronavirus Response Act as that Act (which will be effective April 2, 2020) substantially expands some of the obligations traditional imposed on employers under the FMLA.  For those employers, however, that are below 50 or above 50 employees, you should keep the following principles in mind in dealing with the Coronavirus.

  • Employees who develop complications from COVID-19 may have a “serious health condition” that would trigger FMLA leave. The same is true of a “family member,” defined by the FMLA as a spouse, child, or parent, who develops complications from COVID-19;
  • However, leave taken by an employee to avoid exposure to COVID-19 would not be covered by the traditional principles of the FMLA;
  • The traditional FMLA does not currently cover employees who require leave to tend to healthy children or children who have been dismissed from school or childcare by their state governments;
  • The traditional FMLA provides only for unpaid leave to employees who qualify; however, the FMLA allows for employees to substitute paid leave in place of unpaid leave in certain circumstances and if the employer’s policies provide for such paid leave;
  • Employees seeking to use FMLA leave are required to provide 30-day advance notice of the need to take FMLA leave when the need is foreseeable and such notice is practicable.  In addition, employers may require employees to provide:
    • medical certification supporting the need for leave due to a serious health condition affecting the employee or a spouse, son, daughter or parent, including periodic recertification;
    • second or third medical opinions (at the employer’s expense);
    • periodic reports during FMLA leave regarding the employee’s status and intent to return to work; and
    • consistent with a uniformly-applied policy or practice for similarly-situated employees, a fitness for duty certification. (Employers should be aware that fitness-for-duty certifications may be difficult to obtain during a pandemic.)

The Department of Labor is generally encouraging employers to be flexible in dealing with situations involving employees affected by COVID-19, including re-examining both paid and unpaid leave policies in place at the employer and allowing paid telecommuting to occur.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce educational content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

What Rhode Island Employers Should Know About COVID-19

Posted on: March 19th, 2020

By: Jennifer Markowski and Catherine Scott

Governor Gina Raimondo has declared a state of emergency in the state of Rhode Island and implemented certain measures, such as the closing of public schools through April 3, that have a direct effect on Rhode Island employers. The Rhode Island Department of Labor and Training (RIDLT) continues to issue guidance to Rhode Island employers to help with these issues.

Unemployment Benefits

In light of the impact of COVID-19, many employers have needed to consider layoffs, furloughs, salary and time reductions, and other options for reducing costs.  Many affected employees are entitled to unemployment benefits.  To facilitate the receipt of benefits, RIDLT announced it would suspend the seven-day waiting period for unemployment claims related to layoffs or involuntary furlough due to COVID-19. Employers who are considering furloughs or layoffs due to COVID-19 can contact our office with any questions about these measures.

Paid Leave Benefits

Many employees in Rhode Island will be eligible to use their paid time off and/or sick leave if their offices remain open but they are unable to work due to an illness and/or childcare issues. The Healthy and Safe Families and Workplace Act provides most employees in Rhode Island with one hour of paid sick leave for every 35 hours worked up to 40 hours per year. The size of the employer will impact how the law is applied, and the waiting period will be determined by the class of the employee.

Additionally, the Coronavirus Response Act has been executed by President Trump. The federal legislation mandates that certain employers provide additional paid leave to their employers.  You can read here to find out more about the provisions and whether it applies to your business.

Temporary Disability Insurance (TDI) and Temporary Caregiver Insurance (TCI) Benefits

For employees whose offices are open but do not have access to paid leave benefits, Rhode Island offers both TDI and TCI insurance benefits. Similar to unemployment benefits, RIDLT announced it would waive the seven-day out-of-work period required before a claimant can receive TDI and/or TCI benefits. Claimants for such benefits will be allowed to temporarily qualify for benefits via self-attestation of quarantine due to COVID-19, rather than being required to supply medical certification. Moreover, employees who are required to stay home due to issues with childcare may be temporarily eligible for TCI benefits.

Unpaid Leave

We note many Rhode Island workers are likely entitled to job-protected unpaid leave under the Rhode Island Parental and Family Medical Leave Act and/or the federal Family and Medical Leave Act as it stands.

If you have questions about these laws or how they apply to your business, feel free to contact Jen Markowski at [email protected] or Cat Scott at [email protected].

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

COVID-19 Closes Schools Across the United States: United States Department of Education Releases New Guidance for Schools During Coronavirus Outbreak

Posted on: March 19th, 2020

By: Tia J. Combs

Many schools across the county have closed or are operating virtually due to the COVID-19 outbreak.  On March 12, 2020, the US Department of Education released two documents with new guidance for schools and educators faced these unprecedented problems.

First, the Student Privacy Policy Office released its FERPA & Coronavirus Disease 2019 (COVID-19) Frequently Asked Questions (FAQs) March 2020.  This document details how schools should handle confidential information covered by the Family Educational Rights and Privacy Act (FERPA) during the outbreak.  Most importantly, the document addresses how the health or safety emergency exception to FERPA’s consent requirements (20 U.S.C. § 1232g(b)(1)(I); 34 C.F.R. §§ 99.31(a)(10) and 99.36) might permit an educational agency or institution to disclose personally identifiable information (“PII”) about particular students.  The document reiterates that agencies and institutions are responsible for making a determination, on a case-by-case- basis, concerning disclosure.  It also notes that disclosure, without prior written consent, is permitted under law if there is, based on the totality of the circumstances, an articulable and significant threat to the health of safety of a student.

The document specifically addresses the question of whether schools may disclose, without prior written consent, to other students and parents that a student is out sick due to COVID-19.  The document states that such disclosure is generally going to be permissible if it is released in a form that cannot be traced back to a specific student.

Second, the Department released its Questions and Answers on Providing Services to Children with Disabilities During the Coronavirus Disease 2019 Outbreak. This document outlines how local educational agencies (“LEA”) can provide a free appropriate public education to students with disabilities during a school closure caused by the COVID-19 outbreak.  The document explains that if LEAs are continuing to provide educational services to the general student population during a closure, LEAs must also continue to provide educational opportunities to special education students consistent with their IEP or 504 Plan to the greatest extent possible.  Schools must also provide specialized instruction to children with disabilities who are infected with COVID-19 and miss school for an extended period of time, possibly via homebound services if the student qualifies. The document emphasizes that special education students who are not provided with services could be owed compensatory education.

The US Department of Education has also launched a website with general information for schools faced with complications from COVID-19 at https://www.ed.gov/coronavirus.

More Information Can be Found at:

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

Coronavirus Lawsuit Seeking Coverage is Filed in Louisiana

Posted on: March 18th, 2020

By: Philip W. Savrin and Erin Lamb

The first in what is bound to be a virtual tsunami of coverage lawsuits arising from the spread of the Coronavirus was filed in New Orleans this week by a restaurant in the famed French Quarter. In its complaint, Oceana Grill seeks a declaration that the government’s orders to close down the business will trigger coverage for losses it anticipates it will sustain as a result of a government-mandated suspension of its operations. As in many policies, coverage is provided for the loss of net income that results from a “direct physical loss” to the insured’s property. In the lawsuit, the restaurant alleges that “any effort … to deny that the virus causes physical damage and loss would constitute a false and potentially fraudulent misrepresentation that could endanger policyholders and the public.”

This argument, which we predict will become central to insurance coverage disputes throughout the country, was supported by the Mayor of New Orleans who publicly stated that she will be “very aggressive” when it comes to business interruption claims.  Indeed, in her emergency declaration, Mayor Cantrell stated explicitly that Covid-19 “causes property loss and damage in certain circumstances.”

Whether interruptions to business operations are covered by policies that require a direct physical loss to property will depend on the particular language of each policy and the application of the terms may vary as well depending on the jurisdiction. In addition, policyholder advocates are turning to state legislatures for assistance in mandating insurers to cover losses particularly where closures are mandated by local governments. The only thing that is certain at this point is Covid-19 is going to impact virtually every industry and on a global scale, with many lawsuits being filed by businesses asserting novel arguments to cover their mounting losses.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

State and Federal Motor Vehicle Exemptions related to COVID-19

Posted on: March 18th, 2020

By: Josh Ferguson

The Federal Motor Carrier Safety Administration (FMCSA) issued a national emergency declaration and in doing so provided a limited exemption from driver safety regulatory requirements.  The exemption applies “for motor carriers and drivers engaged in the transport of essential supplies, equipment and persons” that provide “direct assistance in support of relief efforts related to the COVID-19 outbreaks.”  The Emergency Declaration was effective March 13, 2020 and remain in effect until the end of the emergency or until 11:59 p.m. (ET) on April 12, 2020, whichever comes sooner.

The declaration defines “Direct assistance” as transportation and other relief services provided by a motor carrier or its driver(s) incident to the immediate restoration of essential services, such as medical care, or essential supplies such as food, related to COVID-19 outbreaks during the emergency.  These include transportation of the following:

  • Medical supplies and equipment related to the testing, diagnosis and treatment of COVID-19;
  • Supplies and equipment necessary for community safety, sanitation, and prevention of community transmission of COVID-19, such as masks, gloves, hand sanitizer, soap and disinfectants;
  • Food for emergency restocking of stores;
  • Equipment, supplies and persons necessary to establish and manage temporary housing, quarantine, and isolation facilities related to COVID-19;
  • Persons designated by federal, state or local authorities for medical, isolation, or quarantine purposes; and
  • Persons necessary to provide other medical or emergency services, the supply of which may be affected by the COVID-19 response.

Direct assistance does not include routine commercial deliveries or transportation of mixed loads that include essential supplies, equipment and persons, along with supplies, equipment and persons that are not being transported in support of emergency relief efforts related to the COVID-19 outbreaks.  Another important aspect is the exemption terminates when a driver or commercial motor vehicle is used to transport cargo or provide services not identified on the list.

Many states have issued public emergencies, and ultimately those emergency powers may include other exemptions for operators of commercial vehicles.  For example, in Georgia, in declaring a public health emergency Governor Kemp stated that the declaration would immediately be used to help some nurses from other states get temporary licenses to practice in Georgia and lift restrictions on commercial truck drivers to let them continue stocking stores with supplies.  Just how these emergency declarations and exemptions factor into tort and employment-related claims will be seen months and years down the road.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

Webinar series- Business Issues & Coronavirus

Posted on: March 18th, 2020

Choose your program and register here.

House Amends Coronavirus Bill to Ease Burdens on Small Businesses

Posted on: March 17th, 2020

HOUSE AMENDS CORONAVIRUS BILL TO EASE BURDENS ON SMALL BUSINESSES

By Bill Buechner and Justin Boron

The U.S House of Representatives, by unanimous consent, amended the Families First Coronavirus Response Act last evening. Although the amendments were characterized as technical in nature, there were several significant substantive changes made to the legislation in an attempt to respond to concerns that it imposes too substantial of a burden on small businesses.

Particularly, the amended act formalizes exemption of employers with 50 or fewer employees from liability. The amended act makes clear that paid leave requirements are not triggered when the employee still can perform his  job by teleworking from home. Also, the amended act will allow employers to construct compliant paid leave policies so that amounts they pay employees are subject to tax credits so they effectively will be paid for by pass-through credits from the federal government.

Our summary of the initial legislation passed by the House on March 14, 2020 can be reviewed here.

With respect to the Emergency Family and Medical Leave Expansion Act, the most significant changes are as follows:

  • The bill now exempts employers with fewer than 50 employees from civil liability for any violations
  • Employers who are health care providers or emergency responders may elect to exclude their employees from coverage
  • The bill now limits “qualifying need related to a public health emergency” to mean “the employee is unable to work or telework due to a need for leave to care for the son or daughter under age 18 years of such employee if the school or place of care has been closed or the child care provider of such son or daughter is unavailable due to a public health emergency.” (emphasis added)
  • The amended bill reduces the amount of initial unpaid leave from 14 days to 10 days
  • The amended bill limits the amount of new Coronavirus paid FMLA leave for each employee to $200 per day and $10,000 in total for the duration of the leave. This critical change means that employers can structure their paid leave obligation under FMLA leave so that they will receive payroll tax credits by the government for providing the paid leave required by this new law.

Previously, employers were faced with the prospect of being required to pay 2/3 of compensation to highly paid employees. This meant that employees making more than $80,000 would have received 2/3 of their compensation paid for exclusively by the employer. This provision was a focus of concern from US Chamber and the national Federation of Independent Businesses, as well as many other employer groups.

With respect to the Emergency Paid Sick Leave Act, the most significant changes are as follows:

  • Clarifies that employee must be unable to work or telework
  • The amended bill specifies six grounds for emergency paid sick leave, which generally fall into two categories: (1) sick leave needed for the employee’s own Coronavirus diagnosis/symptoms or quarantine/isolation order; and (2) sick leave needed to care for others because of their Coronavirus diagnoses/symptoms or quarantine/isolation order
  • Employers who are health care providers or emergency responders may elect to exclude their employees from coverage
  • Similar to the analogous FMLA leave provisions, the amended bill limits the amount of paid leave to $511 per day and $5,110 total for leave required due to the employee’s own Coronavirus diagnosis/symptoms or quarantine order. There were no limits in the original version.
  • The amended bill limits the amount of paid sick leave to $200 per day and $2,000 total for leave required due to the employee’s need to care for others.  There were no limits in the original version.

In addition, the amended bill expands employers’ tax credits to include health insurance contributions to employees who take the Coronavirus-related leave, as well as the 1.45% Medicare tax for such employees.

Whether these changes will be sufficient to earn passage in the U.S. Senate later this week remains to be seen. FMG will keep you posted on the latest legislative developments.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

Cyber Attack on HHS is a Reminder for Businesses to Remain Vigilant About Cybersecurity During the COVID-19 Pandemic

Posted on: March 17th, 2020

By: Renata Hoddinott

Amidst all the information and news flooding the internet regarding COVID-19, another troubling headline emerged this morning: an unknown actor launched a cyber attack on the Department of Health and Human Services (HHS) on Sunday. The attack was not a hack in the traditional sense, and no data was stolen from HHS’s systems. Rather it was an attempt to slow down HHS’s COVID-19 response by flooding the site with millions of requests over the course of several hours. It was a distributed denial of service – or DDOS – attack. The distinction is important because there was no apparent breach of the system of the lead agency responding to the coronavirus pandemic, and none of HHS’s critical functions were interrupted. HHS’s system was largely able to repel the intrusion, the agency was fully functioning at all times, and its site never crashed. But while the attack was unsuccessful, it is a harbinger of things to come and businesses should take note.

Most corporations and firms with the capability to do so have permitted, encouraged, or even mandated their employees to work from home for an extended amount of time to limit the spread of the virus. All of that remote access may be on potentially less secure networks should raise some concerns for those businesses. Bad actors will no doubt use the opportunity to gain access to less secure devices and networks to penetrate systems they may not have had access to previously due to the security in place for devices “in-house.”

Now is the time to remind remote employees to practice basic sense and security in ensuring they are only accessing company systems on private, password-protected networks. Employees also need to be watching for social engineering and phishing attacks. It may seem as though the email from the boss asking for password information or the firm’s credit card number is legitimate because employees do not have the ability to walk down the hall and ask.

And, for some smaller enterprises who may be new to remote-access, some systems may have been rolled out untested in certain circumstances to ensure business continuity. In those cases, it will be important to ensure that when restrictions are lifted and employees are able to return to work that those remote system are analyzed and secured from future threats.

This pandemic has unexpectedly and almost immediately changed the way business is conduct day-to-day around the globe. It remains to be seen whether those changes will be permanent. While most people are pulling together in this outbreak, malicious actors will always be looking for every opportunity to take advantage of the situation. During the period of social distancing and self-quarantining, individuals are desperate for up to the minute information on the crisis. Businesses need to be aware that attackers will attempt to exploit the human element now more than ever. And, as we all know, there is almost always a human element – whether an honest mistake or negligence – in most cybersecurity incidents.

In addition, FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you. We will continue to produce educational content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

New Jersey and New York Signal Intent to Force Coverage for COVID-19 Business Losses; Other States Will Follow Suit

Posted on: March 16th, 2020

By: Erin Lamb and Marc Shrake

Both New Jersey and New York have taken steps toward attempting to force coverage of business losses related to COVID-19. In New Jersey, Assembly Majority Leader Louis Greenwald and Assemblyman Roy Reiman have introduced Assembly Bill 3844. As written, the bill would force insurers to provide coverage for claimed business losses alleged to be caused by COVID-19, under policies that were in effect on March 9, 2020 (the date that New Jersey declared a state of emergency). If successful, these state governments would be taking an extraordinary step that not only changes the terms and conditions of an existing contract, but also creates coverage ex nihilo for virus-related losses expressly bargained between the contracting parties, and underwritten, to be excluded from coverage.

Back in 2006, ISO adopted a mandatory exclusion for such losses that specifically referenced the SARS (also a coronavirus) epidemic. Obviously, then, since at least that time purchasers of insurance, and agents, were on notice of such risks — which include damage and loss caused by COVID-19 — and the fact that they are not covered under the bargained-for terms and conditions of the insurance coverage.

The New Jersey bill seeks to wipe all of this out. The bill would apply to insureds with fewer than 100 eligible employees in New Jersey. (It defines “eligible” as “full-time employees who work more than 25 hours or more in a normal workweek.”) It is unclear whether the new bill would eliminate the requirement that there be direct physical loss of damage to covered property, or on an arguably more limited basis, void application of the 2006 Virus exclusion. The New Jersey bill is up for discussion on the floor of the Assembly today, March 16, 2020.

In New York, the Department of Financial Services ordered all authorized Property/Casualty Insurers to provide them with details on business interruption coverage for all business owner policies, commercial multiple peril policies, and specialized multiple peril policies. The letter instructed insurers that DFS considered their obligations to policyholders under business interruption policies a “heightened priority.” The letter demanded that every insurer provide DFS with its volume of business interruption coverage, civil authority coverage, contingent business interruption coverage, and supply chain coverage, including direct premium amounts, policy types, and numbers of each type of policy written. Each insurer is additionally instructed to prepare information regarding COVID-19 coverage not only as of today but “as the situation could develop to change the policyholders’ status.” Insurers were instructed to consider whether there was any potential for COVID-19 coverage.

It is notable that these steps are being taken in two states with major industries (including all shipping through the East Coast’s largest port) that have already suffered COVID-19 losses from the shutdowns in China, Asia, and now Europe. They have filed claims for those losses under some of these policies and have been denied. Policyholders have been marshaling their own resources and lobbying organizations to push to transfer their business risks, including having their losses paid for by insurance companies for reasons other than an arm’s-length, bargained-for agreement in place that would obligate the insurers to do so in exchange for a policy premium tied to the risk of loss being transferred.

Other states impacted by the COVID-19 outbreak, especially California and Washington, are also likely to try to spread the costs of the COVID-19 business losses to other businesses and entities who did not cause the loss and who did not contract to, were not paid to, did not expect to, and are not obligated to take on such risks.

In addition, FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

COVID-19: What Medical Inquiries Can Employers Make?

Posted on: March 16th, 2020

By: Jennifer Markowski

Last week, Brad Adler, addressed FAQ’s (and Answers) for Employers Dealing with the Coronavirus, COVID-19. Subsequent to that article, on March 11, 2020, the World Health Organization (“WHO”) declared COVID-19 a pandemic. Consequently, employers should follow the Equal Employment Opportunity Commission’s (“EEOC”) pandemic guidance “Pandemic Preparedness in the Workplace and the ADA,” which details what medical inquiries and testing are permissible in the workplace in light of the existing pandemic.

The Americans with Disabilities Act (“ADA”) prohibits employers from making disability-related inquiries and/or requiring employees to submit to medical examinations unless they are job-related and consistent with business necessity.  Now that COVID-19 has been declared a pandemic, according to the EEOC guidance, employers can do the following without running afoul of the ADA:

  • Send employees home who are exhibiting COVID-19 symptoms;
  • Ask employees who call-in sick whether they are experiencing fever or chills and a cough or sore throat (symptoms of COVID-19);
  • Measure employee temperatures, if COVID-19 is widespread in the community as defined by state or local health ordinances or the CDC;
  • Ask where employees have traveled;
  • Ask why employees have not reported to work (this is always permissible);
  • Implement measures to prevent infection, such as wearing masks or requiring teleworking.

As always, information obtained about an employee’s medical illness must be kept confidential and separate from the employee’s personnel file and can only be shared with individuals on a need to know basis.  Additionally, if an employee receives ADA accommodations in the workplace and is then required to telework, those same accommodations should be provided for in the telework space, unless doing so would create an undue hardship.

The Occupational Safety and Health Organization (“OSHA”) has also issued guidance for pandemic preparedness. Those guidelines are accessible here.

In addition, FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

House Passes Coronavirus Bill with Major Implications for Employers

Posted on: March 15th, 2020

By: Jeffrey A. Hord and David A. Cole,

Shortly past midnight on Saturday morning, the House of Representatives passed the Families First Coronavirus Response Act (the “Act”) on a bipartisan 363-40 vote, bringing the nation one step closer to implementing a sweeping financial aid package designed to address the Coronavirus outbreak. A copy of the entire bill, as amended, is available here.

The legislation comes on the heels of last week’s bipartisan emergency Coronavirus response initiative providing $8.3 billion in research and vaccine development funds. The bill will now head to the Senate for final approval, where it is expected to pass in substantially similar form due to President Trump’s vocal support for the legislation.

In addition to guaranteeing free Coronavirus testing by requiring private health insurers — and government programs such as Medicaid — to cover the cost of tests and doctor visits, while strengthening food security initiatives like TEFAP, SNAP and WIC, the Act also includes several employment-related provisions that are likely to have major implications for employers.

Amendments To The Family And Medical Leave Act:

If enacted into law, the Act would create a new type of leave under the Family and Medical Leave Act (“FMLA”) allowing for leave in cases of a “public health emergency.”

Answers to questions about the key parts of this potential change to the FMLA are below:

  • When Does Law Go Into Effect – If passed, it would stay in effect until December 31, 2020 (unless renewed by Congress).
  • When Is Leave Allowed – From now until the end of 2020, the Act would allow eligible employees to take FMLA leave to: (a) comply with a recommendation or order by a health care provider or public official to not attend work because of exposure to or symptoms exhibiting Coronavirus; (b) care for a family member being quarantined because of exposure to or symptoms exhibiting Coronavirus; or (c) care for a son or daughter whose school or place of care has been closed due to Coronavirus.
  • Which Employers Are Covered – While traditional FMLA leave requirements only apply to employers with 50 or more employees, the new FMLA leave for Coronavirus would apply to all employers with fewer than 500 employees. However, the Act does give the U.S. Department of Labor authority to issue regulations for good cause that could exempt small businesses with fewer than 50 employees if imposing the new requirements would “jeopardize the viability of the business as a going concern.” As of right now, we are unaware of the Department of Labor working on such regulations.
  • Which Employees Are Eligible – While traditional FMLA leave is only available to employees who have worked for 12 months and for 1,250 hours in the immediate preceding 12 months prior to taking the leave, the new FMLA leave for Coronavirus would apply to any employee (full or part-time) who has been employed for at least 30 calendar days.
  • Does The Employer Have To Pay The Employee While Out On Leave – The first 14 days of FMLA leave for Coronavirus may be unpaid. An employee may choose to substitute available paid leave during those 14 days, but the employer may not require it. After 14 days, the employer must provide paid leave for the remainder of the FMLA leave for Coronavirus in an amount that is no less than two-thirds of the employee’s regular rate of pay for the number of hours the employee would otherwise normally be scheduled to work.
  • What Is The Definition Of Family Member – an individual who is: (i) a pregnant woman, senior citizen, individual with a disability, or has access or functional needs; and (ii) who is a son or daughter of the employee, a next of kin of the employee or a person for whom the employee is next of kin; or a grandparent or grandchild of the employee.
  • Is The Employee Guaranteed The Employee’s Position Upon Return – Just like traditional FMLA leave, the employee is entitled to his/her job position upon return from this leave, except employees with less than 25 employees may be exempted if the employee’s position does not exist anymore because of the public health emergency.
Emergency Paid Sick Leave Act

The Act would also require any government or public agency with 1 or more employees and any private employer with fewer than 500 employees to give their employees paid sick leave for the following reasons: (a) to self-isolate because a diagnosis with Coronavirus; (b) to obtain medical diagnosis or care if experiencing symptoms of Coronavirus; (c) to comply with a recommendation or order by a public health official to not report to work because of a diagnosis of Coronavirus or symptoms exhibiting Coronavirus; (d) to care for a family member with Coronavirus or symptoms exhibiting Coronavirus; and (e) to care for a child whose school or place of care is closed due to Coronavirus.

  • When Does Law Go Into Effect – If passed, it would stay in effect until December 31, 2020 (unless renewed by Congress).
  • Which Employees Are Eligible – Emergency paid sick leave under the Act must be available to all employees for immediate use regardless of how long they have been employed.
  • How Much Paid Sick Leave Does An Employee Receive – Full-time employees must be given up to 80 hours of paid sick leave and part-time employees must receive a number of hours equal to the average hours they work over a 2-week period.
  • How Much Is The Employee Paid While Out – Employees who take leave to self-quarantine or to seek diagnosis or care must be paid at their regular rate. Employees who use the leave to care for an afflicted family member or to care for a child whose school has closed must be paid at two-thirds their regular rate.
  • What If An Employer Already Provides Paid Sick Leave – Employers with existing paid leave policies must provide this emergency paid sick leave in addition to the existing paid leave, and they may not change existing policies after the date of the Act to avoid these requirements.
  • Can An Employer Require Substitution Of This Leave For The New Paid FMLA Leave – An employee may use this emergency sick leave to cover the first 14 days of unpaid FMLA leave for Coronavirus (see above). However, an employer may not require an employee to use other paid leave before using this emergency sick leave.
Reimbursement for Employers:

The Act provides tax credits to reimburse employers for the costs of the paid FMLA leave and emergency sick leave discussed above. Specifically, the Act creates both: (1) a payroll credit for paid sick leave, and (2) a payroll credit for required family leave, allowed against the employer’s portion of Social Security taxes.

  • For paid emergency sick leave, the amount of the credit, on a per-employee basis, is limited to $511/day for employees that self-isolate, have Coronavirus symptoms, or are ordered to stay home; otherwise, the credit is capped at $200 per day. There is effectively a two-week cap on this credit, after which the new FMLA tax credit would kick in.
  • The amount of the FMLA leave credit, on a per-employee basis, is limited to $200/day and $10,000 total for all calendar quarters. These tax credits would cover one year, and could not be used in combination with the existing credit(s) for employers that provide paid family and medical leave to their employees.
State Unemployment Insurance:
  • The Act would also direct $2 billion to state unemployment insurance programs as emergency grants for processing and paying unemployment insurance (UI) benefits, and to provide immediate funding for staffing, technology, systems, and other administrative costs of state unemployment agencies.
  • Standard screening measures, such as “job seeker” requirements and mandatory waiting periods, would be waived for anyone applying for UI benefits who has either been diagnosed with COVID-19 or who has lost their job due to the spread of the virus.
  • The Act provides for full federal funding of extended unemployment compensation for any state that experiences and increase of ten percent (10%) or more in its unemployment rate over the previous year.
Additional Information
An earlier version of the bill (which can still be viewed here) included a permanent paid leave program that House Democrats said would help deter infected workers from returning to work too quickly and spreading the illness unintentionally. That feature (among others) was ultimately removed from the version that passed early Saturday morning; the amended H.R. 6201 is a more limited, temporary response to the specific public health emergency created by the coronavirus.

Even so, the bill’s protections are a major change in U.S. policy, particularly with respect to paid sick leave. It will be interesting to see whether the Act passes the Senate in its current form and, if so, whether it will be replaced by more permanent legislation for mandatory paid sick leave once it expires on December 31, 2020.

The FMG Employment team will be conducting a webinar on coronavirus issues on Tuesday, March 17, at 12:00 noon EST. To register, please click here.

In addition, FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

Predicting the Sources of Claims arising from Coronavirus and COVID-19

Posted on: March 13th, 2020

By: Erin Lamb

The worldwide spread of COVID-19 is creating financial difficulties for individuals and businesses affected by illness and cancellations. Based on the evolving data, predictions are being made about the sources of claims under various insurance coverages.

The disease caused by the virus disproportionately kills people over 70-80 years old. In China, the estimated fatality rate for people over 80 is roughly 21.9%. The virus seems to spread relatively easily, and people can be asymptomatic for 5-14 days, during which time the affected person is a carrier of the virus itself.

These numbers seem to indicate nursing homes, assisted living facilities, and rehabilitation centers are at high risk of fatalities and at increased risk of infections. Workers’ compensation claims from nurses, doctors, health aides, and the myriad non-health care related workers at such facilities are expected to rise. Patients, families, contract employees, and other third parties may complain about inadequate warnings and failure to prevent the spread of infection.

Some commercial liability policies exclude coverage for damages arising from bodily injury caused by exposure to viruses, bacteria, or pollutants. The parties will need to determine when and where the infections occurred, how they were transmitted, and whether transmission was in the course and scope of employment as the virus moves outside healthcare facilities and into the community.

Health care facilities and other large communities of people, such as schools, universities, and houses of worship, where a coronavirus patient will be discovered to have traveled are going to require disinfection and cleaning. Not every policy provides coverage for such measures relating to COVID-19, and those that do may have terms and conditions such as written notification to both the insurance company and the local department of public health, high deductibles, or sublimits.

Businesses that do not encounter infected people will also be reviewing their insurance coverage. Some travel cancellation and travel interruption insurance policies do not cover cancellations of travel due to a disinclination to travel due to fear or concern about traveling to a place with an outbreak. Event cancellation and business interruption coverages also may contain exclusions.

Most people and entities will be checking to see whether and, if so, the extent to which they have successfully transferred their risk of loss due to the worldwide effects of COVID-19. It is important to understand the facts as well as the terms and conditions of each insurance policy that may apply.

If you have questions or would like more information, please contact Erin Lamb at [email protected].

FAQ’s (and Answers) For Employers Dealing With The Coronavirus (Updated March 11, 2020)

Posted on: March 11th, 2020

By: Brad Adler

As I’m sure many of you have heard or read, a new virus (COVID-19 aka “Coronavirus”) first found in Wuhan, China in late 2019 has been spreading across the world and is now emerging in the United States on an increasing scale.  As employment issues surrounding the Coronavirus continue to arise, below are some answers to commonly-asked questions that employers may be asking in addressing Coronavirus-related issues.

In addition, employers should read and be familiar with the Guidance the CDC issued for employers in handling Coronavirus-related issues.  https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html

What Is It?

Based on what health officials know right now, the Coronavirus is not a flu, but a pneumonia-like infection.  The virus symptoms manifest as a mild to severe respiratory illness with fever, cough, and difficulty breathing. The Centers for Disease Control (CDC) believes at this time that symptoms may appear in as few as two days or as long as 14 days after exposure.

How Does It Spread? 

The disease can spread from person to person through small droplets from the nose or mouth, which are spread when a person with the Coronavirus coughs or exhales. These droplets also then land on surfaces around the person and others can catch the Coronavirus when they touch these same surfaces, particularly if they then touch their mouth, nose or eyes.

What If An Employee Tests Positive For The Coronavirus?

Ask the employee to stay out of work until 14 days after the employee was diagnosed with the Coronavirus, unless a doctor certifies that it is safe for the employee to return to work earlier.  Further, you should promptly notify colleagues who work with that employee that they may have been exposed to a person with the Coronavirus and request that they visit their doctor to confirm that they did not contract the virus.  In the absence of a confirmed diagnosis of an employee, we suggest that you do not issue a blanket instruction that all employees have to get tested as such a directive could run afoul of the Americans with Disabilities Act’s general prohibition against medical examinations for employees unless “job-related and consistent with business necessity.”

Further, employers should ensure the confidentiality of all employees’ medical information to prevent harassment or a violation of the ADA’s medical privacy rules.  If an employer believes it is necessary for the safety of other employees to identify a confirmed Coronavirus victim to others in the workplace so the employer can determine who may have been exposed to that individual, it is important to first discuss the issue with employment counsel (and possibly governmental officials) due to the privacy implications, both under the ADA and state law.

What Should An Employer Do If An Employee’s Household Member Tests Positive For The Coronavirus Symptoms?

We believe it is appropriate to ask employees to notify your designated Coronavirus-response person (typically someone in Human Resources) if a member of an employee’s household is diagnosed with Coronavirus.  Once notified, the employer should request the employee stay out of work until the employee visits his/her doctor to confirm that the employee did not contract the virus or they also can self-quarantine themselves for 14 days.

What Should An Employer Do If An Employee Presents Coronavirus Symptoms, But Is Not Confirmed With The Coronavirus?

If you have an employee who presents Coronavirus symptoms at work (but not yet diagnosed with the Coronavirus), we suggest that you send the employee home and request that they get tested and cleared from having the Coronavirus before returning to work or they also can self-quarantine themselves for 14 days.  If the employee exhibits the symptoms at home, ask them to stay out of work until they get tested and cleared from having the Coronavirus or they also can self-quarantine themselves for 14 days.  It is important that your Human Resources representative is involved in these situations so you can navigate any unique issues.

Further, you should try and determine who the employee interacted in close proximity with at work (typically six feet or less) in the previous 14 days, including by asking the employee for help in identifying those individuals.   After those individuals are identified, you should notify them of their potential exposure to an individual with the Coronavirus.

Employers, however, should avoid identifying the infected employee to other employees (or customers or vendors) to prevent harassment or a violation of the ADA’s medical privacy rules.  If an employer believes it is absolutely necessary for the safety of other employees (or customers or vendors) to identify a confirmed Coronavirus victim to others in the workplace (or customers or vendors) so the employer can determine who may have been exposed to that individual, it is important to first discuss the issue with employment counsel (and possibly governmental officials) due to the privacy implications, both under the ADA and state law.

What Should An Employer Do If An Employee Reports That He/She Interacted With Somebody Who Has Been Diagnosed With The Coronavirus?

Once notified, the employer should request the employee stay out of work until the employee visits his/her doctor to confirm that the employee did not contract the virus or they also can self-quarantine themselves for 14 days.  Further, you should try and determine who the employee interacted in close proximity with at work (typically six feet or less) in the previous 14 days, including by asking the employee for help in identifying those individuals.   After those individuals are identified, you should notify them of their potential exposure to an individual with the Coronavirus.

Employers, however, should avoid identifying the infected employee to other employees (or customers or vendors) to prevent harassment or a violation of the ADA’s medical privacy rules.  If an employer believes it is absolutely necessary for the safety of other employees (or customers or vendors) to identify a confirmed Coronavirus victim to others in the workplace (or customers or vendors) so the employer can determine who may have been exposed to that individual, it is important to first discuss the issue with employment counsel (and possibly governmental officials) due to the privacy implications, both under the ADA and state law.

What Should An Employer Do If An Employee (Or An Employee’s Household Member) Returns From An International Trip, But Has Not Exhibited Any Coronavirus Symptoms

This is tricky so you have to make sure you are watchful in dealing with this type of situation.  As of March 3, 2020, the State Department has advised travelers to avoid all non-essential travel to China, Italy, South Korea, Azerbaijan, Mongolia, Turkmenistan and Iran https://travel.state.gov/content/travel/en/traveladvisories/traveladvisories.html/.  The CDC also has advised identified Japan (Level 2) and Hong Kong (Level 1) as areas of heightened risk for the coronavirus.  https://www.cdc.gov/coronavirus/2019-ncov/travelers/index.html.

As a result, if an employee does travel internationally to China, Italy, South Korea, Azerbaijan, Mongolia, Turkmenistan and Iran, even if they present no symptoms, it is advisable to require that employee to either wait 14 days or visit their doctor to confirm that they did not contract the virus before returning to the workplace.  If an employee travels to Japan or Hong Kong, but exhibits no symptoms, you can require the employee to wait 14 days before returning to the workplace, but you should typically avoid requiring an employee to present any type of clearance from a doctor.  If an employee travels internationally to a location that is not on the CDC or the State Department’s coronavirus travel advisory list and exhibits no symptoms, then we do not advise imposing any type of return to work condition.

Do I Have To Pay The Employee While Out Of Work?

Under the Fair Labor Standards Act (federal wage/hour law), you do not have to pay non-exempt hourly employees while they are out sick.  If, however, they perform work while at home, you must pay them for those hours (so it is critical that the employees keep a record of their hours worked).  If a non-exempt hourly employee wants to use PTO while the employee is out sick and not being paid, that is permissible.  For exempt employees, unless they are out for an entire workweek, you should pay them their normal salary for the workweek in which they miss time because of your “stay out of work” instruction.  Of course, many states and some cities and counties have their own wage and hour, leave and paid time off laws that you will need to consider when assessing how you handle Coronavirus-related absences.

Can I Restrict Employees From Traveling Internationally?

If the travel is work-related, then an employer can ban an employee from traveling internationally.  If the travel is not work-related, then you typically will be permitted to restrict travel to international destinations, but it is prudent to limit the travel to areas designated as at least a heightened-risk of coronavirus by the White House, CDC or the World Health Organization as several states have laws that prohibit an employer from taking action against an employee for “lawful off-duty” activities.  These types of restrictions could prove important both to protect employees from exposure to the Coronavirus and to limit the risk of travelers becoming stranded by travel limitations or quarantines overseas.

How Do I Avoid National Origin Discrimination?

This one is pretty simple.  Don’t make judgments on how to treat an employee based upon the national origin (or race) of the employee.  Rather, your decisions should be based upon reasonably objective information that you have received from both the employee and the U.S. Government (or World Health Organization) on where the employee is going and whether he has interacted with an individual diagnosed with the virus.  Remember that an employer may deny time off for an employee’s personal travel, but it should be based on the employee’s travel destination, the business cost of any potential resulting quarantine, or other legitimate business-driven interest.

What If An Employee Wants To Wear A Respirator Or Mask At Work Or Requests Not To Come To Work?

At this time, there is no general requirement for non-healthcare employees to wear respirators or other types of personal protective equipment and the CDC is not recommending use of facemasks or any other protective equipment by the general public.  As a result, employers have a wide amount of discretion to determine whether to allow the use of a respirator or a facemask.  For any employee who requests to not come to work out of fear of being around others and contracting the virus, unless that employee has a reasonable objective belief that someone at the workplace has the virus, you can deny the request.  If an employee still refuses to come in, you are permitted to discipline the employee.  If the employee is exempt, you also likely can choose not to pay them for the all-day absence.  Of course, if the employee is non-exempt, you don’t need to pay the employee for any hours unless the employee is working.

What Can We Do To Help Reduce Potential Exposure To The Coronavirus?

Providing employees with a written reminder about effective steps for reducing the risk of exposure to Coronavirus is a great way to let employees know you are paying attention to the issue and looking out for their safety.  A few things to include:

  • Remind employees to cover their mouths and noses when they cough or sneeze, and to immediately throw used tissues in the garbage.
  • Remind employees of the importance of regularly washing their hands (for at least 20 seconds with soap and water) and/or using an alcohol-based hand sanitizer containing at least 60 percent alcohol.
  • Avoiding touching your eyes, nose, and mouth with unwashed hands.
  • Avoiding close contact with people who are sick.
  • Ensure you have enough relevant supplies, including soap, hand sanitizer, tissues, paper towels, disinfectant, and trash receptacles.
  • Encourage the regular cleaning of frequently-touched surfaces in the workplace, such as workstations, countertops, and doorknobs.
  • Practice social distancing
  • Consider the use of tele-conferencing options instead of in-person meetings
  • Consider the feasibility of implementing a remote work policy

We know this is a new area for many employers so, if you have questions or need a sample “notice” to employees or a remote work policy, please do not hesitate to contact Brad Adler ([email protected]) or 770.818.1413.