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Archive for July, 2020

Pennsylvania Offers Certain Employers Help with Hazard Pay

Posted on: July 23rd, 2020

By: Justin Boron

Last week, the governor made $50 million available to businesses, health care non-profits, public transit agencies, and certain economic development organizations to cover hazard pay for ‘front line’ employees exposed in life-sustaining industries exposed to COVID-19 risks. The payments must go toward paying employees in certain industries, including healthcare, food manufacturing, food retail, childcare, janitorial, transit, and security services.

The hazard pay is a $3/hour raise on the employee’s regular pay rate paid during the ten-week period from August 16, 2020 to October 24, 2020. It also must be used to supplement—rather than supplant—any eligible overtime, benefits, existing employer-paid, hazard pay, or any scheduled increases to current compensation. The funding also may be used only to pay direct, full-time and part-time employees earning less than $20/hour, excluding fringe benefits and overtime.

Eligible businesses must apply online with the Department of Community and Economic Development.  The amount of funding is limited to $1,200 per full-time equivalent employee for up to 500 employees per location.

Employers relying on this program will need to be careful to assimilate the hazard pay correctly into their pay system to ensure compliance with wage-and-hour regulations. One question left unanswered is whether the adjusted regular rate that includes hazard pay should be used for calculating the overtime rate. It’s likely that additional guidance will be issued, so employers using a hazard pay grant will need to track updates.

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

Additional Information:

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.**

How CPAs Can Minimize Liability When Assisting Clients With PPP Loan Forgiveness

Posted on: July 21st, 2020

By: Nancy Reimer and Elizabeth Lowery

The CPA’s client received funds from the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and is asking if and how they will qualify for PPP loan forgiveness. As of this date, there is uncertainty over some of the program details and businesses worry about meeting and maximizing the loan forgiveness requirements. With the uncertainty surrounding the loan forgiveness process how can CPA’s protect themselves from liability while assisting clients seeking loan forgiveness? 

The best protection tool in a CPA’s arsenal is the Engagement Letter. An engagement assisting clients seeking loan forgiveness under the PPP is considered a consulting engagement in accordance with the Statement on Standards for Consulting Services issues by the American Institute of Certified Public Accountants (“AICPA”). Like any engagement letter, the PPP loan forgiveness engagement letter should spell out the nature and scope of work to be performed, the CPA firm’s responsibilities, the client’s responsibilities and the work product to be delivered to the client.  The Engagement Letter should also contain limitation of liability and indemnification clauses. 

In drafting the engagement letter, the following considerations should be taken into account:

  • The terms and scope of the consulting services should be discussed with the client and clearly described in the letter
  • Describe the engagement’s objectives.
  • Describe the scope and limitations of the engagement.
  • List the services that are not within the scope of the engagement.
  • Summarize the tasks to be performed and completed.
  • Describe the deliverables.
  • List the applicable professional standards.
  • List the client’s responsibilities.
  • List the CPA’s responsibilities.
  • State when the services will begin and conclude.
  • State the limitations on the use of the deliverables.

We also recommend stating the CPA is not involved with and has no influence upon the loan forgiveness process and cannot guarantee the Application will be approved. It is important for the client to accept responsibility for the accuracy and completeness of all certifications included in the Application and maintain all required documentation to support the application.

While clients may be anxious to apply for forgiveness keep in mind the following factors:

  • Most lenders are not ready to process forgiveness applications as they are awaiting guidance from the Program.
  • Many lenders are developing forgiveness portals to make the process more efficient.
  • Businesses have 24 weeks to use the PPP funds leaving more time to take steps to help qualify for forgiveness
  • Payroll costs are a significant component of PPP forgiveness. Most payroll providers are developing special reports to help the process. But they too are waiting for guidance.
  • Payments are not due yet. Borrowers are not required to make loan payments before they apply for forgiveness or until 10 months after the covered loan period ends.

While it can be difficult for a client to be patient with the ongoing uncertainty prevented by COVID-19, as their trusted advisor, a CPA can help calm the fears while awaiting proper guidance from the PPP.

Even apart from Coronavirus issues, CPAs should periodically review and update their engagement letters. Stay tuned for our upcoming Webinar on Engagement Letters.

If you have questions or would like more information, please contact Nancy Reimer at [email protected] or Elizabeth Lowery at [email protected].

Twitter Hack and the Lessons it Leaves Behind

Posted on: July 21st, 2020

By: Courtney Mazzio

Twitter fell victim to a major cyber attack on Wednesday, July 15, when the accounts for some of the world’s most recognizable public figures, executives and celebrities starting tweeting out links to bitcoin scams. The first public signs of the intrusion came around 3 PM EST, when the Twitter account for the cryptocurrency exchange Binance tweeted a message saying it had partnered with “CryptoForHealth” to give back 5000 bitcoin to the community, with a link where people could donate or send money. Shortly after that, similar tweets went out from the accounts of other cryptocurrency exchanges, and from the Twitter accounts for certain politicians and celebrities including President Barack Obama, Joe Biden, Elon Musk, Bill Gates, Kanye West, Michael Bloomberg, and Apple. In immediate response, Twitter blocked new tweets from every verified user, whether compromised or not, and they locked all compromised accounts.

In order to gain access to the user accounts, the attackers targeted certain Twitter employees through a social engineering scheme. In this attack, the attackers successfully manipulated a small number of Twitter employees and used their credentials to access Twitter’s internal systems. As of July 18, Twitter knew that the bad actors accessed tools only available to their internal support teams to target 130 Twitter accounts. For 45 of those accounts, the attackers were able to initiate a password reset, login to the account, and send the tweets. Twitter’s also reporting that for up to eight of the accounts involved (none were verified accounts), the attackers took the additional step of downloading the account’s information through our “Your Twitter Data” tool. This is a tool that is meant to provide an account owner with a summary of their Twitter account details and activity, meaning that information such as private conversations and personal information on those accounts could have been accessed by the attackers.

Though the identities of the hackers are not yet known, there are strong indications that the attack was perpetuated by individuals who specialize in hijacking social media accounts via “SIM swapping,” an increasingly popular form of crime that involves bribing, hacking or coercing employees at mobile phone and social media companies into providing access to a target’s account. It’s estimated that the bad actors collected over $100,000 through this Twitter scam.

This incident demonstrates that even tech companies with technically sophisticated employees can still fall victim to phishing attacks. Twitter has said it will conduct additional company-wide training to guard against social engineering tactics in order to supplement the training its employees already receive during onboarding, and that employees will receive ongoing phishing exercises throughout the year as well. Training of that type is important not just for companies like Twitter, but really for companies of all sizes and in all industries. Employees continue to be a front line of defense in cybersecurity and no amount of technical safeguards on your computer network can protect against an employee being tricked into disclosing his or her credentials in a social engineering scam. So the moral of the story is: train early, train often, and talk about social engineering and cybersecurity in your workplace.

If you have questions or would like more information, please contact Courtney Mazzio at cma[email protected].

A Temporary Reprieve for New Jersey Employers: Delay and Changes to the Amended New Jersey WARN Act

Posted on: July 21st, 2020

By: Stephanie Greenfield

Six months ago, prior to the COVID-19 pandemic in the United States, New Jersey became the first state in the nation to pass a law obligating employers to provide severance to employees affected by a mass layoff.  On January 21, 2020, New Jersey Governor Phil Murphy amended the existing New Jersey Worker Adjustment and Retraining Notification Act (NJ WARN Act). The new amendments, originally scheduled to go into effect on July 19, 2020, require that employers provide severance to each laid-off employee in the amount of one weeks’ pay for each year of employment. Previously under the NJ WARN Act, employers were only obligated to provide severance in connection with a covered mass layoff only if they failed to comply with the required 60-day notice. The new law will ultimately make it drastically more expensive for companies to conduct a large- scale reduction in force in New Jersey.

The significant changes to the NJ WARN Act include:

  • Expanded Notice Requirement: An employer that has 100 or more employees must provide at least 90 days’ notice before the first employee is discharged as part of a mass layoff, termination of operations, or transfer of operations. The existing NJ WARN Act requires only 60 days’ notice.
  • Mandatory Severance Requirement: In addition to notice, employers must provide discharged employees with “severance pay equal to one week of pay for each full year of employment.” Under the existing NJ WARN Act, an employer is only required to pay severance as a penalty if it fails to provide the required notice.
  • Lower Threshold for Mass Layoffs: The threshold for a “mass layoff” was lowered to 50 employees (even if they did not amount to 33% of the workforce). 
  • Expanded Counting and Coverage of Part-Time Employees: Employers must include part-time employees in both the 100-employee (for a covered employer) and 50-employee (for a termination of operations or a mass layoff) thresholds. Further, part-time employees are entitled to 90 days’ notice and severance just like full-time employees.
  • Expanded Statewide Definition of “Establishment”: The definition of “establishment” was expanded to include a group of all of the employer’s locations in New Jersey.

When the law was passed, the state and nation had no way of knowing that, in a matter of weeks they would be facing a national health crisis. Given the massive labor disturbance and resulting economic impact caused by COVID-19, New Jersey amended the NJ WARN Act once again, effective April 14, 2020. The NJ WARN Act now exempts from coverage any mass layoffs resulting from a natural disaster or national emergency (such as COVID-19), and delays the effective date of the amendments that were originally scheduled to take effect on July 19. These exclusions are retroactive to March 9, 2020, and, thereby, exclude any otherwise covered mass layoff from that date forward. This change permitted New Jersey employers to breathe easier, especially those implementing furloughs and layoffs due to the pandemic.

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

Seeing is Believing: Effective use of Animations in and out of the Courtroom

Posted on: July 20th, 2020

By: Paul Bigley

In California, we are blessed with a California Supreme Court case by the name of People vs. Duenas (2012) 55 Cal. 4th 1. The Duenas court addressed the use of animations in trial. The court drew a distinction between simulations and animations, equating animations to traditional demonstrative evidence such as charts or diagrams. Animations are not held to the traditional scientific Daubert challenges as to admissibility. 

The following are actual quotes from the Duenas opinion: “ Animation is merely used to illustrate an expert‘s testimony while simulations contain scientific or physical principles requiring validation…. Animations do not draw conclusions; they attempt to re-create a scene or process, thus they are treated like demonstrative aids… In other words, a computer animation is demonstrative evidence offered to help a jury understand expert testimony or other substantive evidence.“

The formula for considering whether or not an animation should be prepared in a case is simple: Potential Large Exposure + Liability defenses = Need To Consider Animation. 

If the decision is made to use an animation, it should be prepared early, for use at mediation and trial, if necessary, to maximize benefit. Studies show that people retain far more information from seeing something as opposed to hearing or being told about something. The impact of an animation is enormous and once seen and appreciated by opposing counsel, it often has the effect of greatly deflating their expectations and driving a very favorable settlement. After all, opposing counsel now knows that they need to make an investment in one of their own at great cost and expense while facing the very real prospect of obtaining nothing from a jury if the jury accepts, as credible, what they see in the animation.

Admitting an animation into evidence is easy. I ask just a few questions of an appropriate expert, usually an accident reconstructionist or a human factors expert: Have you reviewed the animation we prepared? Does the animation generally support your opinions? As you might imagine, the answers to those questions are always yes. 

Because simulations, which are intended to exactly replicate a scene or event, are often challenged and never end up seeing the light of a court room, animations are my preferred choice. At FMG, we actually prepare these animations in-house with the assistance of our litigation support manager who has a degree in game design and animation. While not inexpensive, we prepare them at a fraction of the cost from outside vendors. 

If you are not making use of this tool, you are missing out on a cutting edge opportunity. That said, we know that states other than California may treat animations differently. You should explore whether your state follows California’s Duenas court decision.

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

You can view examples of FMG’s animation capabilities below: