Questions and Answers for New Jersey Employers Affected by COVID-19
The federal government and New Jersey have taken various measures aimed at assisting business and individuals in the state suffering hardship as a result of the COVID-19 outbreak. The following “links” and Questions and Answers are designed to provide information on the issues our clients and many New Jersey businesses are facing.
1) What changes should my business be aware in its legal obligations to employees since the COVID-19 crisis?
Employers must post this flyer providing information regarding the expanded protected family medical leave under the First Families First Coronavirus Protection Act (FFCRA). Under the FFCRA, those private employers with 500 or less employees and certain public employers have newly expanded requirements to provide employees with expanded family and medical leave for certain COVID-19 related reasons, including the employee’s inability to work due to:
- The employee’s quarantine (whether pursuant to Federal, State, or local government order or the advice of a medical professional) and/or the employee has COVID-19 symptoms and is seeking a medical diagnosis (Two weeks of expanded family and medical leave at the employee’s regular rate of pay)
Two weeks of expanded family and medical leave at 2/3 the employee’s regular rate of pay where the employee cannot work due to:
- Caring for a child under 18 when the child’s school is closed or unavailable due to COVID-19
- Suffering symptoms of COVID-19
If an employee has been employed for at least 30 days, covered employers must provide up to an additional 10 weeks of expanded family and medical leave at 2/3 of the employee’s regular rate of pay if the employee cannot work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.
The U.S. Department of Labor has posted a series of Q&A’s to provide compliance assistance to employers and employees on their rights and responsibilities under the FFCRA. In addition, temporary final regulations have been promulgated regarding implementation of the FFCRA’s provisions (note corrections to those regulations have been issued as well.)
New Jersey Law:
Pursuant to New Jersey Bill A3848/S2301, employers are prohibited from terminating, refusing to reinstate or otherwise penalizing an employee if the employee requests or takes time off due to an infectious disease during the COVID-19 health emergency. Employers who violate this law face a $2,500 fine for each violation.
The effective date of New Jersey Mini-WARN Act’s expanded notice requirements prior to mass layoffs, business terminations and transfer of operations and severance obligations for qualifying businesses has been delayed until 90 days after the state’s stay at home order is lifted. In addition, the law was amended to exclude mass layoffs resulting from national emergencies including COVID-19.
2) What is the penalty if my business violates the requirements of the FFCRA?
Employers who violate the first two weeks of paid sick time or unlawful termination provisions are subject to the penalties and enforcement in Sections 216 (Penalties) and 217 (Injunction Proceedings) of the Fair Labor Standards Act. For violations of the provisions providing for up to an additional 10 weeks of paid leave to care for a child whose school or place of care is closed (or child care provider is unavailable) employers are subject to the enforcement provisions of the Family and Medical Leave Act (FMLA). There will, however, be a temporary period of non-enforcement for the first 30 days after the Act takes effect, so long as the employer has acted reasonably and in good faith to comply with the Act. “Good faith” exists when violations are remedied and the employee is made whole as soon as practicable by the employer, the violations were not willful, and the Department receives a written commitment from the employer to comply with the Act in the future.
3) Under the new Executive Order 107, If my business is not an “essential business,” do I have to completely close operations?
No, the Executive Order does require that all non-essential retail businesses and brick and mortar operations close to the public, but if you believe your business is essential you may submit a request to the State Director of Emergency Management. Essential businesses include:
- Grocery stores
- Farmer’s markets and farms selling direct to consumers
- Marijuana dispensaries
- Medical supply stores
- Gas stations including their retail functions
- Convenience stores
- Hardware and home improvement stores
- Banks and financial institutions
- Laundromats and dry cleaners
- Stores that principally sell items for children under five years old
- Liquor stores
- Car dealerships for auto maintenance and repair services only
- Office supply stores
- Mail and delivery stores
- all workers whose job duties can be accomplished by telework should be allowed to do so and given the appropriate tools to accomplish this
- employees that must be on site must be kept to an absolute minimum and only those necessary for critical operations
- employees who must be on site should practice social distancing
4) If I am a business with less than fifty employees, must I comply with the paid sick leave requirements of the newly passed First Families Coronavirus Response Act (FFCRA)?
The Department of Labor (DOL) has released guidance as well as temporary regulations regarding exemptions to the Act’s requirements for certain small businesses. Specifically, the DOL guidance provides that businesses with fewer than 50 employees may be exempt from the requirement of providing leave due to school closings or child care that has become unavailable if doing so would jeopardize the viability of the business as a going concern.
The newly released temporary regulations provide objective criteria for determining when a small employer is exempt from the requirement to provide such leave, as follows:
(1) such leave would cause the small employer’s expenses and financial obligations to exceed available business revenue and cause the small employer to cease operating at a minimal capacity;
(2) the absence of the employee or employees requesting such leave would pose a substantial risk to the financial health or operational capacity of the small employer because of their specialized skills, knowledge of the business, or responsibilities; or
(3) the small employer cannot find enough other workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services the employee or employees requesting leave provide, and these labor or services are needed for the small employer to operate at a minimal capacity.
For reasons (1), (2), and (3), the employer may deny paid sick leave or expanded family and medical leave only to those otherwise eligible employees whose absence would cause the small employer’s expenses and financial obligations to exceed available business revenue, pose a substantial risk, or prevent the small employer from operating at minimum capacity, respectively.
5) In order to avoid layoffs, my business has reduced the number of hours worked by each employee and has proportionately reduced salaries. What salary replacement options are available, if any, for my employees?
Partial Unemployment is available in New Jersey for those employees who work less than 80 percent of the full-time hours.
For any wages earned from any employer:
- If you earn 20% or less of your weekly benefit rate from an employer, you can still receive your full benefit amount for that week. However, you cannot be paid more than your weekly benefit rate.
- If you earn more than 20% of your weekly benefit rate from an employer in a given week, your partial weekly benefit payment will be reduced dollar-for-dollar for all gross wages earned that week.
- For example, if your weekly benefit rate is $200, your partial weekly benefit rate is $240 (20% more than $200). If you earn $50 gross during a week, you would receive $190 in unemployment insurance benefits ($240-$50=$190).
If, however, an employee’s salary is reduced without an accompanying reduction in work hours, unemployment benefits are not available.
In addition, on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed providing for additional expanded unemployment benefits. Specifically, the CARES Act allows eligible workers to collect unemployment benefits for up to 39 weeks and receive an additional $600 per week for up to four months (in addition to benefits previously available). These enhanced benefits are available from January 27, 2020 through December 31, 2020. More workers are eligible for benefits under the CARES Act including individuals who were scheduled to begin employment but no longer has the job or cannot reach the job as a direct result of COVID-19. However, note that those individuals who can telework with pay or are receiving paid sick leave or certain other paid leave benefits are not eligible.
Also of note is the expansion of the CARES Act to cover individuals typically ineligible to receive such benefits such as independent contractors. In addition, the CARES Act allows individuals to take loans and to withdraw monies prior to age 59 ½ from their 401-k without penalty, subject to certain other limitations.
6) What options, if any, are available to independent contractors whose income has been drastically reduced or eliminated as a result of the COVID-19 outbreak?
As noted above, the CARES Act makes individuals eligible to receive unemployment benefits who would not otherwise be eligible including the self-employed and independent contractors.
7) My company is trying to avoid layoffs. What other cost saving options are available?
- Small Business Grants and Loans:
The newly passed Coronavirus Aid, Relief and Economic Security Act (CARES) was signed into law, providing financial relief for small businesses (those with 500 or less employees including all full time, part time, and other basis employees). The Act’s Paycheck Protection Program provides loans of up to $10,000,000. Loan terms are available up to 10 years at 4% interest with six months deferral of principal and interest, no collateral and no prepayment penalties. Other financing sources available under the Act include:
- Bridge Loans of up to $1,000,000 for disaster related reasons
- Economic Injury Disaster Loans of up to $2,000,000 for small businesses
- Emergency loan advances of up to $10,000 which may be forgiven
- New Jersey microloans of up to $50,000
The Act provides for loan forgiveness equal to the amount paid for payroll costs, salaries, benefits, rent, utilities, and mortgage interest for the eight weeks following the loan’s disbursement. This forgiveness may be reduced if the workforce or salary is reduced.
The Small Business Emergency Assistance Loan program provides direct loans of up to $100,000 for New Jersey based small businesses and non-profits that have existed for at least one year and have less than $5 million in annual revenue. Eligible businesses will have suffered a reduction in business hours, complete closure of the business, at least a 20% decline in revenue, employees unable to work, required to close by government order or disruption of supply chain. To see if your business is eligible, visit NJ COVID-19 Business Eligibility Wizard.
New Jersey has created the Small Business Emergency Assistance Grant Program, with applications expected to open the week of March 30th. To see if your business is eligible, use the NJ COVID-19 Business Eligibility Wizard. The program will provide up to $5,000 to New Jersey based small and medium sized businesses that have between 1 and 10 full time equivalent employees. Grants are to be used for payroll and working capital, not for capital expenses or construction.
- Employee Retention Credit
- The CARES Act created a new employee retention credit for wages paid from March 13 to December 31, 2020 for employers that are subject tot closure of significant economic downturn due to COVID-19. The maximum Retention Credit is $5,000 per employee (up to 50% of qualified wages, up to $10,000).
- · Tax credits, deferral, and deadline extension:
Under Division G, the FFCRA provides businesses with tax credits for “100 percent of the qualified sick leave wages paid” by the employer, subject to certain limitations. The number of days taken into account for a tax credit for any given quarter shall not exceed 10 days. The amount of qualified sick leave wages for any employee subject to this tax credit is capped at $200 (of $511 if the leave is as described in §5102(a) of the Emergency Paid Sick Leave Act). For a complete understanding of the limitations of this tax credit, contact your tax preparer.
The IRS has also extended the federal tax filing deadline by 90 days, to July 15th for corporate filers and individual income tax payments. Corporate filers will also receive an extension on up to $10 million in taxes owed.
In addition, the CARES Act Section 2302 delays to timing of required federal tax deposits for certain employer payroll taxes and self-employment taxes incurred between March 27 and December 31, 2020. If 50% of the deferral amount is paid by the end of 2021 and the remainder by the end of 2022, the amounts will be considered timely.
New Jersey law:
New Jersey Bill A3841/S2300 extends time to file gross income tax or corporation business tax return if federal government extends filing or payment due date for federal returns.
As discussed above, the IRS has postponed the April 15th federal income tax filing deadline to July 15th, thereby extending the time to file your New Jersey state return as well.
- Business Interruption Insurance
While New Jersey’s attempts to advance a bill requiring insurance companies to provide coverage despite gaps in policies, businesses should review their business insurance policies and if they contain any form of business interruption coverage, file a claim pursuant to the policy’s procedures.
- 90-Day Grace Period for Mortgage Payments:
Financial institutions will offer, consistent with applicable guidelines, mortgage payment forbearances of up to 90 days to borrowers economically impacted by COVID-19. In addition, those institutions will:
- Provide borrowers a streamlined process to request a forbearance for COVID-19-related reasons, supported with available documentation;
- Confirm approval of and terms of forbearance program; and
- Provide borrowers the opportunity to request additional relief, as practicable, upon continued showing of hardship due to COVID-19.
- Deferral of Pension Contributions
- The CARES Act Section 3608 provides a pension funding holiday for contributions to a single-employer defined benefit pension plan that would otherwise be required to be paid during the 2020 calendar year. Instead, delayed contributions would be due January 1, 2021 with additional interest accruing from the original due date until the contribution is made.
8) What changes have New Jersey courts implemented since the COVID-19 crisis?
On March 27th, the New Jersey state courts issued the Omnibus Order extending discovery deadlines through April 26, 2020. Civil arbitration sessions that had been scheduled from March 16 through April 10 are postponed and those scheduled from April 11 through April 26 will be rescheduled. The Order further directs that depositions be conducted remotely, allowing court reporters to administer and accept oaths remotely. If possible, court matters including hearings, conferences and arguments will be conducted by video or phone and in person appearances only for emergencies. Depositions for doctors, nurses and the like who are responding to the COVID-19 crisis are suspended through April 26 ,2020 as well. The requirement for original signatures are also relaxed under the order and electronic signatures permitted for all filing processes.
The District Court of New Jersey in Newark (both the Martin Luther King and Frank R. Lautenberg U.S. Courthouses) is closed to all visitors through April 6th by Standing Order, dated March 26th. The Trenton and Camden Vicinages are not affected by this closure order. Electronic filing shall function normally. In addition, the District Court issued remote hearing guidelines and extended discovery and filing deadlines in civil matters that currently fall between March 25 and April 30, 2020 by forty-five days.
The State has specifically noted that professional service firms, for example, may continue to operate. See https://faq.business.nj.gov/en/articles/3820777-i-m-not-sure-if-my-business-needs-to-close-due-to-the-state-s-covid-19-directives-what-additional-guidance-is-there