Employment Questions for 2021 and Beyond

Employment Questions for 2021 and Beyond

 

About a year ago, most employers had to abruptly change their operations. You may have rushed out work-from-home arrangements. You may have been forced to reduce your workforce. You may have sought out PPP loans to keep your business afloat. And while you tried to maintain some business operations through all of this, you had to keep your eyes on changing state and federal laws and guidance. We hope you developed a COVID-19 plan and kept track of new paid time off requirements for pandemic-related work absences. But now that case counts seem to be coming down, that more and more people are getting vaccinated, and that we’ve all learned to live with masks, many employers have to face new choices. Below, I’ve assembled some of the leading questions employers face and some guidance for complying with the latest standards.

 

A. Can I mandate vaccines for my workforce?

The short answer is yes. If you wish to do this, consult with legal counsel to structure it properly, as you will have to allow for some exceptions under the standards of the Civil Rights Act and the Americans with Disabilities Act. But it is possible to enact a mandate, and data suggest that very few workers would qualify for exceptions. However, you should also consider the non-legal implications. If you expect some workers to refuse, are you prepared to terminate their employment? Many employers are not ready to take that step, and the latest reports suggest that few employers will make vaccination mandatory. As an alternative, some have suggested paying a premium to workers who get vaccinated. Ironically, this “voluntary” option could create a greater legal risk than a mandate. Older EEOC guidance on wellness programs suggests that if employers give more than a de minimis incentive to encourage participation, they could be discriminating against workers whose disabilities prevent them from taking part in the wellness initiative. And there is no current guidance on what amounts to “de minimis.” Even so, at least one national company announced a plan to pay $100 bonuses to vaccinated employees. Employers certainly can—and probably should—take steps to encourage vaccination, but be sure you check with your legal advisors before wading into this area.

 

B. Am I required to offer paid time off for COVID-19?

Maybe. Many employers re-set benefits at the start of a year, so plenty of workers will have access to some paid sick time in 2021. And some states (such as Michigan) mandate paid sick leave that could be used for many Coronavirus-related situations.

Further, although the paid leave rights under the Families First Coronavirus Response Act expired December 31, 2020, there are circumstances where that can extend to March 31, 2021. And some lawmakers are exploring further extensions. Even without new legislation, employers should also be mindful of unpaid leave rights under the FMLA and other controlling policies on workplace leave.

 

C. What safety precautions should I have in my workplace?

The primary considerations are the things we have been hearing for months now: social distancing, face coverings, and frequent hand washing. But OSHA recently published comprehensive standards on what that means. See the latest guidelines here.

 

D. Can I enforce mask mandates on my clients and customers?

Yes. You have a duty to reasonably accommodate business patrons whose medical conditions prevent them from wearing a face covering. But that does not necessarily mean letting them into your place of business unmasked. The accommodation could be conducting business online, sending a (mask-wearing) representative into your business on behalf of the customer, or having the person wear a different kind of face covering.

 

E. How should I approach the future of work-from-home?

The answer to this will vary greatly from company to company. Some employers are eager to get their workforce back into the office and will be looking for ways to scale back, or even eliminate, working from home. Others will find the forced experiment of 2020 pushing them towards a business model that encourages telecommuting. And still others will fall in between. As a general rule, employers have a lot of latitude in setting the terms of employment, but anti-discrimination laws figure into the equation. Under some conditions, telecommuting could be a reasonable accommodation for a worker with a disability. The option to work from home could also be considered a perk of employment, so you will want to be sure it is offered on a fair basis. The same could be said of the option to not work from home. In other words, you will need to take steps to ensure workspace assignments are made in a non-discriminatory manner.

 

F. Where can I find more help?

We’ve already pointed you to the OSHA website, and useful guidance is also available from the EEOC. For employers with memberships in local or national human resources organizations, your membership likely entitles you to helpful publications on these and many other issues. And our employment lawyers at Tuesley Hall Konopa are always ready to help. As our communities move into the next season of this pandemic, we look forward to working with you to promote legal compliance and help keep everyone healthy and safe.

Michael J. Hays, Business Counsel & Partner, Tuesley Hall Konopa, LLP

Author: Michael J. Hays is a civil litigation attorney and Partner at Tuesley Hall Konopa, LLP. His practice areas include employment law, business transactions, and real estate law. Michael is licensed to practice in Indiana and Michigan.

You can contact Michael by calling 574.232.3538 or email mhays@thklaw.com

Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation. All THK blogs are considered advertising material by the Indiana Bar Association.

Breaking Up Can be Hard to Do

Breaking Up Can be Hard to Do

When small business owners break up, it can be especially hard. The lines between ownership of a business and responsibility for performing the work of a business tend to be blurry. In many businesses, each owner is expected to carry his or her weight helping the business achieve success. When an owner decides that it is time to leave or owners can no longer agree on the direction for the business, difficult questions will need to be answered. Among them, whether or not the departing owner should retain his or her ownership interest in the business, and, if not, what is the right price to pay for the departing owner’s interest? Answering these questions before a breakup happens can save you a lot of heartache.

In Hartman v. BigInch Fabricators & Construction Holding Co., the Indiana Supreme Court recently considered how the price of a departing owner’s interest in a closely-held business should be set. In Hartman, the Court held that there is no ‘blanket rule’ prohibiting owners from incorporating open market concepts into a shareholders agreement meant to establish the value of an interest in a business even if there is no meaningful external market for that interest. In this context, open market concepts are shorthand for the types of discounts that an arm’s-length buyer might apply to the value of an interest to account for the future challenges he or she might face in selling the interest and for his or her inability to control future decision-making of the business.

The Indiana Supreme Court distinguished the circumstances underlying an Indiana Court of Appeals decision in Wenzel v. Hopper & Galliher from the issues at play in Hartman. In Wenzel, the departing owner announced his decision to leave the business, the parties tried to negotiate a mutually acceptable price for his interest in the business and only after reaching an impasse turned to the courts for help in determining the price term for that interest.  In the absence of an agreement among the parties, the Appeals Court looked to the Indiana Professional Corporations Act and the Indiana Business Corporation Law for guidance on how to value the interest of the departing owner. In Hartman, the departing owner had signed a shareholders agreement which included a process for establishing a price term.

Indiana’s Business Corporation Law does not require a departing business owner to sell his or her interest back to the business: nor does it require the business to redeem that interest. There may be a host of good reasons for such a transaction to happen, but the parties have to agree to it. The litigation in Wenzel arose because the two sides wanted to complete a transaction but were unable to agree on the price term. The Appeals Court in Wenzel adopted the concept of Fair Value, which is borrowed from the Dissenters’ Rights provisions of the Business Corporation Law. Using this concept as a framework for determining the price of the interest, the Appeals Court determined that Fair Value must mean something different than Fair Market Value. And further, the Appeals Court concluded that where the buyer is either the business or the other owners of the business, it would be unfair to apply open market concepts like minority discounts for lack of marketability or lack of control. The Appeals Court held that applying open markets discounts to what amounted to a closed-market transaction would result in an unfair windfall for the business and remaining owners.

By contrast, the Supreme Court decision in Hartman underscores the State’s ongoing commitment to the principle that business owners should be free to agree on matters affecting the operations of their businesses. The Court noted that the plaintiff in Hartman had agreed to the buyback provision in his shareholder’s agreement and that the buyback provision entitled the plaintiff to receive the “appraised market value” for his interest. The Supreme Court found that the plain and ordinary meaning of “appraised market value” contemplates the application of minority discounts for lack of marketability and control. In so doing, the Supreme Court rejected the plaintiff’s argument that as a matter of public policy such discounts should not be applied to the redemption of business interests by businesses.

The Hartman decision, particularly when contrasted against the Wenzel decision, underscores the value of a shareholders’ agreement. The Supreme Court in Hartman affirmed a summary judgment decision by the trial court – meaning the litigation costs of settling the dispute remained relatively low. The record in the Wenzel case is much more developed with the plaintiff’s counsel having argued that parts of the Business Corporation Law should be extended on public policy grounds to cover their fact pattern because of similarities to the rights of dissenters in transactions involving sales of businesses. The cost of building that sort of litigation record must have been significant. Agreeing in advance on how to price a departing owner’s interest upon an exit may seem like a nuisance, but the initial investment can save you a lot of time and expense down the road. The Hartman decision confirms a willingness to enforce those provisions.

Author: Partner, Peter J. Gillin, is a seasoned transactions attorney whose experience includes advising middle-market and closely-held businesses. Practice areas include business counsel, business formation, business transactions, business acquisitions, succession planning, partnership agreements, financing agreements, contract review, and intellectual property matters.

You can contact Pete by calling 574.232.3538 or email pgillin@thklaw.com.

Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation. All THK blogs are considered advertising material by the Indiana Bar Association.

COVID-19 Planning for Employers

COVID-19 Planning for Employers

I Love it When a Plan Comes Together: COVID-19 Planning for Employers

Most episodes of the 1980s hit show, The A-Team, involved the team cobbling together some super-weapon from a collection of spare parts that they would use to defeat the bad guys. After securing their victory, team leader, Col. John “Hannibal” Smith, would often say, “I love it when a plan comes together . . .”

As employers have been cobbling together their defenses of hand sanitizer, disinfecting wipes, and face masks, they need to also work on crafting a plan. In fact, Indiana Governor Eric Holcomb’s latest Executive Order says, “On or before May 11, 2020, all Hoosier employers shall develop a plan to implement measures and institute safeguards to ensure a safe environment for their employees, customers, clients, and members. The plan shall be provided to each employee or staff and posted publicly.” As you develop your company’s plan, here are some important considerations:

  • It doesn’t have to be lengthy. Written workplace policies serve many goals, but the most important one here is communication. Use this plan to send clear messages; don’t bog down your workforce with too many details.
  • It should be flexible. None of us have ever lived through a pandemic like this. Things have changed a lot in recent weeks and months and are likely to keep changing. Let your employees know that current workplace procedures are temporary and are likely to change.
  • It must take safety seriously. Read the relevant CDC guidance; study other reputable local, regional, and national resources to determine concrete steps your company can take to do its part in preventing the spread of COVID-19. Seek professional advice if you need it.
  • It must respect other relevant employment laws. All the existing rules against discrimination, harassment, and retaliation—along with laws requiring reasonable accommodations for disabilities and religious beliefs—continue in force. Congress recently passed new laws providing paid sick leave and family leave to most workers, and various other state or federal employment laws could be implicated by your company’s COVID-19 response. Keep these considerations in mind.

Having a plan is required in Indiana, but it is a good practice in other states, too. Tuesley Hall Konopa attorneys are available to assist businesses and individuals in Indiana or Michigan with a variety of legal needs. Visit our website at thklaw.com for a comprehensive list of our legal services.

Michael J. Hays, Business Counsel & Partner, Tuesley Hall Konopa, LLP

Author: Partner, Michael J. Hays, is an employment law and civil litigation attorney at Tuesley Hall Konopa, LLP. His practice areas include civil litigation, employment law, business counsel, real estate transactions, and contract review. Michael is licensed to practice in Indiana and Michigan.

You can contact Michael by calling 574.232.3538 or by email at mhays@thklaw.com

Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation. All THK blogs are considered advertising material by the Indiana Bar Association.

Paycheck Protection Loan Program

Paycheck Protection Loan Program

Paycheck Protection Loan Program: Establishing Historical Payroll Costs will be a Key Part of the Process

The Paycheck Protection Program, which was recently established by the CARES Act, provides for emergency loans to help small businesses meet payroll and certain other current expenses. The maximum amount available under the Program is the lesser of $10 million and 250% of the borrower’s average total monthly payments for ‘payroll costs’ during the 1-year period prior to the date the loan is made plus (if applicable) the outstanding amount of any EIDL loan that the borrower may have received from the SBA since January 31, 2020.

Payroll costs are defined as the sum of payments of any compensation to employees fitting within the following categories:

  • Salary, wage, commission or similar compensation;
  • Payment of cash tip or equivalent;
  • Payment for vacation, parental, family, medical or sick leave;
  • Allowance for dismissal or separation;
  • Payment for group health care benefits including insurance premiums;
  • Payment of any retirement benefit; or
  • Payment of state or local taxes assessed on the compensation of employees.

Payroll costs expressly exclude the following items:

  • The ‘compensation of an individual employee’ in excess of $100,000;
  • Federal withholding for FICA, Railroad Retirement Tax Act and Federal income tax;
  • Compensation to any employee whose principal residence is outside of the US; and
  • Qualified sick and family leave payments eligible for credits under the Families First Coronavirus Response Act.

The timetable for when the SBA and SBA certified lenders will begin to process applications under the Program remains uncertain – likely the end of this week or early next week. Exactly what documentation lenders will require also remains uncertain. But the backbone of the Program rests on establishing a business’ monthly payroll costs for the past 12 months.  Gathering written records to support your business’ recent payroll cost history will save valuable time when the SBA and lenders open for business.

Contact our business legal team with your questions at 574.232.3538. We are open 8 a.m. to 5 p.m. Monday through Friday, and all our attorneys are available to assist you via phone and virtual meetings.

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Author: Pete Gillin is a seasoned transactions attorney whose experience includes advising middle-market and closely-held businesses. Practice areas include business counsel, business formation, business transactions, business acquisitions, succession planning, partnership agreements, financing agreements, contract review, and intellectual property matters.

You can contact Pete by calling 574.232.3538 or email pgillin@thklaw.com.

Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation.

The CARES Act Provides Funds to Help Your Small Business to Stay Afloat

The CARES Act Provides Funds to Help Your Small Business to Stay Afloat

Any Port in a Storm: The CARES Act Provides Funds to Help Your Small Business Stay Afloat

Friday afternoon, Congress approved the Coronavirus Aid, Relief and Economic Security Act (or CARES Act). In part, the CARES Act moves $350 billion to the Small Business Administration (SBA) to underwrite a loan program aimed at helping small businesses make payroll and cover operating expenses. The section of the CARES Act outlining this small business loan program is being commonly referred to as the Paycheck Protection Program. The Paycheck Protection Program will be administered by SBA.

Loans made under the Paycheck Protection Program will only be available through June 30, 2020. Loans will be styled as Economic Injury Disaster Loans (EIDL) under Section 7(a) of the Small Business Act. The Program is intended to provide borrowers with cash flow assistance during the emergency caused by the Covid-19 crisis. Key elements of the Paycheck Protection Program include:

  • Businesses and many non-profits employing 500 or fewer persons will be eligible to participate
  • Proceeds from EIDLs may be used for payroll support, employee salaries, mortgage payments, rent, utilities and other debt obligations incurred prior to the onset of the pandemic
  • Loan amounts will be capped at the lesser of 250% of a borrower’s average monthly payroll costs for the 12 months preceding the date of the loan and $10 million
  • Borrowers may apply for an emergency advance of up to $10,000 which the SBA will distribute on an expedited basis while EIDL loan applications are processed
  • Interest rate will be capped at 4%
  • Maturities will be up to 10 years
  • Loans will be made available through SBA-certified lenders and be guaranteed by the SBA
  • Fees to establish loans will be waived as will any penalties for prepayment
  • For employers that retain and continue to pay their employees through June 30, 2020, the portion of the loan used to cover payroll and payments on pre-existing debt will be forgiven.

The Act also offers relief to borrowers with existing 7(a) or 504 loans.  For these loans, the SBA will cover principal, interest and any fee payments due for a six-month period beginning on the date of the next payment comes due.

The window to participate in the Paycheck Protection Program is limited. Given the size and scope of the Program, there will be challenges in administering it. The hope is that the SBA and SBA-certified lenders will be ready to process applications as early as the end of next week.  The business attorneys at Tuesley Hall Konopa are ready to help navigate the Economic Injury Disaster Loan process and help you determine whether the Paycheck Protection Program may be a good solution for your business needs.

Contact our business legal team with your questions at 574.232.3538. We are open 8 a.m. to 5 p.m. Monday through Friday, and all our attorneys are available to assist you via phone and virtual meetings.

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Author: Pete Gillin is a seasoned transactions attorney whose experience includes advising middle-market and closely-held businesses. Practice areas include business counsel, business formation, business transactions, business acquisitions, succession planning, partnership agreements, financing agreements, contract review, and intellectual property matters.

You can contact Pete by calling 574.232.3538 or email pgillin@thklaw.com.

Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation. All THK blogs are considered advertising material by the Indiana Bar Association.

Work in the Time of Coronavirus

Work in the Time of Coronavirus

If you’ve read Love in the Time of Cholera, you know that running a business in 2020 is nothing like that. Employers addressing this unprecedented pandemic have lots of questions. Below are some quick tips on sick leave, layoffs, medical evaluations, and other issues. As this crisis unfolds, Tuesley Hall Konopa will remain open to address your legal needs. Coming changes might affect our in-person contact, but our lawyers and other professionals will stay engaged to serve our clients. In the meantime, consider the following guidance, which is current as of March 16, 2020:

A. It’s okay to stick with your normal paid time off policies for now, but be ready for changes.

The House of Representatives passed the Families First Coronavirus Response Act on March 14th. If the Senate passes it, and the President signs it, then employees will have a guarantee of 14 sick days relating to COVID-19, easier access to FMLA leave, and other benefits. We are waiting to see the final law before offering more detailed guidance.

As of today, you may insist that employees away from work for Coronavirus reasons follow normal paid time off policies. We advise that you do not penalize employees under normal attendance policies whose absences are caused by the pandemic. We also recommend employers exercise some flexibility and understanding with required doctors’ notes.

B. If mass layoffs may be coming to your business, now is the time to start planning.

The federal WARN Act generally requires 60 days’ notice for “mass layoffs” by employers with 100 or more employees. Please seek legal advice because the counting of employees can be confusing. Employers are to provide a specific written notice to affected workers and to certain local government offices.

A “mass layoff” only falls under the Act if it will be for 6 months or more, but if there is a risk at least some employees will have their hours reduced by at least 50% for at least six months, then the most conservative advice would to be give WARN notices even if you hope and expect any layoffs will be shorter.

WARN is a complicated law with exceptions for “natural disasters” and “unforeseeable business circumstances” that might apply to COVID-19. Generally, these exceptions spare the employer liability for shortening the notice, but notice is still required. Given the unprecedented nature of this outbreak, Congress may intervene to modify the WARN Act. Even so, if the size of your workforce and the size of your layoff implicates WARN, you should consider giving as much WARN notice as possible—even if it’s only a few days.

C. Employers will have to be creative.

There is a “general duty” under OSHA for all employers to protect their employees from workplace hazards. You may rely on this to force employees to stay home from work if they have flu-like symptoms, have likely exposure to Coronavirus, or present other risks. You may also:

  • Consider new standards for work-from-home to mitigate risks;
  • Inform your employees of any exposure risk they may have faced at work, but without revealing confidential medical information about affected employees;
  • Consider temperature screenings before allowing employees to return to work but seek guidance as other “medical examinations” could implicate the Americans with Disabilities Act.

D. Be thinking about “force majeure.”

Using a Latin phrase, the law has long allowed a contracting party to avoid fulfilling a contract if unforeseeable circumstances make performance impractical or impossible. Historically, things like wars, natural disasters, and labor strikes have been considered force majeure events. Most legal scholars believe the COVID-19 outbreak will fit that standard. In fact, the NBA is already talking of invoking this rule to avoid paying players.  Depending on the terms of your agreements, your business may be able to rely on force majeure to avoid certain contracts. But your business partners might be able to do the same to you. This is another area where advance planning and careful guidance are in order.

E. Stay in touch.

The news media and your inbox are flooded with Coronavirus information. That won’t stop any time soon. As you try to run your business while staying abreast of public health needs, contact Tuesley Hall Konopa for legal guidance in this evolving situation.

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Michael J. Hays, Business Counsel & Partner, Tuesley Hall Konopa, LLP

Author: Michael J. Hays is a civil litigation attorney and Partner at Tuesley Hall Konopa, LLP. His practice areas include civil litigation, employment law, business counsel, and contract review. Michael is licensed to practice in Indiana and Michigan.

You can contact Michael by calling 574.232.3538 or by email mhays@thklaw.com

Disclaimer: The THK Legal Blog is for informational purposes only and should not be relied upon as legal advice. In no case does the published material constitute an exhaustive legal study, and applicability to a particular situation depends upon an investigation of specific facts. You should consult an attorney for advice regarding your individual situation.