Welcome to the Weintraub Resources section. Here, you can find our Blogs, Videos, and Podcasts, in which Weintraub attorneys regularly provide insights and updates on legal developments. You can also find upcoming Weintraub Events, as well as firm and client News.

The U.S. Supreme Court Stays Enforcement of OSHA’s Nationwide Vaccine Mandate Because It Exceeds OSHA’s Authority

As Lizbeth West and James Kachmar wrote in previous blogs, here and here, the 6th Circuit Court of Appeals vacated the stay of OSHA’s vaccine-or-test mandate that applies to employers with more than 100 employees. Challengers of the mandate sought immediate review by the U.S. Supreme Court. The U.S. Supreme Court held oral arguments in the matter on an expedited basis on January 7, 2022, and just published an opinion today lambasting OSHA’s vaccine mandate and staying its enforcement.

California Department of Public Health Issues a New Statewide Indoor Mask Mandate

Due to the increase in COVID-19 infection numbers and the rising number of hospitalizations in recent weeks, the California Department of Public Health has issued a mandate requiring all individuals in California wear masks in all public indoor settings regardless of their vaccine status. The mandate is for a one month period from December 15, 2021 through January 15, 2022.

More information can be found at the CDPH website, here.

An Employee Has Requested a Religious Exemption to the Company Vaccine Mandate—What Now?

For those in the Sacramento area, you may have seen large “Destiny” signs overhanging State Route 65 north of Interstate 80. A news story last month suggested that this church is the place to go for COVID-19 vaccine exemption letters. Now that President Biden is planning to use the emergency powers of the Occupational Safety and Health Administration to mandate vaccination for an estimated 100 million employees, the issue is even more prominent.

How New Legislative Policy May Affect COVID-Related Lease Disputes

Over the last eighteen months, we have been forced to devote significant resources to interpreting how largely-forgotten legal doctrines apply to real estate contracts in a post-COVID world. These principles, including force majeure, frustration of purpose, and impossibility/impracticability, were generally overlooked in real estate transactions until life-altering global events required their use. Indeed, many of the cases interpreting these doctrines date back to the world wars that dominated the first half of the twentieth century. Modern practitioners often did not even address these concepts in their agreements.

Now, these policies have come front and center, driving the discourse between parties trying to adjust their expectations to an entirely different business environment. As I have previously discussed, the judicial process is slow to provide guidance on these issues, failing to provide many opportunities for expedited resolutions and the judicial policy which flows from them. Legislators have, perhaps unsurprisingly, been happy to step into this role, and we have seen a tremendous amount of new policy designed to address the impact of COVID on existing and future contractual relationships. One such new policy is particularly noteworthy.

As a quick background, the frustration of purpose doctrine generally provides that where the fundamental reason of a party entering into a contract has been frustrated by an unanticipated, supervening circumstance which substantially destroys the value of that contract and purpose, that party can be discharged from its duty to perform its contract and the contract can be extinguished. Historically, the defense is available only when the frustration is substantial. It is not enough that the transaction will be less profitable than originally anticipated, or even that one party will sustain a loss; rather, the frustration must be so severe that it is not fairly regarded as within the risks assumed by that party under the contract.

On August 4, 2021, the San Francisco Board of Supervisors passed Ordinance 122-21, which provides that for certain commercial tenants, COVID-19 is presumed to have frustrated the purpose of the lease, excusing these tenants’ obligation to pay rent. This ordinance has essentially rewritten how the frustration of purpose doctrine applies, allowing temporary interruptions of normal operations, such as during the COVID-19 pandemic, to be deemed sufficient to allow for relief. While the ordinance does not override an agreement to the contrary and sunsets after 2025, it should assist small retailers who might otherwise be left without relief.

I find this ordinance disconcerting for several reasons. First, by altering the application of a fundamental legal doctrine, the Board of Supervisors undermines at least a century of existing case law, potentially creating even more uncertainty regarding how these doctrines apply now and going forward. Second, the ordinance ignores the interests of landlords, who risk losing their income stream due to COVID and may not be any more capable of sustaining their business than the tenants protected by the ordinance. Finally, the approach manipulates a legal doctrine to achieve its purpose rather than attacking the issue head-on by, for example, offering cash, tax, or other incentives to parties affected by COVID.

Of course, San Francisco is one of perhaps the most progressive political communities in the country. We have not seen similar enactments in other jurisdictions and I do not predict they will follow. The ordinance highlights the importance of understanding the political climate in which properties are located, as these sorts of policies may be more or less prevalent depending on such factors. While the overall impact of the Board of Supervisors’ ordinance is unlikely to have mass application or significantly change the market, it is a notable development in the global reaction to the unique circumstances presented by a global pandemic.

Biden’s Path Out of the Pandemic: New COVID-19 Vaccine Mandates for Large Employers, Federal Contractors and Health Care Workers

Earlier, President Joe Biden announced vaccination requirements for the federal government workers but allowed them to “opt out” if they agreed to more stringent mitigation measures. He also implored private sector employers to encourage vaccination, and many employers began implementing mandatory vaccination plans or incentivizing employees to get vaccinated.

More On The FFCRA: Payroll Tax Credits And Period Of Non-Enforcement

As we told you on March 22, 2020, the Department of Treasury (DOT), Internal Revenue Service (IRS), and Department of Labor (DOL) announced plans to provide some relief for small and midsize employers in light of the recently passed Families First Coronavirus Response Act (FFCRA). In their announcement, it was also stated that employers may make immediate use of their tax deposits to pay employees taking emergency leave under the Emergency Family and Medical Leave Act (E-FMLA) or as Emergency Paid Sick Leave Act (E-PSLA). The DOL further announced that it would not bring any enforcement actions against employers for any violations within the first 30 days the law is in effect, provided the employer can show it is acting in good faith to comply with the new law.

Use Of Tax Deposits/Payroll Tax Credits:

Generally, when employers pay their employees, they are required to withhold various taxes, such as federal income, Social Security, and Medicare taxes. Employers are then required to deposit these taxes, along with the employer’s share of Social Security and Medicare taxes, with the IRS. The announcement stated that employers who pay qualifying emergency leave under the E-FMLA or E-PSLA, will be able to retain a portion of these payroll taxes, equal to the amount of emergency leave paid. If there are not sufficient payroll taxes to cover the cost of the emergency leave, the announcement stated that employers will be able file a request for an accelerated payment from the IRS.

The IRS provided the following examples:

  • If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 of taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.
  • If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.

We expect the details of this new procedure to be announced sometime this week.

Non-Enforcement Period:

The announcement further clarified that the DOL was issuing a temporary non-enforcement period, and providing employers with 30-days to come into compliance with the Act. During this time, the DOL stated that it intends to provide employers with “compliance assistance.” In doing so, the DOL made clear that the brief period of adjustment was only available to employers acting “reasonably and in good faith.” Employers should use this time to work with legal counsel to make sure they are in compliance with the new Act.

We are watching for the issuance of more formal guidance, and we will provide an update at that time. If you have any questions in the meantime, please do not hesitate to reach out to any of our Labor and Employment attorneys for guidance.

Business and Tax Relief in Response to COVID-19

As COVID-19 imposes challenges on our communities, Weintraub is tracking developments to help you deal with the pandemic’s business and legal implications.

I.                 SBA Economic Injury Disaster Loans

A.                 Overview

The U.S. Small Business Administration (SBA) is providing low-interest working capital loans of up to $2 million to small businesses and nonprofits affected by COVID-19 in presidential and SBA-declared disaster areas.  Borrowers can use the loans to cover accounts payable, debts, payroll and other expenses where COVID-19 has affected the borrower’s ability to pay. These loans have an interest rate of 3.75% for small businesses and 2.75% for nonprofits. Loan repayment terms vary by applicant, up to a maximum of 30 years.  SBA press release.[1]

B.                 Eligibility and How to Apply

State governors must request access to the Economic Injury Disaster Loan program for businesses located in their states. As of March 20, businesses in the following states can apply: Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Louisiana, Maine, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington and West Virginia.  Apply online.[2]  See California-specific SBA fact sheet here.[3]

II.                 Federal Reserve Programs (forthcoming)

A.                Main Street Business Lending Program

The Federal Reserve expects to announce the establishment of a Main Street Business Lending Program to support lending to eligible small and medium-sized businesses, complementing efforts by the SBA.  See Federal Reserve press release.[4]

B.                 New Facilities

The Federal Reserve is establishing (i) two facilities to support credit to large employers – (A) the Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance and (B) the Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity for outstanding corporate bonds; and (ii) a third facility, the Term Asset-Backed Securities Loan Facility (TALF), to support the flow of credit to consumers and businesses. The TALF will enable the issuance of asset-backed securities (ABS) backed by student loans, auto loans, credit card loans, loans guaranteed by the SBA, and certain other assets.  See Federal Reserve press release referenced above.

III.             Federal Tax Relief

A.                 Reimbursement for Wages Paid to Employees on Leave

1.                  Background

On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (Act) into law.  See full text here.[5]  The Act provides paid family and medical leave and sick leave to employees of employers with fewer than 500 employees, and provides tax credits to employers to reimburse them for providing such paid leave.  The Act imposes leave requirements on employers via two separate acts within the act: (1) the Emergency Paid Sick Leave Act (EPSLA), and (2) the Emergency Family and Medical Leave Expansion Act (EFMLEA).

2.                  Tax Credits to Reimburse Employers

The Act provides tax credits to employers to cover wages paid to employees while they are taking time off under the EPSLA and the EMFLEA. The credits have three components:

(i)  The EPSLA credit for each employee is equal to the lesser of the amount of the employee’s leave pay or either (1) $511 per day while the employee is receiving paid sick leave to care for themselves, or (2) $200 per day if the sick leave is to care for a family member or child whose school is closed (i.e., the same amounts at which the employer’s obligations to pay for leave are capped under the EPSLA).  An additional limit applies to the number of days taken into account for purposes of the caps described in the preceding sentence – the excess of 10 days over the aggregate number of days taken into account for all preceding calendar quarters.  The EMFLEA credit for each employee is the amount of the employee’s leave pay limited to $200 per day with a maximum of $10,000 (i.e., the same amounts at which the employer’s obligations to pay for leave are capped under the EFMLEA).

(ii)  The amount of the EPSLA and EMFLEA credits are increased by the portion of the employer’s “qualified health plan expenses” allocable to qualified sick leave wages or qualified family and medical leave wages. Qualified health plan expenses means amounts paid or incurred by the employer to provide and maintain a group health plan (defined in IRC Section 5000(b)(1)), but only to the extent that such amounts are excluded from the gross income of employees by reason of IRC Section 106(a).

(iii)  The credits allowed to employers for wages paid under the EPSLA and EMFLEA are increased by the amount of the tax imposed by Code Sec. 3111(b) (1.45% hospital insurance portion of FICA) on qualified sick leave wages, or qualified family leave wages, for which credit is allowed under Section 7001 or 7003 of the Act.

The credits are refundable to the extent they exceed the employer’s payroll tax.  Employers do not receive the credit if they are also receiving the credit for paid family and medical leave provided for in IRC Section 45S.  See IRS news release here.[6]

B.                 Tax Filing/Payment Extensions

IRS tax filings and payments now are not due until July 15, 2020.  See IRS guidance here.[7]  This applies to any taxpayer that is an individual, trust, estate, partnership, association, company, or corporation.  This relief applies to federal income tax payments (including payments of tax on self-employment income) and federal income tax returns that were originally due on April 15, 2020, in respect of the taxpayer’s 2019 taxable year.  This relief also applies to federal estimated income tax payments (including payments of tax on self-employment income) that were originally due on April 15, 2020 for the taxpayer’s 2020 taxable year.

C.                 High-Deductible Health Plans Can Cover Coronavirus Costs

Health plans that otherwise satisfy requirements to be a high deductible health plan (HDHP) under the Internal Revenue Code will not fail to be an HDHP merely because the health plan provides health benefits associated with testing for and treatment of COVID-19 without a deductible, or with a deductible below the minimum deductible (self only or family) for an HDHP. See IRS notice here.[8]

IV.              California Tax Relief

A.                 Tax Filing/Payment Extensions

California tax filings and payments now are not due until July 15, 2020, matching the new IRS deadline.  See California Franchise Tax Board information here.[9]  The new July 15 due date applies to individuals as well as entities, and applies to estimated annual fee payments for 2020 due from entities, and estimated fee payments due from individuals (for both the first quarter and the second quarter).  Regarding estimated tax payments due from C corporations, S corporations, and exempt organizations, if the estimated tax payment was originally due on or between March 15, 2020 and April 15, 2020, the new due date is July 15, 2020.

California Governor Gavin Newsom issued an executive order on March 12 suspending for 60 days after such date the filing requirements applicable to the taxes and fees administered by the Department of Tax and Fee Administration (CDTFA).  This applies to individuals and businesses unable to file a tax return or make a payment on time as a result of a state or local public health official’s mandatory or recommended social distancing related to COVID-19. CDTFA administers a number of taxes, including sales and use taxes, fuel taxes, cigarette and cannabis taxes, and insurer taxes.  See executive order here.[10]

V.                 California Employment Development Department (EDD)

A.                 Work Sharing Program

Employers seeking to avoid layoffs can apply for the Work Sharing Program. This program aims to enable employers to retain employees by reducing hours and wages that can be partially offset with unemployment insurance benefits.  See Work Sharing Program web site here.[11]

B.                 Potential Closure or Layoffs

Employers planning a closure or layoffs as a result of COVID-19 can seek assistance from the EDD’s Rapid Response program, under which Rapid Response teams meet with employers to discuss needs, avoid layoffs, and provide services to workers facing job losses. See fact sheet here.[12]

C.                 Tax Assistance

Employers experiencing a hardship as a result of COVID-19 may request up to a 60-day extension of time from the EDD to file their state payroll reports and/or deposit state payroll taxes without penalty or interest. For questions, employers may call the EDD Taxpayer Assistance Center at (888) 745-3886.

VI.              Other California Resources.  The California Governor’s Office of Business and Economic Development has compiled information for employers, employees and all Californians as it relates to COVID-19.  See webpage here.[13]

VII.           Local Government

A.                 San Francisco

The City of San Francisco has established the San Francisco COVID-19 Small Business Resiliency Fund.  Businesses with 1 to 5 employees can apply for up to $10,000 in emergency funding to help cover rent and employee salaries.  To be eligible, the business must show that it lost at least 25% of revenue, that it has less than $2.5 million in gross receipts, and that it is properly licensed to operate in San Francisco.  See application materials here.[14]  San Francisco has also imposed a moratorium on evictions for small and medium-sized businesses (less than $25 million in annual gross receipts). It is effective for 30 days starting March 17, and the mayor can extend it for an additional 30 days.  See press release here.[15]

B.                 Los Angeles

The City of Los Angeles has established a Small Business Emergency Microloan Program.  Businesses and microenterprises in Los Angeles that are responsible for providing low-income jobs can get an emergency microloan of $5,000 to $20,000. The loans have repayment terms of 6 months to 5 years, and carry an interest rate of either (i) 0% for a term of 6 months to 1 year (Option 1) or (ii) 3% to 5% for a term of up to 5 years (Option 2).  To be eligible, the business must satisfy requirements including having principal business owners with “reasonable and responsible” credit histories, committing to use the loan for working capital only, and having its primary business operation located within the City of Los Angeles. If a business owner owns 20% or more of the business, such owner must guarantee the loan.  Apply online.[16]  Los Angeles has also imposed a moratorium on evictions of businesses impacted by COVID-19 through March 31.  See press release here.[17]

C.                 San Diego

San Diego Mayor Kevin L. Faulconer announced on March 18 an economic relief package worth approximately $4 million.  It aims to reduce fees, provide certainty, and offer support to local employers affected by COVID-19.

The new programs and measures that are part of the package include (i) a new San Diego Small Business Relief Fund (for microloans to small businesses, funded by the City of San Diego and other partners that the city will seek to increase the fund); (ii) Tax Certificate Deferral Program (to ensure business owners are not penalized for late renewal submissions for up to 120 days, and provide for a one-year forgiveness period for Business Tax Certificate penalties and surcharges when reestablishing delinquent accounts); (iii) Commercial Utility Deferral (to help business owners by suspending water billing fees, removing penalties for late payments, and ensuring no commercial account shut-offs); (iv) extension of all building permits (for 180 days, with further extensions available upon review).  See new release here.[18]

D.                Sacramento

The City of Sacramento has a Small Business Economic Emergency Relief Loan Program.  However, as of March 21, 2020, the city is no longer accepting new applications.  If additional funding becomes available, the city will reopen the portal for submitting applications.  See information regarding such loan program and other Sacramento area resources here.[19]

[1] https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/sba-provide-disaster-assistance-loans-small-businesses-impacted-coronavirus-covid-19

[2] https://www.sba.gov/funding-programs/disaster-assistance

[3] https://www.yolocounty.org/home/showdocument?id=62346

[4] https://www.federalreserve.gov/newsevents/pressreleases/monetary20200323b.htm

[5] https://www.congress.gov/bill/116th-congress/house-bill/6201/text

[6] https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus

[7] https://www.irs.gov/pub/irs-drop/n-20-18.pdf

[8] https://www.irs.gov/pub/irs-drop/n-20-15.pdf

[9] https://www.ftb.ca.gov/about-ftb/newsroom/covid-19/extensions-to-file-pay.html

[10] https://src.bna.com/stxd/ca200313-UPD1370-D01

[11] https://www.edd.ca.gov/Unemployment/Work_Sharing_Program.htm

[12] https://www.edd.ca.gov/pdf_pub_ctr/de8714rrb.pdf

[13] https://business.ca.gov/coronavirus-2019/

[14] https://oewd.org/covid-19-small-business-resiliency-fund

[15] https://sfmayor.org/article/mayor-london-breed-announces-moratorium-commercial-evictions-small-and-medium-size

[16] https://ewddlacity.com/index.php/microloan-program

[17] https://www.lamayor.org/mayor-garcetti-orders-moratorium-commercial-evictions-related-novel-coronavirus

[18] https://www.sandiego.gov/mayor/news/releases/mayor-faulconer-outlines-economic-relief-package-san-diego-businesses-affected-covid-19

[19] https://www.cityofsacramento.org/Economic-Development/Economic-Relief