How Did We Get Here?

OSHA published its ETS on November 4, 2021. Almost immediately thereafter, several states, employers, and nonprofit organizations challenged its enforceability, and the Fifth Circuit Court of Appeals initially issued a stay of enforcement and implementation of OSHA’s vaccination/testing mandates.

However, because many different parties challenged OSHA’s ETS in many different federal courts, a special judicial panel consolidated the cases and selected the Sixth Circuit Court of Appeals—via a lottery system—to hear them all. On December 17, 2021, the Sixth Circuit lifted the Fifth Circuit’s stay.

Multiple parties immediately challenged the Sixth Circuit’s decision by filing petitions with the Supreme Court. On January 13, 2022, the Supreme Court issued its decision staying implementation of the ETS until the Sixth Circuit reaches a final conclusion on the enforceability of OSHA’s ETS.

What Was the Supreme Court Rationale?

The Supreme Court’s majority opinion concluded that (1) the parties challenging OSHA’s ETS were likely to succeed on the merits and that (2) OSHA’s enforcement of the ETS must be placed on hold until the Sixth Circuit reached a final decision on the merits.

In coming to this conclusion, the Supreme Court noted that Congress created OSHA when it passed the Occupational Safety and Health Act of 1970 (the “Act”). Therefore, OSHA only has those powers that Congress expressly provided for in the Act.

According to the Supreme Court’s ruling, the Act only permits OSHA to regulate matters of workplace/occupational safety. Although COVD-19 impacts the workplace, it is not a workplace-specific risk. Instead, it is a disease that spreads everywhere including in schools, at sporting events, and any other place where people gather. In other words, COVID-19 is a general health risk—not just an occupational risk—and it reaches areas that fall outside OSHA’s area of expertise.

As the Supreme Court put it: “Permitting OSHA to regulate the hazards of daily life—simply because most Americans have jobs and face those same risks while on the clock—would significantly expand OSHA’s regulatory authority without clear congressional authorization.”

Justices John Roberts, Amy Coney Barrett, and Brett Kavanaugh issued the Supreme Court’s decision, and Justices Samuel Alito, Neil Gorsuch, and Clarence Thomas authored a concurring opinion.

The liberal wing of the Supreme Court—consisting of Justices Sonia Sotomayor, Stephen Breyer, and Elena Kagan—dissented. The dissenting justices indicated that the Act demands OSHA to issue emergency temporary regulations when (1) “employees are exposed to grave danger…from new hazards” and (2) an “emergency standard is necessary to protect employees from such danger.”

Noting that COVID-19 constitutes a new hazard that poses a grave danger to millions of employees and noting that tests, face coverings, and vaccinations serve as proven methods to address that danger, the dissenting justices opined that the Act actually requires OSHA to issue regulations related to COVID-19 and the workplace.

What Comes Next?

The Supreme Court’s decision is not the final word on this matter. Instead, it merely stays implementation/enforcement of the ETS until the Sixth Circuit can fully review challenges to the ETS.

The Supreme Court did opine, however, that the parties challenging the ETS were likely to prevail. For this reason, OSHA may—in an effort to address the Supreme Court’s concerns about the extent of the agency’s powers—issue a more narrow/limited set of workplace COVID-19 regulations.

More Insight from McCarthy Lebit on the “Vaccine Mandate”

Ann-Marie Ahern & Jack Moran Discuss President Biden’s Vaccine Mandate

Listen to Employment Litigators Ann-Marie Ahern and Jack Moran from a recent episode of our podcast – The More Report, Podcast Edition – as they discuss the viability of the “vaccine mandate” in the face of probable legal challenges.

Sixth Circuit’s Reversal of Fifth Circuit’s Stay of OSHA ETS

Check out the previous legal advisory from Frank George, published on December 22, 2021, to read more about details, highlights, and updates on OSHA’s ETS.

OSHA Releases COVID-19 Vaccine Rules but U.S. 5th Circuit Blocks Them

Check out the previous legal advisory from Frank George, published on November 9, 2021, to read more about details, highlights, and updates on OSHA’s ETS.

The post LEGAL ADVISORY: Supreme Court Blocks Enforcement of OSHA ETS appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

Although enforcement of the ETS was briefly stayed/suspended, the Sixth Circuit Court of Appeals dissolved the stay on December 17, 2021, and OSHA has published a new compliance deadline of January 10, 2022.

A Brief Recap of Legal Challenges to the ETS

OSHA issued its ETS on November 4, 2021. Almost immediately thereafter, several states and employers challenged its enforceability, and by November 12, the Fifth Circuit Court of Appeals had issued a stay of enforcement and implementation of OSHA’s vaccination/testing mandates.

Because many different parties challenged OSHA’s ETS in many different federal courts, a special judicial panel consolidated the cases and selected one federal appellate court—via a lottery system—to hear them all. The Sixth Circuit Court of Appeals won this lottery on November 16, 2021.

Then, on November 23, 2021, OSHA filed a motion with the Sixth Circuit requesting that it dissolve the stay issued by the Fifth Circuit. And, last Friday, the Sixth Circuit found in OSHA’s favor.

In reaching this conclusion, the Sixth Circuit reasoned that OSHA has the authority to regulate viruses and infectious diseases that create risks in the workplace. It further reasoned that OSHA’s ETS was enforceable, given that the agency stated sufficient justifications to conclude that COVID-19 posed a grave danger to employees.

OSHA’s Newly Published Compliance Deadlines

After the Sixth Circuit’s decision, OSHA published new compliance deadlines on its website.

The ETS generally requires employers to either institute a mandatory vaccination policy or implement weekly COVID-19 testing for unvaccinated employees. As of now, employers who intend to mandate vaccines must comply with the ETS by January 10, 2022, while employers who opt to test unvaccinated employees must comply by February 9, 2022.

It must be noted, however, that multiple parties have already challenged the Sixth Circuit’s decision by filing petitions with the Supreme Court of the United States. It is widely expected that the Supreme Court will take action by January 10, 2022, so as to provide clarity before the ETS’ current compliance deadlines.

Businesses Should Take Action and Prepare to Comply with the ETS

The Supreme Court has not rendered a final decision with respect to the ETS’ enforceability. As it currently stands, though, businesses are required to take near immediate action to comply with OSHA’s vaccination/testing mandates.

Businesses should know that the ETS requires employers to implement a mandatory vaccination policy, unless employers instead enforce a mandatory weekly COVID-19 testing requirement for unvaccinated employees. The ETS also requires businesses to maintain proof of employees’ vaccination status, provide employees paid time to receive the vaccine, implement face-covering policies for unvaccinated workers, and distribute information regarding the ETS to employees.

If your business employs at least 100 employees, McCarthy Lebit encourages you to contact our office for advice and counsel regarding your compliance with these regulations.

Update (12/23/2021): SCOTUS Agrees to Fast Track Legal Challenges to OSHA ETA

The Supreme Court of the United States announced Wednesday evening that it will hear oral arguments in cases appealing the legality of OSHA’s ETS on January 7 — a surprise expedited process that could signal the Court’s intention to act quickly to resolve the legal challenges. For the moment, the OSHA rule (and the subsequent guidance on revised compliance deadlines) remains in effect, as SCOTUS has not made any move to stay the rule, pending its own judicial review. It is not clear whether the Justices will accept any motions to reinstate the Fifth Circuit’s stay of the rule, so employers would be wise to continue making plans for compliance ahead of the January 10 deadline.

More Insight from McCarthy Lebit on the “Vaccine Mandate”

Ann-Marie Ahern & Jack Moran Discuss President Biden’s Vaccine Mandate

Listen to Employment Litigators Ann-Marie Ahern and Jack Moran from a recent episode of our podcast – The More Report, Podcast Edition – as they discuss the viability of the “vaccine mandate” in the face of probable legal challenges.

LEGAL ADVISORY: OSHA Releases COVID-19 Vaccine Rules but U.S. 5th Circuit Blocks Them

Check out Frank George‘s previous legal advisory for more details, highlights, and updates on OSHA’s ETS.

The post LEGAL ADVISORY: Sixth Circuit’s Reversal of Fifth Circuit’s Stay of OSHA ETS appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

First, an employer is permitted to know an employee’s vaccination status. There is nothing legally improper about that inquiry. Second, earlier this month, the Occupational Safety and Health Administration (OSHA) issued an emergency temporary standard (ETS), generally requiring businesses with 100 or more employees to implement a mandatory vaccination policy that incudes maintaining proof of employees’ vaccination status. Thus, for many employers, they may already have, or will start to have, evidence of vaccination status on file for their employees.

Also, most employers have policies regarding truth and honesty, particularly with respect to documents and information submitted to the company. If an employer doesn’t have such a policy, it should adopt one as soon as possible. If an employer learns that an employee has been dishonest in its dealings with the company, that alone is often grounds for termination.

The only complexity comes from if an employee asks for a medical or religious accommodation upon being confronted with the dishonesty. An employer does not have to excuse a violation of conduct rules that are job-related and consistent with business necessity, even if that violation is related to an accommodation request. For that reason, documenting a discipline or termination decision and when it was made (after discovering the dishonesty but before the employee requested the accommodation) can be important.

Of course, the employer need not impose such a harsh penalty. It is unlikely, for example, that the Green Bay Packers will terminate Aaron Rodgers – he is the quintessential “key” employee for the organization. Employers should bear in mind, however, that if they do not terminate one employee for such dishonesty regarding their vaccination status, it may make it more difficult to justify future terminations on similar grounds for other employees.

NOTE: On Wednesday, The NFL fined the Green Bay Packers organization $300,000 for its part in not properly enforcing safety protocols, including permitting Rodgers to attend practice and team meetings maskless. The NFL also warned that future violations could result in more severe punishment, including lowered or lost draft picks. Meanwhile, the NFL also fined Aaron Rodgers and Packers wide receiver Allan Lazard $15,000 each for breaking league protocols by going to a Halloween party, despite being unvaccinated.

More thought leadership about vaccine “mandates” and the OSHA ETS

LEGAL ADVISORY: OSHA Releases COVID-19 Vaccine Rules but U.S. 5th Circuit Blocks Them

Employment Law Associate Frank George breaks down the OSHA ETS for private employers and the resulting legal challenges that have lead to an injunction blocking implementation and enforcement since OSHA announced the new rules

Ann-Marie Ahern & Jack Moran Discuss President Biden’s Vaccine Mandate

Jack Moran an Ann-Marie Ahern made an appearance on The More Report, Podcast Edition, to discuss President Biden’s “vaccine mandate.”  Listen to Jack and Ann-Marie discuss the legal challenges that the administration is likely to face if implement this policy.

The post Key Takeaways for Employers After Aaron Rodgers’ Misleading Comments About His Vaccination Status appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

On November 4, 2021, the Occupational Safety and Health Administration (OSHA) issued an emergency temporary standard (ETS), which applies to most businesses with 100 or more employees and introduces COVID-19 rules. These newly issued federal regulations require many employers to maintain mandatory vaccination and/or testing policies.

OSHA’s ETS became effective immediately upon its issuance, but covered employers are afforded 30 days to develop a mandatory vaccination policy and 60 days to comply with testing requirements. If your business employs at least 100 employees, McCarthy Lebit encourages you to contact our office for advice and counsel regarding these regulations. Read the full text of the rules here.

Highlights from the OSHA COVID-19 ETS

• OSHA has determined that unvaccinated workers face serious danger, that vaccinations and/or regular COVID-19 tests are necessary measures to take in order to protect against this danger, and that employers with 100 or more employees have the administrative capacity to implement vaccination and/or testing policies.
• The ETS requires employers to implement a mandatory vaccination policy, unless employers instead enforce a mandatory weekly COVID-19 testing requirement for unvaccinated employees.
• Among other things, the ETS also requires businesses to:
  • Maintain proof of employees’ vaccination status;
  • Provide employees paid time to receive the vaccine and recover from any side effects;
  • Implement mandatory face-covering policies for unvaccinated workers; and
  • Distribute information regarding the ETS to employees.

Because businesses are expected take immediate action to comply with OSHA’s newly issued ETS, contact McCarthy Lebit as soon as possible for more information.

U.S. Fifth Circuit: Not So Fast!

It took just a day-and-a-half for OSHA’s ETS to be blocked by a federal appeals court. On Saturday, November 5, a 3-judge panel from the U.S. Court of Appeals for the Fifth Circuit granted an emergency stay of the OSHA requirement that workers be vaccinated by Jan. 4 or face mask requirements and weekly tests.

In response to the ETS, more than two dozen states, businesses, business groups and religious organizations have sued, calling the rule issued by the Occupational Health and Safety Administration an overreach of government authority, with most arguing that OSHA lacks the legal standing to issue a rule in response to a society-wide health concern, and even if reducing the risk of COVID-19 “remains a compelling interest,” it is not necessarily a “grave danger” as OSHA has declared it to be. The plaintiffs also questioned the timing of the rule, coming more than a year-and-a-half into the pandemic, when many employers have already implemented safety measures and COVID cases are falling.

In issuing a stay on Saturday, the 5th Circuit Court of Appeals, based in New Orleans, said the petitions “give cause to believe there are grave statutory and constitutional issues with the Mandate.”

Biden Administration Response Late Monday

In an expedited reply to the motion for a permanent injunction Monday, Biden administration officials warned that maintaining the stay “would endanger many thousands of people,” as the death toll from COVID continues to hover around 1,300 people per day nationally.

“With the reopening of workplaces and the emergence of the highly transmissible Delta variant, the threat to workers is ongoing and overwhelming,” the administration argued, while dismissing the legal objections that led to the stay as lacking merit. In fact, the White House is urging companies to ignore the stay and continue implementing rule compliance.

What’s Next For the Legal Challenges?

Because there are challenges to the OSHA rule in multiple circuit courts — including the 5th, 6th, 7th, 8th, 11th and D.C. Circuits, federal law dictates that the cases be consolidated and heard by one federal appeals court, chosen by lottery. That lottery could take place on or around Nov. 16, according to the U.S. Department of Justice. Ultimately, the case could end up at the Supreme Court. Meanwhile, petitioners in the Fifth Circuit Case have until 5pm Tuesday, November 9 to file a reply to the government’s response.

UPDATE (11/12/2021): Fifth Circuit Stays Biden Mandate

On Friday, November 12, the Fifth Circuit Court of Appeals agreed to issue a stay of enforcement and implementation of the OSHA’s ETS.  In their 22-page opinion and ruling, the Court made reference to several reasons why the ETS should be stayed pending additional review, including suggesting that the ETS was unconstitutional under the Commerce Clause and non-delegation doctrine. Even if the ETS could survive a constitutional challenge, the court went on to hold that COVID-19 was not the proper subject of emergency administrative action by OSHA. Pending further review, this ruling effectively invalidates the ETS, since OSHA is now barred from implementing or enforcing the standard.

UPDATE (11/16/2021):  Six Circuit Wins Lottery to Hear Consolidated Challenge to OSHA ETS

The U.S. Judicial Panel on Multidistrict Litigation held a lottery on November 16 that named the Sixth Circuit Court of Appeals, an overwhelmingly  conservative court (11 of 16 sitting Judges were appointed by Republicans), will take up the 34 lawsuits now consolidated into one case.  The Court has not yet scheduled oral arguments or assigned judges who will hear the cases, though at least one challenger has filed for en banc consideration by the Court – meaning the entire bench of 16 judges would hear the cases.

It is not immediately clear whether the transfer of the cases will override the injunction issued by the Fifth Circuit. Still, because the ETS is not scheduled to go into effect until January 4, 2022, there is no change to existing policy at this time.

Update (11/17/2021): OSHA Suspends Enforcement of ETS Pending Judicial Review 

In perhaps the first sign by the Biden administration that they may not emerge victorious from the mounting legal challenges to the ETS after the 6th Circuit Court of Appeals was awarded the consolidated legal challenges via a lottery of the courts conducted by the Department of Justice, OSHA has announced they are officially suspending enforcement of the ETS pending further judicial review.

What Can/Should You Do Next?

As with all things COVID, uncertainty is the only certainty today.  Employers should stay up to date on litigation developments and continue to prepare themselves for the possibility of the ETS going into effect in the near future. Essentially, employers should continue preparing final vaccination policies, compliance policies, communications plans, and a process to track and store confidential details about an employees’ vaccination status.

That said, federal contractors and healthcare employers should continue to comply with their separate federal COVID-19 requirements, which have not been stayed in the OSHA ETS litigation.  If you’re in doubt about where your business falls, please reach out to any of our employment law attorneys for a consultation.

More Insight from McCarthy Lebit on the “Vaccine Mandate”

Ann-Marie Ahern & Jack Moran Discuss President Biden’s Vaccine Mandate

Listen to Employment Litigators Ann-Marie Ahern and Jack Moran from a recent episode of our podcast – The More Report, Podcast Edition – as they discuss the viability of the “vaccine mandate” in the face of probable legal challenges.

The post LEGAL ADVISORY: OSHA Releases COVID-19 Vaccine Rules but U.S. 5th Circuit Blocks Them appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

Initial Impact on Construction Industry

When COVID-19 first emerged as a national emergency, many construction sites shuttered operations as the county went into a lockdown. Although construction was later deemed essential work, allowing sites to re-open early on, the pandemic still took its toll and the industry lost nearly 1 million workers. After re-opening, the market boomed – despite projections that supply and labor demand would remain stagnant throughout the pandemic. In fact, the past year has seen record numbers of new construction, as well as surge in average consumer DIY home improvement projects. This unexpected demand placed heavy burdens on the supply chain, especially while production entities were impacted by COVID-19 protocols for worker safety.

For the residential real estate market, increased competition for homes raised sale prices and shifted the market to rely more heavily on new construction. In April, reports indicated that new construction represented 1 in 4 homes on the market – the biggest share of the market ever.

Fluctuation of Material Costs and Labor Availability

Earlier this summer, as COVID-19 precautions were loosened, some of the concerning figures regarding material cost increases began to improve. For example, lumber futures in July were down 70% from May, when they had peaked at $1,711.20 per thousand board feet. Other resources, however, continued to increase in cost. July figures for oriented strand board were more than 510% above the January 2020 level.  Shortages have remained a major concern for contractors, 84% of whom reported experiencing at least one material shortage in the Q2 2021 U.S. Chamber of Commerce Commercial Index.

The pandemic had a drastic impact on construction labor, as well. But as of July, it appears that the market has bounced back. According to July unemployment figures, construction unemployment has continued to trend lower, with a 7.3% adjusted rate in July. This is down from the pandemic peak of 14.1% unemployment in the sector from April 2020.

Lingering Effects to the Real Estate Market

Even as certain material and labor issues are trending in the right direction, the culmination of COVID’s impact is still being felt in the real estate market. Lot values for single-family detached homes are now at a record high, approaching the adjusted levels of the housing boom of 2005-2006. Nationally, the median lot price is $53,000 – in the East North Central region, where Cleveland is located, the median value is $52,000. Lot prices like these, and the lingering construction cost increases due to supply-chain and labor issues, have delayed active homebuyers from committing to the deal. High demand has also kept prices high in the existing home market, with cost cited as the biggest obstacle for active homebuyers.

Key Takeaways Going Forward

With renewed concerns about the Delta variant of COVID, and heightened precautions resurfacing in some states and cities, it is possible that the construction industry will require more time to fully stabilize. Until supply-chain issues and labor concerns are more resolved, you can expect that the real estate market (especially the market for new builds) will continue to exhibit high prices and competition.

The post How the Lingering COVID-19 Pandemic Is Thwarting the Real Estate & Construction Market Recovery appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

Earlier this week, the SBA announced that the portal for the RRF will go live on Friday, April 30, 2021, beginning at 9 am EDT so that qualified applicants may register for an account.  Further, the SBA announced that the portal would officially begin accepting applications to receive funds from the program on Monday, May 3, 2021 at 12 pm EDT.  Applicants will need an account in the system in order to apply for funds.

The SBA is encouraging applicants to familiarize themselves with the application process by registering for an account in advance, ensuring a smooth and efficient experience.  Applicants should also review the official SBA guidance, including the program guide, frequently asked questions, and the sample application.

One notable change is that the SBA has signaled that the portal will remain open to eligible applicants only until the Fund has been exhausted. Previously, there had been speculation about options to increase the funds if the applicants flooded the SBA with requests, as happened last year during the initial round of the Paycheck Protection Program.  This week’s announcements seems to imply that once the RRF funds have been exhausted, the application portal will shut down.

What does this mean for restaurant owners who have suffered huge losses during the pandemic?  For starters, applicants would be wise to review the application requirements in advance and be prepared with all the information required to complete the application once the portal begins accepting applications on Monday, May 3.

Although the SBA has set aside the first 21 days of the application period as a priority window to benefit businesses owned by women, veterans, and socially and economically disadvantaged individuals, it is recommended that any qualified applicant register and apply early.  Expectations are high that the SBA will be flooded with applicants and the funds will quickly be exhausted.

The post Update On SBA’s $28.6 Billion Restaurant Revitalization Fund: Launch Date For Online Application Portal Announced appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

Application

Ahead of the program launch and over the next two weeks, the SBA will conduct a 7-day pilot period where the SBA will address any technical issues ahead of the launch.  Applicants will be able to submit applications as soon as the program opens, but the SBA will prioritize applications from businesses owned by women, veterans, and economically disadvantaged individuals for the first 21 days.  After the first 21 days, the SBA will accept applications from all eligible participants and process applications in the order in which they are approved by the SBA. The SBA has not announced an official launch date for the program.

Applicants will be able to apply through SBA-recognized Point of Sale Restaurant Partners or directly via the SBA’s forthcoming online application portal.  While the SBA is not currently accepting applications, a sample application can be found on the SBA’s website.  Applicants must complete the application (SBA Form 3172) and provide the following additional documentation with their application:

1. IRS Form 4506-T (completion of this form digitally on the SBA platform will satisfy this requirement); and
2. Gross receipts documentation demonstrating gross receipts and, if applicable, eligible expenses. Gross receipts documentation includes business tax returns, IRS Form 1040 Schedule C, IRS Form 1040 Schedule F, a partnership’s IRS Form 1065 (including K-1s), bank statements, externally or internally prepared financial statements, and point of sale reports (including IRS Form 1099-K).
3. Brewpub, tasting room, taproom, brewery, winery, distillery, or bakery applicants must provide confirming documentation that onsite sales to the public comprise at least 33% of gross receipts.
4. Inn applicants must provide confirming documentation that onsite sales of food and beverage to the public comprise at least 33% of gross receipts.

Eligible Entities

Eligibility for the program is confined to those entities that have experienced pandemic-related revenue loss.  Eligible entities include: (1) restaurants; (2) food stands, food trucks, food carts; (3) caterers; (4) bars, saloons, lounges, taverns; (5) snack and nonalcoholic beverage bars; (6) bakeries; (7) brewpubs, tasting rooms, taprooms; (8) breweries and/or microbreweries; (9) wineries and distilleries; (10) inns; and (11) licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products.

Funding Calculations

The SBA may approve up to $5 million per location, not to exceed a total of $10 million per applicant and any affiliated businesses. The minimum award is $1,000.  The SBA has provided three separate calculations to determine an applicant’s funding amount:

CALCULATION 1:

For applicants in operation prior to or on January 1, 2019:

(2019 gross receipts) – (2020 gross receipts) – (PPP loan amounts)

CALCULATION 2:

For applicants whose business operations began partially through 2019:

[(Average 2019 monthly gross receipts) X (12 month)] – [(2020 gross receipts) – (PPP loan amounts)]

CALCULATION 3:

For applicants that began operations on or between January 1, 2020 and March 10, 2021 and have not yet opened but have incurred eligible expenses:

[(Amount spent on eligible expenses between February 15, 2020 and March 11, 2021) – (2020 gross receipts) – (2021 gross receipts through March 11, 2021) – (PPP loan amounts)

Entities who began operations partially through 2019 may elect to use either Calculation 2 or Calculation 3.  Further, for purposes of the program, gross receipts do not include:

1. Amounts received from Paycheck Protection Program (PPP) loans;
2. Amounts received from Economic Injury Disaster Loans (EIDL);
3. Advances on EIDL;
4. State and local grants; or
5. SBA Section 1112 payments.

Eligible Use of Funds

Recipients are not required to repay the funding, as long as funds are spent on eligible uses by no later than March 11, 2023.  RRF funds may be used for specific expenses including:

1. Business payroll costs (including sick leave);
2. Payments on any business mortgage obligation;
3. Business rent payments (not including prepayments of rent);
4. Business debt service (both principal and interest, but not including any prepayment of principal or interest);
5. Business utility payments;
6. Business maintenance expenses;
7. Construction of outdoor seating;
8. Business supplies;
9. Business food and beverage expenses;
10. Covered supplier costs;
11. Business operating expenses.

Conclusion

The SBA will announce in the near future a start date to start accepting applications once the website they will be using has been tested.  Until then, prospective applicants are encouraged to visit the SBA website for additional information and begin assembling all necessary data and documentation requirements for the application.

The post SBA Announces Official Restaurant Revitalization Fund Application and Guidelines appeared first on McCarthy Lebit - A Cleveland/Ohio Law Firm.

As part of its efforts to finalize and unveil program, the SBA has released a draft application form, together with a letter to the Office of Management and Budget asking for emergency review of the materials.  While the application is merely in draft form, it is believed that the finalized application will largely reflect the information included in the current document.  Thus, the draft application helps shed some light on the specifics of the program and what information business owners should have available when applying for the RRF grants.

For instance, the draft application shows that the SBA plans to maximize the covered period under which businesses can spend grant proceeds.  The ARPA identifies a covered period of February 15, 2020 to December 31, 2021, however it also gives the SBA the ability to expand the covered period to no later than two years after the legislation was passed.  The current draft application indicates that the SBA intends to maximize the covered period so that businesses can spend grant proceeds through March 11, 2023.

Further, the draft application provides additional details on the group of applicants given priority under the program.  During the first 21 days of the program, the ARPA gives priority to applications for businesses owned by women, veterans, and/or socially and economically disadvantaged individuals.  Pursuant to the draft application, the applicant must be at least 51% owned and controlled by individuals who are women, veterans, and/or socially and economically disadvantaged individuals in order to receive priority treatment.

Additionally, businesses must not be permanently closed to qualify for the program.  Businesses that have declared bankruptcy but have an approved reorganization plan are still eligible to receive RRF grants.  However, if a business has declared bankruptcy but does not have a plan for reorganization, or has filed for a liquidation, the business will not be eligible for the program.

The draft application also details the documentation required to be submitted when applying for a RRF grant.  All applications must include:

1. a completed application form;
2. a completed IRS Form 4506-T; and
3. documentation demonstrating gross receipts, such as business tax returns, IRS Forms 1040 Schedule C and Schedule F, bank statements, externally or internally prepared financial statements, and point of sale reports. Paycheck Protection Program (PPP) proceeds are removed from gross income for purposes of calculating gross receipts in the application.

Additionally, applicants from businesses defined as brewpubs, tasting rooms, taprooms, breweries, wineries, distilleries, bakeries, and inns must supply additional documentation evidencing onsite sales to the public comprise at least 33% of gross receipts.  In total, the application is expected to take about 45 minutes to complete.

Further guidance by the SBA is expected as the program nears its launch date Though  the application is not “live,” applicants would do well to gather the required information in advance so they have everything ready when the program does go live, especially since the $28.6 billion ear-marked for the program is not expected to last long. In the meantime, the draft application is available for review and can be found at https://omb.report/icr/202104-3245-001.

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To be eligible for funds from FEMA, the decedent must have died in the United States (including the U.S. territories and the District of Columbia) and their death certificate must indicate the death was attributed to COVID-19.  Additionally, the applicant for the FEMA funding must be a U.S. citizen, non-citizen national, or qualified alien, who incurred funeral expenses after January 20, 2020 for the decedent.  Minor children cannot apply on behalf of an adult and aliens lawfully present in the U.S. are not eligible for this relief if they are temporary tourist visa holders, foreign students, or temporary work visa holders.

Those applying for FEMA funeral funds should keep records, including the decedent’s death certificate and copies of contracts with the funeral home and other receipts for expenses incurred in connection with the burial.  Additionally, the applicant must provide proof of any funds received from other sources that were used to pay the decedent’s final expenses, such as insurance, charities, or other agencies, as FEMA will not provide duplicative benefits.  Expense documentation should be ready and available when the applicant applies.  The applicant will also need the social security number for both the applicant and decedent, dates of birth for the applicant and decedent, current contact information for the applicant, location or address where the decedent died, information about any burial or funeral policies covering the decedent, and any funding or donations received to assist with the decedent’s final expenses.  Finally, if the applicant is requesting funds be paid by direct deposit, they will need to have the appropriate bank account and routing numbers.

Online and paper applications are not available.  Rather, applicants must call 844.684.6333 / TTY: 800.462.7585 between the hours of 9 a.m. and 9 p.m. Eastern, to apply.  Applications are estimated to require 20 minutes to complete, while speaking with a live FEMA representative.  Once an application number is given to the applicant, supporting documentation is sent to FEMA via an online account to be created with FEMA, by fax, or by regular U.S. mail.  If an application for FEMA funeral relief is approved, the applicant will be paid either by check or direct deposit.  Generally, only one applicant may be paid per decedent.  If families split costs associated with the funeral, FEMA is allowing one additional co-applicant to apply, but both co-applicants must use the same application number.

Expenses eligible for FEMA funds generally include all the costs associated with funeral services, burial, or cremation.  Such expenses typically include transportation for two individuals to identify the decedent, transfer of the decedent’s remains, acquisition of a casket or urn, acquisition of a burial plot or cremation niche, obtaining markers or headstones, paying clergy or officiants for services, arranging the funeral ceremony, expenses paid for the funeral home equipment or staff, costs for obtaining death certificates, and any other attendant costs that may be mandated by state or local law.

FEMA is providing an excellent opportunity to assist families dealing with the loss of loved ones due to COVID-19.  Those who think they may qualify can obtain additional information at FEMA’s website.  Our attorneys can help guide applicants through the process as well.  Please contact your MLCL attorney if we can be of service.

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The CTA was passed as part of the National Defense Authorization Act with the stated goal of combating money laundering and other illicit activity occurring through anonymously owned shell companies operating in the U.S.  To aid in the fight against these illegal activities, the CTA will require most privately held businesses to identify and report their beneficial ownership to the Financial Crimes Enforcement Network (“FinCEN”) at the U.S. Treasury. Companies required to report such ownership are generally those companies formed or registered to do business in the U.S. The CTA’s statutory reporting exemptions mostly apply to companies otherwise already required to register with the federal government in some form or another.

For compliance purposes, privately owned companies will be required to identify and report beneficial owners that own at least 25% of the company or exercise substantial control over the business. Certain owners are exempt from reporting, such as minors, employees, heirs, or creditors. Ownership information gathered by FinCEN will be stored with the Treasury and shared with law enforcement or regulatory agencies as necessary, but generally will not be made available to the public. Reporting will include each beneficial owner’s name, current residential or business address, date of birth, and a unique identification number.

The Treasury will be providing regulations during 2021 to help clarify the CTA’s reach and its implementation. In the interim, privately held companies should be consulting with their advisors to discuss forthcoming compliance as the CTA will take full effect on January 1, 2022. Newly formed businesses in 2022 will be required to comply with the CTA in conjunction with the entity’s formation. Entities existing prior to 2022 shall have a grace period by which to obtain compliance with the CTA.

The second significant legislative update occurred at the state level, being that Ohio enacted a new limited liability company statute. Like the CTA, the new Ohio Revised Limited Liability Company Act (“ORLLCA”) takes effect January 1, 2022.

The ORLLCA is intended to modernize Ohio’s LLC statute. The most significant change from the preexisting LLC statute is that Ohio will now permit the existence of “Series LLCs”, beginning in 2022. Series LLC’s are already recognized in certain other states, such as Delaware and Texas. Series LLC’s are generally intended to provide certain administrative conveniences by allowing for internally designated interests, assets, and operations of an “independent series” all within one LLC, thus reducing the need for extra LLCs to segregate business operations or assets and insulate liability. The most critical aspect of a Series LLC is that, when properly used, liability within the series is limited only to the assets of that same series.

Additional guidance and rules on both legislative changes discussed herein are anticipated throughout 2021. Business owners should be discussing these new rules with their advisors during 2021 in preparation of each taking effect when 2022 arrives. Please contact your attorney at McCarthy Lebit to review these new laws and strategize for their impact upon your business.

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