Updated Guidance, Warnings and Information

April 2, 2020 | from AdminBerenson No Comments

Confusion continues to abound regarding state and local shutdown and stay-at-home orders (a list that seems to grow larger by the hour), the Families First Coronavirus Response Act and the new Coronavirus Aid, Relief and Economic Security Act (“CARES Act”).  We have some important new guidance for the industry, some developing issues and some questions that clients keep bringing up, so we will list them in this Alert as an FYI.

Industry WIC (Warnings, Information and Concerns)

Financing Begins to Shut Down

Not unexpectedly, given the rapidly deteriorating unemployment conditions, we are beginning to see some industry lenders pulling out of the market. Reports have been coming in that certain industry financing operations are backing out of loan commitments and refusing to approve new jobs. This may get worse before it gets better, as lenders and sales finance companies are facing increasing problems underwriting customers who are no longer employed.

50-Employee Exemption From the Families First Coronavirus Response Act


As we know – employers with fewer than 500 employees are now required to provide (i) 2 weeks of paid sick leave and (ii) up to 12 weeks (10 weeks paid) of job-protected leave under the Family and Medical Leave Act (“FMLA”) for employees impacted by the coronavirus.  The start date on this was to have been by April 2, but for simplicity sake the Department of Labor just set it at April 1. 

However, there was a partial exemption in the law for businesses with fewer than 50 employees.  We have been waiting for the Department of Labor to get a working exemption structure up and running.  Well, looks like the complexity of this was taking too much time, so in a piece of good news, here is where it stands now under the most recent DOL guidance:

First, the exemption only applies if the worker is requesting leave to care for a child as a result of a school or place of childcare being closed (or childcare provider unavailability) due to the coronavirus.

Second, the exemption will apply to both the two weeks of paid sick leave and the up to 12 weeks (10 weeks paid) leave under FMLA.

What this means is that a small employer can exempt out of having to provide both the 2 weeks of emergency paid sick leave and the 10 paid weeks out of 12 weeks of job-protected leave under the expanded FMLA.

So, how do you qualify for this exemption? Well, as of now it appears the DOL has decided to allow small businesses to self-certify their qualification.  BLLP has provided a custom Exemption Form for you to use for this purpose. But, make very sure you read through the form and understand how it works before you use it.

Families First Coronavirus Response Act – POSTER

Most of us have forgotten that there is a posting requirement, so that employees can be formally notified of their rights under the Families First Coronavirus Response Act.  In these difficult times, please let’s not forget that all the hard working 1-800-sue-you lawyers are trying very hard to line up their next set of cases to bring against the evil home improvement contractors – and if we don’t have our poster up, that’s a quick shakedown letter you can expect to have to pay off in the months ahead.  Please, get this poster up on your wall by April 8. You can also post it on your web site or mail/email it out to your workers.

Don’t Abuse the Shutdown and Stay-at-Home Orders

As we’ve mentioned before, under a majority of the COVID-19-related orders being issued by governors and mayors around the U.S., there is almost always a reasonable argument that the orders do not apply to many types of remodeling and home improvement projects. BLLP (along with other law firms and industry manufacturers, etc.) have been providing clients with various types of clearance or authorization letters. At BLLP we refer to these as “Street Letters”, and they are used by clients to show to officials or for staff to carry out in the field in the event they are stopped. But these are not legal guarantees, they are efforts to keep our clients in a functional operating mode – keep this in mind. Not too many people are going to really believe your remodeling project is “necessary” or “essential” in a PR battle on the o’clock news.

More concerning, reports are now coming in about contractors pushing the limits in these difficult times – running aggressive canvassing operations, not practicing social distancing protocols, etc. We are starting to see various efforts to tighten up shutdown orders and close down home improvement projects.  This push back has been notable from the Governors of New York and Michigan, and police stop-and-question activity has increased around the U.S.  Indeed, there is an argument that per New York’s most recent guidance letter, remodeling activities are essentially now prohibited throughout New York if there is more than one person on the job site at a time. And the list of jurisdictions that are trying to completely ban remodeling and home improvement jobs, from Pennsylvania to New Jersey, is expanding. If you intend to operate in the field and run sales and installs under a shutdown or stay-at-home order, stay under the radar and do not call undue attention to yourself – or you may regret the eventual outcome.

FAQs  (The Most Recent and Most-Asked BLLP Client Questions):

  1. What are our risks if my sales representative gives the homeowner the virus during a demo at an in-home appointment? Can we get sued? What if our installer gets it from the homeowner?

Legally, this is much like a claim from a customer that our installation gave them lead blood poisoning because we failed to use lead safe work practices.  The fact of the matter is that proving actual legal liability in this situation is next to impossible.  Unless a consumer has been in strict quarantine with no contact other than our sales representative before, during and after the presentation, then there is likely no way for anyone to determine who gave the virus to whom, or exactly when.

Sure – anyone can sue anyone for anything in the U.S., and the 1-800-sue-you lawyers are already working on various claims to generate once the dust settles, however as a rule this is not likely to be a problem for us – but pay attention to question No. 2, below.

  1. Do I need to tell homeowners if we find out their sales representative tested positive for the virus?

Ouch. Do you “need to” legally? No, you do not. But this is a very difficult issue that involves a risk analysis that involves legal exposure, public relations problems and ethics.  From a public relations standpoint, be careful. On one hand, if it gets out through a loose-lipped sales representative or an installer (now or weeks and months down the road) that we had a COVID-19 worker in the home and never mentioned it, that could easily blow up on us. Maybe you can avoid that by carefully advising the homeowner of the situation. On the other hand, no good deed goes unpunished, and you can create a PR problem if you do choose to disclose it.

 Moreover, as we mention above, you face little risk of discovery let alone liability if you do not disclose this. And, putting all else aside, from an ethical standpoint, you must consider the damage that might be done by not disclosing the fact in a timely manner. Unfortunately, this question will need to be considered by clients on a case-by-case basis, so feel free to reach out to us if we can assist.

What we do advise is for each worker to sign a confidential affirmation that they have not tested positive for COVID-19 and that they are not aware of having any symptoms, and so on and so forth – before we let them go out into the field. We call this a “COVID Staff Affirmation”.  If you need one created, please let us know.

  1. If I have both a husband and a wife working for me, are they both entitled to take paid leave to care for their child who is home from school?

Yes. Remember the Families First Coronavirus Response Act has two parts. Part One is up to 10 weeks of paid leave under the Emergency Family and Medical Leave Expansion Act to care of a child at home due to a school closure or unavailable child care as a result of the COVID-19 situation. Part Two is up to 2 weeks of paid medical leave under the Emergency Paid Sick Leave Act. Guidance from the Department of Labor makes clear that both parents have the right to claim leave under these laws.

  1. I’ve trimmed staff back, mostly my sales representatives, and they are on unemployment, but under this new payroll loan program, I will have to bring my staffing levels back up soon or I will lose the loan forgiveness. How can I be sure I can do that?

We will have a Client Alert out later today on our developing guidance for the Payroll Protection Program within the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). But an answer to the question will depend on a few factors including how many employees you had in the measurement period versus how many you have when you originate your loan. Some clients may consider offering a retention bonus now – to be paid later – so you can have a better chance of bringing terminated staff back on when the dust settles. Finally, in normal times, an employee cannot simply choose to remain unemployed and claim unemployment insurance so if you offer to bring an employee back and they refuse, you can let it be known that you have an obligation to notify the state unemployment insurance agency and that may imperil the person’s benefits. Although the new unemployment insurance benefits law does allow for a “self-certification” that the person’s ability to work has been disrupted for “COVID-19 related reasons, so a creative person may be able to get around this normal prohibition. Also, keep in mind that depending on if your sales representatives are employees or under IRC §3508, and how they are being paid, they may not trigger unemployment. For example, if your representatives are paid on pure commission, and your leads have dried up – that does not mean they are fired. They may quit for lack of leads, but that is not necessarily going to allow them to claim unemployment (unless you want them to and you do fire them, of course)