Special Alert - News & Updates Connecting You, Your Business, and Your Community

OFF THE RECORD

SPECIAL COVID-19 ALERT

A Message From Our Firm

Dear Friends!

As the situation surrounding the Coronavirus continues to unfold, we understand that you may have concerns about the impact on you and your family, as well as on your business or place of employment. Like so many others, we are closely monitoring the latest developments and working to safeguard the health and well-being of our clients, employees, and all of our business and community partners.

Our team is following U.S. Centers for Disease Control and Prevention guidelines and best practices, we are regularly monitoring news and updates provided by public health officials, and we are taking preventative measures to combat the spread of this virus.

The attorneys, paralegals and administrative team members at our firm have the ability to employ modern technology to ensure the needs of the firm’s clients. While it is certainly not business as usual, our firm is committed to doing everything possible to effectively meet your needs. Our team is prepared to work smart and to utilize the capabilities to work remotely, thereby limiting face-to-face meetings, on-site visits and working within close proximity to others.

We remain committed to being your partner in your success, and doing all that we can to continue to support your legal needs. To this end, we suspect that you have many legal questions regarding your personal affairs, your employment or your business. Our team stands ready to address the unique nature of issues with which you may be confronted and work with you to find practical and legally sound solutions. In this special edition of Off the Record , we pose, and address, some of the legal issues which you may be facing; however, since new ones emerge every day, we do encourage you to reach out to us to directly to ensure that your unique issues are promptly addressed. As always, client service is and will always be a priority for us.

Be strong, smart and resilient; take care of your personal and business families; and most importantly, stay healthy!

Kindest regards!

Paul G. Skalny

Managing Director

For Businesses, Entrepreneurs & Organizations

CONTRACTS

The business impact of the novel COVID-19 virus outbreak has many business owners reviewing the " force majeure " clauses in their business contracts to determine if performance can be excused. However, there are no clear answers as force majeure clauses do not typically list public health crisis or pandemic as excusable events.

Essentially, a force majeure event is an unforeseen or unavoidable event beyond the reasonable control of the parties to an agreement that justifies an excuse or delay in the affected party's performance of its obligations under the contract. Commonly, clauses are limited to "acts of god", terrorism, war, and labor strikes. Broader clauses may excuse performance if it is "illegal" or "impossible."

So, does a force majeure clause extend to the COVID-19 pandemic? Possibly. It's going to depend on the specific language of the clause and the circumstances for performance. Please feel free to contact one of our business attorneys with any questions about a force majeure clause in your contract.

INSURANCE

Check your insurance coverage. Many businesses carry business interruption insurance to replace income lost in a disaster. While most policies typically only cover income lost as a result of physical damage, such as a fire or a tornado, some policies include income losses associated with other kinds of perils, including disease. Whether you can make a claim will depend on many factors, including the type of loss, the coverage you carry, and the terms of your particular policy. Talk to your insurance agent or contact us to ensure sure you know what kind of coverage you have.

BANKING RELATIONSHIPS & LOANS

Keeping your banker informed is critical. A common clause in business loan agreements is a default related to lender “insecurity.” This clause means that a lender can declare a default and call the loan, demand additional collateral, or halt future advances if it deems itself “insecure,” even if not a single loan payment has been missed. While the circumstances under which a lender can declare a default under an insecurity provision depends on the exact language contained in the loan documents, you can minimize this risk by talking to your banker early and often about your financial situation and developing a plan for handling the challenges your business may be facing as a result of the coronavirus and economic uncertainty.

Take advantage of available resources. The Small Business Administration has announced that it will work directly with state Governors to provide targeted, low-interest loans to small businesses and non-profits severely impacted by the coronavirus. The SBA’s Economic Injury Disaster Loan program can provide working capital loans of up to $2 million to help small business facing temporary loss of revenue as a result of the crisis. In addition, the Comptroller of Maryland has extended business tax filing deadlines to June 1 for some businesses with March, April and May due dates, and all licenses, permits that would expire during the current state of emergency in Maryland will be extended until at least the 30 ^th day after the state of emergency is lifted.

ESTABLISHING STANDARDS OF CARE

Businesses are forced to deal with many issues as they continue to manage their operations in the face of the COVID-19 pandemic, including to what extent they must take measures to protect and maintain the safety of their employees, as well as their customers and clients who come to their business establishment, office, or campus. Businesses need to balance their own business interests with the safety of others, and must consider what measures should be taken to avoid placing the business at risk of claims that employees, customers or clients became ill because the business failed to take reasonable precautions. Some issues businesses will need to consider to avoid potential claims for negligence include:

1. To what extent do government agency directives, mandates, or guidance concerning closures or self-quarantine have on determining what reasonable measures your business should take?

2. If other businesses and establishments in your industry or community voluntarily close, must you do the same?

3. What increased sanitary measures do you need to take at your office or business establishment to comply with your responsibility to protect the safety of your employees and customers?

Please contact our office for guidance as you work through these various issues with your business. We are ready to offer our assistance as you maneuver through these unprecedented times.

COMMERCIAL LEASES

Keep your landlord in the loop. If you know that you are going to have trouble paying the rent because of lost income related to the coronavirus crisis, begin a conversation with your landlord as soon as possible. Remember, a crisis for businesses is also a crisis for landlords. It is in the best interest of most landlords to help tenants get back on their feet as quickly as possible. Your landlord may be able to help with temporary rent forgiveness, addressing the shortage at the back end of the lease, or another plan to provide rent relief until the crisis passes

EMPLOYEE AND LABOR ISSUES

With the spread of the COVID-19, employers are searching for ways to protect their employees and their businesses during this global emergency. With new federal and state declarations being made every day, employers should have a plan and be prepared while not violating existing employment laws.

We have already received numerous requests from our clients on a variety of coronavirus-related topics. Our hope is to provide the facts and offer continued guidance to any of your concerns and questions during this unprecedented time.

Are my leave policies sufficient ?

It is time to ensure that your sick leave policies are flexible and consistent with public health guidance and that your employees and managers are aware of these policies. Employers and managers should be aware of how your sick leave policies are applied, especially if you are requiring employees to telework. Employers will need to comply with the local or state employment laws of where their employees are working. Employees should continue to use their earned sick leave for conditions as outlined in the company’s policy manual, and in accordance with federal and state laws. If an employee is exhibiting coronavirus symptoms, an employer can require any employee exhibiting symptoms to work from home (such action is permitted as COVID-19 poses a direct threat to the workplace).

At present, employers are not required to provide extra paid sick leave days; however, there is a federal bill, “ Families First Coronavirus Response Act ,” ( H.R. 6201 ), pending which may require employers with 500 employees or less to provide 2 weeks of paid sick leave for COVID-19 circumstances. Stay tuned!

Am I in compliance with the ADA and the FMLA?

Regular flu symptoms aren't usually considered a serious health condition under the Family and Medical Leave Act (FMLA), but a longer-term respiratory illness could trigger an employee's right to take job-protected, unpaid FMLA leave. Employers should note that employees may be entitled to paid family and medical leave for qualifying conditions in a handful of states. States and municipalities that mandate paid sick leave all provide paid time off for an employee who is ill with COVID-19. The vast majority of paid sick leave laws also provide paid time off if the employee's eligible relative—such as a spouse, child or parent—is sick or requires treatment associated with an illness.

On March 14, 2020, the US House of Representatives passed the “ Families First Coronavirus Response Act ,” ( H.R. 6201 ) and it will be voted on by the Senate this week. If passed, the Bill will become effective within 15 days after signed by the President and expire December 31, 2020. This bill will impact all private employers with less than 500 employees. It will require employers to provide 2 weeks of paid sick leave for certain circumstances related to the coronavirus. The Bill amends FMLA Family leave to apply to employers with less than 500 employees and defines eligible employee as one who has worked with employer for at least 30 days. After the first 14 days, Paid Family leave is to be paid at two-thirds of the usual pay rate. The House capped paid sick leave at $511 per day and paid family leave at $200 per day. In other words, paid sick leave would fully compensate employees earning up to about $130,000 a year for that two-week period, and paid family and medical leave would fully compensate employees earning up to about $75,000 a year for the three-month period.

The bill provides a tax credit to cover the costs to many small businesses. The credit is applied to the tax the company normally pays for each employee’s Social Security. (This is the 6.2 percent tax employers pay on each employee’s salary.) If sick leave or family and medical leave ends up costing more than the Social Security bill, the U.S. government will send the employer a check to cover the remaining costs.

Under the American with Disabilities Act (“ADA”), Employers can ask employees if they are experiencing coronavirus symptoms. Since it has been determined that coronavirus is a pandemic, such inquiries are justified. Employers should not take employees temperatures but can send those employees who are exhibiting symptoms to leave work and seek medical treatment. Employers can require employees to be 24 hour symptom free before returning to work. Employers can generally require employees to provide written verification from a medical provider if paid sick leave is needed for more than three days. The CDC is recommending that employers don't require such documentation in this situation since medical providers are likely to be overwhelmed with requests if COVID-19 spreads.

Is telework or flex working an option for my company?

Teleworking, if planned and managed successfully, can be thought of as an opportunity for an organization to build trust and productivity among employees. It can also be employed as a strategic talent management initiative that improves employee attraction, engagement and retention while reducing costs for both the company and the employees. With COVID-19, teleworking may be the new norm for companies. Employers should review or adopt an effective telework policy in order reduce exposure to unintended wage claims.

Effective January 1, 2020, the new overtime rules raised the salary threshold to $35,568. Employees who do not earn at least $35,568 a year ($684 a week) must be paid overtime, even if they’re classified as a manager or professional. Exempt employees are now reclassified as non-exempt and are subject to overtime. Thus, monitoring all non-exempt employees time is critical. Clear and accurate time monitoring and time keeping policies are essential to monitor you employees hours, so employers are not paying for unauthorized off the clock hours and overtime.

For Individuals & Families

FAMILY LAW

Rising apprehension surrounding the spread of COVID-19 has caused a variety of concerns to arise for parents and families. These concerns may be particularly challenging to manage for dual-household families, or those in which the parents are separated or divorced. A few examples come to mind:

1. Many parents share or alternate their children’s spring break from school. With Maryland public schools closing for (at least) two weeks, and spring break potentially being used to make up lost time, questions arise as to whether and when spring break access with the children will occur.

2. Some families have planned travel with their children, and one parent who had provided consent for the children to travel might wish to withdraw that consent given the current health-related concerns. Is this reasonable?

3. With many schools and child care facilities closing unexpectedly and for an unprecedented length of time, parents may be required to arrange care for their children, as well as costs for that care. Who is responsible for arranging care? Who is responsible for bearing the cost of that care?

Please feel free to reach out to our firm should you and your family need assistance in handling these, or any other, issues that may arise in the wake of COVID-19.

COMMUNITY ASSOCIATIONS

The coronavirus outbreak has raised a number of issues for condominiums, homeowner associations and cooperatives. Most significantly, questions have arisen regarding the open meeting requirements for both Maryland and District of Columbia condominiums, for Maryland homeowner associations, and for Maryland cooperatives. The laws require association boards to meet in person and, except in limited circumstances, board meetings must be open to all members. Given the risks associated with the coronavirus, can boards meet by phone or video conferencing or take action on items that cannot wait without holding an actual meeting?

The Maryland corporate code provides that, unless restricted by its articles of incorporation or bylaws, boards may meet via telephone or video conferencing, provided all persons participating in the meeting can hear each other at the same time. Therefore, boards of associations that are incorporated as non-stock corporations may utilize the corporate code to meet remotely. Since owners have the right to attend board meetings and to participate during the open forum portion of the meeting, all owners must be able to hear and participate in board meetings held via telephone or video conferencing. Note, that in light of the coronavirus, the Montgomery County Commission on Common Ownership Communities has provided a temporary waiver of the in-person, open meeting requirements and is allowing and recommending that associations consider the use of telephone/video conferencing to conduct board meetings, provided that all owners have the opportunity to join in and participate.

In the District of Columbia, except in limited circumstances, board meetings must be open to all members. However, the District of Columbia Condominium Act permits boards to meet via telephone or video conferencing so long as everyone can be heard.

What if boards cannot meet because board members are sick and a quorum cannot be achieved or boards lack the technical ability to meet remotely? Typically, association bylaws permit boards to take action without a meeting as long as the vote of each board member is in writing and the vote to take the action is approved unanimously by all board members. Moreover, if the association is incorporated, both Maryland and District of Columbia laws allow boards to take action outside a meeting by unanimous consent given in writing or by electronic transmission. Each director’s consent must be filed with the board meeting minutes, and in the District of Columbia, a copy of the resolution must be attached to the minutes of the next board meeting.

Should you have any specific questions about open meeting requirements for your association or have any other questions pertaining to your association and the coronavirus, please do not hesitate to contact us!