NEWS

Home » News
COVID-19 (CORONAVIRUS) LEGAL RESOURCE CENTER

The Carrington Coleman COVID-19 Legal Resource Center is the collection of coronavirus related alerts to keep our clients apprised of potential legal issues that arise from the pandemic. If you would like to receive our alerts via email, please email us.

During this challenging and unsettling time, Carrington Coleman is here to help you and ready to respond to any legal needs you might have. Our attorneys are monitoring legislation, executive orders, and court orders that impact our clients and their legal matters. If there is a topic of interest or you have questions regarding our coronavirus related alerts, please contact one of COVID-19 response team:

   
David Heidenreich   Bonnie Barksdale   Lance Currie
dheidenreich@ccsb.com   bbarksdale@ccsb.com   lcurrie@ccsb.com
214.855.3031   214.855.3119   214.855.3122

Additional Relief and Flexibility Provided to PPP Borrowers by the Paycheck Protection Program Flexibility Act of 2020. (Last updated June 5, 2020)
Contact Attorney: David Heidenreich

Reopening Your Business in the Age of COVID-19: A Customer-Facing Approach. (Last updated June 1, 2020)
Contact Attorneys: Monica Gaudioso, Debrán O’Neil, and Andrea Perez

SBA Releases Two Critical Interim Final Rules On: (1) Paycheck Protection Program Loan Forgiveness; And (2) Review of Forgiveness Applications by Lenders and SBA. (Last updated May 27, 2020)
Contact Attorney: David Heidenreich

The SBA Releases Paycheck Protection Program Loan Forgiveness Application (SBA Form 3508). (Last updated May 18, 2020)
Contact Attorney: David Heidenreich

SBA Issues New Rule Allowing Increased PPP Loan Amounts for Certain Partnerships and Seasonal Employers Previously Caught in Gaps of Changing Rules. (Last updated May 14, 2020)
Contact Attorney: David Heidenreich

SBA Provides Much Needed Guidance on “Necessity” Certification for PPP Loans and Impact on the Forgiveness Process. (Last updated May 13, 2020)
Contact Attorney: David Heidenreich

Federal Reserve Reworks Main Street Loan Program; SBA Promises to Audit PPP Loans in Excess of $2M Before Forgiveness is Approved. (Last updated April 30, 2020)
Contact Attorney: David Heidenreich

CARES Act 2.0 – Additional PPP and EIDL Funding and More. (Last updated April 23, 2020)
Contact Attorney: David Heidenreich

So You’ve Successfully Applied for a PPP Loan, Now What? What You Need to Know About the PPP Forgiveness Process. (Last updated April 17, 2020)
Contact Attorney: David Heidenreich

CARES Act Provides Subsidies for Loan Payment Relief on Certain SBA Loans. (Last updated April 10, 2020)
Contact Attorneys: Bonnie BarksdaleMichael Lin

“I Need a Hero” – The Fed Comes to the Rescue with an Array of Weapons Aimed at Combating Economic Impacts of COVID-19; PPP Support, Main Street Business Loans and More. (Last updated April 9, 2020)
Contact Attorney: David Heidenreich

U.S. Small Business Administration (SBA) Issues Supplemental Interim Final Rule for Affiliation Rules Applicable to Paycheck Protection Program. (Last updated April 5, 2020)
Contact Attorney: David Heidenreich

U.S. Small Business Administration (SBA) Finally Issues Much Anticipated Interim Final Rule for Paycheck Protection Program Loans. (Last updated April 3, 2020)
Contact Attorney: David Heidenreich

Department of Treasury Posts Application Form for Paycheck Protection Program Loan with More Specific Guidance on Program. (Last updated April 1, 2020)
Contact Attorney: David Heidenreich

Federal Government Rushes Through Legislation Designed to Help an Expanded Universe of Small Businesses. (Last updated March 27, 2020)
Contact Attorneys: David Heidenreich, Bonnie Barksdale, Ted Harrington

SBA Disaster Relief Loans Offer Lifeline to Small Businesses Amidst COVID-19 Uncertainty. (Last updated March 25, 2020)
Contact Attorneys: Bonnie Barksdale, Hayden Baker, Michael Lin

COVID-19: Cash Preservation Solutions. (Last updated March 19, 2020)
Contact Attorney: Bruce Hendrick

Your Contracts and COVID-19: Force Majeure and Impossibility. (Last updated March 20, 2020)
Contact Attorneys: Lance Currie, Bonnie Barksdale, Cathy Altman, Michael Lin, Joshua Kipp, David Drumm, Charles Jordan

COVID-19 Family Law Update No. 5 (Last updated April 1, 2020)
Contact Attorney: Carmen Eiker

COVID-19 Family Law Update No. 4 (Last updated March 25, 2020)
Contact Attorney: Carmen Eiker

COVID-19 Family Law Update No. 3 (Last updated March 23, 2020)
Contact Attorney: Carmen Eiker

COVID-19 Family Law Update No. 2 (Last updated March 19, 2020)
Contact Attorney: Carmen Eiker

COVID-19 Family Law Update (Last updated March 13, 2020)
Contact Attorney: Carmen Eiker

TREASURY SIMPLIFIES RECORDKEEPING FOR PAYROLL COSTS

The US Treasury Office of Inspector General (“OIG”), the audit officials responsible for monitoring the Coronavirus Relief Fund (“CRF”), issued Frequently Asked Questions (“FAQs”) on August 28 that seemed to contradict Treasury’s initial Guidance concerning the eligibility of payroll expenses for public health and public safety employees.

Subsequently, eight state and local organizations penned a letter to OIG seeking clarification and resolution to the conflicting guidance, especially as the September 21 quarterly-reporting deadline approached.

Yesterday, on September 21, OIG released revised FAQs correcting their earlier guidance on August 28, returning to a reading consistent with Carrington Coleman’s Per Se Rule advice.

Carrington Coleman’s Per Se Rule

The Per Se Rule was derived from Treasury’s initial Guidance and FAQs, which stated that payroll for employees “substantially dedicated” to mitigating COVID-19 was an eligible expenditure, that public health and public safety employees were presumed to be “substantially dedicated,” and therefore public health and public safety payroll was eligible.

Additionally, this presumption was granted for administrative convenience, meaning these entire departments were eligible under the Per Se Rule, without the need to test or analyze the day-to-day change in job function for these employees.

On top of this, the supporting documents needed to establish these eligible costs were simple- standard payroll records and account ledgers demonstrating payment using CRF funds.

Confusion Created in August 28 FAQs

OIG released FAQs on August 28 that attempted to narrow the scope of the Per Se Rule, leaving local government officials to make determinations based on vague and conflicting guidance.

Based on released reporting describing how state and local governments were allocating their CRF funds, payroll costs for public health and public safety employees are an overwhelmingly popular expenditure category.

Because of resulting inconsistency and confusion, eight national organizations wrote to the OIG asking them to confer with Treasury and reconsider their August 28 FAQs.

September 21 Resolution

On the afternoon of September 21, OIG released updated FAQs clarifying their position on the eligibility and documentation requirements for public health and public safety payroll. FAQs 70 – 72 explain local governments “do not have to demonstrate/substantiate that a public health or public safety employee’s function or duties were substantially dedicated to mitigating COVID-19” thereby re-establishing Treasury’s presumption that these employees are substantially dedicated.

These FAQs also state that local governments “are not required to perform an analysis or maintain documentation of the substantially dedicated conclusion for payroll expenses of public health and public safety employees.”

It also reaffirms that these expenses, even if previously budgeted for in the FY 2020 budget, are eligible CRF expenditures.

Takeaways

Payroll for public health and public safety employees, dating back to March 1 and extending through December 30, is the most efficient and best use of CRF funds in many instances.

Reduced recordkeeping and generally large payroll costs make the Per Se Rule particularly powerful.

Questions? Please contact:

Bruce Hendrick Ted Harrington
bhendrick@ccsb.com tharrington@ccsb.com
214.855.3033 214.855.3115

 

Additional Information Links:

OIG FAQs Relating to Reporting and Recordkeeping (OIG-CA-20-028 REVISED 9/21/2020)

Treasury Guidance (Last updated September 2, 2020)

Treasury FAQs (Last updated September 2, 2020)

OIG FAQs Relating to Reporting and Recordkeeping (OIG-CA-20-028, released 8/28/2020)

 

PEREZ SELECTED BY TEXAS LAWYERS AS ON THE RISE HONOREE

Congratulations to Andrea Perez. Andrea was selected by Texas Lawyer as a 2020 Texas Legal Awards, On the Rise honoree. The On the Rise award, announced virtually this year, honors “attorneys who are innovators, developing unique practice niches, amassing robust books of business, demonstrating strong leadership qualities, showing expertise in litigation, in-house or transactional work and committing themselves to pro bono, charitable and professional volunteer work.”

Andrea’s practice focuses on art law, business law, and intellectual property. Andrea works with galleries, museums, artists, auction houses, collectors, and art professionals to assist them with their unique art-related legal matters. In addition, she represents both public and private company clients, as well as private equity firms and family businesses, with a variety of simple to complex corporate needs, including mergers, equity and asset acquisitions and dispositions, entity formation, governance, partnerships and joint venture arrangements, intellectual property protection, vendor agreements, master services agreements, employment and contractor agreements, as well as a variety of other commercial contracts.

TREASURY REAFFIRMED “PER SE RULE,” BUT IMPOSED NEW LIMITS ON HOW IT APPLIES TO PUBLIC SAFETY AND PUBLIC HEALTH DEPARTMENTS.

Carrington Coleman previously dubbed the rule that allowed CRF funds to be used for payroll costs of public safety and public health workers as the “Per Se Rule.” Because these payroll costs are legally presumed to be substantially dedicated to COVID-19, these costs are “per se” eligible expenditures. (Link to Client Alert released on Sept. 1.)

On September 2, Treasury reaffirmed the validity of the Per Se Rule but limited its scope. Although generally broad in scope, the per se rule now does not necessarily include all employees working in the public safety and public health departments.

The Majority of Public Safety Employees Should Be Covered by the Per Se Rule

The majority of public safety employees should be covered by the Per Se Rule. But, according to Treasury’s most recent guidance, not every employee in the public safety department is necessarily within the scope of the rule.

Treasury limited the scope to frontline workers and extended it to include others who directly support those workers. Employees who are only indirectly engaged in public safety are not eligible. Treasury failed to define the term “directly.” Without proper guidance, counties and cities will have difficulty knowing whether some employees meet this standard. Further clarification and guidance from the Treasury is needed.

Treasury provided a list of frontline workers, specifically identifying and including police officers, sheriffs, duty sheriffs, firefighters, emergency medical responders, correctional and detention officers, and identified dispatchers and supervisory personnel as directly supporting workers.

Most Public Health Employees Should Be Covered by the Per Se Rule

Most, but not all, public health employees should be covered by the Per Se Rule. However, according to Treasury’s recent guidance, some employees in the public health department may be excluded.

Eligible payroll costs include employees involved in providing medical and other health services to patients, and supervisory personnel, including medical staff assigned to schools, prisons, and other such institutions, and other support services essential for patient care.

In addition, employees of public health departments directly engaged in matters related to public health and related supervisory personnel are covered by the Per Se Rule. But employees who are indirectly engaged in public health matters are not eligible.

Uncertainty and Increased Administrative Burden

Treasury’s new guidelines essentially subjects these workers who indirectly support frontline workers to the same factual and legal scrutiny as other types of employees who are subject to “substantially different use” standard.

The new guidelines create another hurdle for CRF recipients, i.e., a determination of whether certain employees are directly or indirectly related to frontline workers.

This new limitation is inconsistent with Treasury’s policy of administrative accommodation. Further clarification by Treasury is required. It is unfair for Treasury to now limit the scope of the Per Se Rule six months into the ten-month covered period.

Unfortunately, the impact of this rule may keep some counties and cities from properly including all of their public health workers because of (1) the factual and legal uncertainty over whether a particular employee “directly” supports its frontline workers and/or (2) their lack of resources to perform a proper analysis and create the additional documentation needed.

Takeaways

  • Treasury’s guidance reaffirms that CRF funds may be used to pay for public safety and public health payroll costs.
  • However, Treasury’s guidance limited the scope of which public safety and public health payroll costs qualify as per se eligible.
  • Treasury’s limitation should not create substantial economic hardships, but unfortunately, it will create increase administrative burdens.

Questions? Please contact:

Bruce Hendrick Ted Harrington
bhendrick@ccsb.com tharrington@ccsb.com
214.855.3033 214.855.3115

 

Additional Information
Treasury Guidance (Updated 9/2/2020)
Treasury FAQs (Updated 9/2/2020)

TREASURY CONFIRMS CORONAVIRUS RELIEF FUND (“CRF”) RECIPIENTS NEED ONLY MINIMAL SUPPORTING RECORDS TO SUBSTANTIATE PUBLIC SAFETY AND HEALTH PAYROLL COSTS FOR CRF COMPLIANCE

Treasury’s initial CRF Guidance provided a nonexclusive list of eligible expenditures. Among these eligible expenditures are payroll costs for “public safety, public health, health care, human services, and similar employees whose services are ‘substantially dedicated’ to mitigating or responding to the COVID-19 emergency.

Treasury later clarified in its Frequently Asked Questions that payroll costs for public health and public safety employees are legally presumed to be “substantially dedicated” to mitigating or responding to the COVID-19 emergency.

According to Treasury’s Office of Inspector General (“OIG”), recipients of CRF funds “can presume that all payroll costs for public health and public safety employees are payments for services substantially dedicated to mitigating or responding to the COVID-19 public health emergency (emphasis added).” Thus, payroll costs for these employees are presumed to be an eligible CRF expenditure.

Carrington Coleman dubbed this legal presumption for public health and public safety payroll costs as the “Per Se Rule.”

Minimal Records

On August 14th, the OIG informally announced on a webinar that it would require only minimal supporting records to substantiate eligibility. On August 28th, the OIG formally confirmed that position.

The only records needed for these Per Se eligible payroll costs are (1) regular payroll/HR records and (2) usual accounting records.
No additional or specially created documentation is required to demonstrate that these per se eligible payroll costs are “substantially dedicated” to the COVID-19 emergency. This underlying policy is intended to reduce the administrative burden that would otherwise exist by parsing through public health and public safety department records to demonstrate, on an individual basis, which employees are substantially dedicated to responding to COVID-19.

Takeaway

CRF fund recipients should embrace, and benefit from, the Per Se Rule. The Per Se Rule will maximize benefits while reducing CRF compliance risk.

Questions? Please contact:

Bruce Hendrick Ted Harrington
bhendrick@ccsb.com tharrington@ccsb.com
214.855.3033 214.855.3115

Additional Information can be found through the links below:

f