Effective July 13, 2020, all bars, breweries, and pubs in California must close both indoor and outdoor operations due to rising COVID-19 infections and hospitalizations. Additionally, statewide closures of indoor operations in the following sectors have been ordered:

• Dine-in restaurants,
• Wineries and tasting rooms,
• Movie theaters,
• Family entertainment centers including bowling alleys and similar venues,
• Zoos and museums, and
• Cardrooms

There are additional mandated closures for California counties that have been on the County Monitoring List for three consecutive days. Unless the activity can be modified to operate outdoors or via pick-up, the following industries and activities must shut down immediately:

• Fitness centers
• Worship services
• Protests
• Offices for non-essential sectors
• Personal care services, including nail salons, and body waxing and tattoo parlors
• Hair salons and barbershops
• Malls

As of July 13, 2020, the following counties have been on the County Monitoring List for three consecutive days: Colusa, Contra Costa, Fresno, Glenn, Imperial, Kings, Los Angeles, Madera, Marin, Merced, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Joaquin, Santa Barbara, Solano, Sonoma, Stanislaus, Sutter, Tulare, Yolo, Yuba, and Ventura.
According to the Official California State Government Website, as of July 13, 2020, California has 329, 162 confirmed cases of COVID-19. For more information, visit https://covid19.ca.gov/.

Probably the most important fact is that PPP funding is available to businesses that previously received a PPP loan. Business are eligible for a second PPP loan of up to $2 million, provided they have 300 or fewer employees, have used or will use the full amount of their first PPP loan, and can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019. 

• For First-Time Borrowers,
  • Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
  • Sole proprietors, independent contractors, and eligible self-employed individuals.
  • Not-for-profits, including churches.
  • Accommodation and food services operations (those with North American Industry Classification System (NAICS) codes starting with 72) with fewer than 300 employees per physical location.
• Note – the legislation also allows borrowers that returned all or part of a previous PPP loan to reapply for the maximum amount available to them.
• Loan Forgiveness. As with PPP1, the costs eligible for loan forgiveness in PPP2 include payroll, rent, covered mortgage interest, and utilities. There is also a simplified forgiveness application process for loans of $150,000 or less. PPP2 also makes the following potentially forgivable:
  • Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines.
  • Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.
  • Covered operating costs such as software and cloud computing services and accounting needs.

• To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight or 24 weeks — the same parameters PPP1 had when it stopped accepting applications in August.

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See https://www.congress.gov/116/bills/hr133/BILLS-116hr133enr.pdf; https://home.treasury.gov/system/files/136/PPP-IFR-Paycheck-Protection-Program-as-Amended-by-Economic-Aid-Act.pdf; https://home.treasury.gov/system/files/136/PPP-IFR-Second-Draw-Loans.pdf, or the SBA  for more details or contact The Burton Law Firm.

The “Consolidated Appropriations Act, 2021” was passed into law on December 27, 2020 following a bipartisan support despite a short stall issued by President Trump regarding the payment of $600 versus $2,000 of individuals who make less than $75,000.  The law allocates $900 billion for COVID-19 relief and a remaining $1.4 trillion portion towards standard spending allocations. The PPP will be in a separate post; however, the other provisions of the Act provides for:

• $600 Stimulus Checks. Up to January 15th, 2021, single individuals making $75,000 a year or less, and married individuals making $150,000 a year or less, will receive a wired transfer of $600.
  • This will be reduced, pro rata, up to $87,000 for individuals and $174,000 for married couples.
• Extended Employer Assistance for Student Loans. The CARES Act previously amended the Internal Revenue Code to allow employers to treat student loan repayments as nontaxable employer provided educational assistance. This CARES Act relief was set to expire on December 31, 2020. The CAA extended the relief previously afforded under the CARES Act to employer loan assistance provided through December 31, 2025. Accordingly, employers may amend their employer educational assistance programs to include up to $5,250 worth of student loan payments that may be reimbursed or paid on behalf of an employee on a tax-free basis. Importantly, the $5,250 cap applies as a single unified limitation on both loan payments and other employer provided educational assistance.
• Qualified Disaster Relief. Eligible participants can generally take qualified disaster distributions of up to $100,000 in the aggregate, to repay hardship distributions for principal residence, to obtain loan relief
  • Note – the California wildfires or Hurricane Isaias would be covered. A list of all major disaster declarations can be found at: https://www.fema.gov/disasters/disaster-declarations.
• Partial Plan Termination Relief. Wherefore a retirement plan will not be treated as having experienced a partial plan termination during any plan year which includes the period beginning on March 13, 2020 (the date the COVID national emergency was declared) and ending on March 31, 2021, if the number of active participants covered by the plan on March 31, 2021 is at least 80% of the number of active participants covered by the plan on March 13, 2020.
• Pension Relief for Construction Workers. Certain multiemployer pension plan participants in the building and construction industry shall be eligible to begin receiving benefits at age 55, even if they are still employed at the time of such distributions.
• Transfers of Excess Pension Assets to Retiree Health or Life Accounts. Under current law, certain retiree health and life insurance costs may be transferred from a defined benefit pension plan to a retiree health or life insurance account within the pension plan over an elected transfer period of up to 10 years. The CAA, provided certain conditions are met, permits employers to make a one-time election during 2021 to end any existing transfer period for any taxable year beginning after the date of such election.
• Extended Grace Period for Flexible Spending Accounts. Under the CAA, employers may permit extended grace periods or expanded carryovers for health and dependent care flexible spending accounts (FSAs) for plan years ending in 2020 and 2021.
• Temporary DCAP Rule for 14 Year Old Dependents. The CAA temporarily changes the maximum age of a dependent from age 13 to 14 and allows participants who had children who aged out of dependent care FSA (DFSA) coverage in 2020 to use DFSA funds through the plan year ending in 2021 to reimburse expenses for the dependent until the dependent attains the age of 14.
• Changes in Medical Billing Rules. Effective 2022, the law eliminates a plan’s ability to impose restrictions on use of out of network services; requires group health plans to calculate an employee’s cost sharing amount for out of network services; prohibits out of network providers from the practice of billing the plan participant for the balance of the out of network charge not paid by the plan; requires that group health plans and carriers add deductible, out of pocket maximum and consumer resource contact information to any paper or electronic insurance card issued to participants; and requires that group health plans and carriers provide advanced billing and personal cost information to participants based on the contracted rate the plan has established with the provide.
• New Mental Health Parity Rules. Insured and self-insured group health plans that offer mental health or substance use disorder benefits provided by group health plans. Therein, this provides greater transparency to the patients as well offering great contention in the medical community.

Following a surge up 225% increase in cases, on December 3, 2020 Governor Gavin Newsom announced that a Regional Stay Home Order would be in effect for 3 weeks after a trigger-event, where their regional ICU drops under 15% capacity, which will instruct Californians to stay at home as much as possible to limit the mixing with other households that can lead to COVID-19 spread.

The order will be much less inhibiting than earlier as it allows access to (and travel for) critical services and allows outdoor activities with the goal to preserve Californians’ physical and mental health.

In any region that triggers a Regional Stay Home Order because it drops below 15% ICU capacity, the following sectors must close: 

• Indoor and outdoor playgrounds
• Indoor recreational facilities
• Hair salons and barbershops
• Personal care services
• Museums, zoos, and aquariums
• Movie theaters
• Wineries
• Bars, breweries, and distilleries
• Family entertainment centers
• Cardrooms and satellite wagering
• Limited services
• Live audience sports
• Amusement parks

The following sectors will have additional modifications in addition to 100% masking and physical distancing:

• Outdoor recreational facilities: Allow outdoor operation only without any food, drink or alcohol sales. Additionally, overnight stays at campgrounds will not be permitted.
• Retail: Allow indoor operation at 20% capacity with entrance metering and no eating or drinking in the stores. Additionally, special hours should be instituted for seniors and others with chronic conditions or compromised immune systems. 
• Shopping centers: Allow indoor operation at 20% capacity with entrance metering and no eating or drinking in the stores. Additionally, special hours should be instituted for seniors and others with chronic conditions or compromised immune systems.
• Hotels and lodging: Allow to open for critical infrastructure support only.
• Restaurants: Allow only for take-out, pick-up, or delivery.
• Offices: Allow remote only except for critical infrastructure sectors where remote working is not possible. 
• Places of worship and political expression: Allow outdoor services only.
• Entertainment production including professional sports: Allow operation without live audiences. Additionally, testing protocol and “bubbles” are highly encouraged.

The following sectors are allowed to remain open when a remote option is not possible with appropriate infectious disease preventative measures including 100% masking and physical distancing:

• Critical infrastructure 
• Schools that are already open for in-person learning
• Non-urgent medical and dental care
• Child care and pre-K

For more information, visit here, or https://www.cnn.com/2020/12/03/us/los-angeles-hospital-beds-christmas-covid/index.html.

 On November 13, 2020, Sacramento County moved from California’s Red Tier back into the Purple Tier based on current COVID-19 test positivity rates and the adjusted daily rate of new cases. In Purple Tier counties, the risk level of COVID-19 is considered widespread. Sacramento County’s new categorization means the following business restrictions are back in place:

• Dine-in restaurants and wineries may open outdoors only, with modifications
• Bars, breweries, and distilleries are closed

El Dorado, Placer, and Yolo counties have also moved back into the Purple Tier and have the same restrictions in place.

In Sacramento County, as of November 16, 2020, the COVID-19 positivity rate is 6.7% and there are approximately twenty-one new COVID-19 cases per 100,000 people, per day. In El Dorado County, the positivity rate is 3.3% and there are approximately 8.2 new cases per 100,000 people, per day. In Placer County, the positivity rate is 6% and there are approximately 15.7 new cases per 100,000 people, per day. In Yolo County, the positivity rate is 6.7% and there are approximately 17.4 new cases per 100,000 people, per day.

For any county to move back into the Red Tier, the positivity rate must drop below 8%, and the daily rate of new cases must drop to between four and seven new cases per 100,000 people, per day.

For more information and industry-specific guidlines, please call our firm at (916) 822-8700 or you may visit covid19.ca.gov/industry-guidance.

On October 8, 2020, the Small Business Administration (SBA) announced that the loan forgiveness application process has been simplified for roughly 60% of its Paycheck Protection Program (“PPP”) borrowers. PPP borrowers who have borrowed $50,000 or less may now use the new SBA Form 3508S to apply for loan forgiveness. If the business combined with its affiliated subsidiaries borrowed more than $2million, they cannot use this form. Despite being a short form, its contents are to be reviewed with much less scrutiny. As an added bonus, borrowers who use the new form are not subject to reductions in their loan forgiveness amount due to reductions in their number of full-time employees or reductions in employee wages.

The application approval process also benefits the lender side of things, allowing for faster forgiveness approvals. Lenders no longer need to independently verify loan forgiveness amounts reported by borrowers, so long as the borrower submits documentation in support of its request for loan forgiveness. The new loan review process applies to PPP loans of all sizes.

In support of the changes to the loan forgiveness process, the Administrator of the SBA and the Secretary of the Treasury reported that the new SBA Form 3508S “strikes an appropriate balance between the need for simplification in the forgiveness process with the responsibility to protect the integrity of the program and safeguard taxpayer funds.”

For more information on obtaining PPP loans or changes to the loan forgiveness process, call us at (916) 822-8700 or visit https://www.sba.gov/article/2020/oct/08/sba-treasury-announce-simpler-ppp-forgiveness-loans-50000-or-less.

On September 29, 2020, California officials announced that the number of coronavirus cases in Sacramento County had dropped sufficiently over the previous two weeks to categorize the county risk level as “substantial” rather than “widespread.” This new categorization allows for expanded indoor business for certain industries in Sacramento County.

Sacramento County’s previous risk level “widespread,” meant that more than eight percent (8%) of coronavirus tests were positive, and there were more than seven new coronavirus cases per 100,000 people, per day. For county risk to be classified as “substantial,” the positivity rate for coronavirus tests has dropped to between five and eight percent (5 – 8%), and there must be no more than four to seven new coronavirus cases per 100,000 people, per day.

With this news, restaurants in Sacramento County can now open indoors, with modifications. Restaurants must operate at a maximum of 25% capacity or 100 people, whichever is fewer. Wineries may also now operate outdoors only, with modifications. Bars, breweries, and distilleries that do not serve food are currently to remain closed.

For more information, please call our firm at (916) 822-8700 or you may visit covid19.ca.gov/industry-guidance.

On September 9, Governor Gavin Newsom signed several bills intended to bolster small businesses in California that have been impacted by the COVID-19 pandemic. The new laws are set to take effect on January 1, 2021.

Senate Bill 1447 creates the “Main Street Hiring Tax Credit,” which allows businesses with fewer than 100 employees to claim a credit against their sales and use taxes. Beginning this year, a $1,000 credit is available for each new full-time employee hired in 2020, up to $100,000; however, the credit is only applicable to businesses whose gross income has declined at least 50% in Q2 (starting April 2020).

Assembly Bill 1577 excludes Paycheck Protection Program loans and other federal CARES Act funds from both federal and state income taxes. The new law also forgives the debt on such loans equal to the amount of the recipient’s payroll costs, mortgages, rents, and utility payments.

Senate Bill 115 appropriates $561 million this year in stimulus and construction projects across California.

While signing the bills into law, Governor Newsom remarked that surveys found that as many as 44% of small businesses in California were contemplating closures due to the economic crisis caused by the COVID-19 pandemic. The bills were all passed without opposition in the Legislature.

For more information, contact us at 916-822-8700 or visit the California Legislative Information site at https://leginfo.legislature.ca.gov/.

On August 8, 2020, President Donald Trump signed one executive order and three memorandum regarding various forms of economic relief in response to the COVID-19 pandemic. This is in contrast to what many have reported; that all were executive orders.

An executive order is directed to, and govern actions by, federal government officials and agencies, and must cite the legal authority the president has to issue it. Executive orders, according to the Library of Congress, have the force of law if their topic “is founded on the authority of the President derived from the Constitution or statute.”

Contrasting this, an executive memorandum is similar, but is not required by law to be reported in the Federal Register, and does not need to cite the legal authority the president has to issue it.

• The Executive Order on Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners calls for the Health and Human Services Secretary and Centers for Disease Control and Prevention Director to “consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary.” The executive order does not provide financial relief to renters.
• The Memorandum on Authorizing the Other Needs Assistance Program for Major Disaster Declarations Related to Coronavirus Disease authorizes the Secretary of Homeland Security to make available up to $44 billion dollars in unemployment aid. The Memorandum calls for the aid to resume at an amount of $400.00 per week, for those who qualify, and to last until December 6, 2020, or until the aid runs out. The federal government will provide $300.00 of that aid, and states must contribute the remaining $100.00.
• The Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster delays payroll tax collection for those who make less than $4,000.00 every two weeks. Specifically, the Memorandum instructs the U.S. Treasury to cease collection of payroll taxes from September 1, 2020, through December 31, 2020. The Memorandum additionally instructs the Secretary of the Treasury to “explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.”
• The Memorandum on Continued Student Loan Payment Relief During the COVID-19 Pandemic waives interest on federal student loans through the rest of the calendar year, and allows holders of those loans to delay payments until December 31, 2020.

Congress has indicated that it will be on recess for the rest of August; as such, it is unlikely that Congress will pass a new economic stimulus package before September. Due to potential judicial challenges, it is unknown which parts of these Presidential actions will be implemented, so check back frequently for further updates.

The deadline to apply for a Paycheck Protection Program (PPP) loan is now  August 8, 2020. Applying sooner rather than later will allow for sufficient loan application processing time before the deadline. As a reminder, you can apply for a PPP loan through:

• any existing SBA 7(a) lender, or
• any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will also be available to make these loans once they are approved and enrolled in the program.

Loan payments will be deferred for six months, and there are no personal guarantees nor collateral required. As long as the loan is used for payroll costs, interest on mortgages, rent, and utilities – with at least 60% of the loan having been used for payroll – the loan will be fully forgiven.

For help getting started, the U.S. Small Business Administration (SBA) has provided a free online tool to connect small businesses with lenders. Prior to applying with your lender, you can download a copy of the PPP application form to see the information that will be requested of you. According to the SBA, as of June 30, 2020, there have been more than 4.8 million loans approved through the PPP loan program nationwide, with over 5,400 lenders participating in the program.

For more information, please contact us at 916-737-5658 or visit the SBA website at https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.