Wood Law Firm, LLC - Fennimore, Wisconsin

Business Law

Memorandum To Municipal Clients Regarding H.R. 6201

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March 24, 2020 UPDATED

I originally sent out a Memorandum to Municipal Clients Regarding H.R. 6201 on Friday, March 20, 2020. There have been updates and I want to give you a more concise, easy to understand updated Memo.

This Memo will address both paid leave areas that were addressed in the first Memo, but there were updates that the Senate changed before the final passage.

Term of the Law

Originally it was thought that this law would be retroactive, meaning it would go back and start for any time taken off by employees from March 18, 2020 to current. However, that is NOT the case. The law will not be in effect until April 2, 2020 and will be in effect until December 31, 2020.

In this Memo we will address the two-employee related leave changes in the new law. The Emergency Paid Sick Leave Act and The Emergency FMLA.

1. Emergency Paid Sick Leave Act

The law splits the eligible employees into six different categories. An employee is eligible if an employee falls in one of the six categories and it will matter which of the six an employee qualifies for to determine what amount they will be paid.

The six categories are:

  1. Employee is subject to government quarantine or isolation order;
  2. Employee has been advised by a healthcare provider to self-quarantine;
  3. Employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
  4. Employee is caring for an individual who is the object to 1. or 2. on the list above;
  5. Employee is caring for a son or daughter whose school or place of care is closed, or childcare provider is unavailable, due to COVID-19 precautions;
  6. Employee is experiencing substantially similar to conditions as specified by the Secretary of Health and Human Services.

Full time employees are entitled to 80 hours of pay. Part time employees are entitled to an amount of leave up to the average number of hours they work in a two-week period going back 6 months.

Under this Act, it does not matter how long the person has been an employee to qualify.

  1. Amount paid
    1. Employees under categories 1. 2. or 3. above:If the Employee qualifies under 1., 2. or 3. above, then they will be paid no less than the employees’ regular rate of pay. Hourly rate will apply for hourly employees. Salary employees will be broken down into hourly rate unless you know what the employee gets paid for a two-week period.The payment is capped at no more than $511 per day or a total payout over the two weeks at $5,110. The employer is not obligated to pay more than stated here. Many will fall under this.
    2. Employees under categories 4. 5. or 6. above:If the Employee qualifies under 4., 5. or 6. above, then they will be paid no less than the two-thirds (2/3) the employees’ regular rate of pay. Hourly rate will apply for hourly employees. Salary employees will be broken down into hourly rate unless you know what the employee gets paid for a two-week period.The payment is capped at no more than $200 per day or a total payout over the two weeks at $2,000. The employer is not obligated to pay more than stated here.
  2. Notice Requirements
    The question was raised what happens if I want to require notice of the employee to prove they qualify under one of the six above. My recommendation is that under 1. You cannot ask for a notice. This is because everyone is currently under this order if you are not an essential worker. For 2., 3. and 4., it is reasonable for the employer to ask for some documentation. The law states that reasonable notice practices will be followed. So, it may take some time to get this notice, but you can ask for the notice. For 5., we all know the schools are closed so I don’t think a notice will help here unless they are having help at home to assist with the childcare. For 6. Nobody really understands what this means so we will not address.
  3. Violations
    The law comes with a thirty (30) day non-enforcement clause. This means you cannot be sued for thirty (30) days. This does not mean that you get a “get out of jail free” card. Try as hard as you can to follow the law and I will be here to assist.
  4. Using Other Time First
    The employer cannot require an employee to use other paid time off before this time off. The law is clear that the employees are entitled to use this time established under the Act first.

***It is important to note that people who stay home out of fear or who self-quarantine without one of the six (6) requirements above will not qualify under this Act.

2. Emergency Family and Medical Leave Expansion Act

There are twelve (12) weeks available, but this is not twelve (12) additional weeks, it is twelve total weeks. Not much changed here. The first ten (10) days can be unpaid but the remained of the time paid like the 4-6. above.

The Employee will be paid no less than the two-thirds (2/3) the employees’ regular rate of pay. Hourly rate will apply for hourly employees and for salary it will be broken down into hourly rate unless you know what the employee gets paid for a two-week period.

The payment is capped at no more than $200 per day or a total payout over the two weeks at $2,000. The employer is not obligated to pay more than stated here.

There are some groups of exceptions to having employees back if you have less than 25 employees. If those apply, we will discuss.

3. Reimbursement

There will be reimbursement, but it will be against payroll tax credits. It will be the amount equal to the payout obligation and if you meet a situation where that is not enough to make you whole, the government is saying they will write you a check as a refund. More on this to come from the Department of Labor.

Conclusion

I wanted to get you the changes right away. I will give more guidance as soon as it becomes available. But here are the law changes as they stand now.

Wood Law Firm, LLC
Benjamin R. Wood

The UCC

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Long time no post.

In the legal profession it is easy to let work absorb your life. I noticed that last night when I realized it has almost two years since my last post. A lot has changed since that post and a lot has stated the same, only it has gotten better.

I consider myself a general practitioner. I have specialties by virtue of frequency of work: trusts and estate planning, probates, municipal law, real estate, and all areas of business. This week I acquired a new set of skills by virtue of excessive research and practice.

I have always done business law and have helped forms hundreds of limited liability companies, and helped farm families and businesses succeed in business. That said, most of my work was on the formation, administration and equitable dissolution. This week I dealt with an issue of insolvency. I do not practice bankruptcy law and have only a generalized knowledge about the process. This week, that changed.

It was very interesting and I am glad to say I can now assist clients in UCC transactions and issues. For those of you who do not know, UCC stands for Uniform Commercial Code. In Wisconsin is around Chapter 400 and the sections change based on what your specific issue may be.

It was an interesting process and therefore I am proud that my office may be able to assist you will insolvency issues, specifically with farming operations and crops. I really believe having this knowledge has helped me by a better business attorney in general. If you know the dangers and pitfalls that may happen during insolvency, it is easier to help plan to avoid those things. I do not do bankruptcy and do not plan to start.

I would love to help you or your family with all issues of law. The best bet if you wonder if my office handles something is to give us a call. If we can help you, we will be all in with your representation. If we cannot help you, we will refer you to someone who can.

Thank you and hopefully I can have more frequent posts.

Business Succession Planning

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Next week Tuesday I will be presenting at a Fennimore Chamber of Commerce “Lunch and Learn.” The topic I was asked to cover is business succession.  I have helped many businesses succeed without delving into the significance. What I mean is, to create a successful business succession plan the attorney must consider all the legal ramifications; and believe me there are many. Estate planning, tax planning, etc. What I didn’t realize until I prepared my outline for the presentation is all of the “other planning issues” faced by the business owner at the time of succession. Family issues, fairness, pride, nerves, etc. With that as a backdrop, I researched to find and develop a list of common mistakes made by business owners at the time of succession. The following is a list of a few common problems I have found and believe me there are others to consider.

  1. Common Problems that Prevent a Successful Business Succession Plan – What NOT to Do:
    1. Oftentimes business owners do not think about the welfare of their business whenever they pass the torch to a business successor
      1. Sometimes, business owners will ask for an unreasonable purchase price when selling their business to a family member or third party.
      2. If a deal is completed with an excessive price, there could be hazardous results since it will substantially change the business’s economic equilibrium and increase the costs of operating the business.
  • Over time, the business’s expenses could not be used to support the business, going instead to the debt used to cover the business successor’s acquisition costs.
  1. Sometimes, a small business is its own worst enemy. Some circumstances that cause a business to fail from the inside out.
    1. The business successor not having enough leadership ability or experience to properly take over the business,
    2. The business successor not having enough education or skill to manage the business or to supervise over the business’s work product,
  • The business owner and workforce’s self-satisfaction that the business can be transitioned without adequate planning
  1. Many clients, out of a sense of fairness, will try to divide their business interests equally among all of their children. (Estate Planning implications and Life Insurance and other tools – there is such a things as too fair)
    1. In many instances, this can lead to bad results—
      1. The business’s division can water down the business’s profitability, giving the children no incentive to continue the business.
      2. Worse, it might cause management problems where a share of the business goes to a child that is a ne’er-do-well and another goes to a golden child.
        1. For example, without the right business structure, the ne’er-do-well could easily make business deals that could destroy the business.
      3. Additionally, differences between the children’s personalities might cause the business to dissolve over a lack of compatibility
    2. Outside market forces – things outside of the businesses control
  2. Why is it so important to have a plan?
    1. Oftentimes a successor is chosen at the last moment due to a lack of planning and subsequent sense of urgency.
    2. After a business owner dies, becomes severely disabled, or retires, interested parties may scramble trying to find someone that they believe, rightly or wrongly, can manage the business. May have ethical considerations – like lawyers – duty to clients.