The most important content we can create right now comes directly from our clients’ questions. We hope these relevant topics give you a sense of how your peers are approaching and solving similar business challenges. As always, let us know if you have a question you’d like answered in an upcoming issue.

Today, we’re answering three questions that we received yesterday from our readers:

1. “Nobody has taken vacation time because there is nowhere to go. If things open at year-end, there will be a ton of accumulated vacation time. What to do? Legally, can you force people to take vacation and use it?”

There is a real concern that because of how COVID-19 has restricted travel and gatherings, employees have not been using their available vacation time and will flood employers with requests to use vacation time at the end of the year. The first step is to check your current policy for any requirements for approval of leave, how excess requests will be handled, and whether employees may be required to use their accrued vacation (which is generally permitted by law). If your policy does not have these provisions, consider updating your policy now, to avoid confusion at the end of the year. Some other strategies to consider include requiring employees to use some portion of their vacation while the office is closed, staggering vacation periods for the second half of the year, so you have appropriate coverage at all times, and allowing employees a one-time carryover of some or all accrued vacation so they can take it next year. The LP team is available to assist with reviewing and revising your policies and working through your options.

2. “What if an employee does not feel comfortable coming back to work before 6/1? We have all the precautions mandated. They are not entitled to unemployment, right?”

Essential businesses are currently dealing with this question, and all businesses are likely to face it after stay-at-home restrictions are lifted. In general, employees who are essential or aren’t subject to a stay-at-home order can be required to report to work (and thus will become ineligible for unemployment if they refuse). Still, it’s important to be consistent in responding to these situations, and there are some situations where employees may have a right to stay home. For instance, if an employee is pregnant or has a preexisting condition, it’s important to look at whether not reporting to the office would be a reasonable accommodation. Similarly, it’s important to confirm that the employee is refusing to report because they are uncomfortable and not for a reason for which the law may permit them to use leave time (such as for Emergency Paid Sick Leave or Extended FMLA under the Families First Coronavirus Response Act or for “old fashioned” FMLA). 

3. “How should we decide whether or not we should return all or some of our PPP loan before 5/7?”

If you received PPP loan funds and have been grappling with whether or not to return the funds by May 7 to avoid liability (see our original article on the topic here), below are a few factors to keep in mind when making this important decision:

• The SBA confirmed that all companies receiving more than $2 million in PPP funds, and other loans as appropriate, will be reviewed by the SBA. 
• When reviewing your specific facts, consider the following very high-level questions and be sure that you have adequate documentation to support these facts if you choose to keep the loan funds:
  • Whether because of the COVID-19 crisis, there was economic uncertainty that negatively impacted the business (e.g., changes in revenue, negative supply chain impacts, etc.) – if not, loan funds should likely be returned.
  • Whether the PPP loan was necessary to keep business operations running (see the bullet point below as a follow up) – if not, loan funds should likely be returned.
  • Whether the business has access to other sources of capital, such as through the public securities market, private equity, or hedge funds – if so, loan funds should likely be returned.

Update: on the evening of May 5, 2020 after the original publication of this article, the SBA announced that the deadline for returning loan funds by May 7, 2020 to be eligible for the safe harbor for making the economic necessity certification in good faith has been extended to May 14, 2020 (see FAQ#43). Borrowers do NOT need to apply for this extension and it will be implemented through a revision to the interim final rule. Additional guidance will be released by the SBA in advance of May 14, 2020 on this certification review process.

3+.  In a time of social distancing, there are still opportunities for social connection. Today is #GivingTuesdayNow, a global campaign promoting acts of generosity and connections within our communities. No matter how big or small, your participation today and in the future can make an impact – whether that is by helping a neighbor, thanking a front line worker, giving to nonprofit causes, or supporting a local business. Take a moment to see how you can make an impact.

For more resources and LP's response to COVID-19, visit this webpage.

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