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A Seeming Disconnect

By Jean M. Deliso

Have you wondered how the S&P 500 stock-market index has been trading at near all-time highs when, in the second quarter, S&P 500 corporate earnings were down compared to the first quarter of 2020, daily confirmed cases of COVID-19 in the U.S. are currently stable or declining, and the Bureau of Labor Statistics’ July unemployment report showed more than 16 million unemployed Americans, with an unemployment rate of 10.2%?

That question is a good one, with the seeming disconnect between what the stock market has been doing and what we are seeing in the news and the U.S. economy. No doubt the stock market was arguably pricing in what the economy will look like a year from now and what the market sees as significant pent-up demand, a fading pandemic-induced economic impact, and a wall of liquidity coursing its way through capital markets.

The real question is whether investors should be concerned about the U.S. stock market hitting all-time highs with the economy still bruised and slowly recovering. Could this mean a crash or major correction is coming?

Jean Deliso

Jean Deliso

“There is a chance the economy one year from now will be in better shape than it is today — or it may be worse. But being a participant in the market for the long haul means participating in the growth and losses that happen between now and then, and always focusing on your investment time horizon.”

No one truly knows the answer to that question. But we know that market corrections and bear markets are normal and common; we just don’t know when they will arrive or how long they will last. And if anyone tells you ‘with certainty’ when a market downside is coming and how long it will last, you might want to run the other way.

When thinking about where the markets and economy could go in the next year and beyond, it’s useful to break it down by key categories:

Economics. The pandemic-induced recession has been steep and ugly. But there is a good argument that the worst of the crisis could be behind us. Manufacturing and service activity have rebounded, the housing market has seen very solid activity, and spending has outpaced expectations, according to the Washington Post.

Earnings. Second-quarter earnings were bad, plain and simple. But at the same time, earnings were not as bad as the double-digit expectation of Wall Street, and clearly stocks love positive surprises. Will earnings continue to improve going forward? That is the question — and we all hope the answer is ‘yes.’

Interest Rates. Overnight rates in most developed countries are near historic lows, meaning borrowing costs and financing costs are highly attractive for businesses and individuals that can obtain loans. The Federal Reserve also signaled plans to keep interest rates near zero for years; these actions make equities attractive by comparison.

Inflation. The amount of global stimulus is massive; the total global fiscal and monetary stimulus being deployed amounts to approximately 28% of world GDP, according to the Wall Street Journal. This ‘wall of liquidity’ makes inflation seem more likely in the coming years and will be a factor to watch.

Sentiment. Consumer and investor sentiment is improving in the wake of the pandemic, but may sour as the election nears.What’s the bottom line for investors? The nature of bull markets is that we can expect the stock market to reach new highs over time. This is what history has told us to expect every time. That said, I would caution against seeing an all-time high in the S&P index as a reason to go completely defensive. When setting a long-term investment strategy, it is important to consider how the economy may grow or contract in the next six, 12, or even 18 months, and how that plays into your personal goals and objectives. If your retirement date is close, it is always prudent to review how much safe money you may need to weather an unexpected storm.

There is a chance the economy one year from now will be in better shape than it is today — or it may be worse. But being a participant in the market for the long haul means participating in the growth and losses that happen between now and then, and always focusing on your investment time horizon.

Jean M. Deliso is a registered representative offering securities through NYLIFE Securities, LLC (member FINRA/SIPC), a licensed insurance agency. Deliso Financial and Insurance Services is not owned or operated by Eagle Strategies, NYLIFE Securities, LLC, or any of their affiliates.

Features

Telecommuting Can Be Taxing

By Carolyn Bourgoin and Lisa White

In response to the COVID-19 pandemic and the related public-health concerns, many businesses have implemented work-from-home (WFH) arrangements for their employees. Whether due to government-mandated shutdowns or voluntary efforts of employers to protect workers, there has been a significant rise in telecommuting that continues even as some states begin to relax restrictions.

Carolyn Bourgoin

Carolyn Bourgoin

Lisa White

Lisa White

Businesses with telecommuting workers need to evaluate the potential payroll and business-tax consequences created by those employees working from home in states where the business would not otherwise have a taxable presence.

Though most states have existing guidance addressing telecommuting for both businesses and workers, the unusual circumstances created by the COVID-19 pandemic has necessitated the need for states to revisit these rules. Unfortunately, there is also little uniformity among the states in both the existing guidance and the temporary guidance being issued.

In order to remove some of the uncertainty and to limit the potential adverse state tax consequences of employees working remotely, the Remote and Mobile Worker Relief Act (RMWR) was introduced to the Senate in July as part of the American Workers, Families, and Employers Assistance Act. The RMWR contains special provisions prohibiting a state and its localities from taxing the wages of an employee who is performing services in a state other than their state of residence due to the COVID-19 public-health emergency.

“Businesses with telecommuting workers need to evaluate the potential payroll and business-tax consequences created by those employees working from home in states where the business would not otherwise have a taxable presence.”

For calendar year 2020, this protection is afforded for a period not to exceed 90 days. Businesses would also be provided protections under this tax-relief package concerning their telecommuting employees. Remote workers performing duties in a state or locality where the employer does not otherwise have a presence would not automatically cause the business to be subject to taxation in that state. However, as it is unclear when or if this bill will pass, employers must continue to review the guidance of the respective states and localities where their remote workers are performing services.

Massachusetts Guidance

Massachusetts issued temporary guidance providing tax relief where an employee is working remotely in the state due to the COVID-19 pandemic. A recent technical information release (TIR 20-10) issued by the Department of Revenue provides that the presence of one or more employees working remotely in Massachusetts will not by itself create a withholding responsibility with respect to that employee if the remote work is due to any one of the following:

• A government order issued in response to the COVID-19 pandemic;

• A remote-work policy an employer adopts to comply with federal or state guidance or public-health recommendations relating to COVID-19;

• A worker’s compliance with quarantine requirements due to a COVID-19 diagnosis or suspected diagnosis; or

• A worker’s compliance based on a physician’s advice due to a worker’s COVID-19 exposure.

For businesses, wages paid to a non-resident employee who, prior to the pandemic, was performing services in Massachusetts, but who is now telecommuting, will continue to be treated as Massachusetts source income, subject to income tax and withholding. The information release further provides that, while it is in effect, the presence of one or more remote workers in the state due to the COVID-19 pandemic will not automatically create a Massachusetts sales and use tax-collection responsibility or a corporate excise tax-filing responsibility.

These provisions are effective until the earlier of Dec. 31, 2020 or 90 days after the state of emergency in Massachusetts is lifted. Employers must maintain written records to substantiate the pandemic-related circumstances that caused an employee to fall under the TIR’s provisions.

Massachusetts issued its temporary guidance with the understanding and expectation that other states either have adopted or are adopting similar sourcing rules. However, similar to the relief provided in the Senate bill discussed earlier, it would still be prudent for an employer to still review the guidance of the respective states and localities where their remote workers are performing services.

Guidance from Neighboring States

New York: New York is one of five states that has a ‘convenience of the employer rule,’ treating as New York wages any compensation earned by employees of a New York company while they are working outside the state. Under this rule, the wages of a telecommuter could be sourced to both New York and the telecommuter’s resident state, requiring payroll withholdings for both states.

A bill was introduced in the New York Senate in May that would offer relief to businesses by exempting the non-resident employee wages from New York income tax and withholding requirements for a specified amount of time. However, as of the time of this article, the New York Department of Revenue has remained silent on its position regarding these matters.

Connecticut: Connecticut is another state with a ‘convenience of the employer rule.’ However, the state only applies this rule in determining Connecticut source income of residents of states that also apply the convenience rule. Otherwise, wages are sourced to Connecticut based on the portion of services performed within the state.

The Connecticut Department of Revenue has not issued any form of guidance to date, but did respond to a state survey this past May regarding telecommuting due to the COVID-19 crisis. The agency replied that it was working on guidance that would ensure ‘fair and equitable treatment’ to both its individual residents and Connecticut-based businesses.

Rhode Island: Rhode Island has issued formal guidance similar to that of Massachusetts, providing that the presence of one or more remote workers in the state due to the COVID-19 pandemic will not automatically create an income tax-filing responsibility and sales and use tax-collection responsibility. Wages paid to a non-resident employee who is now telecommuting will continue to be treated as Rhode Island source income subject to income tax and withholding.

Businesses with telecommuting employees in other states must check to see if those states offer tax relief from withholding taxes, income-tax nexus, and sales and use tax-filing obligations created by these remote workers during the COVID-19 health crisis. Unfortunately, there is no set time frame or requirement that states issue such guidance.

Passage of the Remote and Mobile Worker Relief Act would help to remove some of the uncertainty surrounding the tax treatment of these workers. Employers in the meantime are left to monitor potential changes to state tax laws where their remote workers are located during the COVID-19 pandemic to determine whether they have relief from tax filings in the telecommuting state.

Carolyn Bourgoin, CPA is a senior manager, and Lisa White, CPA is a manager for the Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.; [email protected]; [email protected]

Banking and Financial Services Coronavirus

Volume Business

By Mark Morris

When COVID-19 made its arrival in Western Mass., it was mid-March, just weeks before the start of the traditional home-selling season. Area mortgage professionals didn’t know what to expect when the pandemic hit, but they certainly weren’t projecting a solid year.

Soon, though, they had to adjust those expectations and projections.

Indeed, a combination of factors, from historically low interest rates to high demand and low inventories, have made this a much busier, much better year than most residential lenders and home sellers could have hoped for back in the dark days of March.

Indeed, instead of completely canceling the spring home-buying market, the pandemic merely postponed it, said James Sherbo, senior vice president of Consumer Lending with Holyoke-based PeoplesBank.

“We’ve been very busy because the activity we would have normally seen in April or May, we saw in June, July, and August,” he told BusinessWest.

Jeffrey Smith, vice president and chief Lending officer with Freedom Credit Union, concurred, noting that any debilitating effects on the housing market from the pandemic have been more than offset by lower interest rates. The rates were already fairly low — in the 3.25% to 3.5% range — before the pandemic, he said, but now consumers can now get a 30-year fixed-rate mortgage for well under 3%.

James Sherbo

James Sherbo

“We’ve been very busy because the activity we would have normally seen in April or May, we saw in June, July, and August.”

“This is probably the best real-estate market I’ve seen in years,” Smith said. “When the pandemic first hit, I thought it was going to be just the opposite.”

Meanwhile, many mortgage holders are taking advantage of these lower rates to refinance, and this high volume of refis, as they’re called, is keeping most all lending institutions busy.

“It’s crazy … we’ve seen an 80% volume increase in our overall business compared to last year,” Smith noted. “And we certainly did not expect that.”

Tami Gunsch, senior executive vice president and director of Relationship Banking at Berkshire Bank, agreed. She said the bank is pleased with the Mortgage Division’s performance, “especially during these unprecedented times of COVID-19.”

For this issue and its focus on banking and financial services, BusinessWest takes an in-depth look at the housing market and the various, and powerful, forces that are driving it.

Rooms for Improvement

Flashing back to mid-March, Sherbo said his department was mostly focused on where (and how) team members would work, and keeping employees and customers safe.

“We just tried to prepare as best as we could to keep our team safe and our customers safe,” Sherbo said. “When COVID-19 first hit, everybody wondered what would happen; nobody had a crystal ball.”

Indeed, no one could have foreseen how the drop in interest rates — one of many steps taken to stimulate the economy — and other factors would collaborate to stimulate virtually all aspects of the housing market and create a unique set of circumstances.

Home sales are strong, again, because of low interest rates even though fewer homes are for sale, said Sherbo, adding that he can’t recall a time when both conditions have happened at the same time.

Jeffrey Smith

“This is probably the best real-estate market I’ve seen in years. When the pandemic first hit, I thought it was going to be just the opposite.”

“I’ve seen rates this low before, but I’m not sure we’ve seen this lack of supply in quite a while,” he said, adding that it’s no surprise that many people do not want to move or sell during the pandemic, so the supply of homes for sale is limited. That creates an environment where many purchase offers are coming in higher than the asking price.

“New listings are selling very quickly,” noted Smith, adding that nearly all the houses offered for sale in early July were sold by early August.

In addition to people moving out of the city and into the suburbs to take advantage of low interest rates, Smith said the demand for second homes is exploding.

“In the last three to six months, prices have increased by 20% or more in areas like Cape Cod or Maine,” he noted. “Second homes are a hot market right now, and because there is a limited supply, properties are on the market for only a short time before they are sold.”

Then, there’s the refi market.

Gunsch said that, in addition to strong new-mortgage activity, Berkshire Bank is doing a high-volume business in refinances.

“Refis account for 52% of our closed-loan production through July,” she said, “while in the prior year, during the same period, they accounted for 35% of the closed loan volume.”

Smith added that, thanks to the robust business Freedom is doing with loan refinancing, he does not anticipate the lack of housing supply to limit the institution’s growth potential this year.

Strong housing-sales activity is even more impressive considering how the entire home-buying process had to quickly change when COVID-19 hit.

The notion of a real-estate agent walking potential buyers through a house for sale sounds almost quaint these days, as virtual tours have replaced showings, and drive-by looks at a house have become the norm.

“People are buying homes based on what they see online,” said Smith. “Many people are not even going out to the house to see it. In some cases, particularly for second homes, they are buying them sight unseen.”

Before COVID-19 struck, Smith said Freedom had limited online mortgage-application capabilities, but the virus forced the institution to quickly go all in.

“Luckily, we had the technology to be able to make a fast adjustment to online only, so we were kind of ready for it,” he told BusinessWest.

PeoplesBank launched its paperless mortgage-application system in October 2019 after two years of refining it. When COVID-19 arrived and disrupted so much of daily life, Sherbo said having a touchless system already up and running made it easier to maintain business levels.

“Our customers don’t have to meet or sign anything in person,” Sherbo explained. “The entire application process can be done online or over the phone. We were ready for this, which was great.”

Gunsch said Berkshire also uses an online application process. When an appraisal of the property is needed, only the exterior is appraised to reduce physical contact.

“Loan closings are still done in-person with everyone wearing masks and following social distancing guidelines,” she added.

Critical Deferrals

A serious concern at the beginning of the pandemic was the potential for mortgage delinquencies to spike due to homeowners affected by financial and health issues. In April, Gov. Charlie Baker signed into law a moratorium on evictions and foreclosures on consumers through March 2021.

Meanwhile, those who are struggling with COVID-related issues are encouraged to contact their mortgage holder to defer payments. The law makes it clear that, by deferring, consumers merely extend the length of the mortgage without taking a hit on their credit rating.

All the mortgage professionals BusinessWest spoke with said the deferral program has worked to keep delinquencies down and allow people to stay in their homes.

“We have a strong team in place to assist our borrowers with loan deferrals and ensure they understand their options to defer payment during this time,” said Gunsch.

Smith said that roughly 5% of Freedom mortgage holders have taken advantage of the deferral program. “We’re actually seeing our delinquencies at very low levels, lower than they’ve been in years.”

Smith added that most of the deferral requests occurred in April and May. With each passing month, the number of new deferrals continues to decline.

“The deferral program is working the way it was intended,” Sherbo added. “It’s giving people the chance to maintain their own stability and credit.”

As for inventories, even that picture may improve soon. A recent report from the U.S. Census Bureau and Housing and Urban Development (HUD) showed new housing construction starts are up more than 23.4% in July 2020 compared to July 2019. The national figure closely mirrors the Northeast, which saw a similar increase of 23.3%.

Locally, Sherbo said new home starts are relatively flat, but if interest rates continue at record lows, that would encourage more new construction in Western Mass.

Just as no one had a crystal ball back in March, none of the mortgage professionals we spoke with can really say what will happen six months or a year from now. That’s the nature of this pandemic — a high level of unpredictability.

For now, the housing market is booming at a time when few thought it would. This is good news for banks and credit unions — and for the customers they serve.

And it’s certainly one of the more intriguing stories in a year with seemingly no end of them.

Banking and Financial Services

Course of Action

By Gabriel J. Jacobson and Ian Coddington

In addition to the obvious financial benefit to the employee, employer-funded advanced education can carry financial and soft benefits for employers, employees, and colleagues alike.

These benefits extend beyond the person who is pursuing advanced education, as this article explains.

More Accessible to Working Professionals

As access to online education grows, the number of professionals seeking to advance their education also increases. In 2017, one in six students enrolled entirely online, and one in three enrolled in at least one online course.

With the advent of the COVID-19 pandemic, schools around the country shut down their physical locations, and students were forced to move to online learning. Now that most students have taken some form of online classes, it is likely that many will choose to continue this method of learning.

Gabriel Jacobson

Gabriel Jacobson

Ian Coddington

Ian Coddington

Advanced education has become more attractive to employees and employers because it is a more accessible option for working professionals. One tax associate at Meyers Brothers Kalicka recently took advantage of the opportunity to pursue an advanced degree while continuing to work full-time. He enrolled at the Isenberg School of Management at UMass Amherst to gain a BBA in accounting and decided to remain online rather than go in-person.

Prior to making this choice, he worked full-time for a few years before deciding he wanted to earn his business degree. He enrolled in a la carte online classes immediately to accelerate his degree track before he was officially admitted. Once he was accepted into Isenberg, he decided to remain online so he could continue working a full-time internship at Meyers Brothers Kalicka, which ultimately led to him being offered an associate position at the firm.

He attributes the combination of full-time school and full-time work to his success, claiming that experiencing real-world situations reminiscent of the subject matter of his classes helped cement key concepts related to his profession. He graduated with more than a year of real-world professional experience under his belt.

The heart of online school is the flexible pace; students choose any quantity of classes each semester, meaning they could offload during busy season and upload during the slow season. Some employers allocate otherwise-unassigned slow-season hours to degree-earning coursework.

“Employers can sponsor employees with funds for academic training to build job-related skills. They may provide up to $5,250 in employer education-assistance benefits for undergraduate or graduate courses tax-free each year.”

With the increase in availability of online education due to the pandemic, companies can leverage this opportunity to attract talent earlier to both their and the student’s benefit.

Tax Incentives for Employers

Employers can sponsor employees with funds for academic training to build job-related skills. They may provide up to $5,250 in employer education-assistance benefits for undergraduate or graduate courses tax-free each year. To receive the benefit, the funds must pay for tuition, fees, books, supplies, and/or equipment. As an added bonus, these funds qualify for a business deduction and are not required to pay FICA or FUTA payroll taxes.

However, the education must be legally required for the employee to maintain their current position, or it must improve or maintain skills required for the position. One of these two stipulations must be met to satisfy the tax-free treatment.

There are limits, as these benefits are for employees only, and not for spouses or dependents. Also, there is no choosing between the education benefit and a cash payment to the employee. Employers should provide these rules and others as a written notice to employees interested in receiving the benefit.

Organizational and Culture Benefits

Outside of the financial benefits, there are workplace benefits to supporting student employees. Collaborative teams are a mainstay of most successful businesses. These teams often group employees with differing niches and experience levels, so they translate directly to supporting newer employees’ development through mentorship.

Mentorship relationships can help maintain accountability and time management for online student professionals. They can also serve as sounding boards for in-class work and discussion that reflect areas of interest to the student employee.

For example, the previously mentioned associate nurtured a mentorship relationship with his manager by discussing his primary interests and questions from his corporate tax class. Outside the mentor relationship, he found solidarity and motivation with peers at his level as many completed online master’s programs to advance their careers.

These relationships foster vibrant cultures of positive reinforcement toward educational goals within firms all over the country. Further, this culture can extend beyond the classroom and cultivate a collaborative and supportive work environment.

The human-capital, financial, and cultural benefits of incentivizing employees’ advanced education through online learning cannot be overlooked in today’s business climate. With the tools highlighted above, companies should take advantage of this opportunity.

Gabriel J. Jacobson and Ian Coddington are associates at Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.; (413) 536-8510.

Company Milestones

Company Milestones

Paul Scully, president of Country Bank

Paul Scully, president of Country Bank

It was March 1850. Millard Fillmore was still working through his first 100 days in office as the thirteenth President of the United States — although no one was probably counting the days back then. In six months, California joined the Union as its 31st state, taking the country from coast to coast and Ware Savings Bank was incorporated under the laws of the Commonwealth of Massachusetts. Thus, the first chapter in the 170-year history of Country Bank was written.

There have been a number of important chapters written since — including the incorporation of Palmer Savings Bank in 1870 and the merger of those two institutions in 1981 to form Country Bank for Savings (later shortened to simply Country Bank). Paul Scully, the bank’s current president, noted that many things have changed at this institution over those 170 years, everything from its footprint — it now stretches from Ludlow to Worcester, with 14 branches and 23 ATM/ITM locations — to how people do their banking.

Company:
Country Bank
www.countrybank.com
800-322-8233
Home Base:
Ware, Mass.
Founded:
1850
President:
Paul Scully
Company Snapshot:
A community bank with 14 locations

What’s more significant to him — and all members of the Country Bank team — is what hasn’t changed in that time. Specifically, it’s a commitment to the customers, communities, and staff that sets this institution apart. In short, what hasn’t changed is that this is still a community bank in every sense of that phrase. “What we are celebrating is the bank’s support for those who have been right there with us along the way,” stated Scully. “And we’re celebrating our independence in being a mutual savings bank, and one of the most highly capitalized banks in the Commonwealth.”

This rich history of support prompted the bank to assume a leadership role during times of crisis — and there have been many over the past 170 years, perhaps none more significant than the COVID-19 pandemic.

Over the past several months, the bank has stepped up to assist its commercial and consumer customers impacted by the virus and resulting economic downturn. “Every customer matters, regardless of their deposit balance, and we’re here to help them achieve their dreams or navigate through rough waters.” None have been rougher than those generated by the pandemic, he noted, adding that the bank has written 475 Payment Protection Plan (PPP) loans in amounts ranging from $1,500 to $2 million and helped many commercial and mortgage borrowers. “It’s the premise of why community banking and Country Bank exist,” he went on. “Since the start of the pandemic, the bank has donated over $450,000 to COVID-related relief efforts along with an additional $400,000 to other local non-profits. For the past one hundred and seventy years, the bank’s operated with the belief that healthy communities thrive; recognizing that it has not only an opportunity but a responsibility to support its communities at varying levels.”

A RICH HISTORY

There have been many milestones for Country Bank since 1850, and dates to remember:

July 1869: The Committee of Investment voted that the bank loan to the town of Ware in the amount of $70,000 was to be used in the building of the Ware River Railroad;

• 1920: The service of school savings accounts was inaugurated to help establish a habit of thrift among young savers;

• 1945: The first home loan to a veteran of World War II was made under the G.I. Bill of Rights;

• 1982: The first ATM was installed;

• 2017: The Boston Business Journal first recognized the bank for its charitable donations; and

• 2019: Country Bank became a founding member of the Worcester WooSox.

These milestones collectively speak to the notion of what a community bank is — or should be — and that legacy is being celebrated as this institution turns 170. “Behind the individual milestones is a consistent pattern of service to the community,” Scully said.

A LEGACY OF CARING

When asked how the bank would mark its 170th birthday, Scully said there would be “subtle” celebrations. “We’re not big on tooting our own horn on things,” he noted, adding that there would be themed events in the fall celebrating its 170th birthday and the staff and customers who have been a part of the bank’s legacy. Rather than celebrate with lots of hoopla, the bank is far more focused on continuing — and building upon — its strong track record. “It’s a significant milestone that you can’t take lightly,” he said. “For all of us who are associated with the organization, we are given the challenge — and opportunity — to maintain a legacy: a legacy of supporting those in need and helping customers achieve their financial goals and dreams, whatever they may be. And that’s what is being celebrated as this institution turns 170.”

Opinion

Opinion

By Suzanne Parker

This year marks the 100th anniversary of the passage of the 19th Amendment and women’s constitutional right to vote. This historic moment provides an important opportunity to emphasize that full gender equity requires racial justice and equity as well.

While the women’s suffrage movement benefited tremendously from the leadership of black women, it did not advance or include their right to vote. In fact, it took more than a half-century later for women of color to access the ballot with the passage of the Voting Rights Act of 1965.

The U.S. has a long history of denying its citizens the right to vote. ​Building a more equitable society means ensuring ​all ​people, regardless of race, gender, and socio-economic status, are able to participate in our political system. Many of our most heavily debated issues — the economy, healthcare, education, and public safety — carry tremendous consequences for those most vulnerable and with the least amount of political power.

That’s why it’s so important for girls, particularly girls of color, to be civically engaged as early as possible. Through our She Votes initiative, Girls Inc. helps girls realize the power of their voices, learn about the structure and role of the U.S. government, and even be inspired to run for elected office one day. Girls are innately powerful and, with the right opportunities and support, can grow up to be leaders and change agents in the world.

​Building a more equitable society means ensuring ​all ​people, regardless of race, gender, and socio-economic status, are able to participate in our political system.

Often overlooked in the pages of history, women of color have played an instrumental role in advancing civic engagement, voting rights, and social movements for centuries. From abolitionists like Sojourner Truth and Harriett Tubman to suffragettes and activists like Mary Church Terrell, Nannie Helen Burroughs, and Ida B. Wells, black women bravely fought for the rights of women and men long before they themselves were seen as equal citizens under the law or had the right to vote. They endured racial prejudice, discrimination, and even violence to advance justice and freedom for all. As ​educator and civil rights activist ​Nannie Helen Burroughs wrote​, “to struggle and battle and overcome and absolutely defeat every force designed against us is the only way to achieve.”

When the Voting Rights Act of 1965 was passed — making racial discrimination in voting illegal — it marked more than a century of work by black suffragists to secure voting rights for all people, which finally would include them. To this day, however, obstacles to voting still persist for black Americans and communities of color, including voter suppression, ​photo-ID requirements, early-voting cutbacks, under-resourced polls, and inadequate funding for elections.

Young people of color face additional barriers. ​Mail-in ballots, which many young people complete (as well as first-time ​voters and people of color), have been found to be rejected at a higher rate than in-person ballots, according to the U.S. Election Assistance Commission. Tougher voting rules, difficult absentee-ballot procedures, and irregular school and work schedules serve as additional obstacles to young people exercising their right to vote.

Increasing voter participation is critical for democracy. With Nov. 3 just two short months away, we must do everything we can to ensure safe, fair, and accessible elections amid the COVID-19 pandemic. Many states have begun preparations to educate people about the health risks, make polling places as safe as possible, and also encourage voting by mail. We must also urge Congress to appropriate emergency funding to support such efforts, as the funds provided in the CARES Act fall tremendously short of what is necessary.

Millions of eligible voters, many of them women and people of color, are not active in our political decision making — and we need them to be. During this year’s centennial celebration, we remember the women who paved the way for future female voters and political leaders, and the work that remains to ensure ​all​ girls and young people grow up in an equitable and just society.

Suzanne Parker is executive director of Girls Inc. of the Valley; (413) 532-6247.

Community Spotlight

Community Spotlight

By Mark Morris

Despite what she described as “shifting sands and shifting times,” Easthampton Mayor Nicole LaChapelle believes her city is more than holding its own in the face of COVID-19.

By that, she meant this community of roughly 16,000 people is moving ahead with a number of municipal projects and economic-development initiatives. And it is also undertaking several efforts, often in cooperation with other entities — such as the Greater Easthampton Chamber of Commerce — to help its business community, and especially the very small businesses that dominate the landscape, weather this intense storm.

“We’re focused on a good, basic plan that addresses infrastructure and quality of life for everyone in our city,” she said, as she addressed the former — and the latter as well.

In that first category, she listed everything from a $100 million school-building project to a $45 million mixed-use development, called One Ferry, that involves renovating old mill buildings and reworking the infrastructure in the Ferry Street area.

“Easthampton’s grit and resilience has gotten us through things like this in the past, and it’s getting us through these scary times. It’s not graceful, but we’ll still be standing at the end.”

And in the second category, she mentioned several initiatives, from small-business grants to a community-block-grant program designed to help microbusinesses, to efforts to help renters. Indeed, the city has put aside $300,000 in relief for renters; the relief begins in the fall and is meant to keep an important source of affordable housing in place.

“If you start losing renters, many of the owners will have to sell because they’ll have trouble paying their mortgages,” the mayor said, adding that there are many ripple effects from the pandemic, and the city’s strategy is to keep the ripples from gaining size and strength.

Overall, LaChapelle acknowledged that COVID-19 is forcing businesses, families, and institutions to make pivotal changes during very uncertain times, but she remains an optimist.

“Easthampton’s grit and resilience has gotten us through things like this in the past, and it’s getting us through these scary times,” she noted. “It’s not graceful, but we’ll still be standing at the end.”

Progress Report

Like other mayors BusinessWest has spoken with in recent weeks, LaChapelle said COVID-19 has certainly impacted businesses in every sector, changed daily life in innumerable ways, and even altered how city government carries out its business.

But in many respects, it hasn’t slowed the pace of progress in the city — at least when it comes to a number of important municipal and development projects, including the aforementioned school project.

Mo Belliveau

Mo Belliveau

“It’s one place where anyone who wants to do business in Easthampton can go to learn about what resources are available to them.”

The as-yet-unnamed school, located on Park Street, is an example of several elements of the city’s plan coming together. The new building will house students from pre-K through grade 8, replacing three older elementary schools in Easthampton. New road infrastructure is planned in front of the building as well, with the addition of a roundabout intersection.

LaChapelle noted that the $100 million project is slightly ahead of schedule and should be completed by late 2021 or early 2022. The roundabout will be completed this month.

Meanwhile, other projects are taking shape or getting ready to move off the drawing board. One involves River Valley Co-op, the Northampton-based food cooperative, which is currently building a 23,000-square-foot market in Easthampton on the site of the former Cernak Oldsmobile Pontiac dealership. The co-op is scheduled to open by spring or summer of next year.

Once complete, the mayor explained, River Valley will employ 60 full-time union workers with the potential to expand to nearly 100 workers in the next two years. Road improvements that will benefit the new co-op include a dedicated turning lane into the market and straightening the road in front.

“This is an area along Route 10 that has been a traffic pain point for economic development,” she said. “While it’s a $400,000 project, we expect the return to far exceed those dollars.”

Another project in the works is One Ferry, an initiative expected to bring new residents, new businesses, and more vibrancy to the city.

“In the next 18 to 24 months, this project will add quality apartments, condominiums, and office space,” LaChapelle said, adding that public infrastructure to support this project includes a roundabout that connects a residential area, the industrial park, and the mill district of Easthampton. The first building in the project, recently completed, provides space for two businesses and two apartments.

“Right now, this project is providing jobs and vitality for the area, and that will only increase,” she noted. “One Ferry is huge for our future.”

Dave Delvecchio

Dave Delvecchio

“While many restaurants in the city were affected by the virus, they’ve adapted well by doing things they didn’t do before, like offering takeout options. It’s remarkable that they’ve been able to continue to offer a service to the community, but in a different way.”

Another bright note for the future involves Adhesive Applications, which makes adhesive tapes for use in more than a dozen industries. The longtime Easthampton manufacturer is planning a 40,000- to 50,000-square-foot addition to the company, the mayor said.

The chamber and the mayor’s office are also working together on Blueprint Easthampton, a resource map designed for entrepreneurs and business people.

“It’s one place where anyone who wants to do business in Easthampton can go to learn about what resources are available to them,” said Mo Belliveau, executive director of the chamber.

According to a news release on Blueprint Easthampton, the mapping initiative will improve access to available business tools and strengthen the links between the city and the business community.

New Normal

While work continues on these projects, efforts continue to assist those businesses impacted by the pandemic. And the Greater Easthampton Chamber has played a large role in such efforts.

Prior to the pandemic, Belliveau had begun shifting the emphasis at the agency away from events and more on education and discussion-type programming. After organizing and scheduling programs for the year, stay-at-home orders went into effect in March and wiped out all those plans.

“Like so many small businesses, we at the chamber had to pivot along with our partners and find new ways to provide meaningful value to our community,” Belliveau said, adding that many of these new ways involve providing information — and other forms of support — to businesses during the pandemic.

Indeed, Easthampton received a $30,000 grant from the state attorney general’s office designed to help small businesses pay for COVID-19-related expenses and allow them to continue their operations. LaChapelle invited the chamber to be the administrator of what became the Greater Easthampton Sustaining Small Business Grant (SSBG) program. Applicants could request up to $1,500 and use the grant for buying PPE, paying their rent, or purchasing supplies needed to comply with state guidelines on reopening.

A total of 31 businesses qualified for the grants, which were to be awarded on a first-come, first-served basis. Fortunately, all 31 applicants received grant money totaling more than $43,000, thanks to donations from Easthampton-businesses Applied Mortgage, which kicked in an additional $10,000, and Suite 3, which covered the remainder of the funding requests.

“My goal going forward is to find other businesses that are able to contribute to this effort so we can do another round of funding,” Belliveau said. “The need is great, and the money from this first effort went fast.”

In addition, Easthampton and six surrounding communities recently became eligible for a $900,000 Community Development Block Grant to help microbusinesses get through the pandemic. Businesses with five or fewer employees can apply for up to $10,000 in grant money. Easthampton was the lead community in applying for the block grant.

“We have many innovative small businesses in Easthampton who still can’t reopen,” LaChapelle said. “This grant program is designed to help them stay afloat.”

Dave DelVecchio is president of Suite3, a company that provides IT services for businesses of all sizes. While most of his customer base is in Western Mass., Suite3 also has clients internationally and in several U.S. states.

As an IT service provider, DelVecchio measures success by “ticket requests,” an indication that a customer needs support. When COVID-19 started taking its toll and many businesses were shut down in March and April, ticket requests were at their lowest point. Since then, Suite3’s business has come back to pre-pandemic levels.

As a past president and current treasurer of the chamber, DelVecchio was concerned about the impact COVID-19 was having on the business community, and especially its growing portfolio of restaurants.

“While many restaurants in the city were affected by the virus, they’ve adapted well by doing things they didn’t do before, like offering takeout options,” he said. “It’s remarkable that they’ve been able to continue to offer a service to the community, but in a different way.”

He added that Easthampton has a good number of other businesses affected by COVID-19 that did not receive as much attention as the restaurants.

“Businesses such as travel agencies and professions that require personal interaction, like chiropractors and massage therapists, were also affected by the virus,” he said, noting that the SSBG and Community Development Block Grant can make a real difference for such businesses.

Coming Together

DelVecchio credits Belliveau with changing the focus of the chamber to more education without losing its important role as a provider of networking opportunities. Part of the changing organization involved moving from an annual fee model to monthly dues. While that can be a risky move, DelVecchio noted there was almost no attrition in membership.

“We are grateful that we continue to get support from the business community and they see value in the chamber,” he said, “especially at a time when expenses are being put under greater scrutiny.”

This support is another indication of how the community, which had been thriving before the pandemic, has come together to cope with a crisis that has provided a real test — or another real test — for residents and businesses alike.

As the mayor noted earlier, Easthampton’s grit and resilience has helped it survive a number of economic downturns and other challenges in the past. And those qualities will see it through this one as well.

Features

What’s New?

By Isaac C. Fleisher

It’s that time of year again. On July 20, the Cannabis Control Commission (CCC) revealed the latest round of proposed revisions to its regulations. Following a period of public comment and review, the CCC is scheduled to take a final vote on these revisions on Sept. 4.

Last year’s round of revisions made waves with two new categories of licenses (social consumption and home delivery), but this year’s revisions are more focused on the owners behind the licenses. This is not too surprising because the demographics of license ownership has become a heavily debated (and litigated) topic.

When the CCC crafted its initial regulations (way back in the halcyon days of 2018), it included provisions intended to diversify the industry, such as a fast track to licensing for economic-empowerment (EE) applicants, as well as fee waivers, training, and technical assistance for social-equity (SE) applicants. Even the new license types that were created under last year’s revisions to the regulations are initially reserved for EE and SE applicants. However, as small startups slam into the economic realities of the cannabis industry, it has revealed a tension between the need for capital and the need for equity.

The CCC’s latest round of draft revisions would require economic-empowerment applicants to satisfy at least one of the criteria related to ‘majority equity ownership’ and then report any changes of ownership and control when renewing their license. EE status is revoked if fewer than 51% of the owners meet the EE criteria. Similarly, the draft revisions specify that the various fee waivers and discounts available to SE applicants only apply to licensees with at least 51% SE ownership.

Last year’s round of revisions made waves with two new categories of licenses (social consumption and home delivery), but this year’s revisions are more focused on the owners behind the licenses.

These changes would help prevent EE and SE certification from being turned into a commodity that could be purchased by investors that were never the intended beneficiaries. However, it would also further trap EE and SE applicants in the catch-22 of needing to raise millions in investment without giving up equity to investors that don’t satisfy the EE or SE criteria.

The draft revisions also seek to tighten the definition of what constitutes ‘control’ over a cannabis business. This is significant because Massachusetts prohibits any entity from controlling more than three licenses of any type. This restriction is a substantial departure from the trend in most other states that have legalized a recreational cannabis industry, and it has become a thorn in the side for cannabis investors trying to build a diverse portfolio, as well as for large, multi-state cannabis companies that rely on economies of scale. As a result, more than a few savvy investors and entrepreneurs have utilized creative corporate structures in an attempt to circumvent the limitations on control.

In 2019, the CCC made substantial updates to its definition of control, making it clear that it was serious about enforcing the three-license cap. The current draft revisions further expand the definition of control by establishing a precise dollar amount for the types of contracts that would be evidence of control; clarifying that anybody with the power to appoint 50% of the company’s board is in control of that company, whether the board members are called directors, managers, or anything else; and, in a possible sign of the times, establishing that a person appointed as a receiver for the licensee is in a position of control.

Additionally, the revisions would redefine the threshold for when control over a parent company constitutes control over the subsidiary. In the current regulations, anybody “with a controlling interest in” the parent company is considered to have control over the subsidiary, but the revised draft would change this to anybody “having control over” the parent company. This subtle change is potentially significant, as the “controlling interest” language has generally been interpreted to relate only to an actual equity interest, while the meaning of “having control” could include people with substantial decision-making authority, even if they are not actually a majority owner. These changes may not be nearly as substantial as the 2019 overhaul of the definition of control, but the fact that the CCC felt that additional changes were necessary at all is a sign that attempts to circumvent the license cap are still happening.

One prosed change that seems to cut against the trend of tightening restrictions on ownership is the revision to the craft marijuana cooperative license, which would actually loosen the requirement that a member of the cooperative filed a profit or loss from farming in the last five years (i.e. they’re a farmer). If accepted, the revisions would allow a cooperative to satisfy this requirement by merely leasing land from such a person. There are plenty of good reasons for this change, but ultimately it likely arises from the CCC’s recognition that the requirements for a craft cannabis cooperative are so burdensome and idiosyncratic that only three applications have been submitted for this license type, and of those, only one has even received a provisional license.

With nearly 550 applications receiving provisional or final licenses, and only 122 currently authorized to commence operations (and a shameful dearth of racial or economic diversity among these licensees), it is becoming clear there is a financial bottleneck in the licensing process. Most commercial financial institutions still won’t go anywhere near the cannabis industry, and cannabis entrepreneurs must therefore rely on venture-capital financing. The result has been an increase in the number of provisional licenses being ‘flipped’ as small startups are forced to sell out to simply cover their growing debt.

This trend toward market consolidation has put the CCC’s equity provisions and ownership limitations under tremendous strain. The draft revisions address that strain by attempting to close potential loopholes in the restriction. These changes would certainly help align the letter of the law with the spirit of the law, but ultimately, they do not address the actual root of the problem.

In order to build a cannabis industry that is stable, sustainable, and diverse, much more needs to be done to lower the economic barrier of entry, such as establishing a state lending program to provide SE and EE applicants with access to financing, or even just simplifying the licensing process so that applicants aren’t forced to submit hundreds of pages of plans, policies, and procedures, only to wait over a year just to obtain a provisional license. But those changes may need to wait for 2021.

Attorney Isaac C. Fleisher is an associate with Bacon Wilson, P.C., where his practice is focused on business and corporate law, with particular emphasis on the rapidly expanding cannabis industry. An accomplished transactional attorney, he has broad experience in all aspects of business representation in legal matters ranging from mergers and acquisitions to business formation and financing; (413) 781-0560; [email protected]

Features

An Uphill Battle

By Mary Bonzagni

Federal trademark registration is viewed as an attractive form of property-rights protection for most industries. The benefits of such a registration are numerous.

A federal trademark registration serves to recast what would normally be localized common-law trademark rights into nationwide trademark rights. It provides the owner with the right to use the ® designation, to enforce the owner’s rights in federal court, and to file the trademark registration with U.S. Customs to block infringing imports. A federal registration also provides a basis for registering the trademark in foreign countries and jurisdictions.

Unfortunately, members of the cannabis industry have faced an uphill battle when trying to protect their brands on the federal level.

This article will focus on strategies for protecting trademarks used on CBD products, which may be grouped into two categories: marijuana-derived CBD products and hemp-derived CBD products.

Mary Bonzagni

Mary Bonzagni

“Unfortunately, members of the cannabis industry have faced an uphill battle when trying to protect their brands on the federal level.”

Marijuana is still treated as a controlled substance and is illegal under the Controlled Substances Act (CSA), regardless of its legality under certain state laws. As such, trademarks for marijuana-derived CBD products cannot be federally registered. The U.S. Patent and Trademark Office (USPTO) has issued trademarks for goods and services that are indirectly related to marijuana, but the closer the description of goods and services is to the sale or distribution of marijuana, the less likely it is that the UPSTO will allow the application.

Hemp was previously regulated as an illegal substance under the CSA. It was removed as an illegal substance under the Agricultural Improvement Act of 2018, also known as the Farm Act, which federally legalized hemp and hemp-derived products that contain no more than 0.3% THC (by dry weight). The 2018 Farm Act legalized CBD derived from hemp not from marijuana, so, at least for now, the federal government will view the source of the CBD as decisive in determining its legality under federal law.

To recap, marijuana-derived CBD products are illegal under federal law, and, thus, trademarks for such products cannot be federally registered. On the other hand, products infused with CBD derived from hemp, which have a low-THC content, are now legal under federal law, and the trademarks under which they are used are capable of federal registration. Being capable of federal registration, however, does not guarantee registration.

The U.S. Patent and Trademark Office’s current policy is to refuse trademarks for foods, beverages, dietary supplements, and pet treats containing hemp-derived CBD that have not been approved by the Food and Drug Administration (FDA). These goods raise lawful-use issues under the Federal Food Drug and Cosmetic Act (FDCA). Trademarks for the following goods, however, can be federally registered:

• Hemp-derived CBD products that are not consumed (e.g. salves, ointments, and skin oils) which contain less than 0.3% THC on a dry-weight basis; and

• ‘Generally recognized as safe’ (GRAS) products (e.g. hulled hemp seeds, hemp seed protein powder, and hemp seed oil). On Dec. 20, 2018, the same day the 2018 Farm Act took effect, the FDA approved the sale of hulled hemp seeds, hemp seed protein powder, and hemp seed oil, and the use of these products in human food. Therefore, trademarks for these hemp products are eligible for federal registration at the USPTO.

In addition, trademarks for hemp advocacy groups and trade associations, and for services such as consulting and advertising services and the like, can also be federally registered. It is legal for advocacy groups and trade associations to educate the public and advocate for changes in hemp and marijuana laws. Thus, the USPTO is willing to issue trademarks to those groups and to others providing services to the legal hemp industry.

Let’s assume for purposes of this article that your trademark is being used on goods that do not fall within one of the above categories, and thus your trademark cannot be federally registered. Here are some options for proceeding.

Federal Registration for Permissible Ancillary Products and/or Services

The first area to explore is whether you also sell goods or offer services that fall outside the restrictions of the CSA or FDCA. For example, do you sell goods without CBD as an ingredient, or provide a website featuring blogs and publications (e.g. articles, brochures, etc.) advocating for changes in hemp and marijuana laws, which constitute lawful goods or services? By obtaining a federal trademark registration in relation to any such lawful goods and services you provide (i.e. registering around the edges of the CSA or FDCA), you may still be able to protect your brand.

Alternatives to Federal Registration

Whether or not you pursue federal registration, you should also consider proceeding within the common-law and state-law frameworks so that you can protect your mark within your geographical trading area. You may also consider copyright protection to protect your logo or design trademark.

Common-law Trademark Rights

By using your trademark in commerce on select goods and services, you will develop common-law rights in that mark. Common-law rights are based solely on use of the mark in commerce within a particular geographic area. Your common-law rights may be used to stop infringers.

State Registrations

Another option to consider is seeking one or more state registrations for your trademark in states that recognize the legality of your goods or services. While state registrations confer the benefits of registration only within the boundaries of that state, registering on the state level can be an effective way to protect your mark and to prevent third parties from using the same or confusingly similar mark on the same or similar goods or services in that state.

Copyright Registrations

Copyright protection may constitute an alternative route to protecting your logos or design trademarks, provided they contain original authorship and are not just familiar shapes, symbols, or designs. Copyright is a form of protection provided under U.S. law to ‘original works of authorship,’ once fixed in a tangible form. A copyright registration establishes a public record of a copyright claim as well as offering several other statutory advantages.

In Conclusion

CBD-based businesses should start using their trademarks on their goods and services as soon as possible in order to establish common-law trademark rights, seek federal registration for trademark uses that are legal under the CSA and do not raise lawful-use issues under the FDCA, seek state registrations in states where trademark use occurs and where cannabis use is legal, and seek copyright registrations for eligible logo and design trademarks.

Please contact us for further information or to set up an initial consultation. We look forward to assisting you in protecting your valuable IP.Please contact us for further information or to set up an initial consultation. We look forward to assisting you in protecting your valuable IP.Please contact us for further information or to set up an initial consultation. We look forward to assisting you in protecting your valuable IP.

Mary Bonzagni is the IP partner with the Springfield-based law firm Bulkley Richardson; (413) 272-6200.

Coronavirus

Safe at Home

By Mark Morris

Keiter Homes’ ‘project of the month’

This before-and-after view of Keiter Homes’ ‘project of the month’ is just one of many jobs keeping crews busy recently.

When COVID-19 began spreading earlier this year, it forced everyone to make adjustments. Or, as Brian Rudd put it, “The pandemic lets you know how prepared you are for change.”

Rudd, owner of Vista Home Improvement, said his company handles around 700 projects every year, and keeps everything straight by following an organized process. Once the pandemic hit, those processes had to change on the fly.

“Thanks to our staff and our company culture, we were able to adapt quickly, especially in the way we interact with our customers,” Rudd said, adding that some of the changes, such as heavier reliance on technology to interact with customers and employees, will benefit the business long after coranavirus is under control.

Amid such changes, though, several home-improvement contractors who spoke with BusinessWest tell a similar story about 2020.

Specifically, they all experienced downtime in March and April; even though they were included among ‘essential’ workers, the home-improvement business suffered a severe slowdown, as most people were not comfortable with any outsiders in their home during the early months of the pandemic.

But as more precautions have been put in place, business has returned to most companies — and, in some cases, increased over last year.

Back in December, Ger Ronan, president of Yankee Home, organized what he calls a ‘mastermind’ group of 11 home-improvement companies from all over the U.S. The point of the group is to network and share ideas about what’s working and what’s not.

“In the early days of the pandemic, members of the group came together and wanted to help in any way they could,” he said. “I got lots of ideas and strategies from companies much larger than mine, and they really helped.”

Ronan expressed a common observation as to why home renovation work has picked up. With people spending so much time at home, they are looking at faded siding, worn-out roofs, and other needed repairs. On top of that, fewer people are going away on vacation this year, opting instead to invest money in their homes.

With everyone staying put, homes are simply getting more use — and attention — than in the past.

“There’s more wear and tear on rooms in the house, especially bathrooms,” he said. “Our bathroom-renovation sales are really strong.”

Scott Keiter, president of Keiter Homes, said his company is working on a wide range of home projects. From new additions to kitchens, bathrooms, and especially outdoor living spaces, he said people want to make their houses more user-friendly in this time of increased isolation.

“We’re doing a huge deck for a client who just had a swimming pool installed,” Keiter said. “Because they are spending so much time on their property, I think people are reinvesting in their homes for their own enjoyment.”

Safety First

All three contractors follow state guidelines for COVID-19 in terms of masks, sanitizing worksites, and keeping a safe distance from clients. They also emphasized the importance of safety for their employees and clients.

“Every morning, we give all of our employees the option to not work that day if they do not feel safe,” Rudd said. “That’s become part of our daily routine, and it’s worked great.”

When working on exterior projects such as siding and roofs, Keiter said, it’s fairly easy to maintain a safe distance from the homeowner.

“It’s a little more complicated when we have to work inside the home,” he said. “A simple solution like a plastic partition wall allows us to segregate our work area from the client’s living space.”

Yankee Home uses red carpets to protect clients’ floors when working inside the home. In addition to having the carpets cleaned frequently, Ronan said, project managers from his company visit every job site to make sure all safety protocols are in place.

These contractors told BusinessWest that having people at home during renovation projects was definitely a help and not a hindrance to the job. They all pointed out how much easier it is to discuss changes to a project while the owner is on site, rather than trying to reach them at work and waiting for a reply.

Ger Ronan

Ger Ronan says people have been spending more time at home — and finding more reasons to invest in their home.

“We do a lot of customization, so it’s nice to have people there so they can tell us exactly what they want,” Ronan noted.

At a recent siding and window installation, Rudd added, the homeowner appreciated the details of the work and enjoyed seeing the job from start to finish. “We love people being home because they can see the craftsmanship and what goes into the investment they’ve made with us.”

One trend developing as a result of so many couples working from home involves ‘his and her’ home-office spaces. Keiter, who builds new homes as well as additions, said he has not worked on such projects, but expects he might get requests in the near future. Long before the work-at-home explosion, his clients have wanted home-office setups either for work or to stay in touch with distant family members online.

Scott Keiter

Scott Keiter

“We’re doing a huge deck for a client who just had a swimming pool installed. Because they are spending so much time on their property, I think people are reinvesting in their homes for their own enjoyment.”

“Whether it’s a dedicated office space, flex space, or a study, many plans call for one room in the house that’s being dedicated for computer use,” he explained, noting that the next trend in home offices will likely involve upgraded wireless infrastructure. “From parents working at home to kids trying to go to school online, and all the other laptop and iPad use, I think we will be seeing more sophisticated wireless access points in the home.”

Security Blanket

Though business is booming now, Ronan predicts that the pent-up demand caused by COVID-19 will eventually dissipate, but won’t reduce business too much.

“You know the old adage of, no matter how bad the recession might be, you’ll always get your haircut,” he said. “Well, we’re not quite up there with hairdressers, but you’re always going to take care of your home.”

Rudd said 2020 reminds him of the period right after 9/11 when people saw the home as a security blanket. Similar to that time, his clients are focused on ‘nesting’ in the safety of their home — so it’s not surprising his business is up 32% over last year.

“Anything related to the home is booming,” he noted. “Friends of mine who are landscapers are having record years, too.”

Homeowners have long been advised to make renovations to their kitchens and bathrooms because money spent on those two rooms will provide the best return on investment if the house ever goes up for sale. While kitchen and bathroom renovations remain popular, Keiter said, he’s finding that people are investing in those spaces for a different reason: quality of life.

“We’re staying at home because the virus has made the world unpredictable in so many ways,” he told BusinessWest. “With all this uncertainty, putting money into our homes seems like a pretty safe bet.”

Coronavirus Law

A Stern Test

By Marylou Fabbo

With schools reopening, parents and employers will be in a difficult boat together as they attempt to juggle parenting with personal and professional responsibilities.

Parents are understandably anxious about how they will meet their obligations to both their children and their employers. Several school districts have announced hybrid returns with students alternating between attending school and remote learning. Some jobs just can’t be done from home, and some parents who would otherwise be able to work at home will be needed to help their children with remote learning (or breaking up arguments).

To make matters worse, schools that are already back in session have shown us that, despite precautions that are being taken, school-based COVID-19 outbreaks are a real concern.

Employment-law Compliance

There is no question that many parents will be working from home in some capacity once the school year starts. Businesses should keep in mind that laws that are applicable in the workplace don’t go out the door simply because the workplace has moved to an employee’s home.

Marylou Fabbo

Marylou Fabbo

“Does workers’ compensation insurance apply when an employee trips over a toy during the workday and fractures her ankle?”

For instance, Massachusetts employers must continue to make sure their employees take their 30-minute meal break and keep records of all hours worked, which may not look like the normal 9-to-5 workday. State and federal laws that require employers to provide a reasonable accommodation to disabled employees in the workplace apply to remote employees as well.

To meet these requirements, employers may need to do things such as make adjustments to equipment or the manner in which work is completed. Notices that must be posted in the workplace should be electronically distributed or mailed to an employee.

Still, there are many unanswered questions, and businesses are advised to consult with legal counsel before taking any risky actions. For example, employers are required to reimburse employees for required business-related expenses, but what does that mean when employees use their own laptops and internet for at-home work?

Does workers’ compensation insurance apply when an employee trips over a toy during the workday and fractures her ankle? How does an employer prevent and address sexual harassment in the remote workplace? Is it discriminatory to distribute extra or different tasks that can’t be done at home to older employees who no longer have kids at home? All these issues should be discussed with your employment-law advisors.

Job-protected, Paid Time Off

Not all employees will be able to work when their children are taking classes from home. Employers should be prepared to work with a reduced staff for the foreseeable future. Federal laws will provide many parents with job-protected time off when school is closed, which includes situations where some or all instruction is being provided through distance learning.

The Families First Coronavirus Response Act (FFCRA) generally requires employers to provide paid time off to employees who cannot work (or telework) because their child’s school is closed. However, it’s not enough that a child is attending class remotely. The parent must be needed to care for the child, and the child must be under 14 absent special circumstances.

Still, the FFCRA does not cover all employees or all employers. Employers with 500 or more employees are not covered by the law, while small employers and healthcare providers may be exempt from certain requirements. Also, employees who have been employed for less than a month are only eligible for a maximum of two weeks of ‘emergency sick’ leave, while employees who have been employed for at least 30 days may be able to take up to an additional 12 weeks of expanded family and medical leave (EFML), including on an intermittent basis, assuming that the leave hasn’t already been taken for other permissible purposes.

Eligible employees can earn up to $200 per day when taking childcare EFML, subject to certain maximum dollar amounts. Lawmakers in several states, including Massachusetts, are considering legislation that would fill the gaps in the FFCRA’s paid-leave provisions, and several states have already extended virus-specific paid leave. Employers whose employees aren’t eligible for protected leave will have to decide whether to allow job-protected leave or lay off or otherwise separate with the employee.

School-related Exposure

Unpredictable, illness-related absences can pose another challenge for employers and employees. Children may be exposed at school and bring the virus home.

Employees may be needed to care for their children who are ill and may even test positive themselves. The FFCRA provides up to two weeks paid time off for COVID-related illnesses. The Massachusetts paid-sick-leave statute and the FMLA may also provide employees with paid time off. Employees may also be able to take protected time off (or time at home) as a reasonable accommodation for the employee’s own disability that makes it risky for the employee to go into the office.

Plan Ahead

There’s never been a return to school quite like 2020. The only certainty is that employers could not possibly plan for all potential scenarios. Businesses should make sure they have effective remote-work policies, practices, and procedures in place, be prepared to operate with fewer employees on an intermittent and possibly long-term basis, and designate one or more people within the organization to whom management and employees can direct their questions.

Marylou Fabbo is a partner with Springfield-based Skoler, Abbott & Presser, P.C., a law firm that exclusively practices labor and employment law. She specializes in employment litigation, immigration, wage-and-hour compliance, and leaves of absence. She devotes much of her practice to defending employers in state and federal courts and administrative agencies. She also regularly assists her clients with day-to-day employment issues, including disciplinary matters, leave management, and compliance; (413) 737-4753 ; [email protected]

Senior Planning

Follow These Five Steps When It’s Time to Talk About Care

Whether your loved one needs full-time care or you’re just beginning to anticipate a need, here’s a series of steps you’ll need to take, with some thoughts on each from leading voices in the field. Just take it one step at a time.

1. Start the Conversation

“Talking with your parents about their future will not be a one‐time conversation, but an ongoing process,” says Catherine Hodder, author of Estate Planning for the Sandwich Generation: How to Help Your Parents and Protect Your Kids. “You must be patient and willing to wait until your parents feel comfortable. They will need to be ready to talk with you or to make certain decisions about their future. The hardest part will be for them to admit they need help and that you will be taking on more responsibility for them. Understand they still see you as their child who they should be helping, not the other way around. Try to feel out the right times to talk about healthcare concerns and when to talk about finances. Depending on your parents’ personalities, one may be an easier conversation than the other.”

2. Consider How Much You Can Take On

“For many, our responsibilities extend beyond the needs of our aging parents and carry over to our own families,” says Amy Osmond Cook, author of Things to Discuss with Aging Parents Before Becoming Their Caregiver. “Those obligations don’t end when a parent needs extra care. By discussing a schedule with your loved one, you can establish a balance between his needs and the needs of your family. For example, you may have a nurse stay in the home on certain days with an understanding you will take your aging parent to all of the doctor’s appointments. A routine can provide comfort to your loved one because he will know when to expect you or other helpers when care is needed.”

3. Build a Team and Make a Plan

“Family meetings are a way for siblings, parents, and other concerned relatives or friends to try to clarify the situation, work out conflicts, and set up a care plan that, ideally, all can agree upon,” says  Bonnie Lawrence, author of A Sibling’s Guide to Caring for Aging Parents. “If the meeting is likely to be contentious, or if you want an experienced, objective voice to guide it, involve a facilitator such as a social worker, counselor, geriatric care manager, or trusted outside party who will ensure that all participants have a chance to be heard. You may need more than one meeting.”

4. Discuss How You Will Pay for Care

“What is the truth about your parent’s situation — finances, health, and what they want for care?” asks Catherine Flax, author of Aging Parents and Money: Difficult Conversations That Need to Be Had. “The reality is that, when it comes to finances, most people (parents and their children) are largely in the dark. What are the rules around Social Security? How much do they currently spend on healthcare, and how do Medicare and insurance supplements work? What is the optimal, tax-efficient draw-down schedule for their retirement assets — and how far will these assets take them? Do they have other assets that they could manage to their advantage (like a home that could be downsized) to give them a higher quality of life, and would they want that?”

5. Make the Transition — and Follow Up

“Once your mother selects a place and settles in, visit frequently — by whatever means possible,” says Kerry Patterson, author of Preparing for a Crucial Conversation with an Aging Parent. “Check to see what is working and what isn’t. Where possible, make further changes to match her needs to the facility. Finally, live up to the promise you made to yourself. You meant it when you decided that you wanted what’s best for your mom/dad or loved one. Whether this turns out to be true depends a great deal on how often you make contact with him/her once she’s/he’s found a new place to live.”

Senior Planning

Start the Conversation

From the AARP FOUNDATION

The reality is that some conversations are just plain difficult — even with the people to whom you feel the closest. When preparing to discuss a difficult topic like senior care needs, it helps to follow the ground rules below to ensure that everyone’s feelings are respected and viewpoints are heard. To help make the conversation as productive and positive as possible:

1. Try not to approach the conversation with preconceived ideas about what your loved ones might say or how they might react. “Dad, I just wanted to have a talk about what you want. Let’s just start with what is important to you.”

2. Approach the conversation with an attitude of listening, not telling. “Dad, have you thought about what you want to do if you needed more help?” — as opposed to “we really need to talk about a plan if you get sick.”

3. Make references to yourself and your own thoughts about what you want for the future. Let them know they are not alone, that everyone will have to make these decisions. “Look, I know this isn’t fun to think about or talk about, but I really want to know what’s important to you. I’m going to do the same thing for myself.”

4. Be very straightforward with the facts. Do not hide negative information, but also be sure to acknowledge and build on family strengths. “As time goes on, it might be difficult to stay in this house because of all the stairs, but you have other options. Let’s talk about what those might be.”

5. Phrase your concerns as questions, letting your loved ones draw conclusions and make the choices. “Mom, do you think you might want a hand with some of the housekeeping or shopping?”

6. Give your loved ones room to get angry or upset, but address these feelings calmly. “I understand all this is really hard to talk about. It is upsetting for me, too. But it’s important for all of us to discuss.”

7. Leave the conversation open. It’s okay to continue the conversation at another time. “Dad, it’s OK if we talk about this more later. I just wanted you to start thinking about how you would handle some of these things.”

8. Make sure everyone is heard — especially those family members who might be afraid to tell you what they think. “Susan, I know this is really hard for you. What do you think about what we are suggesting?”

9. End the conversation on a positive note. “This is a hard conversation for both of us, but I really appreciate you having it.”

10. Plan something relaxing or fun after the conversation to remind everyone why you enjoy being a family. Go out to dinner, attend services together, or watch a favorite TV program.

These are just a few suggestions of things you, your loved ones, and other family members can do to unwind after a difficult conversation.

Senior Planning

Having the Talk

From VISITING ANGELS

Here are sample conversation starters and strategies to introduce home-care services to your loved one. Each scenario is a catalyst to take action and start talking. Prior to talking, prepare and arrange with a reliable friend or your spouse to take part in the plan.

SCENARIO: Your loved one mentions plans to drive to the grocery store. He’s shown signs of unsafe driving (getting lost or confused or unexplained dents on the car). Coordinate with a trusted neighbor, friend, or spouse to serve as a driver for one trip. 

SAY: “I see you’re planning to go to the grocery store.  I think it would be a great idea to ride with [the neighbor/friend/spouse] next time or even hire a professional who can take you where you need to go. You could tell her exactly where you want to go, and she’ll get you there. You’d be in control.”

SCENARIO: You noticed your mom or dad isn’t eating.  

SAY: “I don’t have the time to stay and cook tonight, but [neighbor/friend/spouse] loves to cook, and said she would love to cook with you tomorrow night, and she won’t have to leave early. Then you won’t have to worry about making dinner, and the family will feel good knowing someone’s with you to help you out in the kitchen. You can tell them what you’d like to eat, and you’ll be in total control. Let’s at least try it and talk about it afterward to see if it’s an arrangement you’d like.”

SCENARIO: Your loved one forgets to take her medicine repeatedly. (Alert the doctor first.)

SAY: “I’m worried that you forgot to take your medicine again. I spoke with your doctor, and he’s especially concerned about missing doses. He suggested we find a way prevent it from happening. I thought a professional caregiver would be really helpful. Let’s at least give it a try and see how you like it. Then we can talk about it and see if it’s something you want going forward.”

SCENARIO: Your elderly loved one is struggling to get dressed, whether it’s a fall or a misbuttoned shirt. You’ve realized they need help in the bedroom to get dressed.

SAY: “I’ve noticed you’re wearing the same clothes again. What if we got you a helper for the mornings — someone who can stop by and help get you ready for the day? She could even do a load of laundry or two; that’s completely on your terms. Think of how nice it’ll be knowing there’s one less thing you have to do. Mind if we give this a try?”

SCENARIO: You notice a high pile of dishes in the kitchen sink. 

SAY: “I know you care about keeping your place clean and tidy. But your dishes have piled up again, and the kitchen’s getting dirty. I’ll help you get those done, but what if we explored getting someone in here to keep the dishes done and the place clean? We’d love to take that off your plate, and then everyone can feel good knowing your house is clean and the way you like it. Let’s at least give it a try and go from there.”

Senior Planning

Understand the Difference, and Seek Help If It’s Needed

By Beth Cardillo

As Baby Boomers are getting older and representing the largest age group, the questions concerning dementia, as opposed to normal aging, continue to crop up in medical offices.

In the Greater Springfield area, 16.9% of residents over age 65 are living with a diagnosis of Alzheimer’s disease or other related dementia. The national average is 13.6%.

Someone develops Alzheimer’s disease every 68 seconds, with 5 million Americans affected, and the number expected to increase to 20 million by 2050.

Given these numbers, it’s understandable when loved ones become concerned when they notice a family member having memory issues. It’s also understandable when people start to wonder themselves if they a problem. So how does one know if it’s dementia or simply normal aging?

“Someone develops Alzheimer’s disease every 68 seconds, with 5 million Americans affected, and the number expected to increase to 20 million by 2050.”

Let’s discuss normal aging first, so you can have a sigh of relief. We all have occasional word-finding difficulties, but you can come up with the word given a bit of time. Not remembering someone’s name if you don’t see them often, or see them out of context, is normal. That is something we all do. Misplacing an item, but having the ability to retrace your steps and locate the item, is also normal. How many times do we all walk into a room and not remember why, then walk out and immediately remember, ‘oh yeah, I was getting the book I left on the couch’?

Rest assured, these are all normal signs of aging. Have any of you purchased ‘the tile’ so you can keep track of your keys, work keys, iPad, and whatever else you need? It can even help you find where you parked your car, which is extremely helpful in New York City, where there’s alternate parking every day.

What isn’t normal is having new problems finding words when speaking or writing (more than being on the tip of your tongue) and you just can’t bring them up. Or forgetting things more often, such as appointments, events, and your way around familiar places. Perhaps you can’t remember or keep up with conversations, books, movies, or newspapers. Are you stopping in the middle of the conversation because you can’t remember what was just said, or the thread of the conversation?

Also, are decisions harder to make? Is your judgment a bit skewed? Are friends and families asking if you are OK? Are you showing up to people’s homes or appointments on the wrong date? Is your mood and behavior a bit unstable or unpredictable? Are you withdrawing from social activities because you don’t want people to notice that you are having difficulty, but instead they notice you aren’t showing up?

These are symptoms of mild cognitive impairment, a precursor to a full dementia diagnosis.

There are more than 100 types of dementia. People are very reluctant to use the ‘A’ word. They quickly point out it’s not Alzheimer’s or they have just “a little bit of dementia.” The reality is that Alzheimer’s disease accounts for approximately 75% of all dementias. It could be vascular dementia, frontotemporal lobe dementia, Parkinson’s disease, or the 97 other types, and often they are concurrent. If you feel like this could be you, contact a neurologist, or a neuropsychologist, or the Alzheimer’s Assoc. at (413) 787-1113.

Today, there is no cure, but there are medications that can slow down the progression of the disease. Diet, exercise, genetics, and co-morbidities all play a part in the diagnosis, and it is said that those physiological changes could be forming in the brain 10 to 20 years before the actual symptoms start to show. There is no shame in asking for help if you feel you may have increased symptoms or you suspect them in a loved one.

On a side note, worth mentioning is that COVID-19 has wreaked havoc with the senior population, and the virus could be a new type of dementia. It has many side effects consistent with dementia if the virus has traveled to the brain. People are experiencing physiological and neurological changes within the brain, causing confusion, seizures, emotional dysregulation, and strokes that are having long-term effects.

Beth Cardillo, M.Ed., LSW, CDP is a licensed social worker, certified dementia practitioner, and executive director of Armbrook Village, and has worked in the dementia field for more than 20 years. Previous to working with dementia, she opened the nation’s first state-funded traumatic brain injury program in Westfield. She was named Western New England Social Worker of the Year in 2016, and was the 2019 Friends of the Alzheimer’s Assoc. Honoree of the Year; [email protected]; www.armbrookvillage.com

Senior Planning

How Will You Know If Your Older Parents Need Help?

By Brenda Labbe

Many experience aging as a joyful time in their life, filled with retirement, travel, and spending more time with family. But for some, aging represents a series of losses — loss of employment, health and energy, friends, mobility, and independence.

As such, it is not uncommon for older adults to resist reaching out for help. To help start the conversation, we have listed some common signs that might indicate your loved one may need some extra support.

“Stacks of unopened mail, late-payment notices, unfilled prescriptions, and the lack of general upkeep of the house can all be signs that your loved one may need someone to assist with bill paying or homemaking.”

1. Neglecting household responsibilities. Stacks of unopened mail, late-payment notices, unfilled prescriptions, and the lack of general upkeep of the house can all be signs that your loved one may need someone to assist with bill paying or homemaking. Lack of interest in eating or preparing nutritious food and/or lack of food in the home can be a sign that they may need help with grocery shopping or meal prep.

2. Frequent falls. If your loved one experiences frequent falls or you have observed new bruises on their face or body, chances are they should be evaluated by their physician for illness, dehydration, or infections, or X-rayed for fractures. Other items that can increase the risk for falls include the lack of proper medication management and the lack of proper safety equipment in the home. You may want to consider having a safety evaluation of the home to look for any other factors that may be contributing to their falls.

3. Unsafe driving. As our bodies slow down in the aging process, so too will our reflexes, which can make driving even more difficult. Observe your loved one’s car for new scrapes, scratches, dings, or missing mirrors. Avoiding driving or not being able to tolerate any changes in directions may indicate some cognitive changes which signal that now might be the time to consider transportation assistance.

4. Listen for clues in conversation. Many seniors will state they do not want to burden their busy adult children with requests for help. They describe feeling foolish for not being able to keep up with cleaning, medications, or repairs. However, if you listen closely, you may hear repeated areas of concern. Your loved one’s close friends or neighbors may also have input to offer, if asked in confidence.

Finally, consider the old adage “it is all in how you wrap the gift.” In this case, the gift is the offer of help and support. Try asking the question in a manner that is non-threatening and neutral. For example: “gosh, I would be so overwhelmed if I got all this mail — how about I help you go through it?”

Unfortunately, many people will experience a traumatic event before realizing that they need assistance. One way to help better prepare for any emergencies is to monitor your loved one’s physical and mental abilities and start researching care options before you need them. Greater Springfield Senior Services is your local resource to find help, support, and care for your loved one.

Call our office Monday through Friday, 8 a.m. to 5 p.m., and ask to speak with one of our highly trained information and referral specialists to find out more. Knowledge is power, and we are here to help.

Brenda Labbe is the caregiver specialist at Greater Springfield Senior Services and specializes in assisting caregivers in accessing respite and support services for their loved ones.

Senior Planning

It’s Important to Understand Your Alternatives

By Eric Aasheim

Moving from home to a senior-living community is one of the most consequential decisions elder loved ones may be faced with in their lifetimes.

The move is usually permanent; is unfortunately often made in crisis mode or under duress, and involves a host of emotional and psychological implications around declining physical capabilities, perceived loss of independence, and financial worry.

“Moving from home to a senior-living community is one of the most consequential decisions elder loved ones may be faced with in their lifetimes.”

Knowing the answers to these commonly asked questions will help seniors and their adult children plan ahead and ultimately put themselves in a position to make thoughtful and informed decisions about the most appropriate living and care options for their needs.

What is the difference between independent living, assisted living, memory care, and skilled nursing?

Independent living (IL) is intended for seniors who do not need assistance or supervision with independent activities of daily living (IADLs) like showering, dressing, toileting, eating, or transferring (mobility, bed to standing, sitting to standing, etc.).

Most IL communities provide apartments with full kitchens, and the monthly fee includes one main meal per day in the dining room. Independent living in Western Mass. ranges from $2,000 to $5,000 per month.

Assisted living (AL) communities are appropriate for seniors who require some level of assistance with two or more IADLs and help with medication management; apartments are typically equipped with a kitchenette only because the monthly fee includes three restaurant-style meals per day. Assisted living in Western Mass. ranges from $4,000 to $9,000 per month.

Memory care (MC) is intended for individuals who have dementia, Alzheimer’s, or other neurogenerative diseases and require an intensive or specialized program of care and supervision. Memory-care communities are secure settings with passcode entrances and enclosed outdoor spaces to keep residents on site, and can be stand-alone facilities or a separate wing or ‘neighborhood’ within a traditional assisted-living community. Memory-care communities most often provide private studio or shared companion suites for their residents. Memory care in Western Mass. ranges from $3,500 (companion suites) to $11,000 per month.

Skilled-nursing facilities (SNFs) are licensed healthcare residences for individuals who require a higher level of medical care than can be provided in an AL setting. Skilled-nursing staffs consisting of RNs, LPNs and CNAs (certified nursing assistants) provide 24-hour medical attention for their long-term and short-term rehabilitation residents. While private rooms are available in many SNFs, shared living arrangements with two or three residents to a hospital-style room are much more common. Skilled-nursing facilities in Western Mass. range from $250 to more than $500 per day.

Can I receive care at home rather than moving to a senior-living community?

Absolutely. There are any number of quality home-care companies that can provide a wide range of custodial and healthcare services in the comfort of your own home. Home care is often referred to as non-skilled care (grooming, dressing, bathing, cleaning, and other everyday tasks) and home health care as skilled care (skilled nursing and therapy).

Seniors who are largely independent but can benefit from limited home care or home-healthcare services may choose to continue living in their homes as long as these services help them do so safely. Unless you hire a full-time live-in, skilled and non-skilled care are typically provided for only a few hours per day a few days per week, meaning family members often are called upon to supplement the home-care schedule on their own.

Seniors who are at risk for (or have experienced) frequent falls or who require consistent overnight supervision or assistance may find that moving to an assisted-living community provides them with a more secure living environment.

The choice between home care and senior living is highly personal and almost always comes down to a question of safety, location, the desire and need for socialization, and finances.

What is a continuing-care retirement community (CCRC), and what are the benefits compared to other senior-living communities?

Continuing-care retirement communities (CCRCs) are senior-living communities that offer a complete continuum of care (IL, AL, MC, and SNF), usually on a single campus. The primary benefit of a CCRC is that you can stay in the same community and never have to move, even as your care requirements change as you age. CCRCs (also referred to as life-plan communities) do typically require a substantial up-front community fee that can range from $10,000 to $300,000 or more depending on the community, the structure of the life-care plan, and the size and type of apartment.

Many CCRCs offer declining, refundable options that can return 70% to 90% of the up-front community fee to the resident when he or she moves, or to her estate when the resident passes away. CCRCs do still charge monthly fees, but they are often lower and increase less from one level of care to the next than traditional senior-living communities. CCRCs also offer a potential tax-deduction benefit that many non-CCRCs do not provide.

Will my health insurance cover the cost of assisted living or memory care? What if I am eligible for Medicaid?

Medicare and private insurance plans do not cover the cost of assisted living or memory care. Medicare will cover short-term and intermittent home care or rehabilitation stays in a SNF following hospitalization, but will not pay for either long-term. Seniors generally must pay for assisted living, memory care, and home care privately unless they have long-term-care insurance with benefits specifically designed to cover these services.

Qualifying veterans and their spouses may be eligible for the aid and attendance benefit from the VA to help pay for the cost of assisted living, memory care, home care, and skilled-nursing facilities.

Some, but not most, assisted-living and memory-care communities do participate in programs administered by Medicare and Medicaid that are designed for low-income seniors who could otherwise not afford senior-living communities.

Medicaid does cover the cost of long-term care in Medicaid-certified skilled-nursing facilities and home healthcare services for recipients who would qualify for nursing-home care.

What other senior-living and care options are there?

• Residential care facilities (also called rest homes) provide meals, housing, supervision, and care for seniors who need assistance with activities of daily living but don’t yet require skilled nursing care.

• Congregate housing is a shared-living environment that combines housing, meals, and other services for seniors but does not provide 24-hour care or supervision. Public congregate housing is administered by municipal housing authorities and is partially subsidized by the state and federal government.

• Adult foster care is an alternative to residential care and matches seniors who can no longer live on their own with individuals or families who provide room, board, and personal care in their homes.

• Respite care is short-term care and supervision provided for seniors at home or in assisted-living or skilled-nursing facilities to provide family members who need some time off from their caregiver duties.

• Adult day health programs (also called adult day care) provide a wide array of community-based services for seniors during the day (skilled nursing, supervision, direct care, nutrition and dietary services, and therapeutic, social, and recreational activities) so that family members can work or attend to other responsibilities.

• Hospice care is available for individuals with life-threatening illnesses or a life expectancy of six months or less and can be provided in the home, in assisted-living or skilled-nursing facilities, in the hospital, or in specialized hospice facilities. When curative treatment is no longer an option, hospice professionals work to make a patient’s life as dignified and comfortable as possible and provide critical emotional and spiritual support services to the patient and family members.

How have senior-living and care options been impacted by COVID-19?

In short, the impact has been profound, and the ‘new normal’ is taking shape as we speak. Most home-care providers and senior-living communities have resumed services to current and new clients at some level. However, the provision of these services is governed by strict protocols to protect the health and safety of residents, staff, and family members.

For instance, many assisted-living communities are not currently offering in-person tours and assessments and instead facilitating these interactions virtually. Since most senior-living communities are observing social-distancing guidelines, new residents must quarantine for 14 days after move-in, and residents are dining in their apartments rather than in the community dining room. Social activities and outings have largely been modified or canceled, and visits from family members have been curtailed for the time being.

Eric Aasheim is a certified senior advisor and owner of Oasis Senior Living of Western Massachusetts. He assists seniors and family members through the entire process of transitioning from home to senior-living communities in Hampden, Hampshire, and Berkshire counties and surrounding areas.

Senior Planning

Some Questions and Answers About Home-care Services

By Tania Spear

What is home care?

Home-care services are delivered to clients wherever they call home. There is a wide variety of assistance available, including everything from occasional help with housekeeping, meal preparation, companionship, and errands to skilled services such as nursing, physical therapy, occupational therapy, speech therapy, and hospice care. The goal is to support clients who prefer to remain at home, but need care that cannot easily or effectively be provided by family or friends.

Who provides home care?

Home-care services can be provided by an agency or an individual. Support can be provided from one hour to up to 24 hours a day, 365 days per year. There are many reputable agencies in the area. Your physician, area Council on Aging, hospital-discharge planner, or geriatric-care manager will be able to refer you to a home-care provider most appropriate to assist you.

“The goal is to support clients who prefer to remain at home, but need care that cannot easily or effectively be provided by family or friends.”

How do I pay for home-care services?

Government and private insurance may pay for services under specific circumstances such as after a recent hospitalization when skilled nursing or therapy services are needed. Ongoing assistance with activities of daily living (bathing, dressing, feeding, etc.) and housekeeping are generally not covered by insurance and are often private pay. It would be best to contact your provider for more information.

Are there benefits to using an agency?

While you may pay more using an agency caregiver, there are some advantages. An agency will offer pre-screening of workers, liability protection, workers’ compensation, and backup care in the event a particular caregiver isn’t available. An agency handles scheduling, payroll, and taxes, resulting in less paperwork.

How do I evaluate a home-care agency?

You will want to know if the agency works with you to develop a written plan of care and/or service contract and, if so, how often it is updated. How does the agency screen and evaluate employees? Are caregivers and supervisors available 24/7/365? How does the agency resolve concerns or complaints? Can the agency provide a list of local references?

What about COVID-19?

While accepting help at home from an agency may cause some fear during the pandemic, there are some things to consider that may help make you feel more confident in your decision to refuse or accept care as well as minimize risks. First, you want to assess the need for care. For many, care is essential, and refusing assistance in not an option. If you’ve determined help is necessary, check with the agency to determine what infection-control protocols are in place and if the agency has enough personal protective equipment (PPE) available. In addition to following CDC guidelines, you may want significant details related to how the agency is protecting staff and clients.

Are there any other things I should consider before receiving home care?

If a client or family hasn’t ever had help at home in the past, it can create some distress. The loss of independence and privacy can be factors. Oftentimes, if a competent caregiver with the right skills is placed, even the most seemingly resistant client may begin to look forward to the caregiver visits. Establishing expectations based on an appropriate plan of care and a goal for each visit is important for both the client and caregiver. With the right blend of care and compassion, a bit of support can make a world of difference in allowing someone who wishes to remain home to stay safe and healthy.

Tania Spear, MSN, MBA, RN is the owner and administrator of Silver Linings Home Care, LLC. She is a registered nurse and an Elms College graduate with a master of science degree in nursing and health services management and an MBA in healthcare leadership; (413) 363-2575; [email protected]

Senior Planning

Eight Tips for Medication Management for Seniors

By Kara James

In general, as we age, our need for a variety of medications increases. This includes everything from prescriptions to over-the-counter medications, as well as vitamins and supplements.

Unfortunately, as the number of remedies we take increases, so too does the difficulty in managing them, which can lead to problems such as potential interactions and missed doses. Here are eight tips to help properly manage medications.

1. Check for interactions. Talk to your pharmacist and let them know about all the medications you are taking, including natural remedies and over-the-counter products. Your pharmacist can let you know in advance about any potential for interactions that could have serious health consequences.

“As the number of remedies we take increases, so too does the difficulty in managing them, which can lead to problems such as potential interactions and missed doses.”

2. Make a written schedule. It’s important to take medications as prescribed so they work effectively. Write down which medications you need to take, and at what time of day (morning, noon, evening, or bedtime). Be sure to include any important reminders, such as if you are supposed to take a medication with food or on an empty stomach. Keep this schedule in a visible place. Use an alarm to set reminders, if necessary, to stay on schedule.

3. Pre-sort medications weekly. A pill organizer makes it easy for you to see what medications you need to take and when, and also lets you easily see if you already took a dose so you don’t accidentally take it twice. Our MediBubble medication-management system does this for you with monthly pill-pack organizers.

4. Create a comprehensive list. Make a list of all your medications and supplements and keep it on your phone or in your wallet for easy reference. Include the medication name, dosage, frequency, and purpose.

5. Store medications appropriately. Many people store their medications in the bathroom; heat and humidity can cause medications to degrade. They should be kept in a cool, dark place, out of the reach of children.

6. Ensure accessibility. Some seniors struggle with opening child-proof bottles, so make sure you can actually access the medications you need to take. If you must put them in another container, make sure the container is labeled with the medication name, dosage, and other instructions.

7. Understand side effects. Make sure you understand the potential side effects of medications you take, and be sure to let your provider know if you experience any that are serious. They can often provide advice or change the medication or dosage to minimize issues. You can also talk to your pharmacist with questions and concerns about side effects.

8. Plan ahead for refills. Make sure you order refills well in advance to avoid missed doses. Some pharmacies now offer medication-management programs allowing for routine refilling of your prescriptions, and will notify you when your refill is ready. n

Kara James, Ph.D. is pharmacy manager and co-owner of Louis & Clark Pharmacy in Springfield.

Senior Planning

Many Options Are Available for Seniors and Their Families

From the NATIONAL INSTITUTE ON AGING

Many older adults and caregivers worry about the cost of medical care. These expenses can use up a significant part of monthly income, even for families who thought they had saved enough.

How people pay for long-term care — whether delivered at home or in a hospital, assisted-living facility, or skilled-nursing facility — depends on their financial situation and the kinds of services they use. Often, they rely on a variety of payment sources, including personal funds, government programs, and private financing options.

Out of Pocket

At first, many older adults pay for care in part with their own money. They may use personal savings, a pension or other retirement fund, income from stocks and bonds, or proceeds from the sale of a home.

“How people pay for long-term care — whether delivered at home or in a hospital, assisted-living facility, or skilled-nursing facility — depends on their financial situation and the kinds of services they use.”

Professional care given in assisted-living facilities and continuing-care retirement communities is almost always paid for out of pocket, though Medicaid may pay some costs for people who meet financial and health requirements.

Medicare

Medicare is a federal government health-insurance program that pays some medical costs for people age 65 and older, and for all people with late-stage kidney failure. It also pays some medical costs for those who have gotten Social Security Disability Income (discussed later) for 24 months. It does not cover ongoing personal care at home, assisted living, or long-term care.

Medicaid

Some people may qualify for Medicaid, a combined federal and state program for low-income people and families. This program covers the costs of medical care and some types of long-term care for people who have limited income and meet other eligibility requirements.

Program of All-Inclusive Care for the Elderly (PACE)

PACE is a Medicare program that provides care and services to people who otherwise would need care in a nursing home. PACE covers medical, social-service, and long-term-care costs for frail people. It may pay for some or all of the long-term-care needs of a person with Alzheimer’s disease. PACE permits most people who qualify to continue living at home instead of moving to a long-term care facility. There may be a monthly charge.

State Health Insurance Assistance Program (SHIP)

SHIP, the State Health Insurance Assistance Program, is a national program offered in each state that provides counseling and assistance to people and their families on Medicare, Medicaid, and Medicare supplemental insurance (Medigap) matters.

Department of Veterans Affairs

The U.S. Department of Veterans Affairs (VA) may provide long-term care or at-home care for some veterans. If your family member or relative is eligible for veterans’ benefits, check with the VA or get in touch with the VA medical center nearest you. There could be a waiting list for VA nursing homes.

Social Security Disability Income (SSDI)

This type of Social Security is for people younger than age 65 who are disabled according to the Social Security Administration’s definition. For a person to qualify for Social Security Disability Income, he or she must be able to show that the person is unable to work, the condition will last at least a year, and the condition is expected to result in death. Social Security has ‘compassionate allowances’ to help people with Alzheimer’s disease, other dementias, and certain other serious medical conditions get disability benefits more quickly.

Private Financing Options for Long-term Care

In addition to personal and government funds, there are several private payment options, including long-term-care insurance (see story on this page), reverse mortgages, certain life-insurance policies, annuities, and trusts. Which option is best for a person depends on many factors, including the person’s age, health status, personal finances, and risk of needing care.

Reverse Mortgages for Seniors

A reverse mortgage is a special type of home loan that lets a homeowner convert part of the ownership value in his or her home into cash. Unlike a traditional home loan, no repayment is required until the borrower sells the home, no longer uses it as a main residence, or dies.

There are no income or medical requirements to get a reverse mortgage, but you must be age 62 or older. The loan amount is tax-free and can be used for any expense, including long-term care. However, if you have an existing mortgage or other debt against your home, you must use the funds to pay off those debts first.

Trusts

A trust is a legal entity that allows a person to transfer assets to another person, called the trustee. Once the trust is established, the trustee manages and controls the assets for the person or another beneficiary. You may choose to use a trust to provide flexible control of assets for an older adult or a person with a disability, which could include yourself or your spouse. Two types of trusts can help pay for long-term-care services: charitable remainder trusts and Medicaid disability trusts.

Life-Insurance Policies for Long-term Care

Some life insurance policies can help pay for long-term care. Some policies offer a combination product of both life insurance and long-term-care insurance.

Policies with an ‘accelerated death benefit’ provide tax-free cash advances while you are still alive. The advance is subtracted from the amount your beneficiaries will receive when you die.

You can get an accelerated death benefit if you live permanently in a nursing home, need long-term care for an extended time, are terminally ill, or have a life-threatening diagnosis such as AIDS. Check your life-insurance policy to see exactly what it covers.

You may be able to raise cash by selling your life-insurance policy for its current value. This option, known as a ‘life settlement,’ is usually available only to people age 70 and older. The proceeds are taxable and can be used for any reason, including paying for long-term care.

A similar arrangement, called a ‘viatical settlement,’ allows a terminally ill person to sell his or her life-insurance policy to an insurance company for a percentage of the death benefit on the policy. This option is typically used by people who are expected to live two years or less. A viatical settlement provides immediate cash, but it can be hard to get.

Using Annuities to Pay for Long-term Care

You may choose to enter into an annuity contract with an insurance company to help pay for long-term-care services. In exchange for a single payment or a series of payments, the insurance company will send you an annuity, which is a series of regular payments over a specified period of time. There are two types of annuities: immediate annuities and deferred long-term-care annuities.

Senior Planning

Five Things to Know About Long-term-care Insurance

By ELLEN STARK for the AARP BULLETIN

By the time you reach 65, chances are about 50/50 that you’ll require paid long-term care (LTC) someday. If you pay out of pocket, you’ll spend $140,000 on average. Yet you probably haven’t planned for that financial risk. Only 7.2 million or so Americans have LTC insurance, which covers many of the costs of a nursing home, assisted living, or in-home care — expenses that aren’t covered by Medicare.

“Long-term care is the unsolved problem for so many people,” said Christine Benz, director of Personal Finance at Morningstar, an investment research firm in Chicago. Here’s what you need to know about long-term-care insurance today.

1. Traditional policies have fewer fans. For years, long-term-care insurance entailed paying an annual premium in return for financial assistance if you ever needed help with day-to-day activities such as bathing, dressing, and eating meals. Typical terms today include a daily benefit for nursing-home coverage, a waiting period of about three months before insurance kicks in, and a maximum of three years’ worth of coverage.

“This is a classic story of market failure. No one wants to buy insurance, and no one wants to sell it.”

But these stand-alone LTC policies have had a troubled history of premium spikes and insurer losses, thanks in part to faulty forecasts by insurers of the amount of care they’d be on the hook for. Sales have fallen sharply. While more than 100 insurers sold policies in the 1990s, now fewer than 15 do. “This is a classic story of market failure,” said Howard Gleckman, a senior fellow at the Urban Institute, a nonpartisan think tank in Washington, and the author of Caring for Our Parents. “No one wants to buy insurance, and no one wants to sell it.”

2. You might not need insurance  …  but you need a plan. Premiums for LTC policies average $2,700 a year, according to the industry research firm LifePlans. That puts the coverage out of reach for many Americans. (One bright spot for spouses: discounts for couples are common —  typically 30% off the price of policies bought separately.)

If your assets are few, you may eventually be able to cover LTC costs via Medicaid, available only if you’re impoverished; if you have lots of money saved, you likely can pay for future care out of pocket. But weigh factors other than cash: do you have home equity you could tap? Nearby children who can be counted on to pitch in? Or do you have a family history of dementia that puts you at higher risk of needing care?

3. There’s a new insurance in town. As traditional LTC insurance sputters, another policy is taking off: whole life insurance that you can draw from for long-term care. Unlike the older variety of LTC insurance, these ‘hybrid’ policies will return money to your heirs even if you don’t end up needing long-term care. You don’t run traditional policies’ risk of a rate hike because you lock in your premium up front. If you’re older or have health problems, you may be more likely to qualify.

4. But old-school policies are cheaper. If all you want is cost-effective coverage — even if that means nothing back if you never need help — traditional LTC insurance has the edge. “Hybrid policies are usually two to three times more expensive than traditional insurance for the same long-term care benefits,” said Scott Olson, an insurance agent and co-owner of LTCShop.com in Camano Island, Wash. With hybrids, you’re paying extra just for the guarantee of getting money back.

A hybrid policy may make the most sense if your alternative is to use your savings, or if you have another whole-life policy with a large cash value.

5. Speed and smart shopping pay off. If you want insurance, start looking in your 50s or early 60s, before premiums rise sharply or worsening health rules out robust coverage. “Every year you delay, it will be more expensive,” Olson said. Initial premiums at age 65, for example, are 8% to 10% higher than those for new customers who are 64.

As for where to shop, seek out an independent agent who sells policies from multiple companies rather than a single insurer. For extra expertise and a wider choice of policies, Olson suggests looking for agents able to sell what are known as long-term-care partnership policies — part of a national program that has continuing-education requirements for insurance professionals.

Ellen Stark, a former deputy editor of Money, has written about personal finance for more than 20 years.

Senior Planning

Consider These Important Estate-planning Documents

By KEN COUGHLIN

Making sure you have the right estate-planning documents is one of the simplest ways to have a positive impact on your family’s future. Proper planning ensures that your wishes will be followed and that your family will have less to worry about after you are gone.

Estate planning does not need to be difficult; a few documents can make a big difference. Here are the five legal documents, in order of priority, that everyone should have in place:

1. Durable Power of Attorney. This appoints one or more people to act for you on financial and legal matters in the event of your incapacity. Without it, if you become disabled or even unable to manage your affairs for a period of time, your finances could become disordered and your bills not paid, and this would create a greater burden on your family. They might have to go to court to seek the appointment of a conservator, which takes time and money, all of which can be avoided through a simple document.

“Estate planning does not need to be difficult; a few documents can make a big difference.”

2. Healthcare Proxy and Medical Directive. Similar to a durable power of attorney, a healthcare proxy appoints an agent to make healthcare decisions for you when you can’t do so for yourself, whether permanently or temporarily. Again, without this document in place, your family members might be forced to go to court to be appointed guardian. Include a medical directive to guide your agent in making decisions that best match your wishes.

3. HIPAA Release. While the healthcare proxy authorizes your agent to act for you on health care matters, you may appoint only one person at a time. It may be important for all of your family members to be able to communicate with healthcare providers. A broad HIPAA release — named for the Health Insurance Portability and Accountability Act of 1996 — will permit medical personnel to share information with anyone and everyone you name, not limiting this function to your healthcare agent.

4. Will. Your will says who will get your property after your death. However, it’s increasingly irrelevant for this purpose, as most property passes outside of probate through joint ownership, beneficiary designations, and trusts. Yet, your will is still important for two other reasons. First, if you have minor children, it permits you to name their guardians in the event you are not there to continue your parental role. Second, it allows you to pick your personal representative (also called an executor or executrix) to take care of everything having to do with your estate, including distributing your possessions, paying your final bills, filing your final tax return, and closing out your accounts. It’s best that you choose who serves in this role.

5. Revocable Trust. A revocable trust is icing on the cake and becomes more important the older you get. It permits the person or people you name to manage your financial affairs for you as well as avoid probate. You can name one or more people to serve as co-trustee with you so that you can work together on your finances. This allows them to seamlessly take over in the event of your incapacity. Revocable trusts are not as simple as the prior four documents because there are many options for how they can be structured and what happens with your property after your death. Drafting a trust is more complicated, but also more nuanced, giving you more say about what happens to your assets.

Unless your situation is complicated, these documents are straightforward, and the process to create them is not difficult. By drafting an estate plan, you can save your family a great deal of strife, difficulty, and cost at an already-tough time.

Ken Coughlin is editorial director of ElderLawAnswers.

Senior Planning

Five Steps to Take When Your Parents Need Assisted Living

By MERRITT WHITLEY

Many families look to assisted-living facilities to provide essential care and peace of mind when it comes to their aging parents. Finding the best senior-living community means matching your parents’ needs, lifestyle, and budget with communities in their desired area. The process is easiest and most successful when you ask the right questions, prepare, and have open conversations with your family.

If you’ve noticed signs your parents need help, it may be time to look for assisted-living options. Follow these six steps to find the right senior-living facility for your parents.

Determine Cost and Payment Options

Decide what your family can afford on a monthly basis, and look for assisted-living communities that fit your budget. Some people have savings or long-term-care insurance to help fund senior living, while tthers need to be creative. You may consider options such as Social Security, VA benefits, cashing out a life-insurance policy, selling a home, or reverse mortgage to help pay for care.

Have a Conversation with Your Aging Parents

You can do much of the legwork for your parents, but have regular discussions with them about their desires and preferences. When you have a list of options ready, talk to them about communities you think are a good fit and why you like them. The more your parents know and are involved, the smoother their transition to senior living will be.

Visit or Virtually Tour a Community

No amount of time spent viewing brochures, floor plans, photos, or reviews can substitute for an in-person visit to or virtual tour of an assisted-living community. Visit at least three communities for comparison. Schedule visits for you and your parent, and try to tour during mealtimes. This allows you to interact with staff and residents, and sample the food. Overall, you’ll get a good feel for the environment and culture of the community.

Consult a Variety of Sources

You can always bounce ideas off of a senior-living advisor during the decision-making process. When making a decision, talk to those in the know to learn as much as you can. Read reviews of senior communities on senioradvisor.com to help you make an informed and confident decision. Check the background of an assisted-living community you’re considering with the state licensing agency tasked with monitoring facilities.

Prepare for the Transition

Do not delay the move — it’s risky to procrastinate, especially when a parent needs care. Delays can lead to avoidable accidents and medical problems. When preparing for a move, it’s important to:

• Consolidate possessions. Is your loved one downsizing? Can you help them sell or donate any items?

• Plan and coordinate the move. Are you hiring a company or helping on your own? Set up a schedule and plan to ensure the move goes smoothly to alleviate stress.

• Gather and manage legal documents. Locate medical documents, tax returns, or any important information your parents may need. Make sure they’re in a safe place so they don’t get lost or misplaced during the move.

Bottom Line

Whether your parents are choosing the community themselves, or you’re helping decide for a parent, the above steps should help ensure everyone in your family feels good about the assisted-living facility selection. When possible, have conversations with your parents, discuss the pros and cons of each option, and try to come to a consensus together.

Merritt Whitely is an editor at A Place for Mom.

Senior Planning

It’s Not About Giving Up, but About Quality of Life

From the AMERICAN ACADEMY OF HOSPICE AND PALLIATIVE MEDICINE

There may come a time when efforts to cure or slow an illness are not working and may be more harmful than helpful. If that time comes, you should know there’s a type of palliative care — called hospice — that can help ensure your final months of life are as good and fulfilling as they can be for you and your loved ones.

Hospice is not about giving up. It’s about giving you comfort, control, dignity, and quality of life.

Insurers, Medicare, and Medicaid will generally provide coverage for hospice care if your doctors determine you likely have six months (a year in some cases) or less to live if your illness follows its normal course.

“Requesting hospice care is a personal decision, but it’s important to understand that, at a certain point, doing ‘everything possible’ may no longer be helping you. Sometimes the burdens of a treatment outweigh the benefits.”

So, how do you know when it’s time for hospice care? Requesting hospice care is a personal decision, but it’s important to understand that, at a certain point, doing ‘everything possible’ may no longer be helping you. Sometimes the burdens of a treatment outweigh the benefits. For instance, treatment might give you another month of life but make you feel too ill to enjoy that time. Palliative doctors can help you assess the advantages and disadvantages of specific treatments.

Unfortunately, most people don’t receive hospice care until the final weeks or even days of life, possibly missing out on months of quality time. This may be out of fear that choosing hospice means losing out on a chance for a cure. Sometimes doctors fear their patients will feel abandoned if they suggest hospice.

Hospice care can help you continue treatments that are maintaining or improving your quality of life. If your illness improves, you can leave hospice care at any time and return if and when you choose to.

The following are some signs that you may experience better quality of life with hospice care:

• You’ve made several trips to the emergency room, and your condition has been stabilized, but your illness continues to progress.

• You’ve been admitted to the hospital several times within the last year with the same symptoms.

• You wish to remain at home, rather than spend time in the hospital.

• You are no longer receiving treatments to cure your disease.

Hospice care can free you up to ensure a time of personal growth and that you get the most you can out of your time left, allowing you to reflect on your life; heal emotional wounds and reconnect with a loved one with whom you have been estranged; visit favorite places or those with special meaning, such as a school, house, or location with a beautiful view you’ve always loved; put your financial affairs in order; create a legacy, such as a journal, artwork, or a videotaped message; or simply be with the people you love and who love you.

There are other benefits of hospice care, too:

• Hospice care allows you to remain and receive medical care in your own home, if desired and possible.

• It prevents or reduces trips to the emergency room for aggressive care that you might not want. Although you still might go to the hospital for tests or treatments, hospice allows you and your loved ones to remain in control of your care.

• Members of the hospice team can clean, cook, or do other chores, giving your loved ones a chance to run errands, go out to dinner, take a walk, or nap.

• Hospice programs offer bereavement counseling for your loved ones, often for up to a year.

Hospice care may not be appropriate if you are seeking treatments intended to cure your illness. Whether receiving hospice or palliative care, you should make a plan to live well so that your wishes for care and living are known.

Senior Planning

It’s Important to Act Based on Facts, Not What You Think You Know

By Gina M. Barry

In the realm of estate planning, the following myths are rampant. You may have heard them, or even believe them, yourself.

As it is not possible to make proper decisions with incorrect information, it is important to dispel these myths.

Myth 1: “If I need to go into a nursing home, Medicare will pay for my care.”

This myth may very well be perpetuated by the fact that ‘Medicare’ sounds very much like ‘Medicaid,’ which does pay benefits for nursing-home care for qualified applicants. Medicare Part A will pay for medically necessary inpatient care in a skilled-nursing facility, but only following a three-day hospital admission.

Gina M. Barry

Gina M. Barry

“The best estate-planning legal advice comes from a qualified estate-planning attorney, who will explain the options that best suit your unique situation and help you choose the best option for you based on correct information.”

In this case, Medicare will pay for up to 100 days of skilled-nursing care or rehabilitation services. The actual length of benefits could be much shorter than 100 days if those services are no longer required.

When Medicare benefits are available due to a qualifying hospital admission, Medicare pays 100% of the cost for the first 20 days, but only 80% of the cost for the next 80 days. Most Medicare recipients also have Medigap insurance, which will pay the balance not covered by Medicare. When Medicare benefits are exhausted, an alternative payment source is needed to pay for ongoing nursing-home care.

This alternative source could be long-term-care insurance benefits, private payment from income and assets, and/or Medicaid. For qualifying individuals, benefits from the Veterans Administration may also be available.

Myth 2: “I can give away assets and then obtain Medicaid benefits to pay for my nursing-home care.”

When faced with a nursing-home bill of approximately $13,000 per month, many people seek Medicaid benefits to pay for this care. In order to obtain Medicaid benefits, an asset limit must be met; therefore, assets valued above this amount must be reduced to the asset limit before benefits will be paid.

To reach this asset limit, most hope to give away excess assets, usually to their children. The Medicaid program imposes a penalty when any assets are given away within five years of the application for benefits, except in very specific circumstances. This penalty results in the applicant being unable to obtain Medicaid benefits for at least five years after such a gift is made.

There are planning options available at the time of a nursing-home admission, but in most cases, gifting will not be one of those options. Gifting options can exist if undertaken five years prior to nursing-home admission or earlier.

Myth 3: “I can give away $10,000 to as many people as I want each year, but if I give more, then I have to pay gift tax.”

This myth emanates from the federal gift-tax system. There is currently no gift tax in Massachusetts. In 2020, you may give up to $15,000 to as many people as you want without having to file a federal gift-tax return. The amount that can be gifted is stated incorrectly in the myth, as most people remain unaware of the ongoing increases in the allowable gift amount, which is known as the annual gift-tax exclusion. Also, in 2020, even if a gift-tax return must be filed because more than $15,000 is given to one person in one year, the giver of the gift will not pay any gift tax until they have gifted more than $11.58 million during their lifetime.

All gifts made that exceed the annual gift-tax exclusion will reduce the estate-tax exclusion available at the death of the giver of the gift. Thus, if you have $115,000, and you give all of it away in one year to one person, then you will need to file a federal gift-tax return. You will not owe any gift tax because the gift itself does not exceed the lifetime threshold, but when you die, the amount of assets you would have been allowed to pass without paying estate tax will be reduced by $100,000 (the amount of the gift that exceeded the annual exclusion amount).

Myth 4: “When I die, if I have a valid will, my estate does not have to go through probate.”

The assets in your probate estate are those that, when you pass away, are held in your name alone and do not have a designated beneficiary. Whether probate is needed is not based upon whether you have a will; rather, it is based upon how your assets are owned when you die. If you leave probate assets, then in order for your will to ‘speak,’ a probate estate must be opened. To avoid probate, you would need to have all assets held jointly or in a trust or with a designated beneficiary.

Although the above myths remain popular, they are not accurate. The best estate-planning legal advice comes from a qualified estate-planning attorney, who will explain the options that best suit your unique situation and help you choose the best option for you based on correct information.

Gina M. Barry is a partner with the regional law firm Bacon Wilson, P.C. She is a member of the National Assoc. of Elder Law Attorneys, the Estate Planning Council, and the Western Massachusetts Elder Care Professionals Assoc. She concentrates her practice in the areas of estate and asset protection planning, probate administration and litigation, guardianships, conservatorships, and residential real estate; (413) 781-0560; [email protected]

Senior Planning

It’s Helpful … Like Driving with Google Maps

By Liz Sillin

It is a product of the COVID-19 era, but we have found that many people are thinking about wills and other estate-planning issues this year. The truth is that people of all ages should be thinking about a will, and not just during a pandemic.

What is a will, and why would you want one?

A ‘last will and testament’ is a document that spells out who it is that you would like to receive certain assets of yours — your ‘probate assets’ — at your death. In it, you name a ‘personal representative’ (formerly known as an executor/executrix) who oversees the directives in your will.

If you have minor children, you name a guardian and conservator for them. A will is a formal document, signed in front of two disinterested witnesses and a notary who attest to your apparent soundness of mind and that you appear to be over the age of 18 and signing willingly.

It’s a little like having Google Maps for those you leave behind — it lays out where you want your assets to go and how to get there. You can say who you want to receive specific assets, be it your mother’s wedding ring or your house, and you can direct assets to family, friends, and charities in whatever proportions you wish.

“It’s a little like having Google Maps for those you leave behind — it lays out where you want your assets to go and how to get there.”

If you die without a will, state law takes over. The state has tried to determine what most people would want in the absence of a will, but it is not nuanced. For example, if you are married and all your children are from that marriage, state law presumes that you want all your probate assets to go to your spouse — no direct gifts to your children, no charitable gifts, no gifts to friends. By contrast, if you are married and have children from a prior marriage, then state law presumes that the first $100,000 of your probate assets should go to your surviving spouse, and the rest of the probate assets are split 50/50 between the spouse and the children of the prior marriage.

State law cannot know that you have a disabled child who needs a special-needs trust or a house that you really want your surviving spouse to have. State law also sets forth who has priority to serve as your personal representative if you don’t have a will.

We should pause to talk about ‘probate assets.’ These are assets that you own in your own name — not jointly with someone else and not owned in a trust — and assets as to which you have not made a beneficiary designation or a pay-on-death payee. You own a house in your own name — it’s a probate asset. You own a house jointly with your spouse — it transfers to the spouse by operation of law at your death and is not a probate asset. If you have a retirement asset, such as a 401(k) or an IRA, or a life-insurance policy on which you have filled out a form designating a beneficiary, the asset passes to that beneficiary at your death and is not a probate asset.

If you make a will and in it you say your life insurance proceeds go to Joe, but your life-insurance beneficiary designation form says they go to Jane, the proceeds go to Jane. It is important to understand that the will only deals with your probate assets.

Why is a will helpful?

• It is easier to sell real estate from your probate estate if you have a will.

• You may not want your assets to go the way that state law directs. In Google Maps talk, state law provides directions to Boston, and you are thinking more about Alaska, with stops in Ohio and California along the way…

• You may not want the person state law prescribes as your ‘driver’ (the personal representative); perhaps you love your spouse dearly, but your sister is much more organized and would be much better at following directions.

• You want to name your neighbors to serve as guardians for your children if your spouse is unable to do so, because it is important that they stay in the neighborhood and stay in their current schools through high school.

• It provides certainty among those you leave behind that the map you have drawn is going to direct your heirs to where you want your assets to go, with the driver you have selected. It provides you, as well as your family, with certainty. And certainty, in this COVID-19 era, is a very nice thing.

Liz Sillin is an estate-planning specialist with the law firm Bulkley Richardson; (413) 272-6200.

Accounting and Tax Planning Special Coverage

By All Accounts

By Jim Moran CPA, MST

Jim Moran CPA, MST

Jim Moran CPA, MST

The Coronavirus Aid, Relief, and Economic Security (CARES) Act has provided taxpayers affected by COVID-19 with some relief in the area of retirement-plan distributions and loans.

A coronavirus-related distribution is allowed by a qualified individual from an eligible retirement plan made from Jan. 1, 2020 to December 31, 2020, up to an aggregate amount of $100,000. A qualified individual must meet one of these criteria:

• Diagnosed with the virus SARS-CoV-2 or with the coronavirus disease 2019 (COVID-19) by a test approved by the Centers of Disease Control and Prevention (CDC);

• Spouse or dependent is diagnosed with SARS-CoV-2 or COVID-19 by a test approved by the CDC;

• Experienced adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, or being unable to work due to lack of childcare due to SARS-CoV-2 or COVID-19; or

• Experienced adverse financial consequences as a result of closing or reducing hours of a business that is owned or operated by the individual due to the SARS-CoV-2 or COVID-19.

An ‘eligible retirement plan’ is defined as the type of plan that is eligible to accept tax-free rollovers. It includes 401(k) plans, 403(b) plans, governmental 457 plans, and IRAs (including SEP-IRAs and SIMPLE-IRAs). It does not include non-governmental 457(b) plans. The $100,000 withdrawal limit applies in aggregate to all plans maintained by the taxpayers.

For individuals who are under age 59½, the act waives the 10% early-withdrawal penalty tax. Although the 10% penalty will be waived, any potential income taxes associated with the retirement plan or IRA withdrawal will still be assessed. The act also suspends the 20% tax-withholding requirements that may apply to an early distribution from a 401(k) or other workplace retirement plan.

“Your tax liability owed to the IRS at the end of the year may be higher than expected if you choose not to withhold the suggested 20%.”

Just keep in mind, your tax liability owed to the IRS at the end of the year may be higher than expected if you choose not to withhold the suggested 20%.

When it comes to paying the resulting tax liability incurred due to the coronavirus-related distributions, the CARES Act allows you a couple of options: spread the taxes owed over three years, or pay the taxes owed on your 2020 tax return if your income (and, thus, your tax rate) is much lower in that year.

Taxpayers may also repay the coronavirus-related distributions to an eligible retirement plan as long as the repayment is done within three years after the date the distribution was received. If the taxpayer does repay the coronavirus-related distribution in the three-year time period, it will be treated as a direct trustee-to-trustee transfer so there will be no federal tax on the distribution. This may mean an amended return will have to be filed to claim a refund attributable to the tax that was paid on the distribution amount that was included in income for those tax years.

Retirement-plan Loans

Loans from eligible retirement plans up to $100,000 to a qualified individual are available for any loans taken out during the six-month period from March 27, 2020 to Sept. 23, 2020. This is up from the previously allowed amount of $50,000.

Participants must repay standard retirement-account loans within five years. The CARES Act allows borrowers to forgo repayment during 2020. The five-year repayment clock begins in 2021. The loan will, however, continue to accrue interest during 2020.

If you have an existing loan outstanding from a qualified individual plan on or after March 27, 2020, and any repayment on the loan is due from March 27, 2020 to Dec. 31, 2020, the due date for any loan repayments are delayed for up to one year.

Employers may amend their plans for the above hardship provisions to apply no later than the last day of the plan year that begins on or after Jan. 1, 2022 (Dec. 31, 2022 for a calendar-year-end plan). An additional two-year window is allowed for governmental plans; however, IRS Notice 2020-51 clarifies that employers can choose whether to implement these coronavirus-related distribution and loan rules, and notes that qualified individuals can claim the tax benefits of coronavirus-related distribution rules even if plan provisions are not yet amended.

Administrators can rely on an individual’s certification that the individual is a qualified individual (and provides a sample certification), but also notes that an individual must actually be a qualified individual in order to obtain favorable tax treatment. IRS Notice 2020-50 provides employers a safe-harbor procedure for implementing the suspension of loan repayments otherwise due through the end of 2020, but notes there may be other reasonable ways to administer these rules.

Please note that the loan provisions apply only to qualified plans such as 401(k), 403(b), and governmental 457 plans; loans may not be taken from IRAs.

Each retirement plan’s rules and requirements supersede the CARES Act. In addition, it is important to remember that not all retirement-plan sponsors allow loans. Before taking out any loan, it is important to check that your employer’s plan adopts these provisions.

Suspension of RMDs

The CARES Act has suspended required minimum distributions (RMDs) for 2020. Individuals over age 70½ (for those born prior to July 1, 1949) or 72 (for those born after July 1, 1949) were required to take a minimum distribution from their tax-deferred retirement accounts.

Most non-spousal heirs who inherited tax-deferred accounts were also required to take an annual RMD. Under the CARES Act, RMDs from qualified employer retirement plans such as 401(k), 403(b), and 457 plans, will be waived. Even those individuals not affected by the coronavirus can waive the RMDs.

For individuals who have already taken their 2020 RMD, the CARES Act allows you to put it back into your retirement account. IRS Notice 2020-51 qualifies the distribution as an eligible rollover distribution if repaid in full by Aug. 31, 2020.

Jim Moran is a tax manager at Melanson, advising clients on individual and corporate tax matters; [email protected]

Technology

From a Distance

By Sean Hogan

Hogan

Sean Hogan

COVID-19 has changed the way we all do business. The remote workforce, which was embraced by a few, is now the new norm and embraced by almost all businesses. The question lingers, though: will this revert when there is a vaccine and we go back to the normal, non-pandemic lifestyle?

Many believe that remote workforce is here to stay, and these numbers seem to be growing with each week and month. But to do that, we need to understand how to manage our remote workforce and embrace technology to support our staff.

To do this effectively, managers need to manage the technology, the people, and the culture. Let’s take them in order.

Managing Technology

Our company, Hogan Technology, has sold and configured videoconferencing and collaboration systems for 25 years. We would set up conference rooms with audio and video so clients could establish videoconferences with employees and customers.

In the past, we saw most of this technology gather dust; at first, a client would embrace video collaboration, but it would quickly be disregarded. The older video and collaboration technology platforms were clumsy and difficult to navigate. Staff would quickly give up trying to learn how to use the tech.

Today’s collaboration tools are extremely easy to use, especially for the younger generation that grew up on smartphones. COVID-19 has promoted the skyrocking popularity of services like Zoom and Microsoft Teams. These tools can be used to enhance your company communications and productivity, but we need to know how to use these tools.

Hogan has had remote employees for more than seven years; the challenge has been including those employees in the day-to-day interaction at the office. Pre-COVID, we rarely had video meetings; now, we meet several times a day via video to collaborate and share data.

“Many of my clients have been quickly thrust into the remote workforce with little or no experience with online collaboration. They have quickly learned how to host and manage online collaboration.”

Meanwhile, many of my clients have been quickly thrust into the remote workforce with little or no experience with online collaboration. They have quickly learned how to host and manage online collaboration. Hogan has adopted a platform for the security and simplicity of the service. We host several Hogan Teams meetings per week. We have fixed meetings and ad hoc meetings. Our fixed meetings are administered by our staff; we create the team, invite the necessary personnel, and share all pertinent data to the Teams site for ease of retrieval. Teams has a smartphone app, desktop app, and browser login.

We have noticed that our video meetings are more focused than our traditional conference room meetings, our data is consolidated, and our agendas are clear.

I must admit that, at first, I was resistant to host sales and client meetings through video collaboration. It took some time and some failures — I completely failed on my first large Zoom conference, but eventually, I embraced the meetings. Throughout the pandemic, all introductory sales meetings have been on Teams, and to my shock they have gone well. We print fewer documents, we save on travel expense, and we can host more meetings per day than before. If we are looking for bright spots during this COVID-19 madness, then this would be one.

Oddly enough, because meetings are so easy, we tend to meet more and share more. We understand that the end game is improving communications; whenever we have a management meeting, we are stressing the need to communicate better, internally and externally. COVID has forced us to communicate better, faster, and more efficiently.

Managing People

We have had many clients request analytics or reports so they can better track the performance of remote employees. There are several ways to track productivity, such as call-volume reports, CRM usage reports, presence activity reports, internet-usage reports, and so on. Personally, I manage my staff to their individual goals; if I have an employee who is exceeding his or her goals, then I don’t need to be very granular with activity reporting. I will use their analytics to compare to other personnel; this helps me determine where I need to focus my attention.

It is critical to protect your company’s endpoints no matter where they reside. If an employee uses a business machine at home, that machine needs to have updated anti-virus, malware protection, multi-factor authentication, and end-point detection and response.

Managing the Culture

Culture is a critical piece in all businesses. Corporate culture refers to the beliefs and behaviors that determine how a company’s employees and management interact. Often, corporate culture is implied, not expressly defined, and develops organically over time. It can be a challenge to maintain your culture while working with a remote workforce.

We have found that we need to engage our employees through collaboration. Our meetings are not just management telling staff what needs to be done and how to do it. The meetings must engage all the personnel — they need to be part of the solution, and we as managers need to stop talking and start listening. This helps cement our team culture.

The key is that we listen to everyone, and other businesses should embrace this mindset. You need to sit back and ask, ‘what is our culture?’ ‘Who are we?’ ‘What matters to our clients?’ and ‘How do we support our community?’

It’s critical to know your culture and even more critical to defend your culture. Make sure your team knows what matters.

In this time when more and more people are working remotely, it’s important to manage the technology. But it’s equally important to manage people and culture.

Sean Hogan is president of Hogan Technology; (413) 585-9950.

Modern Office

Small Steps for Big Wins

By Sarah Rose Stack

Sarah Rose Stack

Sarah Rose Stack

Work-life balance in 2020 has been different, to say the least. And many people have unexpectedly found themselves in a new office … at home. This trend does not seem to be going away. In fact, many businesses plan to extend their work-from-home policies through the end of the year and are considering more permanent work-from-home plans.

If you are working from home, the expectation is that you are working from home. However, if you are not accustomed to this new environment, it can be tricky to perform to your fullest potential while also maintaining work-life balance. You and your employees may need to take additional steps to invest in overall well-being in order to remain effective at work.

Here are some things to think about, focusing on healthy mind, body, and spirit.

Mind

Staying focused and on task is key for productivity. Keep your mind clear and focused. To do that:

• Take a Break. Step away from screens occasionally. Don’t forget to give yourself a few minutes throughout the day to recharge in the same way that you would if you were in the office.

• Fully Participate. Nothing will help you enjoy your time off more then a job well done during your time on. Be engaged during meetings. Put your full workday in. Remain committed to your mission and vision while working. Your mind will appreciate the normalcy, you will do better work, and you will find it easier to turn off your work at the end of the day.

• Schedule Tasks, but Set Limits. Stay organized and on task by being clear about how you will spend your time. Schedule appointments with yourself to complete work. Limit tasks based on how much time it would normally take to complete them in the office.

• Set Ground Rules with Your New ‘Colleagues.’ If you are working remotely due to COVID-19, chances are that there are more people hunkered down at home too. To stay productive and avoid frustration, communicate with your family about boundaries so that you minimize interruptions and distractions.

• Set Up Your Home Office. Remember your first day of work, when you brought in a box of favorite things to keep you inspired and productive? Take some time to set up your new dedicated home-office space. Keep your work area organized and separate from your ‘life’ area. Even setting up a simple desk or table in a dedicated space will help you get into work mode when it is time. It can also prevent your work from overrunning your kitchen, living room, bedroom, or all of the above.

Body

Working — and doing everything else — at home can leave us feeling sluggish. Stay energized to feel and do your best.

• Take a Walk. If you’re taking a 10-minute break, don’t waste it scrolling on your phone. Go outside and take a walk. The combination of sunlight, fresh air, change of scenery, and movement can give you an injection of energy to get back at it.

• Stand Up. On a conference call or virtual meeting? Stand up or even walk or pace during the call. The walk can increase your focus, and you can also get some exercise at the same time.

• Try Yoga to Increase Focus. Did you know certain yoga poses may increase focus and concentration? Try yoga in the morning before work, or mid-afternoon to increase your focus and stay active. Poses for focus include tree, eagle, warrior III, half-moon, dancer, extended hand to toe, side plank, crow, and headstand.

• Choose Healthy Snacks and Meals. With a full range of access to unlimited food and snacks, it can be easy to fall off track and overdo it on the junk food. This obviously can lead to fatigue and become problematic if it becomes habitual. Maintaining a healthy diet with good portions will keep you fueled and energized.

• Drink More Water. Keeping hydrated is critical for well-being. Again, with full access to your kitchen, you may be prone to drink more sugary drinks, coffee, or soda than you normally would. Or you may not be taking in as much water as you usually do. Keep a water glass at your desk (but not near electronics) so you can stay hydrated throughout the day.

Spirit

Acknowledge emotions that are coming up as you navigate a new work situation and then take steps to redirect the narrative.

• Practice Gratitude. Showing appreciation can help you feel more positive emotions. Thank your colleagues when they help you with something. Take a moment to be grateful for the opportunity to work from home right now. Studies show that people who feel and express gratitude generally have a greater level of happiness.

• Go Outside. During social distancing, you can still leave your home to go for a walk or simply enjoy a cup of coffee on the porch. Research has shown that going outside can improve your short-term memory, restore mental energy, relieve stress, improve concentration, and increase your creativity.

• Stay Connected to Colleagues. While you can’t swing by a co-worker’s office to chit-chat, you can take a few minutes each day to connect. Whether it’s a private Facebook group, Teams, or group chat, take some time to check in. Talk. Laugh a little. Share photos, comments, and videos. Motivate each other to do great work together. Staying connected keeps us together while we’re apart.

Healthy Perspective

Small actions that are taken consistently can add up to big results. Focus on the three big rocks and the small wins that can be achieved within them to position yourself for a healthy mind, body, and spirit while working from home … and, for that matter, working from anywhere.

As you and your employees navigate this new work-from-home environment, remember that being productive and healthy is good for business and good for people. Many find that, when they have accomplished their goals during the day, they are able to relax and enjoy their time ‘at home.’ On the contrary, if they have been distracted throughout the day, they may find that nagging feeling of work piling up and following them everywhere.

Create a dedicated space, hours, boundaries, and habits to increase effectiveness and maintain a healthy work/life balance while working from home.

Sarah Rose Stack is marketing and recruiting manager with Holyoke-based accounting firm Meyers Brothers Kalicka; (413) 322-3401.

Accounting and Tax Planning

A Primer on RMDs

By Bob Suprenant, CPA, MST

Bob Suprenant, CPA, MST

With all that’s happened in the world this year, the SECURE Act, signed into law on Dec. 20, 2019, seems to have been robbed of the celebration it deserves.

Let’s give it its due and weave our way through the 2020 rules for what are known as RMDs.

First, what is an RMD, or required minimum distribution? It’s the minimum amount you must take out of your retirement plan — 401(k), IRA, 403(b), etc. — once you reach a certain age. The theory is that the amount in your retirement plan will be liquidated as you age.

To calculate the RMD, as a general rule, you divide the balance in your account at the end of the previous year — for this year, it would be Dec. 31, 2019 — by the distribution period found in the Uniform Lifetime Table. These tables currently run through age 115. Seriously.

Who Must Take an RMD?

This is where we blow the party horns and throw the confetti. These rules changed on Dec. 20, 2019. If you reached age 70½ in 2019, you were required to take your first distribution by April 1, 2020. If you reach age 70½ in 2020, you are not required to take your first distribution until April 1, 2022.

At the risk of putting a wet blanket on the fun, if you do not take the full amount of your RMD and/or you do not take it by the applicable deadline, there is a penalty. The penalty is an additional tax of 50% of the deficiency. The additional tax can be waived if due to reasonable error and you take steps to remedy the shortfall.

Did COVID-19 Change This?

Yes, the CARES Act, which was signed into law on March 27, 2020, included provisions that waived the requirement for RMDs in 2020. This also happened in 2009 when the stock market crashed. In 2020, RMDs are not required. The RMD waiver also applies to inherited IRAs.

It keeps getting better. On June 23, 2020, the IRS released Notice 2020-51, which allows those who have taken an RMD in 2020, but wish they hadn’t, to return the money to the retirement plan by Aug. 31.

There is a bit of a catch here, though. Most who take RMDs have federal and state tax withholdings on their distributions. Under this relief, the entire distribution must be returned to the retirement plan, not the distribution net of taxes.

By way of example, if you have a gross RMD of $20,000 and there is $3,000 in federal and state withholding, your net distribution is $17,000. To have none of your RMD taxed, the $20,000 must be returned to the retirement plan by Aug. 31. If you return only $17,000, you will be taxed on a $3,000 distribution.

Do I Take an RMD In 2020?

I know I don’t need to take an RMD in 2020, but should I? The answer is … it depends. And you should consult your tax advisor. Ask this individual to run projections to see what the best amount is for you to take as a distribution. For married joint filers, the 12% federal tax bracket includes taxable income up to $79,000. For amounts over $79,000, the tax bracket is at least 22%, a full 10% increase.

For many of my clients, I try to take full advantage of the lower tax bracket and get their incomes as close to the $79,000 as possible. Other clients, who use their retirement-plan distributions to make their charitable contributions (a very wise idea as you will generally save state taxes in addition to possibly saving federal taxes), should probably take a retirement-plan distribution in 2020.

Those who are aged may also want to take a distribution. Under the inherited IRA rules, your IRA beneficiaries will be required to take distributions, so consider their tax rates compared with yours.

As always, in the tax code, there are exceptions to exceptions, and this brief summary is only the cocktail hour. Be aware that you are not required to take an RMD for 2020. If you have taken an RMD, you can return it by Aug. 31. Do some tax planning to determine the best amount for your 2020 retirement-plan distribution.

Bob Suprenant, CPA, MST is a director of Special Tax Services at MP CPAs in Springfield. His focus is working with closely held businesses and their owners and identifying and implementing sophisticated corporate and business tax-planning strategies.

Community Spotlight

Community Spotlight

By Mark Morris

While communities nationwide continue to grapple with what he calls the “grumpy cloud” of COVID-19, Westfield Mayor Donald Humason is looking to project a little sunshine.

“A lot of it has to do with the attitude in Westfield,” the mayor said. “We’re optimistic, and we want people to come to our community because it’s a great place to live, work, go to school, and run a business.” 

Kate Phelon, executive director of the Greater Westfield Chamber of Commerce, agreed, and wants everyone to know Westfield is open for business.

Kate Phelon

Kate Phelon says the Greater Westfield Chamber remains strong and active, and has even welcomed some new members.

While the chamber remains strong with more than 5,000 members, two new businesses have recently joined. Play Now, a new toy store on Silver Street, and Results in Wellness, a health and wellness clinic on Springfield Road, were both planning ribbon-cutting ceremonies at press time. Also scheduled to open is a Five Below store, where everything is priced between $1 and $5.

“New business openings are a great thing to see, especially during these times that are so challenging for everybody,” Phelon said.

After many months of not being able to hold any chamber events, she’s also excited about hosting the annual chamber golf tournament, scheduled for Aug. 31 at East Mountain Country Club. “We will, of course, be following all the guidelines for masks and distancing. It certainly helps that this is an outdoor event.”

Speaking of outdoor events, the Westfield Starfires began their Futures Collegiate Baseball League season on July 8. The team modified Bullens Field to provide a safe experience for fans and staff by following state guidelines for COVID-19 safety. Phelon attended as part of a contingent of chamber members and reported that fans simply wore their masks and were able to enjoy refreshments at properly distanced picnic tables.

“We’re optimistic, and we want people to come to our community because it’s a great place to live, work, go to school, and run a business.”

Considering what’s already been lost in this unprecedented year, the shout of ‘play ball!’ was certainly welcome — and city and chamber officials hope it heralds the start of a back half of 2020 that’s far more promising than the first half.

Full Power

While it was uncertain if the Starfires would be able to play this season, the crew at Westfield Gas & Electric never stopped.

General Manager Anthony Contrino said his crews have consistently provided essential services for customers of the municipal utility. After a crash course on handling COVID-19 in the workplace that kept people safe and followed state guidelines, G & E crews have handled only emergency situations for the last several months. More recently, the utility has been able to handle non-emergency work like in-home gas and electric installations.

Contrino said the many disaster-recovery drills he and his colleagues have done in the past helped prepare them well for COVID-19.

“We’ve had a lot of remote-workforce capabilities in place, but they’ve never been tested to this degree,” he said, calling it a “blessing in disguise” as the last several months confirmed that the processes they had set up work when they are most needed.

Administrative staff returned to their offices at the end of June after the building was reconfigured with the latest pandemic protocols in place.

“I commend my co-workers, who have done a very good job during this time for their service to the city and all of our customers,” Contrino said, adding that Westfield G & E received the Reliable Public Power Provider Award for excellence in operating efficiently, reliably, and safely.

Westfield

Westfield Mayor Don Humason says he has heard from business, both downtown and elsewhere, looking to expand once they feel they can.

Whip City Fiber, a separate business that provides fiber-optic internet service, is also run by Westfield G & E. Contrino said 70% of Westfield now has access to the utility’s fiber-optic network. “In 2020, we have continued to add customers to areas that have access to fiber optics in their neighborhood.”

The plan going forward is to expand the network to the remaining 30% of the city. “Customer demand will determine where we build out the remainder of the network,” he noted.

In addition to serving Westfield, Whip City Fiber is working with 19 towns in Western Mass. to establish their internet service, Contrino added. “We are working in places like the hilltowns that were underserved with internet service, so they are appreciative that we can help them get up and running.”

Once established, customers in the hilltowns will have access to gigabit service, or 1,000 megabits coming into their homes. By installing fiber optics, Contrino said, these towns are “future-proofing” their internet systems. “We already had the competencies in place to build fiber-optic networks, so by expanding our services to other towns, we become more cost-effective for Westfield residents.”

Getting Around

On the recreation front, the Greenway Rail Trail, an elevated bike path, is expanding across the city. By the end of next year, bike paths and five bridges will be added to the trail.

“The completion of the bike trail will be a real economic driver for Westfield,” Humason said. “I think it will attract cyclists from other parts of the country, as well as the state.”

Phelon added that serious cyclists will be able to ride continuously from Westfield to New Haven, Conn., and the trail is a valuable asset for casual cyclists as well.

“Bike riders will now have a way to quickly get across town because the trail goes through the center of Westfield,” she noted. “Because it’s elevated and above all the traffic, they will be able to go from one end of town to the other, complete with off-ramps into different neighborhoods.” 

“New business openings are a great thing to see, especially during these times that are so challenging for everybody.”

The mayor is hopeful that enterprising businesses will locate near the bike trail to serve the bikers, walkers, and others who use it.

“The bike trail fits in nicely with the flavor of old Westfield and our history of industry and agriculture,” he said. “Even if you’re not interested in all that, it’s an easy way to get across town.”

Humason said he’s pleased to see that a number of road improvements over the years now connect the downtown area from the south side of the city all the way to the Mass Pike exit.

The latest road project near completion involves widening and adding sidewalks along Western Avenue. The project also improves traffic flow with turning lanes into Westfield State University, as well as pull-off areas for PVTA buses.

“Western Avenue is one of the longest streets in the city, and it deserved to get this treatment,” the mayor said, adding that certain parts of the road also have traffic islands to separate the east and west lanes. “It’s an easier road to drive now, and it looks really nice.” 

The mayor said the city completed a similar project on East Mountain Road, another long street. “If we continually work on the longer streets and keep them in good order when we have the revenue, we can work on the smaller streets in the neighborhoods and the downtown corridor, so we can keep the city in good shape.” 

Future projects coming to Westfield include a new entry gate to the military side of Barnes Airport to service the both the Army Aviation facility and the Air National Guard base. The new entrance will allow the base to modernize function and security for everyone entering the base.

A public park is also planned just outside the gate that will feature one of the F-15 fighter jets that flew over New York City on 9/11. A plaque to tell the story of the jet’s mission on Sept. 11, 2001 will also be part of the display.

Moving On

Also in the near future, Phelon will be retiring from the Greater Westfield Chamber. Before she leaves on Sept. 25, her plan is to work with the new executive director to ensure continuity in the many chamber projects.

“I want to make sure the next director understands our community, as well as our members, and can work with our public and private partners at the local and state level,” she said.

Despite the tough economic times of the last six months, prospects for Westfield look strong, she told BusinessWest, adding that she’s encouraged by the fact that no businesses have decided to not reopen. Meanwhile, Contrino said his crews have not been asked to shut off any business customers because they are permanently closing. Humason said he’s heard only from businesses looking forward to expanding once they can.

“Like many towns, we’re going through the COVID economy, but that’s not going to last forever,” the mayor said. “We’ll be ready to grow when the restraints have finally been taken off because the people in Westfield have put a lot of time, attention, and money into its city and its downtown.”

Banking and Financial Services

More Relief from the CARES Act

By Lisa White

On March 27, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. Since its inception, much of the focus has been on the establishment of additional funding sources, such as the Paycheck Protection Program (PPP), or on the creation of new tax credits, such as the Employee Retention Credit.

However, the act also made some significant revisions to existing tax law to provide additional relief to affected businesses. This article takes a closer look at two of these provisions and delves into how the related benefits associated with the changes might be derived.

Technical Correction for Qualified Improvement Property

The Protecting Americans from Tax Hikes (PATH) Act of 2015 created a new category of asset called ‘qualified improvement property’ or QIP. This term referred to any improvement to an interior portion of non-residential real property, but excluded expenditures for elevators or escalators, enlargements, and interior structural components. Although this category of asset technically had a 39-year cost-recovery period, it was specifically identified as being eligible for bonus depreciation.

When the Tax Cuts and Jobs Act (TCJA) was signed into law at the end of 2017, the intention was to assign a shorter, 15-year recovery life to qualified improvement property, thus ensuring its eligibility for the enhanced 100% bonus depreciation provision also included in the TCJA. Unfortunately, the necessary wording was not included in the final bill, resulting in qualified improvement property retaining its 39-year cost-recovery period, but excluding it from being eligible for bonus depreciation.

Lisa White

Lisa White

“With proper planning and timely tax-advisor consultation, realizing additional relief during these unprecedented times can be achieved.”

Not only did the CARES Act include the technical correction necessary for QIP to have its originally intended 15-year cost-recovery period, but the correction was directed to apply retroactively to all eligible assets placed in service after Dec. 31, 2017.

Then, in mid-April, the IRS provided guidance on how to capture this additional benefit from the change in the depreciable life and the possible eligibility for bonus depreciation. Primarily, the two methods are to either file amended returns for the impacted year(s) or to file a Change in Accounting Method (Form 3115), which allows a ‘catch-up’ for the differences in the recovery periods and applicable depreciation methods.

Here’s an example: A business holds commercial rental property and operates on a Dec. 31 year-end. On July 15, 2018, the business incurred expenses of $150,000 in costs that meet the QIP definition. Assume Section 179 expense was not taken. Due to the technical error in the law, only $1,763 of depreciation expense was allowed in 2018, and $3,846 of depreciation expense would be allowed in 2019. With the technical correction, bonus depreciation can now be taken on the entire amount of the qualified improvement property even though it was placed in service in 2018:

• If the 2019 tax return has already been filed, an amended return should be filed for both the 2018 and 2019 tax years. Taxable income in 2018 will be reduced by the additional $148,237 ($150,000 – $1,763) of accelerated depreciation expense, and taxable income in 2019 will be increased by the removal of the $3,846 of depreciation expense originally recognized.

• If the 2019 tax return has not yet been filed, filing a Form 3115 might provide the easier option. Instead of filing two years of returns, only the 2019 tax return is filed, and the $148,237 of additional accelerated depreciation expense not captured in 2018 is included in the 2019 tax return as a section 481(a) adjustment.

It is important to note that there are certain circumstances where either an amended return or an administrative adjustment request (AAR) must be filed. It is important to consult with your tax advisor to determine the best course of action.

Changes to the Business Interest Limitation

Although most of the provisions enacted as part of the TCJA were intended to be favorable to taxpayers, some new components had the opposite effect. One of these was the revision and expansion of the business-interest-limitation rules. If subject to the new rules, the regulation essentially limited the amount of business interest expense to 30% of taxable income adjusted for, among other things, depreciation.

The interest expense in excess of this 30% threshold would not be deductible in the current year but would instead be carried forward to the following tax years.

The TCJA also included an option for certain businesses to elect out of having this regulation apply. Instead, these businesses that met the definition of a ‘real property trade or business’ could make an irrevocable election to realize a longer recovery period for the cost of real property and to forego any bonus depreciation that would otherwise be allowed on that real property.

Prior to the retroactive change under the CARES Act, the differences in the recovery periods were not substantial, and none of the real property was eligible for bonus depreciation. However, with the CARES Act’s retroactive fix to qualified improvement property, that property is now eligible for bonus depreciation. The loss of being able to take that accelerated depreciation, in addition to another CARES Act provision increasing the limitation threshold from 30% to 50% (for all businesses except partnerships) for 2019 and 2020, might now result in the impact of the irrevocable election having an undue, unfavorable result.

To provide relief to those businesses that made the irrevocable election and that could now benefit from the shorter recovery period, and the applicable depreciation methods, the IRS has issued guidance that provides for the irrevocable election to be rescinded for tax years 2018 or 2019. This is accomplished by filing an amended return for the year the election was made. If 2018 was the election year, and 2019 has already been filed, 2019 must be amended as well to reflect any changes to taxable income resulting from withdrawing the election.

So, What Now?

The CARES Act provides several relief provisions, including a number that can be realized through proper tax planning. Owners of non-residential (i.e. commercial) real property should review any expenditures that were capitalized in 2018 and 2019 to see if any of these costs can be realized now under the new qualified improvement property measures.

Also, it would be prudent to review any elections made during those tax years that might need to be revisited to make sure those elections still result in the most favorable tax position.

As with most things related to the tax code, the final answer is usually complex and nuanced and somewhere in the grey. But with proper planning and timely tax-advisor consultation, realizing additional relief during these unprecedented times can be achieved.

Lisa White, CPA is a tax manager at Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.; (413) 536-8510.

Coronavirus

Back on the Clock

By Mark Morris

Meredith Wise

Meredith Wise says companies should regard older workers as valuable assets that can help them ramp up.

David Cruise knows how to help people navigate tough economic times, but admits COVID-19 is a different kind of event.

“Quite frankly, we’re doing this live,” he told BusinessWest. “We have no playbook.”

Since February, more than 1 million workers in Massachusetts have lost jobs as a result of COVID-19, according to the U.S. Department of Labor (DOL). Cruise, president of MassHire Hampden County Workforce Board, said nearly 35,000 workers filed new unemployment claims between February and May in Hampden County alone. One group in particular, workers age 55 and older, accounted for 20% of those new claims.

Job loss due to COVID-19 presents particular challenges for the 55-plus crowd. On top of the concern about finding a new job as an older worker, many worry that, because of their age, they face a higher risk of serious illness if they catch coronavirus.

Cruise expects many older workers will have an opportunity to go back to their prior jobs, but it may take time for that to happen. Because COVID-19 is still actively infecting people, he noted, career conversations with older workers must take into account a “fear factor” many have about returning to work.

“Our staff are trained to help people develop their career plans, and while they can be supportive, they’re not psychologists,” he said, adding that it can be a tough decision whether or not to return to work — one that’s ultimately up to each individual.

Cruise expects there will be more job search activity in July by older workers, but their prospects will depend largely on how successful the phased reopening has been and if employers are ready to start hiring again.

“Going forward, the whole notion of doing work away from the workplace could benefit many older workers, especially in industries where that type of work is encouraged and fostered. It could extend a person’s career and help maintain their financial, as well as their personal, health.”

As a first step, he recommends workers talk to the employer they recently separated from to see what kind of opportunities might be there, even in a different role. If it’s not possible to return to that employer, openings in other industries might be available.

“There are certain industries where I think older workers will find themselves in significant demand, if not full-time, certainly part-time,” he said.

He also thinks many people will seek out training in new fields, including ones that allow working from home. Those who have health concerns about returning to the workplace may find their next opportunity in a remote job. Cruise said this would be good fit for older people with a good work ethic, time-management skills, and self-discipline.

“Going forward, the whole notion of doing work away from the workplace could benefit many older workers, especially in industries where that type of work is encouraged and fostered,” he said. “It could extend a person’s career and help maintain their financial, as well as their personal, health.”

With so many Baby Boomers retiring, experienced workers are wanted and needed, according to Tricia Canavan, president and CEO of United Personnel. Hiring managers recognize that workers in their 50s still have 10 to 15 years of good work ahead of them.

“Employers are interested in people who bring a good work ethic, have skills, and are reliable,” Canavan said. “We have no issue placing older workers because our clients want employees who have those characteristics.”

Cruise advises older workers to think about who in their personal and professional networks are in a position to help them, or at least provide some guidance to finding work. “It’s essential for people to stay connected and to not leave any person untapped who might be helpful, even your dentist or your barber.”

Maintaining technology skills are another key for older workers. If a person was using technology before being laid off, Cruise said their skills are most likely in good shape. On the other hand, those who did not use technology in their job and now only use it socially may want to consider training to boost their skills and expand their job prospects.

“Technology keeps changing, and it’s possible that we all may need to develop new skills in the way we work because of the pandemic,” he added.

Because these skills can be easily updated, Canavan said a person’s “tech savvy” should not be a deal breaker when they are looking for work. “The hiring philosophy I share with my clients is: hire smart, hire the right person for the job. You can teach someone how to use Slack, but finding someone with initiative and the right mindset is harder to teach.”

When to Return?

For now, many careers are up in the air, at least until the state’s reopening progresses further. And in many cases, some are choosing not to return to work immediately.

At the beginning of the pandemic, the DOL encouraged some flexibility with unemployment claims to make it easier to comply with social-distancing guidelines. As a result, the Massachusetts Department of Unemployment Assistance (DUA) put in place emergency regulations that allowed those who could return to work to keep receiving unemployment benefits for personal health reasons or concern about the health of others in their home, even if they had not been diagnosed with COVID-19.

That emergency regulation expired on June 14. As shuttered businesses begin to reopen, workers who are offered their jobs by their prior employer are expected to accept them. Refusal — unless that refusal is deemed reasonable — would mean losing their unemployment benefits and termination by their employer. The DUA said determining what’s reasonable involves a fact-specific inquiry into the person’s health situation and whether they work with or near other employees or the public.

In addition to fear, finances are another disincentive to return to work. Those who lost jobs at the beginning of the pandemic could apply for traditional unemployment benefits, which cover roughly 50% of a person’s average earnings. Then in March, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which added $600 a week in addition to state unemployment benefits.

Business owners who depend on seasonal workers during the spring and summer months have told BusinessWest they are having trouble filling open positions because of the generous payments from the CARES Act. They say it creates a situation where people can make more money unemployed than if they took the seasonal jobs that are available. Unless it’s reauthorized by Congress, however, the CARES Act is scheduled to expire at the end of July.

A company’s ability to reopen — and quickly get back up to speed — may depend in part on how they acted before COVID-19 hit. Meredith Wise, president of the Employers Assoc. of the NorthEast, said some of her organization’s member companies are easily getting people to come back to work because of a well-established culture that keeps people engaged.

“The leaders have stayed in touch with people, they respect their employees, and they’re trying to do everything they can to create a safe environment for them,” she said, adding that, when employees are engaged, they want to be back at work because there is a mutual trust.

It’s a different story when a company has not communicated well and has allowed distrust to take root.

“For example, if a company has done a shoddy job of keeping up their facilities before COVID hit, why should employees trust them with proper cleaning and sanitizing now?”

Canavan echoed the importance of paying attention to worker safety. After visiting several manufacturing clients, she was impressed with the transformation they’ve done to comply with pandemic-related guidelines.

“They’ve completely retooled their facilities to ensure social distancing, and when that’s not possible, they’re putting up physical barriers,” she said. “Many have extensive policies in place regarding hygiene at work, frequency of washing your hands, and even how to get water out of the water cooler.”

Added Value

The impact of COVID-19 on older workers’ employment is something Cruise predicts will become clearer over the next six months. He is concerned that not just older workers, but younger ones — in the 18-to-24 group — may be more likely to permanently lose their jobs due to the pandemic than other groups.

With three and even four generations in some workplaces, Canavan stressed the opportunity to take a collaborative approach and learn from each other. “The members of my team are of different ages, and they all contribute different strengths based on their life and work experience,” she said.

Might companies use COVID-19 as an excuse to shed older workers? Wise said a few might, but many companies will not because they need the institutional knowledge that older individuals bring to the job. She said very few companies have effective succession planning or make a concerted effort to transfer knowledge, so they need experienced workers to get them back up to speed.

“Whether it’s an operator who knows the ins and outs of a machine or a salesperson who knows what certain customers like, companies need these people to come back to the workplace.”

Accounting and Tax Planning Special Coverage

This Tax-relief Provision of the CARES Act Brings Advantages to Employers

By Carolyn Bourgoin, CPA

Businesses that either repaid in a timely fashion or did not receive a loan pursuant to the Paycheck Protection Program (PPP) should explore their eligibility for the new Employee Retention Credit, one of the tax-relief provisions of the CARES Act passed on March 27.

Like the PPP loan program, the Employee Retention Credit (ERC) is aimed at encouraging eligible employers to continue to pay employees during these difficult times. Qualifying businesses are allowed a refundable tax credit against employment taxes equal to 50% of qualified wages (not to exceed $10,000 in wages per employee).

Let’s take a look at who is eligible and how to determine the credit.

Who Is an Eligible Employer?

All private-sector employers, regardless of size, that carry on a trade or business during calendar year 2020, including tax-exempt organizations, are eligible employers for purposes of claiming the ERC. This is the case as long as the employer did not receive, or repaid by the safe-harbor deadline, a PPP loan. The IRS has clarified that self-employed individuals are not eligible to claim the ERC against their own self-employment taxes, nor are household employers able to claim the credit with respect to their household employees.

Carolyn Bourgoin

Carolyn Bourgoin

First Step: Determine Eligible Quarters to Claim the Credit

Eligible businesses can claim a credit equal to 50% of qualified wages paid between March 12 and Dec. 31, 2020 for any calendar quarter of 2020 where:

• An eligible employer’s business was either fully or partially suspended due to orders from the federal government, or a state government having jurisdiction over the employer limiting commerce, travel, or group meetings due to COVID-19; or

• There is a significant decline in gross receipts. Such a decline occurs when an employer’s gross receipts fall below 50% of what they were for the same calendar quarter in 2019. An employer with gross receipts meeting the 50% drop will continue to qualify thereafter until its gross receipts exceed 80% of its gross receipts for the same quarter in 2019. Exceeding the 80% makes the employer ineligible for the credit for the following calendar quarter.

This is an either/or test, so if a business fails to meet one criteria, it can look to the other in order to qualify. An essential business that chooses to either partially or fully suspend its operations will not qualify for the ERC under the first test, as the government did not mandate the shutdown. It can, however, check to see if it meets the significant decline in gross receipts for any calendar quarter of 2020 that would allow it to potentially claim the ERC.

The gross-receipts test does not require that a business establish a cause for the drop in gross receipts, just that the percentage drop be met.

Second Step: How Many Employees?

Determining the wages that qualify for the ERC depends in part on whether an employer’s average number of full-time-equivalent employees (FTEs) exceeded 100 in 2019. An eligible employer with more than 100 FTEs in 2019 may only count the wages it paid to employees between March 12, 2020 and prior to Jan. 1, 2021 for the time an employee did not provide services during a calendar quarter due to the employer’s operations being shut down by government order or due to a significant decline in the employer’s gross receipts (as defined previously).

“All private-sector employers, regardless of size, that carry on a trade or business during calendar year 2020, including tax-exempt organizations, are eligible employers for purposes of claiming the ERC.”

In addition, an employer of more than 100 FTEs may not count as qualifying wages any increase in the amount of wages it may have opted to pay employees during the time that the employees are not providing services (there is a 30-day lookback period prior to commencement of the business suspension or significant decline in gross receipts to make this determination).

In contrast, qualified wages of an employer that averaged 100 or fewer FTEs in 2019 include wages paid to any employee during any period in the calendar quarter where the employer meets one of the tests in step one. So even wages paid to employees who worked during the economic downturn may qualify for the credit.

Due to the potential difference in qualifying wages, it is important to properly calculate an employer’s ‘full-time’ employees for 2019. For purposes of the ERC, an employee is considered a full-time employee equivalent if he or she worked an average of at least 30 hours per week for any calendar month or 130 hours of service for the month. Businesses that were in operation for all of 2019 then take the sum of the number of FTEs for each month and divide by 12 to determine the number of full-time employee equivalents. Guidance has been issued by the IRS on this calculation for new businesses as well as those that were only in business for a portion of 2019.

Third Step: Calculate the Credit Based on Qualifying Wages

As mentioned earlier, the Employee Retention Credit is equal to 50% of qualifying wages paid after March 12, 2020 and before Jan. 1, 2021, not to exceed $10,000 in total per employee for all calendar quarters. The maximum credit for any one employee is therefore $5,000.

Wages that qualify toward the $10,000-per-employee cap can include a reasonable allocation of qualified healthcare costs. This includes an allocation of the employer portion of health-plan costs as well as the cost paid by an employee with pre-tax salary-reduction contributions. Employer contributions to health savings accounts or Archer Medical Savings Accounts are not considered qualified health-plan expenses for purposes of the ERC.

Qualifying wages do not include:

• Wages paid for qualified family leave or sick leave under the Family First Coronavirus Relief Act due to the potential payroll tax credit;

• Severance payments to terminated employees;

• Accrued sick time, vacation time, or other personal-leave wages paid in 2020 by an employer with more than 100 FTEs;

• Amounts paid to an employee that are exempt from Social Security and Medicare taxes (for example, wages paid to statutory non-employees such as licensed real-estate agents); or

• Wages paid to an employee who is related to the employer (definition of ‘related’ varies depending on whether the employer is a corporation, a non-corporate entity, or an estate or trust).

Eligible employers who averaged more than 100 FTEs in 2019 will then be potentially further limited to the qualifying wages paid to employees who were not providing services during an eligible calendar quarter.

How to Claim the ERC

An eligible business can claim the Employee Retention Credit by reducing its federal employment-tax deposit (without penalty) in any qualifying calendar quarter by the amount of its anticipated employee retention credit. By not having to remit the federal employment-tax deposits, an eligible business has the ability to use these funds to pay wages or other expenses. In its FAQs, the IRS clarified that an employer should factor in the deferral of its share of Social Security tax under the CARES Act prior to determining the amount of employment-tax deposits that it may retain in anticipation of the ERC. The retained employment taxes are accounted for when the Form 941, Employer’s Quarterly Federal Tax Return, is later filed for the quarter.

If the ERC for a particular quarter exceeds the payroll-tax deposits for that period, a business can either wait to file Form 941 to claim the refund, or it can file the new Form 7200, Advance Payment of Employer Credits Due to COVID-19, prior to filing Form 941 to receive a quicker refund.

If an employer later determines in 2021 that they had a significant decline in receipts that occurred in a calendar quarter of 2020 where they would have been eligible for the ERC, the employer can claim the credit by filing a Form 941-X in 2021.

Additional Rules

For purposes of determining eligibility for the credit as well as calculating the credit, certain employers must be aggregated and treated as a single employer.

Also, as a result of claiming the Employee Retention Credit, a qualifying business must reduce its wage/health-insurance deduction on its federal income-tax return by the amount of the credit.

In summary, the Employee Retention Credit is one of several tax-relief options provided by the CARES Act. As it is a refundable credit against federal employment taxes, it is advantageous to all employers, even those who will not have taxable income in 2020. Employers who did not receive PPP funding should check to see if they meet the eligibility requirements and take advantage of this opportunity.

Please note that, at the time this article was written, Congress was considering additional relief provisions that may or may not have impact on the information provided here. u

Carolyn Bourgoin, CPA is a senior manager at Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.; [email protected]

Coronavirus

The Grass Is Greener

By Mark Morris

Brian Campedelli

Brian Campedelli says the pandemic has definitely contributed to a spike in landscaping business.

On his daily commute from Wilbraham to East Longmeadow, Dave Graziano has never seen lawns as green as they are this year — even with the recent lack of rain. And as project manager for the landscape division of Graziano Gardens, he knows a thing or two about green lawns.

“More than ever, people are working on their homes and their yards,” Graziano said. “Because they’ve been stuck at home for the last few months, they’re way ahead in their yardwork projects.”

BusinessWest spoke with several area landscape contractors who say their residential business is booming this year. With people spending so much time at home, yard projects — both large and small — that were delayed in the past are now getting done.

“There’s definitely a correlation between COVID-19 and a spike in our business,” said Brian Campedelli, president of Pioneer Landscaping. “People are stuck at home and want to enhance their lifestyle, so they are improving their yards.”

For some homeowners, the scale of yard projects has gone far beyond replacing some shrubs or reseeding a lawn. Contractors are finding most of their business has shifted to hardscape projects, such as stone patios, stairways, and outdoor kitchens. Projects like these can cost around $20,000, with larger and more elaborate designs exceeding $100,000. For one project, Campedelli and his crew are working on a “massive patio” with an overhang attached to the house to shelter a bar underneath.

“We’re installing a TV with surround-sound speakers, as well as a firepit so they can chill out next to their pool.”

Where patios already exist, Campedelli said some homeowners want to rip out the existing structures and start fresh with new construction, while others enhance what they have by adding a firepit or accent lighting.

According to Gary Courchesne, president of G & H Landscaping, accent lighting has been in high demand in recent years. Also known as low-voltage accent lighting, it’s the subtle lighting that can enhance a home’s aesthetics, safety. and security.

“Because they’ve been stuck at home for the last few months, they’re way ahead in their yardwork projects.”

“As important as the safety and security features are, about 90% of the time, people choose accent lighting for aesthetic reasons,” Courchesne explained.

Improvements like lighting help owners to better enjoy their property now, while boosting curb appeal if they ever want to sell. Real-estate website Homes.com estimates that, when homeowners install accent lighting, they can recoup about 50% of their investment to the eventual resale value of the home. The return on investment for patios and decks can range from 30% to 73%.

No matter what project homeowners choose, they all have the same objective: low maintenance. Courchesne said some of his customers have asked for “no-maintenance” shrubs. While those don’t exist, he and his crew design layouts with reduced maintenance in mind.

“For example, instead of filling around the shrubs with mulch, which needs replacing every year, we’ll use stones,” he said. “People are definitely leaning toward designs that look nice and are easy to maintain.” 

Graziano echoed that point, noting that, when he replaces old shrubs with new ones, his customers want landscapes that are easy to care for and do not require lots of maintenance. “Everyone has busy lives, and they don’t want to be burdened with spending too much time on yard care,” he said.

For many years, sprinkler systems have been an effective way to maintain lawns with minimal effort and continue to be popular this year, especially newer, more efficient models.

“People who did not have sprinkler systems are getting them installed,” Courchesne said, “and those who own systems but haven’t run them much are using them more this year.”

Growing Revenues

While landscape companies are busy with plenty of projects, it’s not exactly business as usual.

Each day starts with making sure workers have the proper face masks and other personal protective equipment they’ll need for that day. In the past, a crew might ride together to a job, but state guidelines now mandate one person per vehicle, and shared equipment must be disinfected in between users. Contractors have adjusted to all these extra steps because they are grateful to be considered an essential business.

That essential status wasn’t a given at first, though. Back in March, when Gov. Charlie Baker released the first round of essential industries that could remain open during the COVID-19 pandemic, the landscape industry was not explicitly listed. The guidelines allowed for some interpretation that would include them, such as support of essential construction projects.

Gary Courchesne says accent lighting is becoming more popular

Gary Courchesne says accent lighting is becoming more popular

So a coalition of landscapers, golf-course superintendents, and related professionals formed the Green Industry Alliance of Massachusetts (GIA) and appealed to the governor to specifically identify landscaping as an essential industry. The group’s argument centered around the short time window that spring presents for fertilizing, as well as controlling mosquitos, ticks, and other invasive species. The GIA also noted that many homeowners who are physically unable to take on lawn care depend on outside companies to maintain their property.

Shortly after the appeal, the governor declared landscapers essential providing they follow CDC guidelines.

Courchesne said the initial confusion of whether or not they could start their season resulted in some starts and stops in the beginning, but his company is now up to full speed and adjusting to the new protocols.

“Normally, we start the day with our full staff gathered around a conference table,” he said. “Now, we’re meeting in smaller groups out in our yard, so even if there was an infection, it’s not spreading to everyone.” 

In early March, before the governor had ruled on landscapers’ status, Greg Omasta, president of Omasta Landscaping, temporarily closed his business over concerns about the spread of coronavirus.

“We closed for three weeks to make sure all our people were healthy,” he said, noting that this decision put his business behind in some of its early spring projects. “We’re scrambling now to get bark mulching done and plant seasonal flowers and such.”

Campedelli said his company also lost some work early in the spring due to delays caused by COVID-19, but he understands the changing nature of the virus and the guidelines. “We stay current on the latest requirements regarding COVID-19, and we make sure to share those with our workers as they happen.”

A few landscapers say hardscape projects are surging.

A few landscapers say hardscape projects are surging.

Since the go-ahead in March, Campedelli said his company is so busy, he would hire 10 more people if he could. Having enough workers is also a constant challenge for Omasta, who has 30 workers on staff but would like to add six or eight more.

Several contractors said one particular challenge in finding workers this year involves the Pandemic Unemployment Assistance program, which allows unemployed workers to collect an additional $600 per week through late July. While they all agree the program has merits and is important to help those who are struggling, they also point out that the additional $600 a week keeps some people on the sidelines who would otherwise be working.

Sometimes, filling open jobs is difficult because of the nature of the work. Graziano said the industry has been the same for more than 50 years, and it’s not for everyone. “Either you like to put a shovel in the ground, move mulch around and install pavers, or you don’t,” he told BusinessWest.

A typical landscaping season can run nine months, with three winter months dedicated to snow plowing. As Omasta pointed out, the length of the season is always tied to weather, which determines how early they start in the spring and how late they can work in the fall.

Even when the season is in full swing, rain is a constant variable to consider, Courchesne added. “There was one week in May when, out of six work days, it rained four of them.”

Home Games

When the rain clears, people are looking to get outside, but they’re not ready to stray too far. Until there is more certainty about the coronavirus, many are choosing not to go away on vacation.

Because of this uncertainty, Omasta said, his customers have made the decision to stay put rather than spending a week at the Cape.

“They’re telling me they want to stay home and work on some improvement projects so they can enjoy their backyard this summer,” he noted.

It’s not unusual for homeowners to want a big improvement project and then procrastinate on making the final decision. Courchesne said this year seems different.

“I’m seeing people with less hesitation than normal in their purchasing attitude,” he noted. “They’re saying, ‘we’re home, so let’s do this.’”

Because more people are home, even working from there, he added, they are realizing their home is not such a bad place — and they want to make it even better.

And that has made this a different kind of year for this industry.

Accounting and Tax Planning

Fight Back with Diligence, Communication, Monitoring, Education

By Julie Quink, CPA, CFE

Julie Quink

Julie Quink

In recent months, business owners have been faced with difficult business decisions and worries surrounding the financial and safety impacts of the COVID-19 pandemic, including the temporary closure of non-essential businesses, layoffs and the health of their workforce, remote work, and financial stability (short- and long-term) for their business.

In short, they have had much on their minds to stay operational on a day-to-day basis or in planning for reopening. And with that, businesses are prime targets for fraud schemes.

As professionals who counsel clients on best practices relative to fraud prevention and detection techniques, we unfortunately are not immune to fraud attempts as well. The filing of fraudulent unemployment claims is a scheme for which we have recent personal experience. The importance of internal controls — and making sure that appropriate controls are in place in a remote environment, with possibly leaner staff levels — should be heightened and reinforced.

Fraudulent Unemployment Claims

The filing of fraudulent unemployment claims has been one of the newest waves of fraud surrounding employees. These claims certainly have an impact for the individual for whom a claim is filed, but also have further-reaching implications for the victimized business as well.

In these schemes, an unemployment claim is filed using an employee’s identifying information, including Social Security number and address. Unfortunately, if you have ever been a victim of a data breach, you can feel confident that your personal information has been bought and sold many times since that initial breach.

Since these claims can be filed electronically, an online account is created by the fraudster for the individual. In that online setup and given that unemployment payments can be electronically paid, the fraudster sets up his or her own personal account as the receiver of the unemployment funds.

“The filing of fraudulent unemployment claims has been one of the newest waves of fraud surrounding employees. These claims certainly have an impact for the individual for whom a claim is filed, but also have further-reaching implications for the victimized business as well.”

In most cases, the first notification that an unemployment claim has been filed is a notice of monetary determination received by the individual via mail at their home address from the appropriate unemployment agency for the state that the claim has been filed with. By then, the claim has already made its way to the unemployment agency for approval and has gone through its system for approvals. In these pandemic times, the unemployment agencies have increased the speed at which claims are processed to get monies in the hands of legitimate claimants, but in the process have allowed fraudulent claims to begin to enter the process more rapidly.

So, you might wonder how this impacts a business if the claim is fraudulently claimed against an individual. Again, with some personal firm experience in tow, we can say that these claims are making it to determination status at the business level.

Even though the claim is fraudulent and, in some cases, the employee is gainfully employed at the business, the claim makes its way to the employer’s unemployment business account. Hopefully, affected individuals have been notified through some means that the claim has been filed. However, employers should not bank on that as a first means of notification of the fraud.

Perhaps employers are monitoring their unemployment accounts with their respective states more frequently because they may have laid off employees, but for those employers who still have their workforce intact, the need to monitor may not be top priority.

Impact of the Scheme

The impact on an employer of a fraudulently filed unemployment scheme targeting one of its employees is not completely known at this time because the scheme is just evolving. However, we do know this scheme merits notification to employees of the scam and increased monitoring of claims — both legitimate and false — by the company, all during a time when financial and human capital resources are stretched.

The scheme could cause employer unemployment contributions going forward to be inflated because of the false claims. For nonprofit organizations, which typically pay for unemployment costs because claims are presented against their employer account, this scheme could have significant financial implications.

For the individual, the false claim, if allowed to move through the system, shows they have received unemployment funds. This has several potential negative effects, including the ability to apply for unemployment in the future, the compromise of personal information, and the potential tax ramifications in the form of taxable unemployment benefits even though the monies were not actually received.

Detection and Prevention Techniques

Internal controls surrounding the human resources and payroll area should be heightened and monitored to encompass more frequent reviews of unemployment claims.

Communication with employees about the unemployment scam and the importance of forwarding any suspicious correspondence received by the employer is key. The employee may be the first line of defense.

Also, working in a remote environment should give business owners cause to pause and re-evaluate systems in place, including data security and privacy. It is unclear how these fraudsters may be obtaining information, but it is critical to be diligent and reinforce the need for heightened awareness relative to e-mail exchanges, websites visited, and data that is accessible.

Diligence, communication, monitoring, and education are important for business owners to prevent and detect fraud. Diligence in ensuring appropriate systems are in place, continued open and deep lines of communication with team members, monitoring relative to the effectiveness of systems, and educating team members on the changing schemes and the importance of their role are effective first steps.

Julie Quink is managing principal with West Springfield-based accounting firm Burkhart Pizanelli; (413) 734-9040.

Accounting and Tax Planning

Changes in Benefit Plans

By Melissa English

Melissa English

Melissa English

Audits of employee-benefit plans continue to evolve, and the pace of this evolution is unpredictable.

Areas such as technology and skills continue to grow, as well as industry standards. Now, throw COVID-19 into the mix, and we have to adjust not only to new ways of having these plans audited, but to additional standards that come into play with it.

The Auditing Standards Board has recently been issuing new standards. These standards go hand-in-hand with changes in technology and skills. These standards will improve the provisions of plans, affect the audits of plans, and address risk assessment and quality control. Auditors, as well as plan sponsors and administrators, should understand what these changes are and how they will affect retirement plans.

So what are some of the changes we can expect to see in the near future?

• Accounting Standards Updates (ASU) 2018-09 and 2018-13, which improve the standards on valuation of investments that use net-asset value as a practical expedient and improvements to fair-value disclosures. These both will be effective for years beginning after Dec. 15, 2019; and

• Statement on Auditing Standards (SAS) 134-141, with the biggest impact on limited-scope audits, which will now be called ERISA Section 103(a)(3)(c) audits. These standards will also affect the form and content of engagement letters, auditors’ opinions, and representation letters. The Statement on Auditing Standards was previously effective for years beginning after Dec. 15, 2020 but, due to COVID-19, has been moved, and is effective for years beginning after Dec. 15, 2021.

“Now, throw COVID-19 into the mix, and we have to adjust not only to new ways of having these plans audited, but to additional standards that come into play with it.”

In addition to these new standards, new acts recently came into law:

• The Bipartisan Budget Act of 2018, which was signed into law on Feb. 9, 2018. This act made changes in regulations for hardship distributions;

• The SECURE Act which became law on Dec. 20, 2019. This act will make it easier for small businesses to set up safe-harbor plans, allow part-time employees to participate in retirement plans, push back the age limit for required minimum distributions from 70 1/2 to 72, allow 401(k) plans to offer annuities, and change distribution rules for beneficiaries. This act also added new provisions for qualified automatic contribution arrangements (QACAs), birth and adoption distributions, and in-service distributions for defined benefit plans; and

• The CARES Act, which was signed into law on March 27, 2020 and acts as an aid and relief initiative from the impact of the COVID-19 pandemic. This act allows participants who are in retirement plans the option of taking distributions and/or loan withdrawals early without penalties during certain time periods for qualified individuals.

Lastly, there are constant discussions on cybersecurity. Cybercrime is one of the greatest threats to every company. Some questions to consider: does your company have a cybersecurity policy in place? Do you have insurance for cybersecurity? What is management’s role on cyber risk management? Do you offer trainings on how to handle cybercrime for both your IT department and all employees of the company? Cyberattacks are a normal part of daily business, but they can be significantly reduced if companies understand the risk, offer adequate resources and trainings, and maintain effective monitoring.

These changes affect most defined-contribution and defined-benefit plans. Plan sponsors should be evaluating these changes and the impact they have on retirement plans.

Some of these changes are optional, some are required, and some require amendments to plan documents. Plan sponsors should be discussing these changes as soon as possible with their third-party administrators and auditors. Remember, it’s the fiduciary’s responsibility to run the plan in the sole interest of its participants and beneficiaries, and to do this in accordance with all industry rules, regulations, and updated standards.

Melissa English is an audit manager at MP P.C. in its Springfield location. She specializes in employee benefit-plan work, such as audits; researching plan issues; compliance regulations, including voluntary plan corrections and self-corrections; and DOL and IRS audit examinations; (413) 739-1800.

Construction Special Coverage

Constructing a New Way Forward

By Mark Morris

Essential.

Brightwood-Lincoln Elementary School

Brightwood-Lincoln Elementary School is an $82 million project currently being built by Daniel O’Connell’s Sons.

That one word made all the difference for the construction industry as most sectors of the economy shut down, except for a handful deemed ‘essential’ by the state, construction among them, and thus able to continue working.

But to do that work, they had to quickly adjust to a new reality, as construction managers adopted new guidelines and procedures to prevent workers from catching the virus on the job site.

“At that time, building the project became secondary,” said Joe Imelio, project executive for Daniel O’Connell’s Sons. “The first item on our list was the health and well-being of everyone on the job.”

On March 25, Gov. Charlie Baker issued an order outlining COVID-19 guidelines and procedures for donstruction sites. In addition to reinforcing CDC guidelines on frequent handwashing, wearing face masks, and maintaining social distancing, the guidelines detailed specific procedures for construction sites.

In addition to providing workers with personal protective equipment (PPE) such as face masks and face shields when social distancing is impossible, the mandate also imposed a “100% glove policy” while on the job site.

Another guideline emphasized zero tolerance for sick workers on the job. The guidelines stated in all caps: “IF YOU ARE SICK, STAY HOME!” Every day, each person reporting to work is expected to self-certify their health status by completing a brief questionnaire to confirm they are healthy enough to work for that day. If the construction work is inside, known as a “closed building envelope,” a medical professional must take everyone’s temperature before they can enter the building.

BusinessWest spoke with several construction managers about the adjustments they have made to maintain a safe environment for workers and keep their projects moving.

David Fontaine Jr., vice president of Fontaine Brothers, said he began preparing pandemic protocols in February, before the guidelines were established, to make sure his company could continue to operate safely.

Joe Imelio

Joe Imelio

“At that time, building the project became secondary. The first item on our list was the health and well-being of everyone on the job.”

“In our industry, many of the products in the supply chain come from overseas, so we saw ripples of this a little earlier than others,” he noted.

In early February, Nate Clinard, vice president of safety for Daniel O’Connell’s Sons, began purchasing more PPE than the normal stock, as well as hand sanitizer and disposable rags and towels. He also tried to buy hand-washing stations for outdoor job sites, which were selling fast.

“Because they were difficult to get from vendors and suppliers, we built our own portable wash stations,” he said.

But, despite the hurdles, at least firms were working, and continue to work, although the long-term economic impact from the pandemic and the shutdown — and what that means for the volume of projects contractors will compete for down the line — remains to be seen.

Starts and Stops

Within some niches, the pandemic offered opportunity. For example, in mid-March, as much of the state began shutting down, the Massachusetts Department of Transportation (DOT) accelerated its scheduled projects for the roadwork season that was about to begin in a few weeks.

Janet Callahan, president of Palmer Paving, which has many DOT contracts, said her crews would normally work on large road projects at night when traffic is lighter. As stay-at-home orders resulted in empty roads across the state, the DOT allowed paving crews to switch to daytime construction.

“For the same number of hours, we are able to work safer and more efficiently,” Callahan said. “You just get more done in daylight.” She noted that daytime paving is a big reason DOT projects across the state are 25% ahead of schedule.

Other construction managers saw several projects delayed at the outset of the coronavirus. Stephen Killian, director of New England Operations for Barr and Barr, said a number of his company’s projects were pushed back by as much as 12 weeks.

“Our people worked on the jobs as best as they could remotely, but if you can’t put it in the ground, you’re not moving the project forward.”

Killian added that, even when projects begin again, it’s not as simple as bringing all the workers back and resuming the job. Among the governor’s guidelines is a mandate that construction managers devote one day as a “safety stand down” to make sure everyone understands the new protocols. Combined with CDC guidelines restricting meetings of no more than 10 people, restarting a job can become a logistical challenge.

David Fontaine Jr.

David Fontaine Jr.

“In our industry, many of the products in the supply chain come from overseas, so we saw ripples of this a little earlier than others.”

“If you have 130 people on a job site, the ramp-up is slow because everyone needs to have the stand-down meeting to understand their responsibilities,” Killian said. “Doing that for all 130 workers in one day isn’t possible now because you can’t meet in groups larger than 10 people.”

One concern cited by several managers involves the uncertainty and anxiety about a virus that everyone is still trying to understand.

“Everyone seems rattled, and tempers are shorter because people constantly feel under pressure,” said John Rahkonen, owner of Northern Construction Services.

Callahan agreed. “Managing people’s anxiety and insecurity is something we work on every day, even before workers start their shifts.”

To try to ease some of the anxiety, Clinard and his staff made themselves available at all the company’s job sites to answer questions and listen to concerns.

“Early on, a lot of people just needed to talk,” he said. “We were there to help educate and provide an ear for them.”

As the owner of his company, Rahkonen said he feels a real responsibility to his employees. He described the decision to continue working during the pandemic as a scary one.

“There were a lot of people who thought we should shut down, but I don’t think that would have been beneficial to the families of our workers,” he said. “So far, knock on wood, we’ve been right.”

Trial and Error

As might be expected, suddenly adapting to new protocols is a process of trial and error. Killian noted a problem with getting accurate temperature readings back in March when it was still cold outside. “People were running temperatures of about 86 to 90 degrees because they were walking to the site after they parked their cars.”

To get more accurate readings, Killian said they changed the protocol to a drive-up system where everyone’s temperature is taken while still in their vehicles.

On face masks, Killian said his safety director found a contradiction in the state regulations. Guidelines for the construction industry say masks must be worn when social distancing is not possible. The regulation that covers all businesses, however, says face coverings must be worn by all workers. While Killian supports wearing masks near other workers, requiring masks at all times may cause problems. He’s concerned about worker fatigue and potential health issues on those summer days when 90-degree temperatures are common.

“We have to be mindful that the average age of the tradesmen and construction workforce is over 45 years old,” he said, adding that he has reached out to state officials seeking clarification on the requirement.

Palmer Paving crews

As more people stayed home and off the roads, Palmer Paving crews switched to daytime work.

Clinard said his job sites are using technology to make the daily self-certifying questionnaire work better. By assigning a QR code to each project, workers simply hold their phone cameras to the code to launch the questionnaire. Once completed, the information is loaded to a master document for that project.

“This gives us a real-time read of who’s on site and that they are healthy,” Clinard said.
“If any responses to the questionnaire suggest issues with that person’s health, they are not allowed on the job site that day.”

Requiring people who aren’t feeling well to stay home contributes to what Imelio called a “culture change in the construction industry,” adding that, “for many of the workers, if they stay home when they’re sick, they don’t get paid.”

On the flip side, Killian said many healthy workers who would normally be on the job are instead filing for unemployment out of a concern they may bring the virus home. “Unfortunately, that affects the daily number of men and women on site. Even the union halls are having a difficult time getting additional staff.”

Several managers addressed the real costs that come with COVID-19 mandates that didn’t exist a few months ago. Fontaine said his company’s staff is able to address many of the requirements but not all of them.

“There are definitely additional costs associated with COVID, such as the increase in labor to sanitize the site and bringing in medical professionals for temperature screening,” he noted.

Killian said building owners have agreed to pay for many of these extra costs, but they’re not happy about it because it’s an added expense they could not have anticipated when budgeting the project.

Factoring in all the added expense from the COVID-19 protocols creates another challenge when bidding on future projects as well. “If you bid on a job and put the cost of all the mandates in your bid, you may not be competitive,” Killian said.

In recent meetings on future projects, Imelio said he was asked about the impact of COVID-19 going forward. “It’s like asking, ‘what do you think interest rates will be in a year?’”

Fontaine’s company is currently building South High Community School, a $200 million project he described as the largest public project in the history of Worcester. He’s concerned that projects like these, which depend on tax revenue from state and federal sources, will be hit hard in the future. In the past, the company has adjusted by taking on more private construction when public projects slow down.

“The biggest question for us is how will COVID affect the 2021 and 2022 workload,” Fontaine said. “We may have to refocus our project mix for a couple years if we go through another significant downturn.”

Hit the Road

If nothing else, Callahan said, the pandemic is a reminder of the important role infrastructure plays in the region’s safety and economy. “Essential service providers such as hospital workers, firefighters, power-company crews, and delivery people all depend on our road system to get to their jobs and to help people.”

Despite the extra steps to start each day, all the managers said they are adapting to the new requirements. The trick now is to stay diligent.

“Our processes are in place, and they work well for the personal protection of all our employees,” Imelio said. “It’s different than the old way of doing business, but we’re making progress.”

“Managing people’s anxiety and insecurity is something we work on every day, even before workers start their shifts.”

Even though their work is outdoors, Callahan said it’s important for her crews to remain diligent. “It would take only one person to affect the jobs of 25 people, and that’s only one crew. We’ve made it clear to our staff, there is no relief from these guidelines.”

Strict compliance is worth it, she went on, because it gives her company the opportunity to repair roads for the DOT and municipalities around the state.

“We are so grateful to be working and employing people,” she said. “We are not part of the 41 million people who have suffered a job loss during the pandemic.”

Fontaine said his workers have had a great attitude during a time of difficult adjustments.

“Being in an essential industry, you know it’s important to be cognizant of your safety and the safety of those around you,” he told BusinessWest, “and you know it’s important to keep moving forward.”

Law Special Coverage

COVID Lawsuits

By John Gannon, Esq.

Businesses across the globe are in the midst of planning, preparing, and executing their reopening strategies. While this news is encouraging, employers face novel and complicated legal questions about their potential liability to employees who either get sick at work or cannot return due to medical or childcare-related reasons.

Searching for answers, businesses leaders are confronted with an array of local, state, federal, and industry-specific protocols for operating safely. Charting a course in the face of this uncertainty is no small task. Unfortunately, one thing remains clear: there will be a wave of lawsuits triggered by the difficult business decisions made during this challenging time.

The COVID-19 crisis will send shockwaves through the courts and fair-employment agencies (such as the Equal Employment Opportunity Commission and the Massachusetts Commission Against Discrimination) for years to come. Senate Majority Leader Mitch McConnell remarked that an “epidemic” of these lawsuits will lead to “a trial-lawyer bonanza.” While likely overstated, the concern for employers should be real. Numerous COVID-19-related lawsuits have been filed, with many more on the way. Here are a sampling of those legal theories, with prevention tips and tactics at the end.

Negligence and/or Wrongful Death

One of the scariest claims for businesses will be negligence and wrongful-death lawsuits. In short, these actions may be lodged by employees (and even customers) who are harmed by COVID-19 because the employer failed to keep the work environment safe.

How might this look? Imagine that employees in a manufacturing plant return to work as the business reopens (or perhaps they have been working all along if the workers are deemed ‘essential’). Joe, who works on the factory floor in close proximity with others, tests positive for COVID-19. Mike, who works near Joe, also tests positive. Mike in turn infects members of his household, including an aging, immune-compromised parent. Can any of them sue the business?

John S. Gannon

John S. Gannon

“Our workers’ compensation system typically prevents employees from suing their employers for injuries that result from working. Instead of suing, employees with occupational injuries get paid through workers’ comp. But is a COVID-19 infection ‘occupational?’”

Our workers’ compensation system typically prevents employees from suing their employers for injuries that result from working. Instead of suing, employees with occupational injuries get paid through workers’ comp. But is a COVID-19 infection ‘occupational?’ Proving the root cause of a COVID infection is very difficult, as the virus spreads easily and can be contracted nearly anywhere.

In the above example, would Joe have a workers’ comp claim? Probably not, unless he can show others he was working in close proximity with someone who had the virus before him. What about Mike? He has a better claim, but still no sure thing. And certainly the family member would not be filing a comp claim. Instead, a negligence or wrongful-death suit might follow.

Recently, the relative of a retail-store employee in Illinois who died from COVID-19 sued the retailer for negligence and wrongful death. The lawsuit claims that the employee contracted COVID-19 in the store, and the business did not do enough to protect employees from the virus. All businesses that are open or reopening should have this case on their radar.

FFCRA Violations

By now, everyone should know that the Families First Coronavirus Response Act (FFCRA) allows employees to take paid leave for a number of COVID-19-related reasons, including the need to care for children who are unable to go to school or daycare. Employees who are denied FFCRA rights or retaliated against for taking FFCRA leave can sue you in court. Successful employees may be entitled to reinstatement, lost wages, attorney’s fees, and double damages.

The first FFCRA-related lawsuit was filed last month. In the case, a female employee (and single mom) claimed she was fired because she requested FFCRA leave due to her son’s school closing. The employee allegedly discussed her need for leave to care for her son, and was told that the FFCRA was not meant to be “a hammer to force management into making decisions which may not be in the interest of the company or yourself.” She was fired a few days later and then filed what might be the first FFCRA lawsuit. Many more are certain to follow.

Discriminatory Layoffs

At the time of this article, the unemployment rate in the U.S. stands at almost 15%, and more than 30 million Americans have filed for unemployment since mid-March. Each layoff decision comes with the risk that someone will claim the reason they were selected was discriminatory.

Suppose Jane, who is 60, gets laid off, while many younger workers were retained for employment. Jane may claim that the reason was at least partially motivated by her age. If she was right, it would be would be textbook age discrimination.

Whistleblower/Retaliation Lawsuits

Employees who raise complaints or concerns about workplace safety are protected against retaliation by the Occupational Safety and Health Act. Similarly, Massachusetts has a law that protects healthcare workers who complain about practices that pose a risk to public health. We expect an increase in these lawsuits during this pandemic.

Prevention Strategies

These novel COVID-19-related lawsuits generally fall into one of two buckets: claims related to worker health and safety, and discriminatory or retaliatory adverse employment actions.

To protect against the first batch, businesses need to rigorously follow federal, state, and local guidance on maintaining a safe workplace. Agencies like the Centers for Disease Control and Prevention, the Occupational Safety and Health Administration, and the Equal Employment Opportunity Commission have issued guidance on topics like maintaining safe business operations, temperature checks for employees, and personal protective equipment. Check with your risk-management advisors to see if they have developed checklists or other tools you can use to aid in your business reopening.

Avoiding the second type of lawsuit (discrimination, retaliation, etc.) involves the same tried and true principles that were critical before COVID-19. Make sure you have reasonable, business-based justifications for your decisions that are not motivated by characteristics like race, age, gender, or use of FFCRA leave. These business-based reasons should be well-documented and understandable to laypeople, who may be reviewing your justification in a jury room. Finally, when in doubt, consult with your labor and employment-law specialists.

John Gannon is a partner with Springfield-based Skoler, Abbott & Presser. He specializes in employment law and regularly counsels employers on compliance with state and federal laws, including the Americans with Disabilities Act, the Fair Labor Standards Act, and the Occupational Health and Safety Act. He is a frequent speaker on employment-related legal topics for a wide variety of associations and organizations; [email protected]