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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]

Coronavirus Special Coverage

Q & A for the Reopening

By Ellen McKitterick and Mark Emrick

Employers are beginning to look at bringing employees back into the workplace and/or opening up their offices after being closed for six to eight weeks. Here is a sampling of the key questions that the HR Hotline staff at the Employers Assoc. of the NorthEast (EANE) is responding to.

Ellen McKitterick

Ellen McKitterick

Mark Emrick

Mark Emrick

How do I respond to an employee who says they are afraid to return to work? Each instance needs to be looked at on a case-by-case basis. If the employee has a valid reason that fits within an FMLA, ADA, or other reasonable accommodation, then be sure to start the interactive process and see if the request is reasonable. Otherwise, general fear is not a valid reason, and the employee would be voluntarily resigning.

How do I respond to an employee who says they don’t feel safe returning to the workplace? Assuming you have taken all required cleaning and disinfecting steps, you can respond: “we are operating a safe workplace. We are operating in accordance with state and local safety and health guidelines. There currently is no recognized health or safety hazard in our workplace.” Otherwise, general fear is not a valid reason, and the employee would be voluntarily resigning.

As we ramp up our operations, we need our workforce to return to the physical workplace. How do I respond to an employee’s request to continue working from home? Employers do not have to permit work from home if it does not fit their business needs; it is not up to the employee. That being said, in our current crisis, it is wise to allow working from home until the COVID-19 situation is under better control.

What if I can only bring my employees back part-time? They have been on unemployment during their furlough. How will this affect their ability to collect benefits? Employees who are collecting any benefit from unemployment insurance (UI) will continue to receive the additional $600 from the federal government at least through July 31. Partial unemployment may still qualify them for some UI; there is a partial-payment calculator at mass.gov to determine the possible benefit.

Can my employees continue to collect unemployment after I have asked them to come back, but they refuse? They can try, but they are not eligible if you have offered work. Employers should notify the Department of Unemployment Assistance of any employee refusing to return.

What do I do if my employee says they are making more money on unemployment than working for me and do not want to return right away? The employee needs to make a decision. Either they take the short-term gain of extra unemployment or the long-term gain of their job. This would be considered, in most cases, voluntary resignation. Their position may not be available when they decide to return to work.

What effects does our recent furlough have on my employees’ flexible spending account and dependent care accounts, the loss of contributions, and amount of time remaining for contributions in 2020? Employees may be allowed to make changes to some accounts, but it would require an amendment to your plan. IRS Notice 2020-29 may answer more questions.

Can I screen or test employees for symptoms of COVID-19 before they return to work? What screening methods should I use? Yes, during a pandemic you can take employees’ temperatures or ask business-related health questions such as “have you had symptoms, a fever over 100.4, or been in contact with someone diagnosed with COVID-19?: Remember that HIPAA and privacy laws apply.

Can I require older workers who are at high risk to continue to stay at home? No, you cannot exclude anyone in a protected class. If they voice a concern, then you should enter into the interactive process and see if a reasonable accommodation may apply.

Do I have to provide face masks for my employees? In Masachusetts, employees will be required to wear them at work, but it is to be determined who has to provide them. Neighboring states are all requiring the employer to provide needed personal protective equipment.

How do I respond to any employee who refuses to adhere to our social-distancing guidelines or wear a face covering in the office? Upon return to work, employers should put employees on notice of any new policy, any special protocols that may apply, and the personal protective equipment that is required. Engage in an interactive process to ascertain any concerns and determine if special conditions may apply before moving to discipline.

What should I do if my employees are complaining about coming back to work and the extra requirements? Employees are entitled to complain about working conditions to fellow employees. They should remain professional and follow all company policies, but they have the right to voice their opinion as long as they are not defamatory or causing disruptions.

Ellen McKitterick is EANE’s newest HR business partner. She advises member organizations on all aspects of employment law, including wage and hour issues, employment discrimination, employee benefits, leaves of absence, and unemployment, and trains EANE members and non-members on harassment prevention, basic employment concepts, employee medical and leave issues, and key management skills. Mark Emrick is a senior HR business partner at EANE with consulting responsibilities for all aspects of the HR function — recruiting, interviewing, hiring, training, benefits administration, compliance, performance management, coaching, development, corrective action, and terminations. He is also an experienced investigator for employee complaints and issues.

Law Special Coverage

Calling Back Workers

By Mary Jo Kennedy, Esq. and Sarah Willey, Esq.

Mary Jo Kennedy

Mary Jo Kennedy

Sarah Willey

Sarah Willey

As businesses prepare for reopening, many employers are summoning laid-off and furloughed employees and notifying employees who have been working remotely to return to the physical workplace.

Some employers are anticipating that their reopening may be a gradual process. Employers may do a ‘soft reopening’ in order to test workplace-safety measures such as social distancing. Some businesses may find, as a result of new safety procedures, that their workplace no longer requires certain positions. As a result, employers may not need the same number of employees or positions they had back in early March.

However, recalling only a portion of a workforce does have its own risks. Employers should carefully consider who and how many workers to recall and when to have them return.

Once notified, workers’ responses to the callback may vary. Some employees will welcome the return to work as a sign that things are returning to ‘normal,’ while others may have mixed feelings as they may want or need to stay home until the pandemic is over. Employers must consider how to best respond to workers’ requests.

How do you select which employees to call back when calling back fewer than all?

First, identify the types of positions and the number of employees needed for each position to be recalled. There may be certain skill sets or knowledge base needed in order to ramp up business after the shutdown.

“If they have medical concerns regarding returning to work, they should discuss those concerns with their supervisor or human-resources team and encourage them to stay home or arrange an alternate work assignment.”

Second, businesses should consider any policy or past practice regarding recalling employees as there may be a legitimate business reason for not following them. Employers should evaluate their business rationale for the selection process and document the criteria used for selecting one employee over another. Selection criteria may appear neutral on the surface, but the effect of its application may inadvertently result in the elimination of all or a majority of a group of employees in a class protected under discrimination laws. As a result, selection criteria may need to be reconsidered in order to avoid possible discrimination claims.

Can you decide not to recall employees because of a concern regarding their health?

Employers may have a genuine concern that a group of employees may be susceptible to greater harm if infected with COVID-19. For example, an employer may be concerned about possible exposure to COVID-19 of an older employee, employees with known medical conditions, or a pregnant employee. Any selection decision based on a person’s age, perceived disability, or pregnancy will expose the employer to discrimination claims.

Employers should not take a paternalistic view of deciding what is best for its employees. Rather, an employer should let employees know that, if they have medical concerns regarding returning to work, they should discuss those concerns with their supervisor or human-resources team and encourage them to stay home or arrange an alternate work assignment.

What if you laid off some and furloughed other employees?

Employers should consider calling back furloughed employees before rehiring laid-off employees. Employers may have given furloughed employees written assurances that they would be called back and may have retained them on health insurance, indicators that the employer intended to have the furloughed employees return to work.

How do you communicate the call back?

Employers should communicate the offer to return to work in writing. The communication should detail the start date, full-time or part-time status, position, hours, work schedules, wages, location, and conditions of the job.

What if a business calls back laid-off or furloughed employees and the response is that an employee has found other employment?

If an employer is told that a laid-off or furloughed employee is not returning to work because the individual has found employment elsewhere, the employer should document the reason for not returning and then move to the next employee on the recall list. If your business participated in the Paycheck Protection Program, documenting the reason for the refusal is critical in order to meet the loan-forgiveness requirements.

Also, if accrued but unused vacation time has not previously been paid, it should be paid out to the employee immediately, and if the employee was on the employer’s health insurance, a COBRA notice should be sent to the employee.

What if a business calls back a laid-off or furloughed employee who is unable to return to work because of a lack of childcare?

With schools and daycare facilities currently closed, employees with school-aged children may not have childcare options. Under the CARES Act, individuals who are unable to work (including telework) and are the primary caregiver for a child whose school or childcare facility is closed or whose childcare provider is unavailable due to COVID-19 can receive Pandemic Unemployment Assistance.

In addition, the employee may be eligible for paid extended family and medical leave under the Families First Coronavirus Response Act (FFCRA), under which eligible employees who are unable to work at their normal worksite or by means of telework are entitled to 12 weeks of paid extended family and medical leave (at two-thirds of their regular rate of pay) to care for a child whose school or place of care is closed (or childcare provider is unavailable) due to COVID-19-related reasons.

The FFCRA provides eligibility for paid extended family and medical leave to an employee who was laid off or otherwise terminated by the employer on or after March 1, 2020 and rehired or otherwise re-employed by the employer on or before Dec. 31, 2020, provided that the employee had been on the employer’s payroll for 30 or more of the 60 calendar days prior to the date the employee was laid off or otherwise terminated.

What if an employee has been working remotely during the shutdown and is unable to physically return to the worksite because of a lack of childcare?

While many remote employees have been able to work effectively at home during the forced shutdown, other remote employees may have struggled due their type of work not being conducive to telework. An employer may have valid concerns about an employee’s telework performance, such as the quality and quantity of the work, and should address with remote employees any performance issues.

An employer should discuss with an employee the possibility of flexible or reduced hours in a physical workplace or a modified remote-work schedule. If these options are not viable, an employee unable to return to their normal worksite may be eligible for unemployment.

What if an employee who has a medical condition increasing their risk of harm if exposed to COVID-19 wants to continue working remotely?

Addressing this issue requires consideration of federal and state reasonable-accommodation laws. If the medical diagnosis constitutes a disability under state or federal disability laws, the employee may be entitled to a reasonable accommodation. Given these unprecedented times, an employer may treat a medical condition that puts an individual at an increased risk of harm if exposed to COVID-19 as a disability. The employer should also explore with the employee other possible accommodations in addition to working remotely.

What if an employee can work but has a medical condition, adding increased risk of harm if exposed to COVID-19, but the employee’s job duties cannot be done remotely?

Dealing with employees whose work cannot be done remotely but are at an increased risk of harm if exposed to COVID-19 has unique concerns, and each situation should be considered on a case-by-case basis. If the employee was advised by a healthcare provider to self-quarantine due to concerns related to COVID-19 and the employer is subject to the FFCRA, the employee may be eligible for 80 hours of paid sick leave under FFCRA.

However, in this scenario, the FFCRA requires that the employee be “particularly vulnerable to COVID-19” and that following the advice of a healthcare provider to self-quarantine prevents the employee from being able to work, either at the employee’s workplace or by telework. Employers should obtain appropriate medical documentation substantiating the reasons for the self-quarantine.

In addition, if the medical diagnosis constitutes a serious medical condition or a disability, the employee may be entitled to either an unpaid leave of absence under the Family Medical Leave Act (if the employer has 50 or more employees and as such is a FMLA-covered employer) or a leave of absence as a reasonable accommodation for the disability.

What if an employee wants to continue to work remotely because the employee has an immediate family member who has a medical condition that puts that family member at increased risk of harm if exposed to COVID-19?

An eligible employee of a FMLA-covered employer can take a leave of absence to care for a family member with a serious medical condition. But if the family member does not need the employee’s care, the requirements for FMLA leave would not be met.

Under the American with Disabilities Act, employers are required to provide qualified disabled employees with a reasonable accommodation. When leave and accommodation laws do not apply, employees may ask employers to apply common decency to the situation and let them return to the physical workplace at a later time.

These are challenging issues for employers, who must balance the need to protect employees from COVID-19 with the need to maintain a workforce to keep the business open.

Employers should be cautious when navigating the various leave and disability laws in order to avoid lawsuits. Before denying employees’ leaves or other reasonable-accommodation requests, employers should engage with employees in order to assess the validity and reasonableness of the requests and should document the steps taken.

Mary Jo Kennedy is a partner and chair of the employment group at Bulkley Richardson, and Sarah Willey is counsel and member of the employment group at Bulkley Richardson.

Features

Closing the Digital Divide

By Mark Morris

When schools closed across Massachusetts due to coronavirus, it revealed a digital-learning divide between low-income students and their higher-income peers. The gap is driven in large part by a lack of internet access and proper devices.

“There was an expectation that, with the schools closed, kids would resume their classwork online, but that can only happen if they have the proper technology and internet service,” said Eileen Cavanaugh, president and CEO of the Boys & Girls Club of Greater Holyoke (HBGC).

Cavanaugh applied for and received a grant for $35,000 from the Waldron Charitable Fund to provide Chrome tablets and internet access to nearly 100 families in Holyoke.

Working with Holyoke Public Schools to identify the families with the greatest need for technology access, club staff began reaching out to those households.

Eileen Cavanaugh

Eileen Cavanaugh

“There was an expectation that, with the schools closed, kids would resume their classwork online, but that can only happen if they have the proper technology and internet service.”

What they found was that many depended on their phones as their only technology and did not own a laptop or tablet computer. Cavanaugh pointed out that phones are not very effective when used for online learning platforms. Even families that owned a tablet or laptop usually had to share it among as many as four school-age children.

“Four kids from one family can’t access the online platforms at the same time using one device, so we were able to supplement those families with additional equipment,” she noted.

Access to reliable internet service is just as important as having the proper device. The HBGC is working with Mobile Citizen to provide secure, high-speed access to internet hotspots in Holyoke for one year.

“Even if students return to the classroom in the coming months, these kids are trying to catch up, so by extending the internet access for a full year, they can take advantage of online educational opportunities,” Cavanaugh said.

A recent study reinforces this point. Curriculum Associates of North Billerica makes distance-learning software for school systems in all 50 states. When schools closed in Massachusetts, they researched the usage patterns of iReady, the company’s digital-learning tool, which was originally designed for the classroom but is now used a great deal in distance learning.

They found that, when learning first moved from the classroom to the home, use of the program dropped significantly in the first week as fewer than half the students who used the software in the classroom used it at home. After five weeks, once students and teachers were able to settle into new routines, the usage rates increased to 81%.

A closer look at the data revealed a digital divide in which students who live in low-income zip codes had a larger initial decrease in using the digital-learning tool followed by a lower recovery percentage five weeks later than students in higher-income zip codes.

On the other hand, once low-income students could access it, they spent more time with the online-learning program than their higher-income peers.

Supplemental Efforts

Cavanaugh pointed out that the HBGC effort supplements the nearly 1,000 tablets and access to Comcast internet hotspots that the Holyoke Public Schools provided to families. She credits Superintendent Stephen Zrike for anticipating that access to digital learning would be a struggle for many families in the city.

In addition to providing devices and hotspots, Cavanaugh said HBGC is also offering technical assistance. “In our conversations with parents, we learned some are not tech-savvy and may need some support, so we’ve made our technology director available for any kind of technical assistance they might need.”

The grant HBGC received was part of a $1 million series of ‘rapid-response grants’ from the Waldron Charitable Fund to assist children affected by school closings due to the COVID-19 crisis. The fund is co-managed by Rob Waldron, CEO of Curriculum Associates, and his wife, Jennifer Waldron, and administered by the Boston Foundation, an organization that does not usually fund efforts in Western Mass.

“This is the first time we’ve been eligible for this type of funding,” Cavanaugh said. “We are grateful for the fast turnaround of our request and the recognition that the need is across the state.”

To date, HBGC staff have distributed nearly 75 tablets. Despite the challenges of social distancing, Cavanaugh said they are able to provide families with tablets and instructions for the device, as well as how to access the internet and tech support. The response has been very positive.

“Our families have been incredibly appreciative,” she said. “They’ve told us about their past frustrations of trying to access the public-school platform by phone and how grateful they are now for our support.”

Coronavirus Features

Unwanted Break in the Action

By Mark Morris

Thunderbirds

Nate Costa says the Thunderbirds were on track for their most successful season when it ended prematurely.

When discussing the impact COVID-19 has had on the AHL’s Springfield Thunderbirds, team president Nathan Costa doesn’t mince words.

“There’s no way to sugarcoat this — it’s a challenge, and it stinks,” he said, noting that, with seven games remaining in the regular season, the Thunderbirds were close to making the playoffs when the American Hockey League (AHL) suspended play on March 12, then formally canceled the remainder of the season on May 11.

“I’ve been in the pro-sports world for more than 10 years, and none of us have ever seen anything like this,” he told BusinessWest, using that phrase to talk about everything from the sudden end to the 2019-20 season to the prospects for the season tentatively scheduled to start in just four short months.

And those sentiments were echoed by executives with teams in another sport — baseball.

Indeed, in Holyoke, the Valley Blue Sox will not be playing in 2020 as its league, the New England Collegiate Baseball League (NECBL), announced on May 1 it would cancel the entire season.

Chris Thompson

Chris Thompson hopes the Starfires are able to take the field at all this summer.

Meanwhile, the Futures Collegiate Baseball League (FCBL) has not yet canceled its season, but it has pushed back opening day from May 27 to an as-yet-undetermined date, which affects the Westfield Starfires, a team in only its second year of existence.

Chris Thompson, owner of the Starfires, said the student athletes on his roster have already missed the spring college season because the NCAA canceled it due to the coronavirus. He remains hopeful there will be some opportunity for his team to play ball this summer, adding that this will happen only if the health and safety of the players, fans, and staff at the ballpark can be assured.

“From our perspective, we won’t play until it’s safe to do so, but we won’t cancel until we’re told we have to,” Thompson said. “There’s no blueprint for this.”

Taking a Timeout

With that last statement, Thompson, who once worked as an executive with the Thunderbirds, spoke for everyone involved in professional sports. There is no blueprint for how to proceed, but teams can try to plan for the short and long term and adjust for what will certainly be a new normal.

Costa said his team and the AHL are having discussions about what the experience will look like for fans at the MassMutual Center, and other buildings in the league, if and when play returns.

He pointed out that the NHL and the NBA may be able to play in empty arenas because of lucrative TV contracts that provide a great deal of income to the teams, but playing with no fans is just not just not feasible for the AHL because so much of its revenue is from ticket sales, concessions, and other in-arena activity.

“As a league, we cannot play without people in the stands,” said Costa. “It’s pretty much impossible to generate any type of revenue, yet we would have the same amount of expense.”

“As a league, we cannot play without people in the stands. It’s pretty much impossible to generate any type of revenue, yet we would have the same amount of expense.”

Before the season was cancelled, Costa was pleased with the momentum the Thunderbirds had been building in their four years as a franchise. Through 31 home games this season, the team had nine sellouts and anticipated at least three more for their remaining games. By contrast, last year they had nine sellouts in their entire 38-game home schedule. He also cited a promotion that received national attention when the team rebranded for one game as the Springfield Ice-o-topes, in a nod to The Simpsons.

With the beginning of a new hockey season four months away, Costa said the AHL has an opportunity to see how other professional leagues handle reopening for games and get a feel for what might work, or not work, as the case may be.

“The NFL will start its season before us,” he noted, “and that will be a real barometer in terms of social distancing at stadiums and what the experience might look like for people going to games.”

He added that state officials and MassMutual Center staff continue to look at ways to make the environment safe for everyone who enters the building. The AHL is also looking at contingencies such as delaying the start of the season to December or January.

“There’s nothing stopping us from pushing back the start and then playing a little longer next year,” Costa said, “especially if it gives us a chance to get a full season in.”

Costa has good reason to be optimistic for a full season next year as it marks the fifth anniversary of the Thunderbirds and begins a new affiliation with the Stanley Cup champion St. Louis Blues. “We’re already deep into planning what the fifth anniversary season is going to look like, and we’re excited about what the future will bring.”

Thompson had similar thoughts on the Starfires and what lies ahead for that team.

While the FCBL has been working on a plan for social distancing at the ballpark — in this case Bullens Field in Westfield — Thompson said working through an unprecedented challenge like this generates more questions than answers. How teams manage ballpark seating and concession operations are just two of the areas where he has concerns. It even affects travel, as the teams play games in three New England states.

“We usually travel on one coach bus,” he explained. “We can’t afford to have fewer people on two buses; it would double our transportation expense.”

Even if summer baseball happens this year, Thompson said coronavirus has already wrecked a special dynamic in the league. Starfire players often come to Westfield from different parts of the country and stay with local host families for the summer.

“Sometimes a family has an 8-year old Little Leaguer in the house who then has a college roommate for the summer, or we have empty nesters who are looking to host a player or two,” Thompson said. “Host families are one of the great things about summer baseball.”

Now, of course, the model of families hosting players is on hold until next year at the earliest.

Rather, Thompson is now looking to have more players from the eastern part of Massachusetts and the Hartford area of Connecticut so they could commute to games in Westfield.

With the Starfires in a holding pattern, it’s doubtful they will get to play their full 56-game schedule. During this time, Thompson has been reaching out to his corporate sponsors to keep them engaged.

“We’re looking at different ways to use our social-media platforms to get our fans involved and to give our corporate sponsors exposure,” he said.

Finding a Winning Formula

The Thunderbirds are also using social media to extend the reach of their sponsors. Costa said one effective technique has been running ‘rewinds’ of notable games from this season on Facebook. In some cases, the potential audience for sponsors can be larger than in-arena exposure.

“Our Facebook presence has grown to more than 22,000 followers, and on Instagram we have 15,000 followers, giving us a core audience of nearly 40,000 eyeballs,” Costa said, adding that many sponsors have already assured him they will be back next year.

When play was suspended, he placed a high priority on reaching out to season-ticket holders about the seven games they would be missing this year. The team provided options such as a refund for the remaining games, or a credit that would apply to tickets for next season. Costa and his staff also offered a third option.

“We’re setting aside some funds to provide tickets to frontline workers next season at no charge and to recognize all their efforts,” Costa said noting that nearly 25% of the season-ticket holders chose that option.

In a similar move, Valley Blue Sox General Manager Kate Avard said the team had planned to dedicate its opening day in 2021 to “honor and support community organizations and first responders who are currently on the front lines of combating COVID-19.”

As the area’s pro sports teams search for some answers concerning the future, they acknowledge they are hard to come by, noting that perhaps the only certainty is no shortage of uncertainty.

But guarded optimism still prevails.

“We have great community partners who want us to succeed for a long time,” said Thompson, speaking, again, for all those in his profession. “Setbacks like this make us more resilient.”

Law

That Is the Question, and Here Are Some Answers

By Valerie Vignaux, Esq.

Valerie Vignaux

Please allow me to interrupt your quarantine gratitude journaling and victory gardening to demystify a topic apt for these unfortunate times: probate.

I have found in my legal practice that most consider probate to be a dirty word. I have also found widespread misunderstanding of what that dirty word really means. What better time than during a pandemic to learn about the legal process surrounding death?

What, then, is probate? It is a process to appoint someone to be in charge of your probate assets after you die, and to distribute those assets according to your wishes. You ask, one eyebrow raised, “what are probate assets?” Excellent question — I can tell that you are a close listener.

Probate assets are property (such as real estate, bank accounts, cars, investment accounts, and retirement funds) that you own in your name alone at your death. These assets do not have a joint owner (like a joint bank account you might have with a spouse). These assets do not have a designated beneficiary (like on an IRA or a life-insurance policy that lists a child as beneficiary). In order for anyone to be able to access these assets after your death — to pay bills, to make distributions to loved ones — the assets must go through the probate process.

“I have a will!” you proclaim with confidence, “so there won’t be any probate.” But you are wrong, my friend. It is not the existence of a will that prevents probate; it is the absence of probate assets that prevents probate. It is how you own something that dictates whether that process must be undertaken, not whether you have a will.

“Then I shall tear up my will!” you cry out. Please, no. Your will makes this process easier, in part, by telling the court whom you want to be in charge of those assets. In the old days, when we shook hands with gusto and gathered at bars to buy overpriced cocktails, we called this person the executor or executrix. Today — really, since 2012 — the personal representative fills this role. Same job, different name.

“What, then, is probate? It is a process to appoint someone to be in charge of your probate assets after you die, and to distribute those assets according to your wishes.”

Your will also informs the Probate Court who will get your probate assets. Additionally, if appropriate, your will names your desired guardian of your children, in the event you die leaving minors behind. (Please wash your hands and stop touching your face.)

“Probate is the fourth circle of hell,” you sigh with resignation, “and I will take great pains to avoid it.” Here’s the dirty word bit, and what so many believe: probate is complicated, takes forever, and costs tons of money. This is not, however, necessarily true, and it is often not true at all. Of course, it depends upon the nature of your assets — perhaps you own many properties in different states, or a family business. Probate’s difficulty depends, too, upon your family circumstances — maybe you don’t have highly valued assets, but your children do not get along and there is a high likelihood of challenge over your collection of red hawk tail feathers.

For most people, probate is simply a process with clearly defined steps and a timeline. Getting help from an attorney can make the process even easier.

You now know, because you’re a quick study, two ways to avoid probate (add a joint owner, designate a beneficiary). But here’s something radical to consider: you might not want to avoid it. There are situations in which it makes good sense to force your assets (some or all) through the probate process. Your will can serve as a master plan for what happens to all you leave behind. That document allows you to spread your wealth (whether millions in cash or a trunkful of hand-sewn face masks) among all of your loved ones equally, or unequally. Your will can even create a trust that can hold assets for minors, those with poor spending habits, or a disabled family member.

If you name your children as beneficiaries of your life-insurance policy and die while they are still minors, a conservator will need to be appointed to receive, hold, and manage those funds for the benefit of your children — kids can’t just inherit money. The conservatorship process, another Probate Court endeavor, also takes time and money — often more than probate itself.

If you instead name your estate as beneficiary of your life insurance (“such madness!” you gasp, but bear with me), those funds will be handled according to the master plan — your will. You can avoid the necessity of a conservatorship by directing those funds into a custodial account at a bank, or by including a trust in your will that will hold the money for the benefit of your children. This is just one example of many.

I work with clients regularly to avoid probate and still achieve their desired goals. But sometimes I recommend that they embrace the process because it makes the most sense for their situation. Probate doesn’t have to be a dirty word. Working with an estate-planning attorney, and perhaps a financial advisor, you may find this is true for you. It’s important that everyone have a plan in place, but let’s all try to stay alive for a good, long while.

Valerie Vignaux is an attorney with Bacon Wilson, P.C., and a member of the firm’s estate-planning and elder-law team. She assists clients with all manner of estate planning and administration, including probate, and provides representation for guardianship and conservatorship matters. She received the Partner in Care award from Linda Manor in 2017, and served on the board of directors for Highland Valley Elder Services; (413) 584-1287; [email protected]

Opinion

Opinion

By Mary Flahive-Dickson

Seemingly, there is very little time for reflection these days. As we move from one news report, one Zoom meeting, one emergency to another, it is not lost on us that this is now our norm; life has changed. Restlessness is nationwide. Our communities are apprehensive at best, and our seniors are even more isolated now than any other historical time.

Social isolation, while defined as a lack of relationships and meaningful contact with society, needs to be further contemplated and gauged in our elder population as COVID-19 continues to force us to shelter in place, while begging for social and physical distance.

Caregivers, as catechized members of the front line, are being asked to rise to the challenge of defense against physical and social isolation of seniors.

Our elders are seemingly the target of so many evil pathogens and infections as their immunologic response has slowed and their physicality is compromised. Add life-changing risk factors such as retirement, death of loved ones, and the global nature of our society to the geriatric mix, and oftentimes the result assumes the form of social and physical isolation and loneliness.

Isolated and lonely seniors are at an increased risk for additional physical and emotional health conditions such as anxiety, high blood pressure, depression, and cognitive decline. With the loss of a sense of connectivity to the outside world and specifically their community, our elders run the risk of a decrease in wellness and a general decline in health.

Additionally, and especially in the current COVID-19 theatre, physical and emotional needs such as activities of daily living (ADL), companionship, and personal care may not be satisfied or executed. This situation is yet another nail in the proverbial coffin of enabling an immunologic response to infections, therefore rendering individuals less able to fight off disease, while increasing their risk of mortality.

Conversely, elders who engage with society, continue to be active and cognitively stimulated, have conversations, and have their ADLs satiated oftentimes experience increased positive influential health opportunities and many times are able to maintain the state of wellness longer.

Our role as caregivers is to facilitate an improvement or at least a maintenance of independence, health, and well-being of our elders. By providing for and assisting them with activities of daily living, promoting self-care, and reinforcing social support and a sense of community, caregivers continue to promote and disseminate multiple dimensions of physical and emotional health and wellness among this population.

As society continues to seesaw under the cloud of COVID-19, the senior population is not exempt from partaking in groups, programs, and activities which can help in thwarting physical and social isolation and loneliness. In fact, for the seniors, it is just the opposite. No populace has seen a furthering of isolation more than the seniors.

And, with home care widely accepted as a significant player in promotion of health and wellness, staving off mortality and reduction of admissions to institutional care such as hospitals and skilled-nursing facilities, caregivers’ roles should be touted as the front-line essential necessity they have always been, albeit unpronounced.

Mary Flahive-Dickson is chief operating officer for Golden Years Home Care Services.

Coronavirus

Opinion

By Thea M. Lee

This week, Democrats in the U.S. House of Representatives released the Heroes Act, which would provide critical relief and recovery measures to the U.S. economy and the people and businesses in it.

One of the most important features of the bill is that it would provide $875 billion in direct state and local aid, as well as targeted fiscal help for education and Medicaid spending for state governments. This is an essential step forward, given that state and local governments will need up to $1 trillion by the end of 2021.

The bill would also provide an extension of the unemployment insurance (UI) provisions in prior relief and recovery packages. This is excellent news from both a humanitarian and economics perspective — particularly the extension of the increased UI benefits of $600 a week, which was one of the most effective parts of the earlier packages. The bill includes many other key provisions, including investments in coronavirus treatment, testing, and contact tracing, which are necessary to reopen our economy.

Inevitably, some policymakers will express concerns over the price tag, which is estimated to be on the order of $3 trillion. This concern is utterly misplaced in this crucial moment. What are scarce in the economy right now are opportunities for workers to earn wages and demand for firms’ output.

Fiscal resources are not scarce — interest rates (our best real-time signal of scarcity of the federal government’s capacity to take on debt) remain historically low. We need to use what we have in abundance — fiscal resources — to relieve the crushing constraints imposed on families by the scarce opportunities to work and earn income. Investments financed by greater public debt will reduce the severity of the economic crisis and will help avoid a prolonged period of high unemployment that would do far more serious and persistent damage to the economy. In short, these investments will have a very high rate of return.

Further, the investments this bill calls for are the absolute minimum required to address the magnitude of the crisis we are facing. The Congressional Budget Office projects that, without additional relief, the unemployment rate will average 16% in the third quarter of this year and 10.1% for the entire calendar year of 2021. Those numbers, which were released two and a half weeks ago, are now looking overly optimistic, given that more than 30 million workers have already filed for unemployment insurance and millions more continue to pour in.

A deep concern in today’s legislation is the lack of ‘automatic’ triggers for the expiration of the bill’s provisions. There is an enormous amount of uncertainty around how the economic impact of the coronavirus will unfold. Assigning arbitrary end dates to provisions to sustain the economy, as the bill does, makes little sense when the process could be handled automatically, by having provisions phase out as the unemployment rate or the employment-to-population ratio are restored to near-pre-virus levels. Using automatic stabilizers would not be any more expensive than the cumulative cost of multiple extensions of the programs in the bill — but it would prevent destructive lapses in critical programs while Congress negotiates extensions, and it would alleviate corrosive uncertainty by giving businesses, states, and households crucial confidence around budgeting and planning.

Thea Lee is the president of the Economic Policy Institute.

Coronavirus Special Coverage

For Many Impacted by the Pandemic, It Might Be a Viable Option

By Michael B. Katz, Esq.

One thing I’ve learned in my 45 years practicing bankruptcy law is that most individuals who wind up taking this course of action are good people who have found themselves in bad and unexpected circumstances, most often caused by things that were beyond their control.

People get sick, get divorced, lose employment, and have accidents. Likewise, businesses can be adversely affected by events over which they have no meaningful control. Outbreaks of disease, oil shortages, breaks in the supply chain, changing technology, interruption of their workforce, and many other factors can all cause a business or individual to be unable to stay financially afloat.

Which brings us the COVID-19 pandemic. It represents the epitome of unexpected circumstances and matters beyond our control. Indeed, in an effort to slow the spread the spread of the virus, the state has shuttered all non-essential businesses, leading to unemployment levels not seen since the Great Depression.

In these precarious times, individuals and businesses are finding themselves in dire financial circumstances they could not have foreseen, nor done anything to prevent. Given their predicament, some might be looking at bankruptcy as a possible recourse.

In order to help honest but financially burdened individuals make a fresh financial start, Congress has passed a number of bankruptcy laws. Here are the key types:

 

Chapter 7

This is the type of bankruptcy proceeding that allows certain qualifying individuals to eliminate most of their unsecured debts (those without mortgages) and to make a fresh financial start.

In order to qualify for Chapter 7, a person cannot have filed Chapter 7 bankruptcy within the prior eight years. The person filing, known as a debtor, must also pass a test which limits how much earned income the debtor had earned in the prior year. This is called the means test, and it varies based on the state in which the debtor resides, the number of dependents in the family, and whether there is any earned income generated by the debtor’s spouse.

For example, for a Massachusetts resident, the limitation is $67,119 for a single person, $84,125 for a couple (combined gross income), and then increases in different amounts for additional dependents. These limitations became effective as of April 1, 2020 and are subject to periodic adjustment. Similarly, in Connecticut, the individual cutoff is $66,689, and $88,594 for a couple.

Michael B. Katz

Michael B. Katz

In these precarious times, individuals and businesses are finding themselves in dire financial circumstances they could not have foreseen, nor done anything to prevent. Given their predicament, some might be looking at bankruptcy as a possible recourse.

While most unsecured debts can be eliminated in Chapter 7, there are some types of debts that cannot, including income taxes owed from the past three years, alimony and child support, student loans, and debts incurred due to an accident while driving under the influence. 

One of the major benefits of Chapter 7 for an individual obtaining a discharge is that not only are the debts — such as most credit cards, personal loans, foreclosure and repossession deficiency balances, and medical bills — totally wiped out, they are eliminated without incurring any phantom income, on which both federal and state income taxes would be owed.

Compare this to either making a direct settlement with a lender or credit-card company, or going through a non-judicial, multi-year debt-settlement plan, where anything that is settled with the creditors results in the person receiving a 1099 from the creditor and having to pay taxes on the forgiven portion of the debts. In Chapter 7, Congress has decreed that all discharged debts are tax-free, and therefore no hidden taxes are incurred.

The key aspect of Chapter 7 is that the Bankruptcy Court is trying to help an honest debtor make a fresh financial start. In regard to secured debts — for example, those debts that are secured by a lien or mortgage, most often vehicle loans or a home mortgage — in Chapter 7, the debtor gets to select whether they wish to keep the item and continue making the payments, or to surrender the item and wipe out any shortfall amount that might exist after the secured party sells the item after repossession or foreclosure sale.

While a corporate entity can also elect to file Chapter 7 and have the Bankruptcy Court liquidate its assets and distribute the proceeds to its creditors, it does not get to carry on its business affairs after filing. Only an individual qualifies for a discharge, so a corporate entity must cease all business after it files Chapter 7.

 

Chapter 13

In this type of proceeding, an individual is given an option to repay all or a portion of the debt, if approved by the Bankruptcy Court and Chapter 13 trustee, through a plan of reorganization that generally lasts for a period of three to no more than five years. There is no need to pass the means test to qualify for Chapter 13, and, unlike the restrictions in Chapter 7 that allow it to include only unsecured debts, Chapter 13 can also affect secured debts.

The most common application in Chapter 13 is to use it to stop a foreclosure sale of a debtor’s home or automobile, and it allows the debtor to pay the outstanding past-due amounts over the life of the plan, in addition to requiring the debtor to make the full current payment each month. 

For example, if a lender is owed $60,000 in back mortgage payments, requiring the borrower to pay it in full in order to prevent a foreclosure sale, in a Chapter 13, the debtor could propose to pay $1,000 per month for the 60 months of its Chapter 13 plan, plus pay the current mortgage amount each month so that debtor does not fall further behind. 

These are simplified examples, and the details of a Chapter 13 plan are more complex and would require you to consult with a qualified attorney for more specific advice.

 

Chapter 11

A Chapter 11 reorganization can be filed by an individual who owns a business and operates as a ‘DBA,’ but due to its complexity and expense, it is most often filed by a corporate entity.

The idea of a Chapter 11 is to grant the business a ‘time out’ and give it some element of time to figure out a plan of reorganization to allow it to continue in business. Under 11 USC 362(d), all lawsuits and claims against the debtor’s business are enjoined from proceeding, and the debtor gets time to meet with its creditors and to seek to formulate a formal plan of reorganization.

That plan may propose to pay unsecured creditors a percentage on the dollar, which must be found to be a greater percentage than the creditors would receive in an immediate liquidation of the business and its assets. In some cases, mortgage debts can be reduced to the actual value of the assets that secure the mortgage, so that if the debtor owes a lender $750,000 on a building that can be proven to be worth only $500,000, the debtor can seek to ‘cram down’ the mortgage to a reduced amount of $500,000, and the additional $250,000 gets treated as an unsecured debt, and paid at the same percentage on the dollar as the other unsecured debts.

This is a very simplified version of a Chapter 11, as there are many other requirements that must be fulfilled by a Chapter 11 debtor, and the cases are necessarily complex and sometimes expensive. However, the overall savings to the debtor can be substantial, and they are often the key to a business’ survival.

The court in a Chapter 11 is seeking to be fair to both the debtor and its creditors, as well as preserving the jobs of the employees of a business.

 

Non-bankruptcy Alternatives

There are sometimes options for a business to consider without the need to file a formal insolvency proceeding. They require a skilled and knowledgeable attorney to know how to handle these matters, and they include utilization under Massachusetts state law of an assignment for the benefit of creditors, trust mortgage, or sometimes just using a skilled negotiator to try to convince creditors to accept an informal settlement of their debt, rather than forcing the debtor to use funds to pay for a formal bankruptcy proceeding, when those same funds could be paid toward a voluntary settlement with the creditors. 

In reality, these voluntary settlements are often difficult to finalize because you need to negotiate with multiple parties, who sometimes will not agree to the same terms. In a Chapter 11, the creditors are legally required to accept whatever settlement is approved by the bankruptcy judge, after a plan is voted on and approved by the Bankruptcy Court.

It is important that you not let your pride prevent you from finding the best and most effective solution for your personal or business cash-flow problems. You cannot make an informed decision until you know and understand all of your options, as well as the positives and negatives of each option.

During this pandemic, many fraudulent parties are preying on people, so make sure to do your homework to get the name of a qualified person to advise you or your business. Contact the Hampden County Bar Assoc. Lawyer Referral Service, call your accountant, or do a Google search to find an experienced person to help you or your business. 

Working together, we can all find ways get through these uncharted waters.

 

Michael Katz is the chairperson of the Bankruptcy & Creditors Rights department of the law firm Bacon Wilson, P.C., with offices in Springfield, Northampton, Amherst, Hadley, and Westfield; (413) 781-0560.

Business of Aging

Team Approach

By Mark Morris

the Bioness L200

This device, the Bioness L200, helps patients recovering from a brain injury to re-establish the use of their arms and hands.

In the U.S., 2.5 million adults and children sustain a traumatic brain injury (TBI) every year.

The Brain Injury Assoc. of America (BIAA) reports that more than 2 million of those injuries are treated in emergency departments, while approximately 50,000 result in death. Nearly 280,000 are admitted to hospitals, after which patients transition to inpatient rehabilitation, where the goal is to get back to their maximum level of function and independence.

But what’s involved in that rehabilitation process for brain injuries? It depends on the patient.

“Many people associate traumatic brain injuries with a younger population because they tend to engage in riskier behaviors. Older people who hit their heads from slips, trips, and falls are also susceptible to TBIs,” said Jennifer Blake, an occupational therapist with the inpatient program at Weldon Rehabilitation Hospital, adding, however, that anyone at any age can sustain a brain injury.

The Centers for Disease Control and Prevention (CDC) defines TBI as a “disruption in the normal function of the brain that can be caused by a bump, blow, or jolt to the head, or penetrating head injury.“

Traumatic brain injuries are evaluated on a spectrum, said Blake, noting that someone who experiences a concussion, also known as ‘mild traumatic brain injury,’ can usually return to normal with just limited therapy. On the other hand, people with moderate to severe brain injuries require medical care and more comprehensive inpatient rehabilitation. Often these patients need some level of supervision after discharge.

On occasion, someone may have a head injury and not immediately recognize it. For example, if a person is in a car accident and has a broken leg, that might get the primary treatment focus, Blake explained. Even after a CT scan, the brain injury may not initially show up. “It’s only after further investigation, when the person is having trouble concentrating or paying attention, that they discover the brain injury.”

“When they see their arm move and their hand open and close, it boosts their confidence and makes them feel more hopeful; you can see it in their faces.”

Because our brains are essential to all our physical and mental functions, therapists have found that taking a multi-disciplinary approach yields the best results in helping people recover from a brain injury. A team of physical therapists, occupational therapists, and speech pathologists, supported by 24/7 care by medical staff such as nurses, doctors, and pharmacists, make sure all the patient’s needs are addressed.

“We meet once a week to make sure we are all on the same page,” said Julie Bugeau, an occupational therapist for Encompass Health Rehabilitation Hospital of Western Massachusetts. “We have an open discussion to determine where the patient is in terms of therapy and function. We also ask questions outside of the therapy, such as, ‘how are they medically?’ ‘Are they eating well?’ We try to look at all the factors that can affect their rehab.”

What’s the Plan?

Blake said most admissions in the inpatient setting last only two weeks, so working as a team helps them determine the patient’s eventual discharge plan.

“By working together in an interdisciplinary team, we can figure out what’s working, what’s not, and make changes along the way.”

Blake said an individualized plan for rehabilitation is developed by therapists who work with patients in three key areas:

• The physical therapist studies a patient’s mobility: for example, how well they can get from one place to another, their balance, and how well their motor skills can function;

• The occupational therapist helps patients with self-care skills, such as eating, getting dressed, bathing, as well as tasks like cooking, cleaning, and managing medications; and

• The speech and language pathologist addresses higher levels of cognition, such as memory, attention, concentration, problem solving, and decision making. Sometimes the pathologist works with patients whose brain injury causes dysfunction in producing or understanding language.

Advancing technology offers therapists tools to aid in rehabilitation that were not available years ago. Bugeau discussed how devices such as the Bioness L300 and H200 help brain-injury patients regain the use of their legs and arms. The L300 attaches to the leg and, through electrical stimulation, can aid a person’s ability to walk.

“The idea is that, with repetition, those leg muscles will be able to move properly without the external stimulus,” she explained.

Meanwhile, the H200 helps re-establish the movement of arms and the grasping action of hands. Bugeau said using these devices results in positive responses from her patients.

help brain-injury patients

The Bioness L300 is used to help brain-injury patients regain their ability to walk through electrical stimulation.

“We’ll have patients who say, ‘my arm doesn’t work — I have a dead arm,’” she noted. “Then, when they see their arm move and their hand open and close, it boosts their confidence and makes them feel more hopeful; you can see it in their faces.”

By employing the different therapies, Bugeau went on, the hope is to maximize the patient’s abilities. But, she added, “while the therapy is important, rest is also an important part of the recovery.”

While many patients transition directly from inpatient to outpatient care, Bugeau said Encompass also offers a home-care component for those who are not yet ready to make the move.

“We will help patients settle into their home and continue training with them and their families to make sure they are safe and getting stronger,” she said. “It’s an option we recommend until the patient is ready to move into outpatient treatment.”

Blake added that the outpatient phase of care at Weldon involves working closely with families during outpatient therapy to help them manage that part of the process.

“Let’s say a patient is receiving all three therapies in an outpatient setting,” she explained. “We will try to schedule all of them on the same day to make it a little less overwhelming for the caretaker.”

Blake said it’s important for the injured person and their support group to understand that, when a person suffers a brain injury, it can be a difficult adjustment for everyone involved.

“You can’t see the residual impairments from a brain injury,” she said. “The person might experience a personality change, or a once-independent person may now need lots of assistance with daily life.”

That’s why Bugeau’s staff involves the patient’s family in training and education early in the process. She said the classes help the family understand how their loved one’s brain injury is progressing and how to properly handle behaviors that are out of the norm.

“We make sure to screen every patient with a brain injury for depression because it is a such a common symptom associated with brain injuries.”

Steady Improvement

While plenty of information and support are available for families, Bugeau said the trick is not to overdo it.

“We create a folder with specific, individualized information that is appropriate to the patient’s injury. We don’t want to overwhelm the family, but we want to make sure they have the information they need.”

Blake and Bugeau encourage families dealing with a brain-injured loved one to take advantage of the support groups available at their respective organizations. Weldon offers a faith-based group as well. Both therapists also cited the Brain Injury Assoc. of Massachusetts as a solid resource for families.

In all cases, the goal is helping patients with a brain injury get back to a maximum level of function and independence.

“It’s hard to say how much time each person needs,” Blake said. “And while things can change quickly or gradually, people do improve and get better.”

Business of Aging

Joint Effort

By Mark Morris

Brianna Butcher

Brianna Butcher says her main priority is to help the patient gain back their range of motion, and “to turn that new joint back into a normal joint.”

In daily life, it’s easy to ignore the important role our knees, hips, and shoulders play in walking, performing simple activities, and helping us get around in the world.

Most people notice these essential joints only when they are in pain. As we age, the onset of arthritis can bring excruciating pain even to the most basic tasks such as climbing stairs and walking.

If medication and physical therapy do not provide relief, then doctors will recommend joint-replacement surgery.

Considered a safe and highly effective surgery, more than 600,000 knee replacements and more than 300,000 total hip replacements are performed each year in the U.S., according to the Agency for Healthcare Research and Quality. The surgery involves replacing an arthritic or damaged joint with a prosthetic made of metal, plastic, or ceramic to replicate the movement of the joint.

Once the surgery is done, then the real work begins, said John Jury, head physical therapist at Weldon Rehabilitation Hospital, noting that “a successful outcome depends on how much effort the patient puts into their rehabilitation.”

The vast majority of patients Jury works with have had total knee or hip replacements, while those with partial knee and shoulder replacements comprise a smaller number. Candidates for joint-replacement surgery tend to be age 50 and up.

“It’s prudent to wait as long as possible to do the surgery so they only have to have it once in their lives,” he said, noting that, if someone in their 40s had a joint replaced, it could wear out in their 90s and when they may not be a good candidate for surgery.

Physical therapy begins on “post-operative day zero,” which means only a few hours after the surgery takes place. Jury said therapy on the same day is especially common for knee replacements. The main goal of this initial session is to initiate moving, standing, and weight bearing, typically with the help of a walker.

“Over the next couple of days in the hospital, we will continue to work with patients on their flexibility with the joint, range of motion, strengthening exercises, and mobility to help get them home,” Jury said.

Some medical centers around the country send knee-replacement-surgery patients home the same day as the procedure. In Western Mass., Jury said, most patients with a total knee replacement are discharged within a day or two, while hip-replacement patients may be hospitalized for up to three days. Both operations are followed up with two weeks of home therapy.

“It’s prudent to wait as long as possible to do the surgery so they only have to have it once in their lives.”

Rehab treatment differs for knees and hips. Jury explained that patients with a hip replacement don’t usually require outpatient therapy after their sessions at home. Knee-replacement patients, however, are almost always scheduled for outpatient therapy.

Moving Experiences

And it’s during outpatient therapy that people like Brianna Butcher, physical therapist and supervisor for Select Physical Therapy, take over joint-replacement rehabilitation.

“Our main priority is to help the person gain back their range of motion and their gait mechanics, which is especially important for knees and hips,” she said. “We’re really trying to turn that new joint back into a normal joint.”

In addition to traditional techniques, therapists are finding new ways to help people get back to day-to-day life with the help of technology. Butcher said one effective tool she has used is called an AlterG. She described it as an anti-gravitational treadmill that uses inflated air to support the body during therapy.

“For people who are tentative about putting weight on their joint, this is a good way to help them get back to normal walking,” she said.

Also finding their way into physical therapy are phone apps. A patient recently asked Jury if there was a way to measure his knee’s range of motion from home.

“We found a couple of apps you can download to your phone that will measure range of motion,” he said. “A family member has to hold the phone next to the patient’s knee, and their movement can be recorded.”

Tele-rehab is another development that is showing promise in several studies here and abroad. Jury said the idea is to share a video of rehab exercises with the patient and follow up by phone, FaceTime, or another video app. The studies compare tele-rehab with the gold standard of care, which is outpatient therapy after a knee replacement.

“They are finding that patients can achieve similar outcomes to outpatient,” he noted, “and they are reporting higher satisfaction scores because they don’t have to get out of the house to drive to a clinic.”

Butcher said her patients are usually driven to physical therapy by someone because they are still taking pain medication and cannot yet drive.

Once the patient arrives, she often observes their sense of fear about starting the therapy.

“For some, this is their first time seeing a physical therapist, and the process can be painful, especially for knees,” she said. “We try to work within that threshold to help the patient make progress while being mindful of the pain, which can be difficult for some.”

On occasion, patients who already have a replacement joint on one side of their body will need a second one, such as the opposite knee or opposite side of the hip.

Butcher said that, in her experience, at least one of those joints proves difficult and painful for the patient during physical therapy.

“The body always responds a little differently from left to right,” she said. “If, for example, therapy on the left hip went great, the right hip just doesn’t want to cooperate.”

In Butcher’s view, therapists often get a bad rap because of a false perception that they somehow enjoy putting people through pain.

“Our ultimate goal is to help patients get back to a better place than before their operation,” she said. “We’re on their side.”

Jury pointed out that therapists are a valuable resource in terms of guiding the patient on what to do, but it’s also up to the patient to follow through. “It’s not an easy rehab, but you’re only going to get out of it what you put into it.”

For those who make the effort, the results can be life-changing. The American Academy of Orthopaedic Surgeons uses the term “second firsts” to describe the experience when patients can once again enjoy things like hiking and other activities that were not possible before their surgery.

For many patients, Jury noted, their biggest revelation is the ability to move around in the world again without a walker or a cane.

“They are happy to be able to return to a certain normalcy of activity,” he said. “Of all the patients I’ve talked to, none of them have said they wished they waited longer for the surgery.”

Bottom Line

Butcher talked about a recent success story in which the patient had undergone a total replacement surgery in his left knee before working with her.

“All he wanted to do was to get back into bowling again, and he’s throwing harder now than before his operation,” she said.

After living with pain for many years, people who have joint-replacement surgery and follow through on their physical-therapy program can often succeed to a point that Butcher describes as almost like having a new life again.

And this new life is the result of successful teamwork — with the patient being a big part of that team.

Opinion

Reflection

By Darby O’Brien

Darby O'Brien

Darby O’Brien

It was 40 years ago — May 1, 1980 — that I started Darby O’Brien Advertising out of a side porch in Holyoke. Charlie Keenan worked with me on copy and concept and Carolyn Harrington handled the books. We outsourced design to Susan Fentin and Kerry Gavin from Brooklyn.

It all started with three clients: A.O. White Clothiers, the Yankee Pedlar Inn, and the Mt. Tom Ski Area.

The staff of three worked at one desk — a cheapo folding table with a tacky vinyl top. The first call we got was from Eddie Fauteaux from A.O. White and the folding table collapsed. Good start.

The inspiration for me to start a business was my great-great grandfather, Daniel O’Connell, who came over from Ireland and started a construction company. All I ever wanted was to build ads as good as Daniel O’Connell’s Sons built buildings, roads and bridges. My father was vice president of that company. 

My father also co-signed the loan from Security National Bank that helped me move the agency out of the side porch and put in a couple real desks. What a risk that was for him, considering it took me five schools and six years to get out of high school. I used to tell my dad, “The longer I go, the smarter I get.”

Al White, the owner of A.O. White, was on the board of the bank and when Wally Burnett, the president of Security National, called for a reference, Al said, “I’d bet my last buck on him.”

 We moved into Baystate West a month later. 

We spent a decade-plus in downtown Springfield. First in Baystate West and then in the historic Stacy Building, where they built the first American gasoline-powered car and where one of our clients, Taylor Street Dental, operates today. 

We had a good run in Springfield. Had a lot of lunches at the Fort and met many great people who became longtime clients and friends, including Brian Trelease, Denis Gagnon and many more. In 1991, we moved to the Village Commons in South Hadley where I designed the playhouse office, met Bill Ochoa, and began another series of adventures.

Just like Daniel O’Connell’s — and one of our best and longest-running clients, Excel Dryer — I’ve been lucky to have the next generation join the business. Joe and Gainer. That’s the best thing that’s happened over 40 years. When I’m gone, they’ll probably sink it. But what the hell.

 A couple of things said about the agency have stuck with me. Peter Rosskothen, owner of the Log Cabin, said, “Nobody will fight harder for a client than those guys.” And Peter Picknelly, president of Peter Pan, said, “They do different good.” 

We’ve always gone over big with guys named Peter.

Hey, it’s always been about the creative. And I’ve always said about the ideas, “They’ll never buy it, but let’s do it anyway.”

It’s a strange time to be celebrating anything right now, but things have always been a little strange with this agency. It’s been a wild ride. But like I’ve been saying from the start, keep your dukes up.

Darby O’Brien is founder and president of Darby O’Brien Advertising.

Coronavirus Sections Special Coverage

Seeking Forgiveness with Little Guidance

By Scott Foster

The Paycheck Protection Program (PPP), part of the CARES Act, was launched just over a month ago to much fanfare and promise, but has been bogged down since with technical malfunctions, overwhelmed bankers, political missteps, and incomplete guidance from the U.S. Small Business Administration (SBA). Current guidance on the forgiveness of these loans is scant, additional guidance has been recently posted, and more is expected in the near future. The SBA’s FAQs for PPP have been updated several times a week since they were originally published on April 3, reflecting the current thinking of the SBA in interpreting the CARES Act.

Many businesses have already received their PPP loan proceeds and are wondering: how should I use these funds? How do I document that use? Will all of my PPP loan be forgiven? Unfortunately, until the SBA issues complete guidance — or Congress amends the CARES Act, which is quite likely — we are all in a bit of limbo, but let’s start with what we know today.

What is the covered period? The eight-week period starts on the day your PPP loan was disbursed/funded. Therefore, if your loan was funded on April 15, your covered period should be from April 15 to June 9. Only expenses that are related to the covered period are potentially forgivable.

What expenses are forgivable? First category: payroll expenses, including health insurance and retirement expenses, subject to a cap of $100,000 per year for salary per person. This translates into a $15,384 cap on forgivable compensation. Self-employment income is included in payroll expenses, but the amount that can be forgiven is 8/52nd of that individual’s self-employment income for 2019. Second category: rent (or interest payments on your mortgage) and utilities. But the forgivable amounts in this category cannot exceed 25% of the total amount to be forgiven (said another way, these expenses cannot be greater than one-third of your payroll expenses). Therefore, incurring payroll expenses during the covered period is critical to receiving any loan forgiveness.

If I have $100,000 in forgivable expenses, but I have fewer employees on payroll, does that matter? Yes. The CARES Act provides that any forgiveness is reduced proportionately to the extent your full-time equivalent employees (FTEs) during the covered period are fewer than the FTEs your business had either at the start of 2020 or early 2019. However, the CARES Act also provides that, if you rehire any employee laid off between Feb. 15 and April 26 by June 30, that employee then counts as a FTE during the covered period (but this won’t increase the amount of your potential forgiveness, since the forgiveness is based on your actual payroll expenses in the covered period).

I laid off several employees, but now that I have the PPP loan, I’m ready to hire them back. However, they are making more on unemployment (with the $600-per-week temporary federal bonus) than I can pay them. Now what? There are a bunch of interrelated issues here, but the bottom line is this: as long as you offer the employee their job back, then they should no longer qualify for unemployment, and the SBA has indicated that, if the employee doesn’t return after you offer them their old job, that won’t count against you for the FTE test. This is one issue that members of Congress have cited in a push to amend the CARES Act to extend the covered period for certain impacted businesses, so there is a chance we will see an amendment that would, for example, extend the covered period to 16 weeks.

What documentation will I need to provide to get forgiveness? At a minimum, you can expect to need to provide the same information you provided to obtain the loan: payroll records (ideally a report from your payroll provider), proof of rent payments, utility bills, and a copy of your lease. You will also need to document the number of FTEs you have during the covered period and compare that to the number of FTEs that you had in either the 2019 or 2020 testing period.

Should I put the PPP loan proceeds in a separate account? Ideally, yes. This is a recommended best practice. You will need to show that you used these funds for their intended use. If the funds are co-mingled with other funds, that might make it more difficult to demonstrate how the PPP funds were used.

We are an essential business and have not felt any significant negative effects yet. Can we still use the PPP loan funds? This is one of the murkiest areas, and we need further guidance from the SBA, especially in light of recent unhelpful comments from U.S. Sen. Ron Johnson and Treasury Secretary Steven Mnuchin. On one hand, every business is America is facing some degree of uncertainty, even if you are up and running. What happens if one of your employees get sick? Or if a major customer shuts down? Or a supplier is unable to meet your needs? On the other hand, if you truly are not feeling any impact, then was the certification you made on the application (“current economic uncertainty makes this loan request necessary to support the ongoing operations”) really accurate?

We are recommending that you document the uncertainty your business is facing, even if the uncertainty never comes to pass, along with any steps you are taking and costs you are incurring to mitigate the risks. For example, did you increase pay to your employees during the state of emergency? Have costs associated with cleaning or sanitizing your facility increased? You may also want to document what you would have done had the PPP loan not been available. For example, would you have reduced hours or furloughed employees in anticipation of decreased income?

My business is currently closed due to the governor’s order. What should I do? The only way to have any portion of your loan forgiven is to spend the proceeds on payroll. You either need to try to hire back your employees (maybe to only lay them off again at the end of the covered period) or pay back the unforgiven portion of the loan (which is accruing interest at the rate of 1% on any amount not forgiven). Currently, there is no way to use the PPP loan proceeds after the covered period and have those expenses forgiven.

Scott Foster is a partner at Bulkley Richardson.

Coronavirus

The Bottom Line

By Michael A. Fenton, Esq. and Mark J. Esposito, Esq.

The COVID-19 pandemic has touched the lives of billions across the globe. In Massachusetts, Gov. Charlie Baker recently extended an emergency order directing that all non-essential businesses cease in-person operations and banning large gatherings.

Michael A. Fenton, Esq.

Michael A. Fenton, Esq.

Mark J. Esposito, Esq.

Mark J. Esposito, Esq.

With each closure, cancellation, or indefinite postponement comes a flurry of legal questions pertaining to contract law. Indeed, the postponement of the comic-book convention scheduled to take place in Boston in March has already resulted in a lawsuit stemming from a disagreement over a contract.

This article focuses on how contracting parties may be excused from certain obligations due to COVID-19.

To a great extent, businesses are in uncharted waters. The last comparable public-health emergency occurred more than 100 years ago: the Spanish Flu of 1918-19. Partly as a result of that rarity, instructive legal precedents are also few and far between. In these unprecedented times, the often-overlooked doctrine of impossibility of contract and the underlying legal concept of force majeure are positioned to play primary roles in the interpretation of contracts during the coming weeks and months.

Doctrine of Impossibility of Contract

The doctrine of impossibility of contract may be raised as a defense in response to a lawsuit seeking to enforce a contract. Under the legal theory, if both parties entered into the contract assuming that a certain state of facts would continue to exist, and that assumption turned out to be wrong, without the fault of either party, the obligation to perform under the contract would be excused (Chase Precast Corp. v. John J. Paonessa Co. Inc., 409 Mass. 371, 373 [1991]). While the doctrine of impossibility of contract may be (somewhat) succinctly summarized, it is not necessarily so easy to interpret in practice.

The circumstances triggering the doctrine of impossibility need not be written into an agreement in order for the doctrine to apply. However, the applicability of the legal theory can be expressed in a contract through what is called a force majeure clause.

Force Majeure

Black’s Law Dictionary defines force majeure as “an event or effect that can be neither anticipated nor controlled; esp., an unexpected event that prevents someone from doing or completing something that he or she had agreed or officially planned to do. The term includes both acts of nature (e.g., floods and hurricanes) and acts of people (e.g., riots, strikes, and wars).” Force majeure intersects with the doctrine of impossibility when a contract cannot be performed as intended because of a war, natural disaster, or the like.

The general definition of force majeure can be customized in an individual contract. Each contract should be reviewed carefully to determine how force majeure is defined, if at all, and to assess whether the current pandemic circumstances preclude enforcement of the contract obligations.

Force majeure clauses are clearly implicated if they explicitly include pandemics or public-health crises within the contractual definition, but what about less obvious situations? Does the COVID-19 crisis qualify as an unanticipated, uncontrolled ‘act of nature’ or ‘act of people’? The pandemic certainly is an unexpected event that is preventing a great many people from doing or completing a great many things. But an insurer being sued in Louisiana disagrees.

Which Applies?

In the midst of the current health crisis, parties with (and some without) a force majeure clause in their agreements find themselves wondering if the doctrine of impossibility of contract applies. Is a commercial tenant required to continue to pay rent to a landlord, when the leased premises have been ordered closed by the governor because of a public-health emergency? What rights does the landlord have in the same situation? Surely the tenant anticipated that it would be able to operate its business out of the space; otherwise, there would have been no reason to rent it. What specifically did the parties think at the time that they entered the agreement?

The general definition of force majeure can be customized in an individual contract. Each contract should be reviewed carefully to determine how force majeure is defined, if at all, and to assess whether the current pandemic circumstances preclude enforcement of the contract obligations.

The general definition of force majeure can be customized in an individual contract. Each contract should be reviewed carefully to determine how force majeure is defined, if at all, and to assess whether the current pandemic circumstances preclude enforcement of the contract obligations.

If the doctrine of impossibility of contract applies, whether through the express provisions of a force majeure clause or otherwise, contracting parties must determine what obligations are excused and to what extent. Most contracts will not be completely invalidated by a force majeure event. Rather, force majeure will operate to relax certain obligations based on the facts and circumstances (e.g., extending deadlines, waiving mandatory production requirements, abating rent, or other payments owed).

It is worth noting that many commercial leases have provisions that expressly define what qualifies as force majeure and narrowly enumerate what obligations can be excused under it. Many commercial leases state plainly that the tenant’s obligation to pay rent cannot be excused by triggering the force majeure provisions. Where losses are realized as a result of the doctrine of impossibility of contract and/or force majeure provisions in a contract, an aggrieved party might reasonably consult with their insurance carrier as business interruption insurance could conceivably be a useful tool in mitigating these losses. Unfortunately, insurance companies are almost uniformly denying such claims.

Uncertain Times

The COVID-19 pandemic has turned our lives upside down. While contractual obligations are the last thing many of us want to be thinking about during this time, it is an undeniable truth that business and professional obligations are on the minds of many as we struggle to honor our commitments. For some, the doctrine of impossibility of contract and force majeure contractual provisions may provide some measure of relief from obligations, while it will only further compound the damage for others who seek to enforce such obligations.

Michael A. Fenton, Esq. and Mark J. Esposito, Esq. are attorneys at Shatz, Schwartz and Fentin, P.C., and specialize in business and estate planning, commercial and tax-exempt bond financing, real estate, litigation, and bankruptcy; (413) 737-1131; ssfpc.com

Estate Planning

A Pandemic Estate Plan

By Gina M. Barry

COVID-19, also known as the novel coronavirus, has arrived in our communities. While statistics show that many people will survive being infected, they may experience incapacity due to significant symptoms, such as breathing difficulties and fever, and, for some, the infection will be fatal.

Most have diligently stocked up on food and household supplies, particularly disinfectants. Some have also prepared a kit of ‘illness supplies,’ containing items that would be needed in the event of illness, such as a thermometer, acetaminophen, and herbal teas. Surely, this preparedness helps to alleviate some of the anxiety that has become rampant as this virus takes its toll on our communities.

However, if you were to become so ill that you could not communicate, do you know who would handle your affairs? Have you given that person the legal authority that they would need to do so without added cost, time, and administrative difficulties? Additional peace of mind can be found in ensuring that you have a plan in place should you become ill or pass away.

Gina M. Barry

Gina M. Barry

“Estate planners are using modern technology, such as videoconferencing, to help you plan with the least amount of risk to all involved.”

Fortunately, legal services have been deemed to be ‘essential’ during this pandemic, and estate planners are using modern technology, such as videoconferencing, to help you plan with the least amount of risk to all involved.

Further, unless remote notarizations become legally acceptable, strict office protocols are in place to minimize the risk of illness transmission when documents are being signed.

A pandemic estate plan should, at minimum, contain the following documents:

Last Will and Testament

Your will directs how your probate assets will be distributed after you pass away. Your probate assets are those assets held in your name alone that do not have a designated beneficiary. A will is also necessary for you to name a personal representative (formerly known as executor), who will carry out your estate. Your personal representative will gather your probate assets, pay valid debts, and distribute the balance as set forth in your will. Further, a guardian can be named in your will to take custody of minor or disabled children. Likewise, a trust may be established in your will to provide ongoing financial protection for these children and other beneficiaries who should not receive their inheritance outright, usually due to spendthrift or addiction concerns.

Healthcare Proxy — and Possibly a MOLST

A healthcare proxy is a document that designates a person to make healthcare decisions for you if you are unable to make them for yourself. Your healthcare agent should make your decisions as you would make them if you were able.

Should you lose capacity and not have a proxy in place, your loved ones will need to petition the Probate Court to become your guardian, which is a lengthy, expensive, and public process. Further, access to the courts is more restricted during the pandemic, with a number of courts being accessible only for emergencies due to court staff having received positive COVID-19 diagnoses.

‘Living-will’ language should be included within the proxy to address your end-of-life decisions. This language generally sets forth that you do not want extraordinary medical procedures used to keep you alive when there is no likelihood of recovery. Due to the need for ventilators for COVID-19 treatment, many have asked whether they would be placed on a ventilator if needed.

Fortunately, recovery is quite possible with ventilator support; therefore, the triggering event of ‘no likelihood of recovery’ would not be present in most cases, and ventilator support for COVID-19 would be instituted. Here, it is especially important to review the language in an existing document and to discuss these concerns with your named proxy.

Those of advanced age, the terminally ill, and those with painful, chronic conditions may also consider establishing medical orders for life-sustaining treatment (MOLST) in addition to a healthcare proxy. A MOLST is a form, usually printed on bright pink paper, that contains actionable medical orders that are effective immediately based upon your current medical condition. A MOLST would eliminate the need for living-will language, but the best practice would be to reference the MOLST in your proxy.

“It is important to note that a living will and a MOLST are very different. A MOLST form needs to be signed by both you and your physician and is used by physicians to understand your wishes at a glance.”

It is important to note that a living will and a MOLST are very different. A MOLST form needs to be signed by both you and your physician and is used by physicians to understand your wishes at a glance.

A healthcare proxy, on the ther hand, only takes effect if you are incapacitated. Also, a living will asks the health care agent to take into account all facts and circumstances to decide whether recovery is likely before carrying out instructions to withhold or terminate life support, whereas a MOLST sets forth decisions you have already made about what you do and do not want as far as medical care.

The MOLST takes the place of do-not-resuscitate (DNR) and do-not-intubate (DNI) forms, as the MOLST is more comprehensive, but existing DNR and DNI forms remain valid. The MOLST not only addresses these situations, but also sets forth wishes regarding hospitalization, dialysis, and artificial means of receiving nutrition and hydration.

Durable Power of Attorney

A durable power of attorney is a document that designates someone to make financial decisions for you. The durable power of attorney is a very powerful document with authority that is as broad as the powers granted within it.

It gives power to the person you name to handle all your financial decisions, not just pay your bills. Should you lose capacity and not have a durable power of attorney in place, your loved ones will have to petition the Probate Court to become your conservator, which involves the same obstacles described above as to the appointment of a guardian.

Homestead Declaration

If you own your primary residence in Massachusetts, you should also record a homestead declaration in order to protect the equity in your primary residence up to $500,000 from attachment, seizure, execution on judgment, levy, or sale for the payment of debts. In some cases, such as advanced age or disability, the equity protection can be up to $1 million.

If a homestead declaration is not recorded, there is an automatic $125,000 of equity protection, which may be adequate for some. Homestead protection will likely be particularly important as the financial consequences of this pandemic take hold.

Conclusion

The COVID-19 pandemic has brought the possibility of disability or death to the fore, and prior dismissals of ‘it won’t happen to me’ ring hollow.

We are at a time when you should presume that it will, in fact, happen to you.

That being the case, would you prefer to have a plan in place to ensure your loved ones can manage your affairs with the least amount of delay, cost, and stress? If the answer is yes, please call an estate-planning attorney today, establish or update your plan, and give yourself and your family that much more peace of mind during this pandemic.

Gina M. Barry is a partner with the 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]

Health Care

A New Normal

By Mark Morris

Dr. S. Lowell Kahn

Dr. S. Lowell Kahn says he feels an obligation to the community to offer his services because it’s so difficult for people to get healthcare right now.

At a time when COVID-19 is dominating everyone’s attention and resources, people are still experiencing other urgent health issues such as heart attacks, strokes, and any number of other medical conditions that require treatment.

During the last few days of March, BusinessWest spoke with several area physicians about the challenges they are confronting in trying to serve the needs of their patients who require medical attention that is not related to the coronavirus.

The doctors BusinessWest spoke with have all reduced their normal business activity and only see patients for emergency or medically necessary reasons. They all said they closely follow the guidelines from the Centers for Disease Control and Prevention (CDC), notices from Massachusetts Gov. Charlie Baker, as well as information from their respective medical societies.

“It’s a challenging environment, to say the least,” said Dr. S. Lowell Kahn, president of New England Endovascular Center.

Kahn said he feels an obligation to the community to offer his services because it’s so difficult for people to get healthcare during these times. The procedures he is doing are non-elective, and in many cases essential for patients, as well as their doctors.

“People with cancer still need chemotherapy, and those with bad peripheral veins need a biopsy first,” he explained. “If we don’t provide that biopsy, the oncologist can’t properly treat them.”

Dr. Stephen Jacapraro, a dentist with Family Dental Care, is only opening his office when someone has a dental emergency. He said moving from reduced hours to closing up completely was a fast transition.

“We are filling a need because my patient doesn’t want go to the emergency room, and the ER staff doesn’t want him there at this time.”

“Back on March 16, the Massachusetts Dental Association recommended that we start limiting hours; then, on March 19th, the state became more stringent, and since then, we shut down completely except for emergencies,” said Jacapraro. “If someone has severe pain or swelling, I can diagnose it, but even in normal circumstances, I would refer the patient to the proper specialist, such as an endodontist or dental surgeon.”

Dr. Christopher Peteros, a podiatrist with New England Foot Specialists, is limiting his practice to seeing post-surgical patients who need follow-up attention, diabetics with foot issues, and others with medically urgent foot conditions.

“If I have a diabetic patient with an infection in his foot, I don’t want to send him to the emergency room at this time,” Peteros said, adding that there is less risk involved in taking care of the patient in his office than sending him to the hospital. “We are filling a need because my patient doesn’t want go to the emergency room, and the ER staff doesn’t want him there at this time.”

Not Business as Usual

Even fairly routine procedures that are usually done in a hospital setting have become more difficult due to hospitals preparing to be overwhelmed with coronavirus cases. Replacing a dialysis catheter for patients would normally be handled in a hospital, but Kahn has been doing them in his office.

“Even though this isn’t considered an emergency procedure, for dialysis patients, it really needs to get done,” he noted, adding that patients prefer to go to his office these days rather than risk exposure to COVID-19 at the hospital.

Dr. Christopher Peteros

Dr. Christopher Peteros is seeing patients with urgent issues for two reasons: because they need care right away, and to keep them out of hospitals.

All three doctors spoke of following the latest protocols for constantly wiping down their offices, as well as screening patients more carefully before they arrive. They all said that, if there is any reason to believe a patient has been exposed to the coronavirus, they are kept away from the office.

In the interest of social distancing, the doctors are spreading out appointment times to prevent more than one patient from being in the waiting room at any time. Kahn has taken it one step further, and offers patients the option of waiting in their car until they are ready to be seen.

“We used to let family members come in and sit with the patient in our recovery area after their procedure, said Kahn. “We don’t allow that anymore.”

The safety of their teams is an obvious priority for all three doctors as well. Kahn said all his staff wear masks the entire time they are in the office.

“We screen ourselves every single day using screening questions issued by the CDC,” Kahn said, noting that they go through the entire list of questions to check every staff member for a fever, cough, shortness of breath, etc.

“People are scared these days. It’s not fun being a healthcare worker like it was before,” he told BusinessWest.

Jacapraro said one of his concerns is that he and his staff are “toward the older, more vulnerable age group,” so one upside of seeing only emergency cases is that it limits his staff’s exposure to the public. He also mentioned that, with masks and gloves in such high demand, the limited hours allows him to conserve his supplies.

“We’ve been cohesive as a team, trying to keep each other healthy both physically and mentally. We’re staying strong through it to make sure we can stay open to help patients who need us.”

“Our suppliers are taking care of the hospitals first, as they should,” he said, adding that, even with limited supplies, he has enough in stock to handle emergencies.

With his primary supplier unavailable, Jacapraro has been using a secondary supplier for masks whose price is four times higher. Jacapraro doesn’t believe the supplier is jacking up the price, but that it’s more likely a cost difference between suppliers. “When you’re not making any money, however, you still have to pay them four times as much.”

Back in mid-March, the U.S. surgeon general asked doctors to stop all elective procedures, a move that has proven almost self-regulating as the doctors have said patients are more reluctant to seek services at this time.

“Some of my patients are asking me to push off appointments, and I’m asking the others to do so as well,” said Peteros.

Jacapraro added that, once social distancing was being encouraged, the Massachusetts Dental Assoc. recommended stopping all elective treatments. “Obviously, we have to get closer than six feet to help our patients.”

Some of the most common procedures are being seen in a different light in the environment of the COVID-19 pandemic. The Society of Interventional Radiology (SIR) issued a reminder to doctors about a basic procedure that Kahn had done many times in his office.

The procedure involves inserting a feeding tube through the skin and into the stomach. Before doing that, however, the doctor inserts a catheter into the patient’s nose, through the esophagus, and into the stomach to determine the best location for the feeding tube. When the catheter is being inserted into the patient’s nose, it is common for them to have a gag reflex. The SIR cautioned that the gag reflex could aerosolize the COVID-19 virus, and recommended that, unless the doctor and staff wear N95 masks and full headgear, they could potentially expose themselves to the virus.

“This has always been a quick and safe procedure, but we’ve had to rethink it,” Kahn said. “And for the time being, we have backed off on doing feeding tubes, per these recommendations.”

Carrying On

The doctors who spoke with BusinessWest have all based their COVID-19 protocols on information from the CDC, and they advise consumers do the same.

“There’s a lot of bad information out there on social media, where suddenly, everyone thinks they’re an epidemiologist,” said Kahn, adding that consumers should get their information from reliable sources.

Early on, as they understood the significance of the coronavirus, Kahn met with his staff to allow everyone to voice their concerns about practicing medicine at this time. By the end of the meeting, he noted, everyone was on board with how they needed to proceed.

“We’ve been cohesive as a team, trying to keep each other healthy both physically and mentally,” he said, while seemingly speaking for everyone in the industry. “We’re staying strong through it to make sure we can stay open to help patients who need us.”

Health Care

Back to Basics

By Ashley Tresoline

The World Health Organization has declared COVID-19 a pandemic. We are all trying to navigate through figuring out what is best for ourselves and our families in these uncertain times. As we all stock our homes with extra food, hand sanitizer, and the toilet paper we waited four hours for at the store, we need to be thinking about how we can keep ourselves healthy too: not just by preparing our homes, but by preparing our bodies as well. All of us are facing a new normal for the foreseeable future.

We need to refocus and go back to basics of everyday living to help us support our immune systems. Here are some tips to do just that.

Get enough sleep. I know your latest binge-worthy Netflix show is calling your name, but you still need to be trying to get seven to nine hours of sleep a night. When we are sleep-deprived, we are more likely to get sick. When we sleep, we make proteins called cytokines, which help regulate the immune system.

Stay hydrated. Drinking water seems so simple. Drinking plenty of water ensures that your blood will carry plenty of oxygen to all the cells of your body. This means all of your body’s systems will function properly, because they’ll be getting plenty of oxygen. Your immune system functions best when your muscles and organs are functioning best. If the taste of plain water is hard for you to stomach, add a little lemon, lime, or cucumber.

“Drinking plenty of water ensures that your blood will carry plenty of oxygen to all the cells of your body. This means all of your body’s systems will function properly, because they’ll be getting plenty of oxygen.”

Stay as active as possible. It is so easy to sit around more than we usually do because we are in our houses and don’t have many social activities. Make your workout a priority for your mental and physical health. There are so many gyms and studios that are offering online training and classes for you to do in your own living room. Being active will help you feel less stressed and help keep your immune system functioning in tip-top shape.

Eat your greens. Do you remember when your mom used to tell you to eat your broccoli because it would make you big and strong? Well, guess what? She was right. When you want to boost your body’s immune system, you can do it naturally by eating the most nutritious foods. Dark, leafy greens and cruciferous veggies are recommended by dietitians because these foods contain high levels of minerals, antioxidants, and vitamins. Broccoli is considered one of the most versatile vegetables to buy because you can consume it in a variety of ways, such as raw in salad, steamed, or sautéed.

Eat other foods that help with your immune system. These include citrus fruits such as oranges, limes, and lemons to help with vitamin C, ginger to protect against bacteria and inflammation, sweet potatoes, green and black tea for the amino acids, mushrooms rich in B vitamins and minerals, yogurt for the probiotics and vitamin D, spinach because of its vitamin C and iron, and turmeric for its anti-inflammatory properties and flavonoids to help fight off countless infections.

Avoid alcohol and processed sugar. I know these are difficult times and drinking in moderation in most cases is OK, but an increase in your alcohol intake can increase a person’s exposure to bacterial and viral infections. Processed sugar can weaken the immune system, and we all know we should limit our processed sugar on a normal basis. Realistically, we all will have a treat or two every now and then, but processed foods are nutrient-poor. When we eat a lot of sugar, the immune system is habitually deprived of nutrients. We need nutrient-dense food to help our immune system fight off colds and viruses.

Incorporate supplements and vitamins. A lot of us take a daily multi-vitamin, which is a good way for us to help get the recommended vitamins and minerals we need in our diet. There are many other supplements that claim they can help you boost your immunity but be careful, as they can load you up with vitamins and minerals your body can’t absorb. Loading up on some minerals and vitamins in large doses can cause you to have other health problems, such as nausea, vomiting, dizziness, kidney problems, headaches, and many more serious conditions, depending on your health situation.

There are a few natural cold supplements that aren’t all bad to add to your health regimen, such as elderberry syrup and zinc lozenges. Elderberry contains natural substances called flavonoids, which can help reduce swelling, fight inflammation, and boost immunity. Studies have shown elderberry can ease the symptoms of the flu, bacterial sinus infections, and bronchitis. The benefits seem to be most effective when started 24 to 48 hours after symptoms begin. (However, never consume a product made with raw elderberry.) Zinc lozenges can also help reduce cold and flu symptoms, but they come with the risk of overwhelming your body with too much zinc. If you take too much, you may be at risk for nausea, vomiting, stomach upset, copper deficiency, and risk of suppressing the immune system. Be sure to speak to a healthcare professional before adding any supplements to your healthcare regimen. Some supplements can react with prescription medications and over-the-counter medications you are taking.

Your body is working hard to keep you healthy. Help your body by eating right, getting proper sleep, staying hydrated, and keeping active. Health is a cumulative thing, so keep up your best health and wellness practices while we are in this difficult time — and, of course, wash your hands!

Ashley Tresoline is the founder of Bella Foodie, LLC; [email protected]

Coronavirus Sections Special Coverage

Strong Medicine

As COVID-19 continues to upend nearly every aspect of life in the U.S., Congress has been working to relieve suffering Americans. Having passed the Families First Coronavirus Response Act on March 18 in an effort to limit the spread of the pandemic and support relief efforts, Congress turned to stabilizing the economy. After days of furious negotiations between Republicans and Democrats on Capitol Hill and Trump administration officials, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. With a $2.2 trillion price tag, the act is the most expensive piece of legislation ever passed.

The act passed in the Senate by a unanimous vote late on March 25 and was passed in the House of Representatives on March 27. The President signed the bill into law later that day.

The CARES Act looks to make a significant impact on the economy by providing loan forgiveness, supporting small businesses, enhancing unemployment insurance, and providing federal loans to industries severely impacted by the pandemic. In addition, it provides tax relief and tax incentives for individuals and businesses alike. The majority of the tax relief is designed to increase liquidity in the economy, largely through the relaxation of limitations on business deductions and the deferral of taxes, but also with the introduction of recovery rebates for individuals.

In this article, Meyers Brothers Kalicka, P.C., in conjunction with its affiliation with CPAmerica, presents some of the key elements of the CARES Act and how they will impact individuals and businesses.

INDIVIDUAL TAX RELIEF

Recovery Rebates

The most well-publicized provision is the $1,200 recovery rebates for individual taxpayers. The rebate amounts are advance refunds of credits against 2020 taxes, and equal to $1,200 for individuals, or $2,400 for joint filers, with a $500 credit for each child. The amount of each rebate is phased out by $5 for every $100 in excess of a threshold amount. This threshold amount is based upon 2018 adjusted gross income (unless a 2019 return has already been filed), and the phaseout begins at $75,000 for single filers, $112,500 for heads of households, and $150,000 for joint filers. Thus, the rebates are completely phased out for single filers with 2018 (or 2019, if applicable) adjusted gross income over $99,000, heads of household with $136,500 (or higher, depending upon whether status is established because of children), and joint filers with $198,000.

In order to be eligible for a recovery rebate, the individual must not be: (1) a non-resident alien, (2) able to be claimed as a dependent on another taxpayer’s return, or (3) an estate or trust, and must have included a Social Security number for both the taxpayer, the taxpayer’s spouse, and eligible children (or an adoption taxpayer identification number, where appropriate). The act includes additional rules for the application of the credit.

The Secretary of the Treasury has been directed to provide the rebate as rapidly as possible.

Retirement Plans

The CARES Act also waives the 10% penalty on early withdrawals up to $100,000 from qualified retirement plans for coronavirus-related distributions. For purposes of the penalty waiver, a coronavirus-related distribution is one made during the 2020 calendar year to an individual (or the spouse of an individual) diagnosed with COVID-19 with a CDC-approved test, or to an individual who experiences adverse financial consequences as a result of quarantine, business closure, layoff, or reduced hours due to the virus. Any income attributable to an early withdrawal is subject to tax over a three-year period, and taxpayers may recontribute the withdrawn amounts to a qualified retirement plan without regard to annual caps on contributions if made within three years.

This relief is commonly granted by Congress in the wake of major disaster declarations, such as those made after a major hurricane.

The act also waives all required minimum distributions for 2020, regardless of whether the taxpayer has been impacted by the pandemic.

Charitable Contributions

The CARES Act enhances tax incentives for making charitable contributions for the 2020 tax year. First, it allows an above-the-line deduction of up to $300 for charitable contributions made by individuals. This allows an individual to claim a deduction for a charitable contribution, even if the individual does not itemize deductions.

Additionally, the percent-of-adjusted-gross-income (AGI) limitations are increased for all taxpayers as well as for specific types of contributions. For the 2020 tax year, individuals can claim an unlimited itemized deduction for a charitable contribution, which is normally limited to 50% of AGI. In the case of corporations, the usual 10%-of-AGI limitation is increased to 25% for the 2020 tax year. Finally, the contribution of food inventory, the deduction for which is normally limited to 15% of AGI, is increased to 25% for the 2020 tax year.

Student Loans Paid by Employers

The act provides for an exclusion of up to $5,250 from income for payments of an employee’s education loans. In order for the exclusion to apply, the loan must have been incurred by the employee for the education of the employee (so, for example, the loan must not have been incurred to pay for the education of the employee’s child). The payment can be made to the employee or directly to the lender. The exclusion only applies for payments made by an employer after the date of enactment and before Jan. 1, 2021.

The $5,250 cap applies to both the new student-loan repayment benefit as well as other educational assistance (e.g., tuition, fees, books) provided by the employee.

BUSINESS TAX RELIEF

Employee Retention Credit

The CARES Act grants eligible employers a credit against employment taxes equal to 50% of qualified wages paid to employees who are not working due to the employer’s full or partial cessation of business or a significant decline in gross receipts. The credit is available to be claimed on a quarterly basis, but the amount of wages, including health benefits, for which the credit can be claimed is limited to $10,000 in aggregate per employee for all quarters. The provision contains several requirements defining qualified wages, qualified employees, and qualified employers. The credit applies to wages paid after March 12, 2020 and before Jan. 1, 2021.

This is very similar to the paid leave credits granted to employers under the Families First Coronavirus Response Act signed into law on March 18, with some changes to the requirements. Most significantly, neither the employee nor the employer have to be directly impacted by infection.

This is also similar to the employee retention credits Congress provides after major disasters, but with different requirements and limitations.

Payroll Tax Deferral

In order to free up employers’ cash flow and retain employees during times of quarantine or shutdown, the CARES Act defers the payment of payroll taxes. Payroll taxes due from the period beginning on the date the CARES Act is signed into law and ending on Dec. 31, 2020, are deferred. The 6.2% OASID portion of payroll taxes incurred by employers, and 50% of the equivalent payroll taxes incurred by self-employed persons, qualify for the deferral. Half of the deferred payroll taxes are due on Dec. 31, 2021, with the remainder due on Dec. 31, 2022.

Net Operating Losses

The act allows for a five-year carry-back of net operating losses (NOLs) arising in 2018, 2019, or 2020 by a business. Businesses will be able to amend or modify tax returns for tax years dating back to 2013 in order to take advantage of the carry-back. Under current law, only farming NOLs are allowed to be carried back, and the carry-back is limited to two years.

The Tax Cuts and Jobs Act (TCJA) eliminated the carry-back of NOLs for tax years ending after 2017 and allowed for the indefinite carry-forward for NOLs. Prior to the TCJA, an NOL could be carried back two years, with longer carry-back periods for NOLs arising from a casualty or declared disaster or farming losses.

The CARES Act also eliminates loss-limitation rules applicable to sole proprietors and pass-through entities to allow them to take advantage of the NOL carryback. Additionally, the act allows for NOLs arising before Jan. 1, 2021 to fully offset income. Under current law, NOLs are limited to 80% of taxable income.

Minimum Tax Credits

The TCJA eliminated the alternative minimum tax for corporations for tax years after 2017, but allowed corporations to claim a refundable portion of any unused minimum tax credits through 2021. The amount of the refundable credit is limited to 50% of any excess minimum tax in 2018 through 2020, before being fully refundable in 2021. The act accelerates the year for which a fully refundable credit can be claimed to 2019, and allows corporations to elect to claim the fully refundable minimum tax credits in 2018.

Business Interest Expense Limitation

The TCJA limited the amount of allowable deductions for business interest (regardless of the type of entity) for tax years beginning after 2017. The limitation is generally the amount of business interest income for the year plus 30% of the taxpayer’s adjusted taxable income for the year. The limitation does not apply to taxpayers with average annual gross receipts for the prior three year below an inflation-adjusted amount. For 2020, this amount is $26 million or less.

The act increases the limitation amount to 50% of the taxpayer’s adjusted taxable income for 2019 and 2020 (with a special allocation election required for partnerships for 2019). In calculating the limitation for 2020, the taxpayer may elect to use adjusted taxable income for 2019.

The option to use 2019 adjusted taxable income in calculating the limitation is meant to counteract the likelihood that incomes will not be higher in 2020 because of the economic environment, whereas 2019 was generally a very high revenue year for businesses.

Qualified Improvement Property

When Congress drafted the TCJA, it allowed for 100% bonus-depreciation rules to apply to all MACRS property with a recovery period of 20 years or less. Before the TCJA, qualified improvement property was depreciated as 39-year residential real property, unless it separately qualified as 15-year qualified leasehold improvement property, 15-year retail improvement property, or 15-year restaurant property. Congress eliminated the three separate categories of 15-year improvement properties with the intention of making all qualified improvement property 15-year property. However, it failed to do so, and as a result, qualified improvement property is depreciated as 39-year property and not qualified for bonus depreciation.

This is known in tax circles as the ‘retail glitch.’ A technical amendment has long been promised and had been included in early drafts of several pieces of legislation since the TCJA became law in December 2017. However, it never made it into the final version of any piece of significant legislation voted on by either chamber of Congress.

The CARES Act corrects this congressional oversight by defining qualified improvement property as 15-year property, thus allowing 100% of improvements to be deducted in the year incurred. The change is made as if included in the TCJA and, thus, is effective for property acquired and placed in service after Sept. 27, 2017.

The closures and quarantines related to the COVID-19 pandemic have been especially hard on small businesses, which include restaurants and local retail stores. This technical correction allows any expenses incurred by owners to make improvements to the physical premises related to these businesses to be accelerated into the 2017 or 2018 tax year on an amended return, or the 2019 tax year on a return due July 15, 2020.

Excise Tax Relief

The act also provides a temporary exception from alcohol excise taxes for alcohol for use in or contained in hand sanitizer produced or directed by the U.S. Food and Drug Administration related to the pandemic. The act also suspends excise taxes on aviation and kerosene used in aviation fuel. The exception and suspensions are applicable to 2020 only.

ADDITIONAL PROVISIONS

The CARES Act is a massive act, the majority of which does not have a tax impact. However, some smaller, but no less significant, provisions impacting federal tax are sprinkled outside of the tax-related division of the act. These provisions include:

• The exclusion from tax of any forgiven small-business loans, mortgage obligations, or other loan obligations forgiven by the lender during the applicable period;

• A safe harbor from the definition of a high-deductible health plan permitting telehealth services to be included, even though such services do not carry a deductible;

• The inclusion of over-the-counter menstrual products as qualified medical expenses for purposes of distributions from health savings accounts and health flexible spending arrangements;

• Pension funding relief for failures to meet contribution requirements to defined benefit plans during 2020; and

• Allowing certain charitable employers whose primary exempt purpose is providing services to mothers and children to use small employer charity pension plan rules.

Construction

Home Makers

Walk-in closets in master bedrooms, low-emissivity windows, and laundry rooms are the most likely features in typical new homes in 2020, based on a recent survey of single-family home builders by the National Assoc. of Home Builders.

Energy-efficient features such as efficient lighting, programmable thermostats, and ENERGY STAR appliances will also be popular, as will open design concepts such as great rooms and nine-plus-foot ceilings on the first floor. Energy-efficient or eco-friendly features not likely to be included in new homes, however, are cork flooring in main-level living areas, geothermal heat pumps, and solar water heating and cooling.

Consumers continue to desire smaller homes, not only in overall square footage, but also the number of features, such as bedrooms and bathrooms. This four-year downward trend has led to the smallest average home size since 2011 at 2,520 square feet — only 20 square feet above the average in 2007, the pre-recession peak. The percentage of homes incorporating four-plus bedrooms, three-plus full bathrooms, and three-plus-car garages have also dropped to levels not seen since 2012.

“This points to an industry trying to meet the demands of the entry-level home buyer,” said Rose Quint, NAHB assistant vice president of survey research. “Builders are struggling to meet these demands, however, because of factors such as restrictive zoning regulations and lot prices, with the price of a new lot in 2019 averaging $57,000.”

NAHB also examined preferences among first-time buyers and repeat buyers to help builders determine what features are most likely to resonate in the market in 2020. When asked which they prefer, the majority of both first-time buyers and repeat buyers would rather have a smaller home with high-quality products and services than a bigger home with fewer amenities. The top features desired by both groups include:

• Laundry rooms;

• ENERGY STAR windows;

• Hardwood flooring;

• Walk-in pantries;

• Patios;

• Ceiling fans; and

• Kitchen double sinks.

These trends are reflected in this year’s Best in American Living Award (BALA) winners as well. For example, designers are including flex spaces that add increased functionality to laundry rooms, hardwood flooring and wood finishes to add warmth and character both inside and outside the home, and creating outdoor spaces that seamlessly integrate with indoor living.

“This points to an industry trying to meet the demands of the entry-level home buyer. Builders are struggling to meet these demands, however, because of factors such as restrictive zoning regulations and lot prices.”

“Every year, winners of the Best in American Living Awards showcase the best of what the home building industry has to offer,” said Donald Ruthroff of the Dahlin Group. “As the chair of the BALA subcommittee and BALA judging, I am privileged to see projects from across the nation, and those projects help me identify the design trends that drive discussions in our offices with our clients.”

Designers are also working to address attainability concerns by developing multi-family and higher-density projects that feel more like single-family homes to meet consumer interest at more affordable price points.

Coronavirus

Novel Solutions

By John S. Gannon, Esq. and Erica E. Flores, Esq.

It has only been a few weeks since the novel coronavirus made its way to our shores, but life as we know it has changed completely and will, perhaps, never be quite the same again. After a near-record-low unemployment rate in February, nearly 3.3 million Americans filed for unemployment benefits last week, a figure that shattered the previous record of about 700,000 set back in 1982. The report confirms what the plunging securities markets have foreshadowed for the past few weeks — that the coronavirus is killing more than just those who are losing their lives to the disease; it is killing businesses and livelihoods as well.

How long this crisis will continue is impossible to predict. Health experts warn against lifting stay-at-home orders, opening non-essential businesses, and loosening social-distancing recommendations too early; economists worry that the economic consequences will be worse for Americans than the actual disease. But however long this new normal persists, the country has borne witness to another unbelievable sight, a welcome bright spot amid so much uncertainty — a sharply divided Congress coming together to try to mitigate the crisis.

Its first emergency measure? Legislation called the Families First Coronavirus Relief Act (FFCRA). It imposes significant new obligations on all private employers with fewer than 500 employees. Below is a summary of this unprecedented new law.

What new rights does the FFCRA provide to employees? The FFCRA requires covered employers to provide the following to all employees:

• Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay if the employee is unable to work or telework because the employee (1) has been quarantined (either by government order or on the advice of a healthcare provider) and/or (2) is experiencing COVID-19 symptoms and seeking a medical diagnosis. Employees will be paid their full wages, up to a maximum of $511 per day ($5,110 total) for these sick-leave reasons; and

• Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay if the employee is unable to work or telework because the employee (1) must care for someone who has been quarantined (again, either by government order or on the advice of a healthcare provider), (2) must care for a minor child whose school or childcare provider is closed or unavailable due to the virus, and/or (3) is experiencing a “substantially similar condition,” which has yet to be defined but will be the subject of regulations to be issued by the Department of Health and Human Services. Employees will be paid two-thirds of their wages up to a maximum of $200 per day ($2,000 total) for these sick-leave reasons.

• Employees who have been employed by a covered employer for at least 30 days may also take an additional 10 weeks of paid leave at two-thirds their wages to continue to provide care for a minor child whose school or childcare provider remains closed or unavailable due to the virus. This also caps out at $200 per day.

How are we going to pay for this? Important question! Qualified employers that pay sick leave will receive a dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA, up to the appropriate daily and aggregate payment caps. Here’s how the IRS explained it will work:

• If an eligible employer paid $5,000 in sick leave and is otherwise required to deposit $8,000 in payroll taxes, including taxes withheld from all its employees, the employer could use up to $5,000 of the $8,000 in taxes it was going to deposit for making qualified leave payments. The employer would only be required under the law to deposit the remaining $3,000 on its next regular deposit date.

• If an eligible employer paid $10,000 in sick leave and was required to deposit $8,000 in taxes, the employer could use the entire $8,000 of taxes in order to make qualified leave payments and file a request for an accelerated credit for the remaining $2,000.

In its guidance, the IRS also stated that “reimbursement will be quick and easy to obtain. An immediate, dollar-for-dollar tax offset against payroll taxes will be provided. Where a refund is owed, the IRS will send the refund as quickly as possible.” Let’s hope this rings true.

Which employers are covered by the FFCRA? The FFCRA covers certain public employers and all private employers with fewer than 500 employees. For purposes of this count, employers must include all full-time and part-time employees in the U.S. (or any U.S. territory or possession), including any employees who are on leave, as well as temporary employees and day laborers supplied by an agency (with limited exceptions). Independent contractors need not be counted, but employers who may be a joint employer with another business or are owned even in part by another entity should consider consulting an employment attorney for additional guidance.

Are any employers exempt from the FFCRA? Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide sick time or FMLA leave due to school closings or the unavailability of childcare if doing so would “jeopardize the viability of the business as a going concern.” Regulations outlining this exemption are expected to be published by the Department of Labor in April.

When does this go into effect, will this leave be available forever, and do we need to notify employees? The law is effective April 1, 2020, and expires on December 31, 2020. And, yes, employers are required to post a notice in the workplace on the FFCRA requirements in a conspicuous place.

We are facing an extraordinary crisis. While this law will certainly be a challenge for employers to grapple with, it is important legislation that helps keep workplaces safe by encouraging sick employees to stay home. It also provides much-needed job and financial protection to employees who are home with their children because schools and daycares are closed. One piece of advice: don’t wait until the sick-leave requests start coming to get your questions answered. Our firm has been working around-the-clock with businesses and organizations that understand they need to plan now for the impact of this historic legislation. Be as prepared as possible, and stay safe.

John S. Gannon and Erica E. Flores are attorneys at the law firm Skoler, Abbott & Presser, P.C. in Springfield; (413) 737-4753; [email protected]; [email protected]

Coronavirus

Bold Response to a Crisis

By Scott Foster

The CoronaCrisis has been a roller coaster for business owners. Starting almost a month ago, the rumblings of disruption began and have now erupted into complete and utter chaos. Business owners have been forced to make stark decisions — restaurant owners laying off their entire workforce; ‘non-essential’ businesses shutting down on 36 hours notice; whether and how to support employees facing three, then six weeks of cancelled school; supply-chain disruptions; canceled orders; canceled events; and more. Business owners have openly wondered, ‘how will my business survive?’

Fortunately, once the legislation pending in the U.S. Senate becomes law, which is widely expected, business owners — including sole proprietors and gig-economy workers — will be receiving a lifeline from the federal government that is unprecedented in scope, speed, and breadth.

Coined the Keeping American Workers Paid and Employed Act, the proposed provisions would appear to apply to every for-profit business with fewer than 500 employees (again, including sole proprietors). The act would allow these businesses (whether a corporation, LLC, partnership, or some other form of entity) to obtain a loan to cover payroll costs, including healthcare premiums and paid time off, rent, utilities, mortgage payments (interest, not principal), and interest on other pre-existing loans for an eight-week period falling between Feb. 15 and June 30, with a maximum loan amount of $10 million. The loan would be non-recourse, require no security or personal guarantees, and bear interest of only 4% with a repayment period of 10 years.

But this is not like any other loan ever offered. This loan would be forgiven in an amount equal to the sum of payroll costs, payments of interest on any covered mortgage, payments on any covered rent obligations, and covered utility payments. The amount to be forgiven would be reduced if the business reduced its workforce, and the forgiveness would not apply to payroll costs of any employees who were paid more than $100,000 in 2019. And the best part, unlike other debt that is forgiven by the lender, any amount forgiven under this program will be excluded from gross income.

To summarize, if you are a business and are willing to keep your employees on the payroll, pay your rent or mortgage, and stay in business, the federal government is prepared to pay your rent, your utilities, and your payroll (for employees making under $100,000 annually) for eight weeks, and the payment is tax-free. It sounds too good to be true, but the public policy is sound — the easiest and best way to get financial support to the most Americans is through their employers (especially in this time of historically low unemployment). 

We would expect loans under this program to start being processed by late April or early May, with funding happening as soon as the loans can be closed. The program is relying on banks and commercial lenders to aggressively participate as the primary lenders under the program, so you should be able to continue working with your current bank. 

Given the tight timeframe and the unprecedented scope of this program, Bulkley Richardson is preparing for an unusually high level of lending in the local market and will be prepared to help our clients navigate this new program, get the necessary loans, and submit the backup needed to qualify for the forgiveness.

Scott Foster is a partner at Bulkley Richardson.

Coronavirus

How to Survive in a Down Economy

By Nicholas LaPier, CPA

Businesses, and especially small businesses, are dealing with a situation that is in many ways unprecedented in both nature and scope: coping with the COVID-19 pandemic.

Indeed, this crisis has impacted almost every industry sector and each specific business, except for supermarkets and online-delivery specialists such as Amazon. No one really knows how long this crisis will last or what the economy will look like on the proverbial ‘other side’ of the pandemic.

Despite the unique aspects of this crisis and the depth of the disruption to the economy in general, there are basic rules, or guidelines, when it comes to business disaster planning, and they apply to the COVID-19 pandemic as well.

Here is a quick checklist of items that I use when talking with clients about this crisis — and any down-economy situation.

• For starters, if you don’t have a disaster-recovery plan, create one. If you do have one, take it out of the drawer and review it. Also, modify the plan over the next few months based on actual experience, and create one as you go by documenting decisions and results.

• Consult your most respected business advisors for advice. This list includes your CPA, bankers, and peers.

• Conserve business assets, both cash (cash flow is tantamount to survival in times of disaster) and investments (don’t sell underperforming investments unless necessary).

• Review current operating costs as compared to expected revenues. And if your costs far exceed the projected revenues, first determine how long the shortage is and how the short term can be funded. Options, and there are many, can include:

– Contribute additional owner capital;

– Access your currently available business line of credit;

– Utilize your existing cash reserves;

– Start reviewing all SBA and state lending programs in place now because of COVID-19. You may even want to start the application early — as of this writing, the initial Massachusetts emergency loan program has already been exhausted;

– Review your commercial insurance policies for business-interruption coverage and how to submit a claim;

– Take a reduced owner compensation. Not only will this help cash flow for the business, you will reap some payroll tax savings as a result;

– Assess where a reduction in workforce makes sense;

– Make a careful assessment before incurring new costs and expenses;

– Accelerate collection efforts on unpaid receivables;

– Enhance your selling efforts — increase your social media posts and other media outlets, while staying the course with advertising and marketing campaigns; and

– Consider closing for a short period to curtail as many costs as possible.

• While addressing the short term, business owners must be focused on how the long term can be funded as well. Options here include:

– Additional owner capital/resources;

– Longer-term reduction of owner compensation;

– Continued reduction of workforce;

– Identification of other cost-saving measures;

– Enhanced sales and collection efforts;

– Obtaining SBA, state, or traditional lending programs; and

– Additional loans from non-traditional sources, such as leasing companies and non-equity partners.

As noted earlier, the COVID-19 pandemic is in many ways unique when it comes to business disasters. It is unlike a natural disaster, a recession, or a terrorist attack like 9/11.

But it is like all those others in that it is a situation that requires careful planning — and execution of a plan.

Nicholas LaPier, CPA is president of West Springfield-based Nicholas LaPier PC CPA; (413) 732-0200; [email protected]

 

Coronavirus

By Andrew Morehouse

We’ve all been to the supermarkets. Households are stocking up on food in response to coronavirus (COVID-19). But let’s not forget there are tens of thousands of individuals across Western Mass. who can’t even get to a supermarket — elders, people with disabilities, and households who must rely on unreliable public transportation. Others can, but they can’t even afford to buy enough food to feed their families, much less stock up for two weeks’ worth as suggested by public officials.

To make matters worse, many of these households have children whose schools are now closed and are not providing essential school breakfasts and lunches that so many families rely on to feed their children day in and day out. Some but not all schools are preparing meals for children to pick up at schools or at ‘summer’ meal sites (check out www.meals4kids.org/summer).

The Food Bank of Western Massachusetts and its network of 174 local feeding partners across all four counties — Berkshire, Franklin, Hampshire, and Hampden — continue to operate as we do year in and year out, providing healthy food to the most vulnerable in our communities. We are all establishing measures to prevent transmission of coronavirus, such as social distancing, hand washing, and wearing protective gloves to ensure that our visitors can receive healthy food safely.

Many food pantries are now pre-packaging food to hand out, often outdoors, in order to minimize contact. Most, if not all, of the meal sites are now making meals to go, which patrons can pick up and take with them. If you are in need of food assistance, visit our website, www.foodbankwma.org/get-help, for a listing of all local feeding sites, and be sure to call prior to visiting to make sure they are open.

We’ve instituted similar safety measures at our biweekly and monthly Mobile Food Bank.
Twenty-one of the 26 sites continue to operate in ‘food deserts’ where access to healthy food is nonexistent. We’ve instituted similar safety measures at senior centers where volunteers distribute bags of groceries to thousands of elders monthly at our 51 brown-bag sites. Many remain open, and we are also working with those that have closed to seek permission to continue to distribute food in their parking lots.

Right now, we have enough food to distribute through our vast regional emergency food network. This is likely to change as the coronavirus persists. You can help by donating — every dollar you give provides four meals. We also have enough volunteers, but this is also likely to change. Please visit www.foodbankwma.org/volunteer for updates.

In addition to distributing food, we are working with our partners across the Commonwealth and nationally to advocate for public food assistance. The Supplemental Nutrition Assistance Program (SNAP) continues to have the greatest impact in nourishing those who receive this federal benefit. Most SNAP recipients are children, elders, people with disabilities, and individuals working part-time and on minimum-wage incomes. SNAP provides nine meals for every meal provided by food banks. And SNAP is proven to be the single most powerful economic stimulus. This is no time to be cutting SNAP benefits; in fact, we should be increasing them.

Now is the time for all of us to band together as a community to ensure the health and food security of everyone.

Andrew Morehouse is executive director of the Food Bank of Western Massachusetts Inc. in Hatfield.

Coronavirus

Don’t Lose Touch

By Meghan Rothschild

The last two weeks have been an unprecedented storm of chaos for anyone managing a business, small or large. Effectively communicating changes in event plans, services, and fundraising strategies is no small feat and requires consistency and strategy. Staying in touch with your clients and customers has never been more challenging, yet more important.

We at Chikmedia have been navigating these communications challenges not only for clients, but for ourselves as well. Remaining calm, proofreading before you click ‘post,’ and applying a strategy are your best bets. We’ve drafted some go-to tips and tricks for ensuring your business looks polished and communicative during this time.

Identify your primary team/spokesperson during this time. As is true with any crisis, you must put together your decision-making team. Your primary spokesperson should not be the president or business owner, as you need a buffer for filtering information between the key decision maker and your primary audiences.

Outline and implement compliance strategies. Explain what you are doing to comply with CDC recommendations, such as, social distancing, hand washing, hand sanitizing, and encouraging staff to work remotely.

Write your plan down. Make sure you have committed to compliance policies that work for you and your business. Don’t say you’re offering hand sanitizer if you don’t have it in house yet.

Ensure your entire team is up to date. Your staff should be well-versed in what the plan is moving forward. Arm them with the copy points they need to communicate effectively to the public, your customers, and other important constituents. 

Make a public statement. If you haven’t done this already, you should, immediately. Even if you are not currently operating or client facing, you must acknowledge what is happening in the world; otherwise, you appear reckless and out of touch. Include information on how it will impact your customers and your business.

Use all of your channels when communicating. Use e-news, social media, signage, your website — whatever you currently use to communicate to clients.

Continue to post. Even when you do not have an update, you must continue to acknowledge and keep your customers informed. They will want to hear from you regularly.

Navigate the official updates from the CDC. Make sure everything you post has been confirmed by two sources and is factual. Do not share content that is not confirmed, not vetted, or from unreliable sources.

Continue to produce regular content. Don’t make it all about COVID-19. Do not stop posting or let your social channels go dormant, as algorithms will penalize you. It may feel awkward to post regular content, but it’s important to maintain some consistent messaging and normalcy on behalf of the business.

Start developing your post-virus plan now. How are you going to get people back through the door when this is all over? Will it be through an event or a major sale? What about a big contest or giveaway? Be thinking about how you will re-engage your audience when the competition will be at its highest. Do not wait: have the plan prepared and ready to go for when the world begins to spin again.

Should you have questions or need assistance, don’t hesitate to shoot us a note at [email protected]. You can also visit our website, www.chikmedia.us, for more information.

Meghan Rothschild is president of Chikmedia.

Coronavirus Features

Lessons Learned from Experience

By Nancy Urbschat

Nancy Urbschat in her home office.

Nancy Urbschat in her home office.

Many of you are experiencing work at home for the first time, and without the luxury of months of planning like those at our marking firm, TSM Design, did when we decided to go virtual on Jan. 1, 2019.

We are now in the midst of a global pandemic, and socially distancing people is the only way to flatten the COVID-19 curve. (Now that’s a sentence I would not have imagined writing, let alone living through. But here we are.)

These are challenging times for everyone. Our concept of normalcy is changing daily. We barely have time to catch our breath before there are new rules of engagement. Businesses have gone from limiting the size of meetings to prohibiting travel and work-at-home orders.

During TSM Design’s morning Zoom on March 16, we started the meeting discussing the impact the virus was having on our lives. Our conversation then turned to all of you who are just starting to work at home. We wondered if we could be helpful sharing what we’ve learned during these past 15 months.

Your Office

• Create a designated workspace in your home. The kitchen or dining-room table is not ideal.

• If possible, position your desk by a window. Then don’t forget to open the shades.

• While you’re working with no one else around, you have the luxury of cranking up the volume on your favorite tunes. No earbuds necessary!

• Don’t assume that your reputation for a messy desk is suddenly going to change now that you’re home.

Virtual Meetings and Conference Calls

• Be mindful of your meeting attendees’ view inside your office.

• If your video is on and no one can see you, uncover your camera. (This has happened on more than one occasion.)

• If you have a barky dog, leave your audio on mute until it’s your turn to speak.

• Project a professional image — at least from the waist up.

• Try never to schedule a virtual presentation with multiple attendees gathered around one computer screen. It’s deadly when you can’t see audience reaction.

• If you have a camera, please turn it on. Keep the playing field level. If you can see me, I ought to be able to see you.

• Provide tutorials for people who are new to videoconferencing platforms.

• Assume the role of facilitator. Pose questions, talk less, listen more.

Productivity

• Take a brisk walk before you start your workday.

• Maintain a regular morning meeting with your team. We try to Zoom every day at 8:30 a.m.

• Try to get your most challenging work done early in the day.

• Save your work frequently — especially if you have a cat that likes to walk across your keyboard.

• Keep a running to-do list. Go ahead and celebrate what got crossed off at the end of every day.

• Don’t sit for hours on end. Get up. Do a few stretches. Walk around the block.

• Don’t eat at your desk. Go to your kitchen and make lunch. Savor it. Then go back to work.

• Give yourself permission to give in to small distractions. If there is a pile of dishes in the sink that’s bothering you, do the dishes. Then go back to work.

Your Mental Health

• Get a good night’s sleep, with plenty of deep sleep and REM. It might be a good time to buy a Fitbit or other device to track your sleep and your heart rate.

• Eat healthy, and stay hydrated.

• Use your newfound virtual-meeting tools to stay in touch with family and friends.

• Schedule a Zoom dinner party.

• Take care of one another.

• Be kind to everyone.

Some Final Thoughts

After a while, the novelty of working from home may wear off. If and when that happens, we hope you’ll remember all of the service-industry workers who have to show up to work in order to get paid. And remember the healthcare workers who are on the front lines, doing battle against the virus, who continue to be in harm’s way without adequate masks and other critical protection.

No one knows how long social distancing will be required or whether more dramatic actions will be necessary. We find ourselves wondering whether people are taking this pandemic seriously and doing what’s necessary to avoid a bona fide human catastrophe. Recent photos from Fort Lauderdale beaches were mind-boggling. Yet, in that same social-media stream, there were posts about acts of courage and heroism.

This is a defining moment for us. Will future generations take pride in how we were able to make sacrifices, pull together, and care for each other?

Your Homework Assignment

So, first-time work-at-homers, get yourself set up, settle in, and shoot me an e-mail about how it’s going.

Nancy Urbschat is president of TSM Design; [email protected]

Coronavirus

We’re in This Together

From the Better Business Bureau

We don’t know how long COVID-19 crisis, with its shutdowns and social distancing, will last, but small businesses certainly need your support to make it through these uncertain times.

This crisis is affecting all types of small business. This includes places you use every day, such as your local coffee shop or favorite lunch place, but also businesses that might not immediately come to mind. The closures and cancellations hurt services like home-improvement contractors, daycare providers, dry cleaners, and car mechanics, as well as healthcare businesses, such as your dentist or chiropractor. Even business-to-business fields, such as the graphic designer who designs your office’s brochures or the accounting firm who does the books, are feeling the impact.   

By closing their doors temporarily, small businesses are helping to keep their customers and employees healthy. But the loss of income makes it tough to cover ongoing expenses like rent and salaries. These tips help ensure your favorite businesses have the cash they need to make it through these lean times.  

Here are the Better Business Bureau’s practical tips on how everyone can support small businesses — with or without spending money.

• Buy a gift card for later. Many small businesses that have had to close are offering gift certificates at discounted rates for when they open back up. Look on their websites and social accounts.

• Skip the refund and take a rain check. If you paid in advance for an event, such as theater or concert tickets, a class, or a service, consider taking a credit for the future instead of asking for a refund. These businesses will appreciate not needing to issue so many refunds right now.

• Commit to future work. While right now may not be the best time to start that home-renovation project, your contractor will appreciate you committing to future projects when business opens back up. The same goes for any future event or project.

• Shop (locally) online. Local shops and vendors may have closed their physical doors, but many still run online shops. Look for them on social media or check the their website for links to their online marketplace.

• Look for virtual classes. People who work in training or professional development — this can be anyone from your personal trainer to the person teaching your office’s public-speaking workshop — are finding creative ways to move their instruction online. Even though your local gym is closed, your favorite yoga teacher may be hosting a live class online. The same goes for people who offer professional trainings. Now may be a good time to brush up on your skills through an online course.

• Get takeout or delivery. Many restaurants and breweries are now offering takeout even as they close their dining rooms. Support these local institutions by getting your food or drinks to go and enjoying them at home.

Not everyone has the financial resources to pay in advance. So, if your own wallet is feeling the pinch, here are some free ways to support small businesses.

• Write an online review. This is a good time to finally get around to reviewing your favorite local business. These five-star reviews help companies rank well in search engines and on other listing services. This is an easy, free way to show your favorite small businesses that you support them.

• Like and share on social media. Help your favorite business reach a broader audience by liking and sharing their information on social media. This will help them reach future customers and gain more exposure.

• Tell your favorite businesses that you appreciate their work. These are tough times. Keep morale up by reaching out to the businesses in your community and letting them know that you appreciate their hard work.

Coronavirus

Survival Mode

As the outbreak of COVID-19 has escalated and caused unprecedented reactions such as closing schools for weeks, cancelling professional sports, limiting restaurants and bars to takeout only, and social distancing and prohibiting the gathering of groups of more than 25 people, business leaders have growing concerns for the financial health of their organizations, people, and customers.

COVID-19 presents an exceptional level of uncertainty, making it difficult to implement any single contingency plan. However, crisis management can be made easier with preparation and by staying current on resources that are available. To that end, Meyers Brothers Kalicka, P.C. offers the following tips and best practices for financially surviving this pandemic.

• Evaluate telecommuting options. Begin by first evaluating your organization’s daily operations. How many of your employees can effectively perform their jobs while working from home? How many essential personnel must be present in order to perform their responsibilities? What will your policy be for employees in each category? Do you have the proper technology and security to even offer a work-from-home option?

Once you have decided who can telecommute and who will simply not have that option, it is important to communicate your policy clearly. What steps should employees without a telecommuting option follow if they need time off?

For employees that do not typically work from home, it can be beneficial to share best practices and expectations, such as to work during normal business hours; be available via phone, e-mail, and company messenger during normal business hours; attend a daily virtual check-in with managers to discuss progress, outstanding tasks, etc.; set up call forwarding for your business line; and maintain access to necessary equipment and materials to perform the job.

• Communicate clearly with your employees and customers. As your business braces for untreaded waters, it is vital that you communicate clearly and in a timely manner to both your customers and employees. Don’t allow misinformation or confusion to spread faster than the virus. Your employees, clients, customers, and stakeholders will be looking to you for reassurance and up-to-date information.

Customers, clients, and stakeholders want to know: will deadlines be affected? Have your in-person policies been temporarily changed? Will you be offering a virtual service in the interim? Let them know that you are actively monitoring the situation and how you are making temporary adjustments to your business so that they know what to expect. This can also mitigate fears and concerns that your customers may be feeling. Communicate these and other relevant information via e-mail, phone, social media, and/or any other normal communication channels.

Your employees want to know: in addition to any telecommuting options that may be temporarily available, what is being done to protect their health and safety? Have you increased cleaning around your place of business? Have you taken any action to limit exposure for employees? Have you encouraged any at-risk or sick employees to stay home? Have you cancelled in-person meetings or business travel to limit exposure? Again, a large part of crisis management is dispelling fear; therefore, a well-thought-out and communicated plan will go a long way for your business.

• Assess your inventory. Whether you are talking about actual inventory that you sell or supplies that your business needs to operate, do you have a clear idea of how this is affected by the virus? Who are your suppliers? Will they be able to replenish your stock, or are they potentially unable to do so because of isolation? Do you have a secondary option for suppliers, or will you have to cease selling certain products or services until these products become available? If so, will you take back orders?

On the contrary, could you end up with a surplus of inventory? For example, did you order perishable supplies that could potentially expire? Are there creative solutions you can take here, such as freezing products? Saving products for a future event or for when you re-open? Increasing the marketing for take-out? Or perhaps even donating products which would become a writeoff and have a positive public-relations benefit? How will you communicate these supply-chain issues to your organization and customers

• Identify scenarios, points of failure, and other risks. Currently, businesses are scrambling to get off defense. In order to get back on the offense, you need to have a good playbook with a variety of plays for any given situation. What are your worst- and best-case scenarios? What is the game plan for the short term and the long term? How would a longer impact affect your business? Will your business see a rise in demand or suffer loss of business — and how will you cope? Do you have the right teams in place to perform critical duties as needed? Do they have the right skills, equipment, technology, and security to perform those duties if they need to work from home for a period? How would staggered shifts affect your business? Are there critical duties that must be performed on site for your organization to function? What adjustments will you make if those duties cannot be performed?

As with any crisis, most plans will need to be adjusted day by day as new information becomes available. If you have planned for a variety of scenarios, then the adjustments will be more manageable. In some cases, it may even be the key to a company’s survival. It is simply critical that businesses and organizations remain proactive, informed, and agile.

• Finally, stay informed about resources for your business and employees. Here are a few financial-assistance and business-planning resources that may be useful to you:

The SBA to Provide Disaster Assistance Loans to Small Businesses affected by COVID-19

Baker-Polito Administration Announces $10 Million Small Business Recovery Loan

U.S. Chamber: 5 Resources to Help your Small Business Survive the Coronavirus

IRS Tax Relief

Treasury Secretary Announces 90-day Delay in Tax Payments

CDC Business Planning Checklist for a Pandemic

CDC Pandemic Preparedness for U.S. Businesses with Overseas Operations

CDC Interim Guidance for Businesses and Employers

Coronavirus Features

Taking Action

If your business, or one or more of your major customers’ or suppliers’ businesses, have been or could be adversely impacted by the effects of the coronavirus outbreak, Bulkley Richardson recommends considering the following proactive actions:

1. Review Insurance Coverage. Most standard business insurance packages include ‘business-interruption’ coverage. Business-interruption insurance is designed to replace income lost in the event that a business is halted for some reason, such as a fire or a natural disaster. It can also cover government lockdowns or mandatory curfews or closings such as those becoming more widespread as a result of the coronavirus. In addition to lost income, such coverage may also include items such as operating expenses, a move to a temporary location if necessary, payroll, taxes, and rent or loan payments. Since the language that addresses the terms of business-interruption coverage and exclusions can be lengthy and complex, it can be helpful to have your policy reviewed by a qualified expert.

2. Review Critical Contracts. It is quite common for certain types of contracts, such as supply contracts that require future performance on the part of one or both parties, to include a contract provision that allows a party to suspend or terminate the performance of its obligations when certain circumstances beyond their control arise, making performance inadvisable, commercially impracticable, illegal, or impossible. Such provisions are most often referred to and appear under a ‘force majeure’ clause of a contract. If disaster strikes or the unanticipated occurs beyond the control of a party, such in the case of coronavirus, a force majeure clause may excuse one or both parties from performance of their contractual obligations without liability to the other party.

Determining which types of circumstances will be covered by the force majeure clause is obviously essential. Standard provisions often cover natural disasters like hurricanes, floods, earthquakes, and weather disturbances sometimes referred to as ‘acts of God.’ Other covered events can include war, terrorism or threats of terrorism, civil disorder, labor strikes or disruptions, fire, disease, or medical epidemics, pandemics, or other outbreaks. Such provisions can also place certain obligations on a party seeking to take advantage of excused performance such as undertaking reasonable actions to minimize potential damages to the other party. As with insurance coverage, it can be very helpful to have the assistance of a qualified expert in reviewing contracts critical to the survival of your business.

3. Communications. Once you have reviewed the terms of your business-insurance coverage and critical contracts, you will be in a much better position to effectively communicate with your insurers, suppliers, customers, vendors, creditors, and other parties with whom your business has relationships concerning the uncertainties facing your business and the businesses of those with whom you have significant ongoing relationships.

Actions like placing an insurance carrier on notice of or making a business-interruption insurance claim, advising another party of your intention to exercise your rights under a force majeure clause of a contract or being prepared for another party with whom you have an important relationship to do so, or effectively communicating with a lender, landlord, or other creditor to productively address disruptions to such relationships are all critical to minimizing losses and ensuring the survival of your business. As with the interpretation of insurance policies and other contracts, input from experts can be very helpful in developing effective communications and providing advice concerning the parties to whom such communications should be directed.

Bulkley Richardson launched a COVID-19 Response Team to address issues critical to businesses and their employees. Call (413) 272-6200 to reach the team.

 

Banking and Financial Services

Volatility Is the Order of the Day

By Jean Deliso

Jean Deliso

Jean Deliso

The market has acted like a roller coaster in recent months, up one day, down another — but where will it end up?

Most investors tend to get unsettled and concerned by such market conditions, and if you are in that group, now is the time to speak to your financial professional to ensure that your investment allocation is consistent with your financial goals. Those investors with a near-term retirement timeline generally should be more focused on preservation of capital. Those with multiple years or even decades before retirement can take a longer perspective as they have more time to wait out market volatility.

All investors should remember to be calm. The worst mistake in this market, or any market, is to try to time the ups and downs. Granted, this volatility can be unnerving, but it’s the price we pay for the potentially greater returns from investing in equities.

In the past 20 years (2000 to 2020), there have been at least two major bear markets with short-term losses in value around 50%, yet it’s also true that, from Dec. 31, 2002 to Dec. 31, 2018, the S&P 500 stock index tripled in value.*

Zacks Investment Management, one of the portfolio managers I work with, produced a white paper listing four reasons to expect more volatility in 2020. I think it’s worthwhile to share some of these highlights:

Reason 1: We cannot ignore history. Over the past 38 years, the S&P 500 has had corrections; they are frequent, and they are the norm.

Reason 2: Low volatility generally gives way to high volatility. From October 2019 to January 2020, the S&P index experienced an unusually low level of volatility. From a historical perspective, such periods of low volatility tend to give way to periods of high volatility. We saw examples of this type of market behavior prior to January 2018 and October 2018.

Reason 3: Stock buybacks are on the decline. Stock buybacks are a corporation’s main tool for reducing outstanding supply of shares, and thereby boosting shareholder value. Stock buybacks were down in 2019, with more declines expected in 2020. Fewer buybacks could mean a tougher road for corporations exceeding their earnings per their share targets. This could make investors jittery.

“The bottom line is that volatility can be a good thing for equity markets, sometimes unsettling but it is normal and to be expected.”

Reason 4: It’s not a straightforward election year. This does not necessarily refer to a political outcome, but more concerning is alleged foreign interference, and potential contested results, civil unrest, and other extraneous factors that might lead to a period of political instability.

 The bottom line is that volatility can be a good thing for equity markets. Though sometimes unsettling, it is normal and to be expected. I tend to agree with Zacks that the S&P 500 index is due for a correction this year on par with the historical averages after several years of increases. We could experience a correction in the 10% to 15% range.

Let’s remember that dollar-cost averaging can be a great tool in managing short-term volatility as well. While no one can predict the future, and the past is no guarantee of future results, historical performance has shown that market downturns can offer attractive investment opportunities, and dollar-cost averaging can help in this regard.

Remember, though, that dollar-cost averaging does not ensure a profit and does not protect against loss in declining markets. It involves continuous investing during a period of fluctuating price levels. To maintain such a strategy, investors should consider their ability to continue investing through differing market conditions.

This article would not be complete without mentioning continuing concerns about COVID-19. As a society, we don’t know enough about it yet to understand how pervasive it will become and how long it will impact the markets. It’s too early to assess the ultimate impact of the virus. Headlines continue to focus on the spread of the virus and those who become ill; however, one should keep in mind that most people who have contracted the virus have gone on to make a full recovery.

Weaker global growth does not often mean recession in the U.S., and the consumer remains a strong factor against a U.S. recession. Lower rates may further boost the housing market, and both manufacturing and wholesaling inventories are at high levels in the U.S., which could mitigate supply-chain disruptions from Asia. More accommodative monetary policy could serve to calm the financial markets and minimize the economic and psychological impacts.

From a financial perspective, it’s important to maintain a diversified portfolio for times like this, and in panicked environments, it’s imperative to keep a level head rather than simply react. Those investors with longer time horizons should try and remain calm and patient when volatility takes hold.

A well-designed financial allocation consistent with your risk tolerance and investment goals is the key. Investors tend to make short-term decisions with long-term assets, but it is important to keep a long-range approach with your money and stick to your investing goals.

For the shorter-term investors, now is a good time to connect and review your plans with your financial professional. Double-check to make sure that your goals and objectives are still in line with your investments. Also, it is important not to stay passive on the sidelines, as investors we need to be engaged in the process and be a full participant in the process.

Jean M. Deliso, CFP is a financial advisor offering investment advisory services through Eagle Strategies LLC, a registered investment adviser, and is a registered representative of and offers securities products and services through NYLIFE Securities LLC, member FINRA/SIPC, a licensed insurance agency. Eagle Strategies and NYLIFE Securities are New York Life companies. Deliso Financial & Insurance Services is not owned or operated by NYLIFE Securities LLC or its affiliates. Neither Deliso Financial & Insurance Services nor Eagle Strategies LLC or its subsidiaries and affiliates provide tax, legal, or accounting advice. Please consult your own tax, legal or accounting professional regarding your particular situation.

*Source: Standard & Poor’s 500 index, 12/31/18. Average annual returns are based on the S&P 500 Index from 12/31/02 to 12/31/18. Large-capitalization stock performance is measured by the S&P 500 index, an unmanaged index considered to be representative of the U.S. stock market. Prices of common stocks will fluctuate with market conditions and may involve loss of principal when sold. Results assume reinvestment of all distributions, including dividends, earnings, and expenses, and are not indicative of any past or future returns of any investment. It is not possible to invest directly into an index. Past performance is no guarantee of future results.

Law

Fresh Start

By John Greaney and Sarah Morgan

John Greaney

Sarah Morgan

Cannabis is a controlled substance under federal law. Massachusetts, however, has shifted from total prohibition to limited legalization. Despite this change, for many individuals, prior convictions for possession of marijuana may still cause major consequences. This raises the question: what can now be done about prior convictions for minor marijuana offenses that are no longer considered crimes under Massachusetts law?

Cannabis (marijuana) is made criminal as a Schedule I narcotic under the federal Controlled Substances Act. Notwithstanding the federal prohibition, Massachusetts and several other states have passed laws loosening the restrictions on small amounts of marijuana for personal use. In 2008, voters in Massachusetts approved a ballot question decriminalizing marijuana possession of up to one ounce per person. Massachusetts enacted an additional measure in 2012, allowing the purchase and use of marijuana for therapeutic uses from registered marijuana dispensaries.

Moving further away from prohibition, in 2016 Massachusetts enacted a law permitting individuals over the age of 21 to possess up to one ounce on their person and up to 10 ounces in their homes. The Cannabis Control Commission, the state agency which now regulates the recreational and medical marijuana industry, is considering social consumption of marijuana at sites designated as licensed marijuana establishments, such as cannabis cafés.

Despite the significant progress made, convictions for marijuana possession under the former criminalization scheme may continue to have lasting effects on individuals. Even minor convictions for possession appear on a person’s criminal offender record information (CORI) report and may disqualify him or her from employment or housing opportunities or possibly lead to other adverse consequences.

The impact of prior criminal convictions for possession also may disproportionately affect people of color. A study conducted by the Cannabis Control Commission found that African-American and Hispanic people — in particular, men — had been disproportionately convicted for cannabis possession between 2000 and 2013 as compared to white people during the same period.

“Despite the significant progress made, convictions for marijuana possession under the former criminalization scheme may continue to have lasting effects on individuals.”

Although the 2016 legalization bill permitted individuals to possess up to one ounce of marijuana, it did nothing to erase past convictions and their lasting impacts.

In 2018, our Legislature addressed the retroactivity problem when it enacted the Massachusetts Criminal Justice Reform Law, comprehensive legislation that allows individuals to seal or expunge their criminal records for offenses that are no longer a crime. This permits individuals who have been convicted for possession of one ounce or less of cannabis to seal or expunge their record. The law does not allow for sealing or expungement of more significant marijuana offenses.

The Criminal Justice Reform bill reflects the Commonwealth’s new views on marijuana use and a progressive intent to address the effects and disparate impacts of marijuana criminalization.

Under our revised laws, sealing and expungement are the two mechanisms available to limit, or remove, minor marijuana convictions from criminal records. Sealing records restricts who can access them and involves a relatively simple process — a petitioner must complete a petition to seal and mail it to the Office of the Commissioner of Probation in Boston. Once sealed, a person may answer, “I have no record,” when asked about criminal records concerning possession of marijuana by an employment or housing screener. However, state law-enforcement agencies and offices responsible for administering foster care, adoption, and childcare programs may still access sealed records.

Expungement permanently destroys a criminal record and allows a person to claim, without limitation, “I have no record,” when asked about their criminal history for any purpose. Expunging records requires a petitioner to file a petition for expungement in court and may require a hearing if either the petitioner or the district attorney, who must be notified of the petition, requests one. A judge hearing a petition for expungement has discretion to approve or deny it. Importantly, individuals who are not citizens, or whose immigration status may be impacted by the process, should not seal, or attempt to expunge, their records without consulting an immigration attorney.

Once a criminal conviction has been sealed or expunged, an individual is no longer obligated to report these convictions on an application for employment or housing. The Massachusetts Ban the Box Law prohibits employers from asking applicants in an initial employment application about their criminal records except in limited circumstances. The changes to the law also require employers to include specific informative language related to criminal-record disclosures in any requests provided to applicants. Applicants whose records have been expunged may answer ‘no record’ on an application for employment or housing.

Once a criminal conviction has been sealed or expunged, an individual is no longer obligated to report these convictions on an application for employment or housing.

At all stages of the hiring process, employers are absolutely prohibited from inquiring about criminal records — or anything related to criminal records — that have been sealed or expunged. In other words, once an employer learns that the applicant either has no record or that the records have been sealed or expunged, the employer cannot inquire further. In view of these changes, employers should review their hiring practices and applications and adjust them, and the interview process, accordingly.

Sealing and expunging prior convictions opens many new doors of opportunity for those impacted by the decades-long criminalization of marijuana in Massachusetts.

Anyone interested in exploring their options for addressing their qualifying Massachusetts cannabis convictions should contact the Hampden County Bar Assoc. regarding “Off the Record: A Clinic on Removing Past Marijuana Convictions from Your Record,” a free event to review individual circumstances and receive assistance on preparing the necessary documents. The clinic is co-sponsored by the Hampden County Bar Assoc., INSA, Sigma Pi Phi, and the Western New England University School of Law Center for Social Justice. 

Justice John Greaney is a former justice of the Supreme Judicial Court and senior counsel at Bulkley Richardson.  Sarah Morgan is an associate in the litigation and cannabis practices at Bulkley Richardson.

Law

LLCs in the Bay State

By Benjamin M. Coyle, Esq.

Benjamin M. Coyle

Benjamin M. Coyle

Many families have homes or other real estate that parents hope to pass along to the next generation. In the world of estate planning, there are a variety of ways to achieve the movement of a family home from parents to children — sometimes through a trust, sometimes through a will after death, or even sometimes by outright gift.

While all these methods have their place, another option that should be considered is the formation of a limited-liability company (LLC) to hold title to real estate.

In Massachusetts, a limited-liability company is a business entity, formed with the secretary of the Commonwealth, and offering great flexibility in its management. This flexibility is very appealing, particularly when a home or other real estate is to be owned, used, and managed by a group.

For example, parents may want their four children to inherit a property equally. By using an LLC, rather than deeding each child a 25% interest in the property outright, parents would be able to transfer shares in the LLC to their children. Doing things this way is beneficial for several reasons.

One of the most important advantages of an LLC is the ability to work under an operating agreement — a formal, written document that clearly states the owners/members of the LLC, their respective interests, and the manner in which the LLC is operated and governed. The operating agreement can also allocate profits and losses to various members (which can be different than their ownership interest). Most importantly, the operating agreement also clearly states rules for use of the property by the members, and allocation of expenses.

“One of the most important advantages of an LLC is the ability to work under an operating agreement — a formal, written document that clearly states the owners/members of the LLC, their respective interests, and the manner in which the LLC is operated and governed.”

This gives everyone involved a crystal-clear understanding of their privileges and responsibilities relative to the property.

Once an LLC is formed and an operating agreement established, the real estate in question would be transferred into the LLC by deed, and the LLC would then be the owner of the property. By transferring the property to the LLC, the grantor has essentially converted real estate into tangible personal property, thereby avoiding many of the probate complexities of real estate.

Additionally, an LLC offers continuity in the property’s title, while still providing for the flexibility of changing ownership interests and membership shares (in contrast to multiple deeds divvying up the property, which could cause significant title confusion).

In the event the property is rented, the LLC provides limited-liability protection for its members, either short term or long term. Further, LLCs often offer tax advantages (over outright ownership) with respect to rental income, repair costs, renovations, and other expenses associated with the property. Additionally, since the LLC is a recognized business entity, it may often be easier for the LLC to obtain insurance or borrow money from a bank, in contrast with the banking difficulties that can be experienced by individuals with a shared interest via deed, or if the property were held in a trust.

Although there are significant advantages to the LLC, there are also startup costs and recurring annual expenses associated with the formation and continued maintenance of the LLC. Initial formation costs include a filing fee of $500 with the secretary of the Commonwealth, and any legal fees associated with the completion of articles of organization and the operating agreement.

Massachusetts requires that LLCs file an annual report with the secretary of the Commonwealth. For LLCs formed outside of Massachusetts, the Commonwealth requires a foreign LLC to register in Massachusetts and comply with the state’s annual filing requirements.

It is good practice (and may even be required by the operating agreement) for the members of an LLC to hold regular meetings, at least annually, where they discuss the business of the prior year and the upcoming year as it pertains to the LLC and the operation of the property. The LLC should maintain a corporate book that includes the minutes of each membership meeting, as well as minutes for any special meetings that may occur throughout the year. Since the LLC is a business entity, it will require its own tax-identification number and annual tax return. Depending upon the tax election chosen by the LLC, if there is any associated tax liability, those costs can potentially be passed on to each member to be addressed on their individual tax returns, and the expenses associated with annual fees and costs can be deducted from any LLC income.

An LLC is an excellent option to consider when determining the best way to address transferring real estate from one generation to the next. The transfer can occur during the lifetime of the current owners with relative ease and can be added to many existing estate plans, thereby providing families with effective ownership transitions and limited liability for the members of the LLC.

Benjamin M. Coyle is a shareholder with Bacon Wilson, P.C. He specializes in matters of estate planning and administration, and also has extensive experience with real estate, business, corporate, and municipal law; (413) 781-0560; [email protected]

Opinion

Opinion

By Paul Caron

If you Google ‘health insurance profits,’ it’s clear the industry is doing very well in the U.S. According to one article, the five largest insurers — Anthem, Cigna, CVS Health, Humana, and UnitedHealth Group — cumulatively expect to collect almost $787 billion in 2019.

A share of Anthem’s stock is more than double what it was just five years ago. Cigna’s stock price has not quite doubled in the last five years, but it is close. Humana stock has also doubled in five years, and UnitedHealth Group’s is worth about three times as much in that same time frame. Only poor CVS is down — but you get the picture: it’s good to be in the health-insurance industry.

The primary reason health insurers are doing so well is due to Obamacare, which mandated people in this country get health insurance. In some ways, the health insurers are no different than the gas or electric companies — they are monopolies, and you have to pay them. The federal government has been very good to that industry, and it’s about to happen again.

Legislation in Congress to end surprise billing, is going to put billions in the pockets of health insurers. Now, surprise billing is a terrible problem. In case you don’t know, you get a surprise bill when you go to a hospital that is in your network, but the doctors you see are not. This typically happens in emergency situations, because many hospital emergency rooms are separate entities from the hospital and are not covered by the same insurance plans. Surprise bills in the six figures aren’t uncommon.

In some ways, the health insurers are no different than the gas or electric companies — they are monopolies, and you have to pay them.

This legislation, sponsored by Republican U.S. Sen. Lamar Alexander and essentially replicated in the Democrat-chaired House Energy and Commerce and Education committees, is problematic regardless of its good intentions. These bills purport to end the practice by putting the onus on ER doctors and other emergency services to either cut their prices or allow insurance companies to reimburse them at the local median cost. These bills require a negotiation between insurers and emergency-services providers, but it’s not a negotiation if one side knows a federal law will allow them to pay less if they can’t reach agreement.

Another wonderful gift for the health insurers from Uncle Sam.

The problem for the American people, and workers, is that many emergency services are going to suffer or be pared back, in order to ensure that health-insurance companies remain grossly profitable. If this legislation becomes law, services like air ambulances will be crushed. If you live in a rural area, it’s hard to see how emergency helicopters will continue to service remote areas if this legislation becomes law.

According to the Kaiser Family Foundation, one in six emergency-room visits in 2017 was out of network, which substantially increases the cost of care. This situation cannot persist.

But it just doesn’t seem fair that health insurers, again, get to walk away unscathed, while hospitals, emergency-services providers, patients, and the American taxpayer will be left paying more to ensure that healthcare is accessible.

Paul Caron served as a Massachusetts state representative from 1983 to 2003.