Employment Law Updates

Many of your companies have already applied for and received the loans provided by the new Paycheck Protection Program which is part of the CARES Act.  A key incentive to receive these loans is the forgiveness feature.  Loans are forgiven when the proceeds are used for any of these costs:

 
• Payroll costs, excluding prorated amounts for employees with compensation greater than $100,000
• Rent pursuant to a lease in force before February 15, 2020
• Mortgage interest
• Electricity, gas, water, transportation, telephone, or internet access expenses for services which began before February 15, 2020, and 
• Group health insurance premiums and other healthcare costs.
 

Note, however, that in order for the amounts to be forgiven, you must maintain the same average number of employees for the eight-week period beginning on the origination date of the loan as you did from February 15, 2019 - June 30, 2019 or from January 1, 2020 until February 15, 2020. If you do not meet this requirement, the amount forgiven is reduced. You incur additional reductions if you cut compensation by more than 25% for employees who make under $100,000 as compared to the most recent quarter. 

 
The Treasury Department has issued guidance stating that you have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15 and April 26, 2020.  If you do so, you remain eligible for the loan forgiveness, assuming you comply with the other requirements.  We do not yet have guidance on how long employees must be kept on payroll after June 30, but expect the Treasury Department or SBA to issue that guidance in the coming months.
Feel free to contact us if you have questions about this matter.

PLDR Law John Falcone 1


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