January 2021 Government Affairs Update

SBA Announces PPP Reopening Dates for Small and All Lenders

Following the passage of the new COVID-19 relief law, the Small Businesses Administration (SBA) announced they will reopen the Paycheck Protection Program (PPP) loan portal to PPP-eligible lenders with $1 billion or less in assets for First and Second Draw applications starting on Friday, January 15 at 9 am ET. These lenders include community banks, credit unions, and farm credit institutions. The portal will fully open on Tuesday, January 19 to all participating PPP lenders to submit First and Second Draw loan applications to SBA.

The SBA is already accepting applications for First Draw and Second Draw PPP loan applications from community financial institutions, including Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs) and Microloan Intermediaries.

The SBA has issued guidance on “First Draw” PPP loans for first-time borrowers and “Second-Draw” PPP loans for repeat borrowers. Major changes from the old PPP rules include more flexibility for borrowers in choosing a covered period, expanded list of eligible loan expenses, and the ability to take out a second loan of up to $2 million under certain circumstances. 

First Draw PPP loans are for those borrowers who have not received a PPP loan before August 8, 2020. Second Draw PPP Loans are for eligible small businesses with 300 employees or less, that previously received a First Draw PPP loan and will use or have used the full amount only for authorized uses, and that can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. The maximum amount of a Second Draw PPP loan is $2 million.

The SBA has created a revamped PPP website where borrowers can find detailed instructions and application forms for First Draw loans, Second Draw loans, and loan forgiveness. Below you will find a list of additional guidance materials on the new PPP.

Paycheck Protection Program Applications

• Paycheck Protection Program First Draw Borrower Application Form
• Paycheck Protection Program Second Draw Borrower Application Form

Supplemental Materials

• Top-line Overview of PPP First Draw Loans
• Top-line Overview of PPP Second Draw Loans
• Updated PPP Guidance Summary

For questions, please contact Kevin McKenney at kmckenney@bscai.org or Alex McIntyre at amcintyre@bscai.org.

DOL Issues Final Independent Contractor Rule

The Department of Labor (DOL) recently announced a final rule clarifying the standard for employee versus independent contractor status under the Fair Labor Standards Act (FLSA). The rule will streamline and clarify the test to identify independent contractors, reduce worker misclassification and litigation, and increase flexibility for employers and workers.

However, future implementation of the final rule remains uncertain as incoming Biden administration officials have indicated that the administration might attempt to reverse the rule once in power. As of now, the rule is scheduled to take effective on March 8, 2021. A summary of the final rule is below.

The Final Rule includes the following clarifications:

• Reaffirms an “economic reality” test to determine whether an individual is in business for him or herself (independent contractor) or is economically dependent on a potential employer for work (FLSA employee). 
• Identifies and explains two “core factors” that are most probative to the question of whether a worker is economically dependent on someone else’s business or is in business for him or herself:
  • The nature and degree of control over the work.
  • The worker’s opportunity for profit or loss based on initiative and/or investment.
• Identifies three other factors that may serve as additional guideposts in the analysis, particularly when the two core factors do not point to the same classification. The factors are:
  • The amount of skill required for the work.
  • The degree of permanence of the working relationship between the worker and the potential employer.
  • Whether the work is part of an integrated unit of production.
• The actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible.
• Provides six fact-specific examples applying the factors.

DOL Issues Guidance on Expiration of Paid Sick and FMLA Leave for COVID-19

The Department of Labor’s Wage and Hour Division (WHD) recently issued additional guidance to provide information to workers and employers about protections and relief offered by the Families First Coronavirus Response Act (FFCRA). The FFCRA’s paid sick leave and expanded family and medical leave requirements expired on Dec. 31, 2020.

The new guidance addresses whether workers who did not use their leave entitlement under the FFCRA in 2020 may use such leave after Dec. 31, 2020. It also explains how WHD will maintain its enforcement authority over employers’ leave responsibilities while the FFCRA’s paid leave requirements were in effect, even after these leave entitlements have expired.

Additionally, the government appropriations bill signed by President Trump last week extended employer tax credits for paid sick leave and expanded family and medical leave voluntarily provided to employees until March 31, 2021.  However, the bill did not extend employees’ entitlement to FFCRA leave beyond Dec. 31, 2020, meaning employers will no longer be legally required to provide such leave.

SBA Extends COVID-19 Economic Injury Disaster Loan Application Deadline

The U.S. Small Business Administration (SBA) has announced that the deadline to apply for the Economic Injury Disaster Loan (EIDL) program for the COVID-19 Pandemic disaster declaration is extended to Dec. 31, 2021. The deadline extension comes as a result of the recent bipartisan COVID-19 relief bill passed by Congress and enacted by President Trump on Dec. 27, 2020.

DOL Announces Annual Adjustments to OSHA Civil Penalties

The U.S. Department of Labor has announced adjustments to Occupational Safety and Health Administration (OSHA) civil penalty amounts based on cost-of-living adjustments for 2021.

In 2015, Congress passed the Federal Civil Penalties Inflation Adjustment Act Improvements Act to advance the effectiveness of civil monetary penalties and to maintain their deterrent effect. Under the Act, agencies are required to publish “catch-up” rules that adjust the level of civil monetary penalties, and make subsequent annual adjustments for inflation no later than January 15 of each year.

OSHA’s maximum penalties for serious and other-than-serious violations will increase from $13,494 per violation to $13,653 per violation. The maximum penalty for willful or repeated violations will increase from $134,937 per violation to $136,532 per violation.

Visit the OSHA Penalties page for more information. The Department of Labor Federal Civil Penalties Inflation Adjustment Act Annual Adjustments for 2021 final rule is effective January 15, 2021, and the increased penalty levels apply to any penalties assessed after January 15, 2021.

DOL Issues Two Wage and Hour Opinion Letters on FLSA Compliance

The U.S. Department of Labor recently issued two opinion letters that address compliance issues related to the Fair Labor Standards Act (FLSA). An opinion letter is an official, written opinion by the Department’s Wage and Hour Division (WHD) on how a particular law applies in specific circumstances presented by the person or entity that requested the letter.

The opinion letters issued are:

FLSA2020-19: Addressing whether certain travel time occurring on a partial telework day is compensable under the FLSA.

FLSA2020-20: Addressing whether certain overtime payments based on an expected number of hours worked may be credited towards the amount of overtime pay owed under the FLSA and whether such overtime payments are excludable from the regular rate.