What Florida Employers Need to Know About the Title VII Ruling

What Florida Employers Need to Know About the Title VII Ruling

On Monday, June 15, the Supreme Court ruled in a landmark decision that protections under Title VII of the Civil Rights Act of 1964 (“Title VII”) extend to protect gay and transgender employees from discrimination. The decision—Bostock v. Clayton County, Georgia—is a consolidation of three cases in which employees were terminated by their employers on the basis of their sexual orientation or transgender stereotyping. Title VII prohibits employment discrimination based on race, color, religion, sex and national origin. However, what constitutes discrimination on the basis of sex has been strenuously debated in courts nationwide, with lower courts regularly holding that Title VII’s protections did not extend to individuals who experienced adverse employment action merely because they were gay or transgender. Courts are now faced with a new Title VII frontier.

In the opinion written by Justice Gorsuch, the Supreme Court held that Title VII is violated by firing an individual for being homosexual or transgender. Justice Gorsuch, who is widely known for his textualist approach in statutory interpretation, wrote: “when an employer fires a person for traits or actions that the employer would not have questioned in members of a different sex, then sex plays a necessary and undisguisable role in the decision, which is exactly what Title VII forbids.” He further wrote that it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex. Notably, Title VII maintains a statutory “but for” cause standard. Thus, if a plaintiff can show that but for their gender identity or sexual orientation they would not have been fired, they have a valid claim under the extension of the statute.

The Court reached its decision by a margin of 6-3, with Justice Gorsuch and Chief Justice Roberts, two conservative members, siding with the four liberal members of the Court. The two dissenting opinions, written by Justice Alito and Justice Kavanaugh, argued that the textual reasoning was misapplied and that drafters of Title VII did not contemplate discrimination based on sexual orientation or gender identity, making the extension of Title VII to cover these individuals a job better suited for the legislation.

Prior to this decision, half of the States—including Florida—did not have laws that prohibit discrimination based on sexual orientation and gender identity. However, Orlando is one of the few municipalities with ordinances that already made it unlawful for an employer to discriminate against an employer for sexual orientation and gender identity. See Section 57.14 of the City Code of Ordinances. Thus, Orlando employers could already face claims of discrimination based on sexual orientation and gender identity under these ordinances. With the Supreme Court’s decision, federal law has caught up to Orlando’s ordinances and Title VII expanded federal protection to these employees as well. Although this decision is narrowly tailored, making it unclear as to how far Title VII will extend in other contexts, many employees across the country are now protected from discrimination based on their gender identity and sexual orientation at the hands of their employers as a result of this decision.

The impact of the Bostock decision has broad implications for employers. Although many Florida employers already have policies in place that prohibit discrimination on the basis of sexual orientation or gender identity, there is no longer any doubt that private employers with more than 15 employees may face legal liability under Title VII if an employee is subjected to harassment or discrimination due to the employee’s sexual orientation or gender identity. Employers should revise and expand their policies, handbooks, and training programs to incorporate specific provisions prohibiting discrimination and harassment against gay and transgender employees.

If you would like to confirm your organization’s policies comply with Title VII’s newly expanded protections or would like assistance in forming and implementing new Title VII training programs, please contact Shuffield, Lowman & Wilson, P.A., for your labor & employment law needs.

Clay Roesch and Alex Douglas Presenting at Florida Law Update 2020

Clay Roesch and Alex Douglas Presenting at Florida Law Update 2020

On June 18, 2020, ShuffieldLowman attorneys Clay Roesch and Alex Douglas will be presenting webinars as a part of the Florida Law Update 2020 live audio webcast. This seminar will provide 2020 updates for following topics: Business and Litigation Law, Labor and Employment Law, Animal Law, Elder Law, Estate Planning, Family Law, Criminal Law and Real Property Law.

Clay will be presenting a Business & Litigation Law Update, and Alex will be co-presenting on two topics, Elder Law and Estate Planning Updates. This webcast is a Continuing Legal Education (CLE) course for the Florida Bar and will take place from 8:00 AM to 4:25 PM. There is a $240 registration fee for the course, which provides 8 CLE credits. For further information and registration details, visit: bit.ly/FL_LawUpdate_20.

PPPFA Signed Into Law: What Does it Mean for PPP Loan Forgiveness?

PPPFA Signed Into Law: What Does it Mean for PPP Loan Forgiveness?

Congress passed the Paycheck Protection Program Flexibility Act of 2020 on June 3, 2020, and President Trump signed it into law on June 5, 2020. The Act made some key revisions to the Paycheck Protection Program (PPP) as well as provided further clarity for issues surrounding the forgiveness portion of the loan. Below are some of the significant amendments that businesses who applied and received PPP loans should now review and take into consideration.

1. While the CARES Act originally granted borrowers only eight weeks to spend the PPP Loan money, this new Act now gives borrowers 24 weeks from when the loan proceeds are received to use the funds and still qualify for forgiveness.

2. The CARES Act originally mandated that at least 75% of the PPP loan funds had to be used towards employee payroll in order for the loan to be forgiven. This new Act has reduced that to 60%. This means that businesses can now use 40% of the loan towards non-payroll expenses and still be eligible for forgiveness. This change was perhaps the most significant as it will make many more businesses (especially those who have not yet been able to hire back employees) eligible for loan forgiveness. Keep in mind, this means that businesses will now have 24 weeks to spend the funds on qualifying rent, utilities and mortgage payments on up to 40% of their PPP loan.

3. For loans that are not forgiven, borrowers now have a minimum of five years to repay the loan – up from the previous two years.

4. Borrowers now have until December 31, 2020 to get their “full-time equivalent” (FTE) employee count back to what it was in the reference period in order to avoid a reduction in the amount of the loan being forgiven. The original deadline was June 30, 2020.

5. The Act allows for two new exceptions for borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. Borrowers were already allowed to exclude employees who turned down good-faith offers to be rehired at the same hours and wages as before the pandemic. The PPPFA adds that an employer can be exempt from the loan forgiveness reduction related to workforce restaffing if they can document that they:

  • Are unable to find and hire similarly qualified employees for unfilled positions on or before December 31, 2020; or
  • Are unable to restore business operations to the levels they were at on Feb. 15, 2020, due to COVID-19-related operating restrictions.

6. Under the new law, businesses can defer payment of the employer portion of the Social Security taxes until 2022 (50 percent to be paid in 2021 and the remainder in 2022), regardless of when the loan is forgiven.

7. Payments under the previous guidelines were set to be due after 6 months. Now payments are no longer due until the forgiveness amount is determined and remitted to the lender.

Although many of these changes eased some of the burdens borrowers felt, there are also some major issues that are awaiting clarification. These include:

  • Forgiveness Calculation: Will businesses still be eligible for loan forgiveness if their payroll costs fall under 60% of the loan? Under the previous rule, if a company’s payroll expenses were less than 75% of the loan, they could still receive loan forgiveness, but the amount forgiven would be prorated. The way the new law is written, it is unclear whether loan forgiveness would be available for anyone whose payroll costs fall below 60% of the total loan.
  • Compensation Limitations: Under the previous law, there was a cap for compensation for any employee making over $100,000. (The cap was $15,384 for the 8-week covered period). The question now is if the provision that increases the covered period to 24 weeks also allows for the salary of employees over $100,000 to be calculated at the 24-week period as well.

ShuffieldLowman’s Corporate Law and Banking & Finance teams are continuing to monitor the changes to the Paycheck Protection Program, and how these new laws will affect Central Florida businesses, banks, and lenders. To speak to an attorney, fill out our contact form.

The Potential for Community Associations to Exercise “Emergency Powers” as a Result of COVID-19

The Potential for Community Associations to Exercise “Emergency Powers” as a Result of COVID-19

Florida Statute Sections 718.1265 and 720.316 provide condominium associations and homeowners’ associations, respectively, the right to exercise certain emergency powers “in response to damage caused by an event for which a state of emergency is declared pursuant to s. 252.36 in …

the locale in which the condominium is located [for a condominium association]”.

the area encompassed by the association [for a homeowner’s association]”.

The range of emergency powers includes, but is not limited to:

  1. The right to conduct board or membership meetings by means other than in person gatherings;
  2. The right to determine that portions of the association’s property would be unavailable for entry or occupancy;
  3. The right to levy special assessments without a vote of the owners; and
  4. The right to borrow money and pledge association’s assets as collateral.

Clearly, these emergency powers would apply in the event of physical damage to association properties caused by an event that results in a state of emergency being declared within the State of Florida.  However, could these emergency powers be used when the “damage” to the association may be economic in nature (such as the loss of expected assessment revenue) or in the form of possible future personal injury or death to others (caused by the permitted use of the association’s property by infected individuals) and when the damage is caused by the consequences of a pandemic, such as COVID-19?

On March 27, 2020, the Florida Department of Business and Professional Regulation issued its emergency order 2020-04.  That order recognized that there were certain emergency powers that were available to associations, enumerated in both the condominium statute (in Section 718.1265) and the HOA statute (in Section 720.316), that could be used as a result of COVID-19.  Those powers expressly recognized by emergency order 2020-04 included the right to conduct board or membership meetings by means other than in person gatherings and the right to determine that portions of the association’s property would be unavailable for entry or occupancy.  However, the powers expressly recognized by emergency order 2020-04 did not include the right to levy special assessments without a vote of the owners or the right to borrow money and pledge association’s assets as collateral.

On May 20, 2020, the DBPR issued a new order, emergency order 2020-06.  The new order terminates most of the provisions in the original order, effective June 1, 2020.

The fact that the DBPR has issued this new order does not mean that the emergency powers of associations that were referenced in the earlier order cannot be used.  However, it means that, in the event a purported emergency power is used by an association which is subsequently challenged by an owner in the community, a court would need to decide whether that emergency power could be used.  The DBPR is no longer providing associations with a possible “safe harbor” to use in arguing that an association’s emergency powers can be used.

It should also be noted that the impact of the original DBPR emergency order, and the impact of the subsequent DBPR emergency order that terminates the original order, is subject to debate.  Many attorneys have questioned whether the DBPR had the requisite constitutional authority to issue a pronouncement that the needed  “emergency” that was required to trigger these “emergency powers” was in existence.  For those attorneys holding such a belief, the issuance of the original order was viewed as an ineffective act, as only the Florida legislature could have modified the provisions of these statutes to clarify whether the “emergency powers” could be triggered by a pandemic, and only a Florida court could have made a binding interpretation of whether the existing provisions of these statutes would allow for an association’s use of these “emergency powers” in the event of a pandemic.  These attorneys also believe neither of these DBPR emergency orders would have impacted the issue of whether community associations could utilize “emergency powers” due to the pandemic.

Any community association seeking to invoke emergency powers should seek assistance of its counsel before doing so.

For the latest news on COVID-19’s effects on community associations, contact our association law team for more information.

Update to CARES Act – SBA Issues New Guidance on PPP Loan Forgiveness

Update to CARES Act – SBA Issues New Guidance on PPP Loan Forgiveness

On May 15, 2020, the U.S. Small Business Administration (“SBA”) released its long-awaited guidance on the forgiveness of Paycheck Protection Program (“PPP”) Loans, in the form of the Paycheck Protection Program Loan Forgiveness Application (the “Application”). The Application contains four components – 1) the PPP Loan Forgiveness Calculation Form, 2) the PPP Schedule A, 3) the PPP Schedule A Worksheet, and 4) the PPP Borrower Demographic Information Form. In order to qualify for forgiveness, a Borrower must provide its Lender with a complete PPP Loan Forgiveness Calculation Form and the PPP Schedule A. The PPP Schedule A Worksheet, on which the Borrower must identify each employee employed during the covered period and allocate payroll costs incurred by each such employee (amongst other things), must be completed and maintained within the Borrower’s records for six years after forgiveness, but is not required to be submitted to the Lender at the time of application for forgiveness. The PPP Borrower Demographic Information Form is completely optional. Accompanying the Application are a set of very detailed instructions which highlight several new developments in the manner in which the forgiveness program will be interpreted and administered. The following are a few of those developments:

  1. Expansion of “Covered Period” –The CARES Act provides that forgiveness will apply to certain costs incurred and payments made (more on this later) during the “Covered Period”, which is defined as the 8-week period beginning on the date of the origination of the PPP Loan (i.e. the date the loan is disbursed to Borrower). The Application clarifies that Borrowers now have the option of designating an “Alternative Payroll Covered Period,” which will begin on the first day of the Borrower’s first pay period following the date of disbursement. This Alternative Payroll Covered Period may be used instead of the “Covered Period” for calculations related to payroll costs and forgiveness reductions, but not for the calculations related to non-payroll costs eligible for forgiveness, such as interest on mortgage debt, rent, and utilities.

  2. Loans greater than $2 million, affiliates included – The Application contains a check-box which must be checked off by Borrowers who, together with their affiliates, have received PPP loans in excess of $2 million. The FAQ for Lenders and Borrowers (the “FAQ”) published and periodically updated by the SBA, in questions 39 and 46, had already made clear that such Borrowers would be subject to a review of their loan file by the SBA and Department of Treasury, so it should be no mystery why this check-box is included in the Application. However, the significance of this inclusion is that Borrowers must now actively confirm whether their loan amount combined with their affiliate’s loan amount(s) exceeds the $2 million threshold in order to provide the accurate information on the Application. This will require such Borrowers to interpret the affiliation rules contained in the regulations concerning the Small Business Act and the prior regulations released regarding the CARES Act in order to accurately check the box.

  3. Payroll Costs incurred but not paid may be forgiven– According to the instructions for the PPP Loan Forgiveness Calculation Form, payroll costs fall within the Covered Period or Alternative Covered Period, and are therefore eligible for forgiveness, when they are either 1) paid, meaning a paycheck has been distributed or an ACH credit transaction has been originated, or 2) not paid, but incurred during the last pay period of the Covered Period or Alternative Payroll Covered Period, as applicable, and paid on or before the next regular payroll date. This clarifies the meaning of the phrase “costs incurred and payments made during the covered period,” as used in the CARES Act with respect to payroll costs eligible for forgiveness.

  4. Payroll costs forgiveness capped at $15,385.00 per employee – the CARES Act has always specified that “payroll costs” do not include “the compensation of an employee in excess of an annual salary of $100,000.00, as prorated for the covered period.” Now, that exclusion has been condensed to a specific number – $15,385.00. In the PPP Schedule A Worksheet, Borrowers must not allocate more than this amount to any single employee.

  5. FTE calculation revealed – Under the CARES Act, a Borrower’s forgiveness amount will be reduced by a factor based on a reduction in the average “full-time equivalent employees” (“FTE”) during the covered period. After much speculation as to whether FTE’s would be calculated in accordance with I.R.S. standards or otherwise, the Application has revealed two ways in which FTE’s may be calculated for purposes of determining the reduction factor – 1) for each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth, capped at 1.0 or 2) employees who work 40 hours or more per week are assigned 1.0 FTE, and all other employees are assigned a .50 FTE (the “simplified” method).  Under the first method, for example, if an employee Is paid an average of 35 hours per week, he or she will count as .9 FTE (.875 rounded to the nearest tenth).

  6. New exceptions to reductions in forgiveness – Now, the reductions in the forgiveness amount due to reduction in FTE will not apply 1) for any positions for which the Borrower made a good-faith, written offer to rehire an employee during the Covered Period or Alternative Covered Period which the employee rejects, and 2) for any employees who were fired for cause, voluntarily resigned, or voluntarily requested and received a reduction of their hours, during the Covered Period or Alternative Covered Period. The exception will not apply to either if these categories if a new employee is hired to replace the one lost. One thing to note is that these exceptions are limited to events occurring in the 8-week Covered Period or Alternative Covered Period. This may be significant since some of these events may have occurred outside the 8-week period but may nonetheless factor into the reduction calculation. For example, if any employees voluntarily resigned after February 15, 2020 (the date which a Borrowers FTE numbers during the Covered Period or Alternative Covered Period are compared against) but before the Covered Period or Alternative Covered Period begins, then they will presumably factor into the reduction in FTE’s per the calculation in the Act, even though they were not terminated by the Borrower.

Here is a link to the Application, in its entirety – https://www.sba.gov/sites/default/files/2020-05/3245-0407%20SBA%20Form%203508%20PPP%20Forgiveness%20Application.pdf

For the latest updates on PPP Loan Forgiveness Guidance, contact our corporate law or banking and finance teams for more information. To see other legal updates that are occurring from COVID-19, visit our resources page HERE.

Update Regarding CARES Act PPP Loan Program – Safe Harbor for Loans under $2 Million

Update Regarding CARES Act PPP Loan Program – Safe Harbor for Loans under $2 Million

On May 13, 2020 the U.S. Small Business Administration (“SBA”) published new guidance clarifying prior guidance which had left many loan recipients confused and fearful of potential penalties associated with their PPP loans. To recap, over the last few weeks there has been much news and discussion debating whether companies who have received PPP Loans were actually eligible at the time they applied for the loan, and whether they should return the money. This came on the heels of the SBA’s publication of Question 31 on its Payment Protection Program Frequently Asked Questions document (the “FAQ”) on April 23, 2020, which states that recipients should have considered their economic need for the loan, including their current business activity and adequate sources of liquidity, at the time they applied for the loan. FAQ 31 goes on to permit recipients to pay back their PPP loans without any penalty for making bad-faith certifications on their application, before May 7th (a deadline that was subsequently extended to May 14th). Ultimately, FAQ 31, as well as the subsequent interim final rules issued by the SBA, simply added to the confusion surrounding the PPP Loan program, and led many borrowers to pay back their PPP loan out of concern that they might be investigated by the SBA for inadvertently making bad-faith certifications on their loan application.

The newly published Question 46 of the FAQ clarifies that any Borrowers of PPP loans under $2 million will be subject to a “safe harbor,” meaning that they are automatically deemed to have made the certifications regarding their need for the PPP loan in good faith, and will not be subject to investigation or penalty. This guidance provides relief to the vast majority of Borrowers, as only a relatively small number of Borrowers have received loans in excess of $2 million, per the SBA’s published data. For those Borrowers who did receive loans in amounts greater than $2 million, Question 47 of the FAQ extends the deadline to pay back the PPP loan through May 18, 2020, so they have a few more days to consider whether they should pay back their PPP loan. In doing so, the following are a few factors these Borrowers should consider:

1) any sources of liquidity, including lines of credit of cash reserves, that the Borrower and/or its affiliates may have had access to at the time they applied for the PPP Loan,

2) whether tapping into those other sources of liquidity to cover the business’s payroll costs, rather than taking the loan, would have been significantly detrimental to the business;

3) whether those sources of liquidity are needed to cover expenses other than payroll costs or cannot be used for payroll costs for other reasons;

4) how the economic uncertainties made applying for the PPP loan a necessary action to secure the survival of your business; and

5) how the pandemic and the government mandated shut down orders have actually affected the underlying stability of your business.

Borrowers should document these details, as well as any other reasons they believe the PPP Loan was necessary to support its ongoing operations, in a brief memorandum in preparation for a review by the SBA and Department of Treasury, who have pledged to review every loan in excess of $2 million following the Borrower’s request for forgiveness. This review will likely look at the Borrower’s initial need for the loan, as well as the Borrower’s use of the loan proceeds, to ensure compliance with the terms of the CARES Act and the subsequent released guidance and regulations. In fact, it may be prudent for Borrowers with loans under $2 million to prepare a brief memorandum for their records, in case their lender asks them to reconfirm their certification that the current economic uncertainty made the loan request necessary to support the ongoing operations of their business.

FAQ 46 also states that if the SBA and Department of Treasury determine that a Borrower did not make the certifications regarding their need for the PPP Loan in good faith, and did not return the funds in a timely manner, it will “seek repayment of the outstanding PPP loan balance” and will deem the Borrower ineligible for forgiveness, but will not pursue any other penalties in connection with the bad-faith certification as long as the Borrower pays back the PPP Loan. Ultimately, Borrowers of PPP Loans in excess of $2 million can still have a legitimate basis for their application, but will need to make sure they are prepared to defend that basis when the SBA and Department of Treasury review their loan.

The periodically updated FAQ can be found on the SBA website at https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf.

If you would like to discuss the Cares Act with an attorney, you can contact us here.