August 31, 2020
In This Issue
September 7, 2020 is Labor Day!
ASM
ASM Upcoming Events
Legislative Update
Legislative Update
Unemployment Insurance Remains a Key Issue for Employers
Economic Development Legislation Addresses MWBE Issue in Public Construction
Transportation and Infrastructure Funding
ASM Legislative Committee
Legal Update
Not All Prevailing Wage Claims Are Also Wage Act Claims, Limiting Individual Liability of Corporate Officers
Employers Beware: Practical Implications Of Governor Bakerís Newly Issued Travel Order, Effective August 1, 2020, in the Workplace
Regulatory Update
New PFMLL Regulations/Big Picture Issue for Employers
SBA Issues New PPP Guidance
OSHA UPDATE
7th Annual National Safety Stand-Down to Prevent Falls Rescheduled for September 14-18, 2020
Member News
JM Electrical Gets NECA Safety Award
Thank you to our 2020 Premium Sponsors
Do You Have A Legal Question? Accessing The ASM Hotline
ASM Associate Members are your Trusted Partners
Are You Following ASM On Social Media?
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September 7, 2020 is Labor Day!

ASM office will be closed in observation of Labor Day. We wish you and your family and happy, restful, and peaceful Labor Day.

Stay tuned for additional programs for the fall. We look forward to getting back together for in-person programs, but until then, we will continue to offer engaging and informational online programs.

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ASM
ASM Upcoming Events

Webinar: Massachusetts Workforce Training Fund Program
September 16 | 12:00 PM - 1:00 PM
Online via Zoom

ASM Virtual Networking
Thursday, September 17 | 3:00 PM- 4:00 PM
Online via Zoom


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Legislative Update
Legislative Update

Our last Legislative update was toward the end of July. At that point there was speculation that the usual end of the formal Legislative Session (July 31st) would be extended. Indeed, that is exactly what happened. Given the circumstances caused by the pandemic, there was no way to finish legislative business by the normal deadline. The Legislature is now poised to act on any issue between now and December 31st.

After not holding many formal sessions in the month of August, the House and Senate will need to reconvene to address the state budget for fiscal 2021. In addition, five “big ticket” bills are still being negotiated in conference committees made up of members from both chambers. Those include health care, transportation bonding, economic development, policing reform, and climate change. Along with these issues, the Legislature continues to focus on COVID-19 bills. As previously mentioned, 228 bills have been filed in the Massachusetts legislature specific to the pandemic on a variety of topics. Many bills would impact employers. Indemnity reform, wage theft, and a host of other issues remain on the table as we enter the fall.


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Unemployment Insurance Remains a Key Issue for Employers

Governor Baker has submitted a letter to the Trump administration indicating that Massachusetts intends to apply for federal funding for the $400 supplemental unemployment benefit. Governor Baker has indicated that he is not supportive of the way federal funds are being made available, stating “As I said before, I don’t think this is the right way to do this. I worry a lot that we’re taking money from federal reimbursements associated with the first four months of COVID. But if this program is there and it is the only thing that’s there, I don’t think Massachusetts should pass on that.”

The governor doesn’t like the proposal because it takes money set aside by the Federal Emergency Management Agency to help states deal with COVID-19 costs and repurposes it to pay three-quarters of the unemployment benefit. The remaining quarter of the cost would come from states themselves, most likely from other federal aid.

A long-term solution to the state costs for unemployment remains unresolved. Federal assistance could provide certainty to the state budgeting process as well as for employers who are anticipating a rate hike.


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Economic Development Legislation Addresses MWBE Issue in Public Construction

At the end of July, the House and Senate passed separate bills seeking to spur economic development in Massachusetts. One of the many issues addressed in the bills deal with assisting Minority and Women Business Enterprises in public construction. ASM has a long and proud history of supporting ways for more MWBE firms to enter the construction business.

The House bill would create a special commission that would meet and make recommendations to the legislature on how to change or improve the current law. In this proposal, ASM is named as one of 21 members on the special commission. The Senate, on the other hand, made some more specific proposed changes to Ch. 149 to promote MWBEs. ASM offered comments to the legislature seeking clarification on this language.


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Transportation and Infrastructure Funding

COVID has clearly changed the conversation about public transportation. The MBTA is looking at a $500 million or more budget deficit by next year, due in large part to a lack or ridership. In mid-July the Senate approved a bill that would allow cities and towns to impose new tax surcharges for local transportation projects. This would allow municipalities the ability to form regional tax districts to place a surcharge on property tax, sales tax, auto excise, and lodging tax. New taxes would require local approval.

The House passed a bill back in March that would raise $500 million a year in additional revenue for transportation projects with a 5- cent gas tax increase, a 9-cent diesel tax increase, and additional fees on app ride services like Uber. This is another issue that remains unresolved in conference committee. Questions remain about when the public will feel comfortable using public transportation again.


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ASM Legislative Committee

ASM welcomes your input on all of these bills. Send us an email at mmcdonagh@associatedsubs.com.

Are you interested in legislation and politics? If so, we would love to have you join our Legislative Committee. The Committee meets periodically to review and discuss pressing legislative and regulatory matters and how they would impact ASM and the members. Contact ASM if you would like to volunteer!

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Legal Update
Not All Prevailing Wage Claims Are Also Wage Act Claims, Limiting Individual Liability of Corporate Officers

Julianne C. Fitzpatrick, Esq.
Kenney & Sams, P.C.

Massachusetts’s Prevailing Wage Act is a comprehensive statute intended to provide an exclusive remedy for underpayment on public works projects. Some, but not all, of the provisions of the Prevailing Wage Act allow employees to hold corporate officers individually liable in certain circumstances. In a recent decision, Donis v. American Waste Services, LLC, the Massachusetts Supreme Judicial Court (“SJC”) held that employees suing their employer under the Prevailing Wage Act, for failing to pay prescribed prevailing wage rates on public works jobs, could not also recover from their employer’s individual officers under the Massachusetts Wage Act. The SJC found that permitting recovery under both statutes—on that sole basis—would be duplicative and contrary to the Legislature’s intent. The holding in this case is significant, in part, because it makes clear that, unless there is a separate, independent basis for filing a claim against an employer under the Wage Act, an employee cannot simply allege claims for underpayment of prevailing wage rates under both the Prevailing Wage Act and the Wage Act, naming corporate officers. This decision has broad implications for employers by continuing to protect their corporate officers from individual liability.

Defendant American Waste Services LLC (“AWS”) is a waste management company. Plaintiffs Elmer Donis and nine others worked for AWS as “shakers” on waste disposal trucks, loading waste into the trucks and compacting it. For five years, AWS had waste disposal contracts with four Massachusetts towns. Although the Prevailing Wage Act required AWS to pay its workers on those routes a certain hourly rate, AWS underpaid them, and the Plaintiffs sued AWS, its president, and its vice president for back wages.

The trial court granted partial summary judgment for the Plaintiffs, concluding that the Defendants’ chronic underpayment violated the Prevailing Wage Act and the Wage Act. The Defendants appealed, asking the SJC to decide “whether the plaintiffs could recover, under the Wage Act, for the defendants’ failure to pay wage rates required by the Prevailing Wage Act.” The SJC held that they could not and reversed the trial court’s judgment.

Different Statutes, Different Purposes, Different Remedies

In reaching its decision, the SJC compared both statutes’ purposes, structure, language, and remedies. The Wage Act requires employers to pay employees earned wages within a certain time period and was enacted to prevent employers from unlawfully withholding employees’ wages. The Prevailing Wage Act serves a narrower purpose, setting minimum wage rates on public works projects, to ensure that workers are paid fairly compared to those on private projects.

In terms of remedies, each statute provides its own private right of action for employees to sue employers, and allows employees to recover treble damages, attorneys’ fees, and costs—powerful tools for employees, and significant penalties for employers.

A key difference, however, is that the Wage Act permits employees to bring claims against corporate officers as individuals—not just against the company. By contrast, the Prevailing Wage Act only allows employees to bring such claims in limited circumstances, none of which applied in this case.

The SJC explained why both statutes are complementary and serve separate purposes. The Prevailing Wage Act establishes which rates are owed to certain employees and provides a mechanism for employees to recover from employers who do not pay those rates. The Prevailing Wage Act does not provide any recourse, however, against employers who withhold payment of those wages, or who retaliate against employees seeking to recover wages, which fall under the Wage Act. In that scenario, employees may have an independent basis for a claim under the Wage Act in addition to the Prevailing Wage Act.

Here, AWS failed to pay Plaintiffs the prevailing wage. Therefore, the SJC found that the central thrust of Plaintiffs claims fell squarely within the applicable section of the Prevailing Wage Act (§ 27F), which has its own remedy and does allow suits against corporate officers. There was no separate basis for the Plaintiffs’ Wage Act claims (e.g., that AWS withheld wages or retaliated against them), and therefore, AWS’s corporate officers could not be held personally liable.

The SJC acknowledged Plaintiffs’ concern that this result could allow unscrupulous officers to hide behind shell companies. The SJC explained, however, that the common law doctrine of “piercing the corporate veil” already exists to address that concern (though it requires a fact-intensive, multi-factor test that is hard to meet without proof of fraud).

Employers must continue to comply with all applicable wage laws. Donis holds that, unless there is separate independent basis for a Wage Act claim, employees are limited to the parameters of the Prevailing Wage Act section that applies, which may not allow them to pursue claims against individual corporate officers.

*****

This alert is for informational purposes only and may be considered advertising. It does not constitute the rendering of legal, tax or professional advice or services. You should seek specific detailed legal advice prior to taking any definitive actions.

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Employers Beware: Practical Implications Of Governor Bakerís Newly Issued Travel Order, Effective August 1, 2020, in the Workplace

By: Michelle De Oliveira, Esq.
Kenney & Sams, P.C.

On July 24, 2020, Governor Baker issued a COVID-19 Travel Order[1] to safeguard residents from exposure to the Coronavirus due to interstate travel. The Travel Order went into effect on August 1, 2020, requiring visitors and returning residents entering Massachusetts to complete and submit a Travel Form and self-quarantine for 14 days unless the individual is exempt from the mandated quarantine.

In this article, our discussion is twofold: First, what are the Travel Order’s essential components? Second, what are the practical implications of the Travel Order for employers?

First: What are the Travel Order’s essential components?

The essential components of the Travel Order are the following:

Who must comply with the Travel Order?

Massachusetts residents or individuals who are visiting Massachusetts must comply with the Travel Order if they are: (a) over 18 years of age, or (b) an unaccompanied minor.

How do you access and submit the Travel Form?

The Travel Form may be accessed and submitted using the following link: (https://www.mass.gov/forms/massachusetts-travel-form). Anyone who enters Massachusetts, after August 1, 2020, is required to complete and submit the Travel Form.

Who is exempt from the 14-day mandated quarantine?

Individuals who fall into one of the exemptions below are not subject to the mandated 14-day quarantine. The exemptions are as follows:

  • Lower-risk state: those who travel to a lower-risk state in the United States, including (as of August 19, 2020): Connecticut, New Hampshire, Vermont, Maine, New York, and New Jersey.[2]

  • 72-Hour testing rule: an individual who can produce, upon request, proof of a negative COVID-19 test result from a test administered on a sample taken no longer than 72 hours before arrival in Massachusetts. An individual may also get tested—at the individual’s own expense—after arrival in Massachusetts, but the individual must quarantine until getting a negative COVID-19 test result.

  • Transitory travel: an individual who passes through Massachusetts, by for example, driving through the state or connecting to an airplane or other mode of transportation in the state.

  • Commuting for work or school: individuals who commute, at least weekly, to a fixed location for school or work so long as the employee or student does not travel to any place that is not their home state for personal or leisure reasons.

  • Travel to seek or receive medical treatment: individuals who commute, at least weekly, to a fixed location for school or work so long as the employee or student does not travel to any place that is not their home state for personal or leisure reasons.

  • Military personnel: individuals who are directed or ordered to travel to Massachusetts by a Federal or State military authority.

  • Workers providing critical infrastructure services: individuals who enter Massachusetts to perform critical infrastructure functions are exempt while they are working.[3] Examples of critical infrastructure functions include without limitation: healthcare or public health workers; law enforcement, public safety and first responders; food and agriculture; energy; water and wastewater; transportation and logistics.

Quarantine Requirements

The Travel Order includes specific requirements that apply during a mandated quarantine. For example: not leaving the living quarters, unless necessary to receive urgent medical care; access to a separate bathroom facility for the individual or family group; having a sufficient supply of face coverings or masks; using recommended personal hygiene protocols (e.g., washing hands with soap, using hand sanitizers, access to cleaning supplies, etc.); having food delivered to the living quarters; and having the ability to quarantine from others in the household in a room with a door. Moreover, an individual must contact a healthcare provider immediately upon experiencing a symptom related to COVID-19 (e.g., fever; cough; difficulty breathing; shortness of breath; chills; muscle or body aches; runny nose or nasal congestion; new loss of taste or smell; headache; nausea; vomiting or diarrhea).

Penalty

Failure to adhere to the Travel Order may give rise to a $500 fine per day.

Employers Should Discourage Out of State Travel

The Travel Order states that employers are “strongly discouraged” from allowing or requiring business-related travel to states that are not on the list of low-risk states. To the extent employers allow employees to travel to states that are not on the low-risk list, employers “should take measures to ensure employees comply with the Travel Order.” In other words, employers should be proactive and take steps to ensure that employees comply with the Travel Order.

Moreover, the Travel Order further states that “[e]mployers are also urged to strongly discourage their employees from taking leisure travel to non-lower-risk destinations.”

Second: What are the practical implications of the Travel Order for employers?

The practical implications of the Travel Order for employers are significant.

First, employees who travel out of state for a vacation or business may be subject to a mandated 14-day quarantine upon their return—depending on the travel destination. While remote work may address this impact for some, allowing employees to telework for two weeks upon return from travel is not always a viable option for employers. To that end, employers should consider the impact that interstate travel may have on business operations.

Second, the quarantine order may have a significant financial impact on employers. Earlier this year, Congress enacted the Families First Coronavirus ACT (FFCRA). The FFCRA will be in effect until December 31, 2020. The Emergency Paid Leave component of the FFCRA provides, in part, two weeks of paid leave to an eligible employee who is subject to a quarantine or an isolation order. K&S’ previous client alerts on the FFCRA are available here https://kslegal.com/covid-19/

The interplay between the Travel Order and the FFCRA generates the following inevitable result: an employee who engages in interstate travel (absent an applicable exemption) will be automatically entitled to two weeks of paid leave under the FFCRA upon return to the state—so long as the employee has not yet exhausted permissible leave under the FFCRA and meets the eligibility criteria.

For this reason, employers should consider taking the following steps: (1) limit or prohibit unnecessary interstate business travel; and (2) revisit vacation and PTO policies, along with any approved summer vacation requests, to better assess the consequences of an employee’s vacation or travel plans. Employers are strongly urged to consider reviewing and updating these policies, if necessary, at this juncture. Indeed, an employee’s one-week vacation to North Carolina, for example, may result in the employee being absent from work for at least three weeks with pay (when factoring in the two weeks of paid FFCRA leave the employee may be eligible for upon return).

Depending on the employee’s role, it may be that the employee can work remotely upon return from travel, or that alternative arrangements can be made to minimize the impact on business operations. In certain circumstances, however, that may not be possible. To that end, employers should assess vacation requests (even if already approved) and decide whether to inform employees that requests are now pending approval because of the Travel Order and the potential impact interstate travel can have on business operations. Employers can then gather information on the employee’s travel destination to assess whether: (a) the employee will be subject to a mandated quarantine (or potential quarantine) upon return; and (b) the employer can absorb the cost of leave, while also absorbing the impact the employee’s absence will have on business operations.

To minimize the impact that the Travel Order can have on an employer’s business operations, employers should review this with care and assess the potential consequences of interstate travel.

As noted above, the practical implications of the Travel Order may be significant for employers. Employers with specific questions relating to the Travel Order, policy or leave entitlements are encouraged to speak with an employment attorney.


[1] The Travel Order may be accessed here: https://www.mass.gov/info-details/covid-19-travel-order#how-to-quarantine-

[2] Please note that the states that are listed here were identified as lower-risk states as of August 19, 2020. States on the list may fluctuate and it is important to check the states on the list before and after traveling out of state. For additional information, please click here: https://www.mass.gov/info-details/covid-19-travel-order#how-to-quarantine-

[3] Additional information as to what is considered a “critical infrastructure function” may be found here: https://www.cisa.gov/publication/guidance-essential-critical-infrastructure-workforce; https://www.cisa.gov/sites/default/files/publications/Version_3.1_CISA_Guidance_on_Essential_Critical_Infrastructure_Workers_0.pdf

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Regulatory Update
New PFMLL Regulations/Big Picture Issue for Employers


By Catherine Reuben, Hirsch, Roberts, Weinstein


The Department of Family and Medical Leave (DFML) just issued final regulations implementing the Massachusetts Paid Family and Medical Leave Law (PFMLL). Employees will become eligible for paid time off under the PFMLL starting on January 1, 2021. Between now and then, we anticipate that the DFML will be issuing additional guidance on the logistics, sample healthcare provider certification forms, and other compliance assistance information and documents. Employers may wish to hold off on finalizing and formally adopting a PFMLL policy and establishing procedures for processing of leave requests pending publication of this further guidance. In the meantime, however, there are plenty of important “big picture” issues for employers to consider now.

The information in this HRW Client Alert is based on our interpretation of the plain language and logical meaning of the regulations; however, it is possible that the DFML will ultimately interpret them differently. This alert is for educational purposes only and is not intended as legal advice. Employers should consult with counsel regarding the specific steps they should be taking now to get ready for implementation of the PFMLL, based on their unique circumstances.

Retooling of Paid Time Off Policies to Maximize the Value of Contributions Paid

Many employers have existing policies that enable their workers to receive pay when they need to be out of work for one of the reasons covered under the PFMLL. For example, a worker needing to take time off to give birth might be able to utilize vacation, sick time, STD, or other existing employer-provided benefits.  The particular type of paid leave that an employee uses can have a big impact on the ability of both the employer and the employee to get the most financial bang out of their PFML contribution bucks. Here is why.

By our reading of the law and regulations, if an employee receives pay during a PFMLL-qualifying leave through “a temporary disability policy or program” or a “paid family or medical leave policy”, the employee can use those employer-provided benefits to supplement (i.e., “top off”) their PFMLL benefits, provided that the total amount received would not exceed their average weekly wage. Further, if an employer makes such payments in an amount equal to or greater than the amount the employee would have been eligible to receive under the PFMLL, the employer will be reimbursed for the money that the DFML would otherwise have had to pay. That’s a win-win. The employee can get more money while on leave, and the employer can recover some of the cost of providing paid leave benefits.

But if the employee instead receives pay during a PFMLL-qualifying leave through use of “accrued paid leave”— which is defined in the regulations as including sick leave, annual leave, vacation leave, personal time, compensatory leave or paid time off—it appears under the regulations that the employee could not get any PFMLL benefits at all. The time off would still count towards the employee’s annual allotment of PFMLL leave, but the employee would not receive any money from the DFML. Conversely, employees could not use accrued paid leave to supplement or “top off” benefits received from the DFML. Employees can use accrued paid leave or PFMLL benefits, but not both. To add insult to injury, employers are not eligible for reimbursement of dollars paid to employees as accrued paid time—even in cases where the employer is paying money that the DFML might otherwise have had to pay.

In short, the regulations seem to provide employers with a financial incentive to move paid leave benefits out of the “accrued paid leave” bucket and into the “temporary disability policy” or “paid family and medical leave policy” bucket. Many employers currently make it a point to give extra generous PTO benefits instead of paid family or medical leave, as a way of providing flexibility to their workers. Going forward, employers may wish to consider retooling their benefits programs in order to maximize the ability of their workers to supplement PFMLL benefits and for the employer to receive reimbursement (consistent, of course, with the employer’s obligations under other laws, such as the Massachusetts Sick Leave law).

Implementing Clear, Consistent Workplace Rules to Help Defend Against Retaliation Claims

One aspect of the PFMLL that is of concern to employers is the presumption of retaliation. If an employee goes on leave and, during the next six months, the employee is furloughed, demoted, or subject to any other negative job action, the employer is presumed to have engaged in unlawful retaliation, unless the employer can show by “clear and convincing evidence” that the action was not retaliation and further that the employer had sufficient independent justification for taking such action and would have in fact taken such action in the same manner and at the same time the action was taken, regardless of the employee’s use of leave, restoration to a position, or participation in proceedings or inquiries under the law. Unlike with retaliation claims under most other employment laws, the burden is not on the employee to prove that the employer’s actions were retaliatory; instead, the burden is on the employer to prove they were not.

The new regulations offer employers a practical and simple way to meet that burden. The regulations state that an employer’s application of a “preexisting employment rule or policy shall be deemed to be clear and convincing evidence.” Put simply, if an employee is terminated and the employer can point to a specific, pre-existing policy that the employee violated, the employer has the proof they need to defend against a retaliation claim. But if the conduct at issue is not specifically addressed by a policy or rule, defense of the claim may be more difficult (and expensive).

In light of this provision, employers may find it useful to review furloughs, terminations, and other negative job actions that they have taken in the past. If there was no specific policy or rule that addressed the circumstances leading to the action, the employer may wish to consider adopting one now, in case they need to take similar action in the future against an employee who has used paid family or medical leave.

Policies That Dovetail with the PFMLL

At various points in the regulations, employers are given the flexibility to do certain things, but only if they have a preexisting policy to that effect. Now is therefore a great time for employers to consider adopting such policies or improving them if they are already in place. Some of the policies specifically referenced in the regulations include:

  • Fitness for duty certificates: Per the regulations, employers can require an employee returning from leave due to a serious health condition to provide a fitness for duty certificate, but only if the employer has a uniformly-applied policy or practice that requires all similarly-situated employees to do so.

  • Increments of intermittent leave: The regulations state that intermittent leave shall be taken in increments consistent with the established policy that the employer uses to account for use of other forms of leave.

  • Employee communication requirements: Per the regulations, absent unusual circumstances, an employee can be required to comply with an employer’s usual and customary notice and procedural requirements for taking leave.

  • Substance use on the job: The regulations provide that if an employer has an established policy, applied in a non-discriminatory manner and communicated to all employees, that provides under certain circumstances that an employee may be terminated for substance use on the job, the employer can apply that policy even if an employee is taking leave due to a substance use disorder.

These are just a few examples of policies that employers may wish to implement or tighten up now, to have the most control over the PFMLL implementation process and to provide greater consistency and clarity.

Conclusion

Final regulations are out, and the DFML is expected to be issuing additional guidance and forms prior to January 1, 2021. Pending that further guidance, it may be a bit early for employers to formally adopt a policy that specifically addresses the PFMLL, beyond the information already provided in the poster and legally required notices. In the meantime, however, there is plenty that employers can do now to get ready. The members of the HRW PFMLL Team stand at the ready to assist employers with such tasks as:

  • Reviewing the employer’s existing suite of leave-related benefits and assessing whether any changes are in order to maximize the employee’s ability to receive and supplement PFMLL benefits and the employer’s ability to receive reimbursement for paid leave benefits that they already provide;

  • Implementing or updating other workplace rules and policies so that they better align with the PFMLL;

  • For unionized workforces, proposing and bargaining over any necessary changes to existing collective bargaining agreements and/or union-sponsored benefit programs;

  • Establishing procedures for coordinating the various types of paid time off to which workers are eligible under federal and state law (PFMLL, FMLA, sick time, Mass. Parental Leave law, etc.), company policy, and/or employment contracts;

  • Education, training, and solicitation of input from Human Resources and senior management team members on PFMLL implementation procedures; and

  • Pending further guidance from the DFML, beginning work on a PFMLL policy and procedures for handling employee leave requests.

 


 

You're invited to our next HRW Roundtable,
The MA Paid Family and Medical Leave Law (PFMLL): Are You Ready?

Date: September 15, 2020       
Time: 8:00 AM – 9:30 AM
Location: Your computer/device of choice


The Department of Family and Medical Leave (DFML) recently issued updated regulations implementing the Massachusetts Paid Family and Medical Leave Law (PFMLL). Employees will become eligible for paid time off under the PFMLL starting on January 1, 2021 – and we anticipate that employers will be getting many such requests in these tough times. Will you be ready for them?

Please join us for a virtual roundtable on September 15th, featuring special guest speaker, William Alpine, Director of the DFML. Director Alpine and the HRW PFMLL Team will update you on your legal obligations, key takeaways from the updated regulations, and steps employers can take now to get ready.

We are also pleased to feature guest speaker Darren Ambler, Managing Principal, OneDigital, who will educate us on insurance issues, including how PFMLL benefits overlap with private STD plans, and private PFMLL plan options.

Please feel free to send us your questions in advance to Cathy Reuben: creuben@hrwlawyers.com
We hope you can join us! Click here to register.

-The HRW Team
 

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SBA Issues New PPP Guidance

Daniel Mayo Principal, JD, LLM, National Lead, Federal Tax Policy


On August 24, 2020, the SBA issued a new Interim Final Rule (IFR) addressing the paycheck protection program (PPP).

This is the SBA’s 24th IFR on the PPP since the enactment of the CARES Act on March 27, 2020. The IFR addresses the ownership percentages that trigger the applicability of the owner compensation rules for purposes of loan forgiveness, and the limitations on the eligibility of certain nonpayroll costs for purposes of loan forgiveness. It is written in question and answer format, but it is separate from the 51 general FAQs and 26 FAQs on loan forgiveness that were previously issued in regard to the PPP.

The first rule is a helpful one that limits the application of the owner-employee limitations. These rules limit the amount of loan forgiveness that can be obtained for payroll costs relating to certain owner-employees. The new rule exempts from the limitation owner-employees that own less than 5% of a C or S corporation. The stated intent is to exempt owner-employees who have no meaningful ability to influence decisions over how loan proceeds are allocated.

The next rule has three subparts that limit the amount of nonpayroll expense that can be forgiven. The first subpart is that forgivable rent cannot include amounts attributable to a sub-tenant. More specifically, a borrower’s rental expense must be reduced for any amounts it receives from a sub-tenant. For example, if a borrower pays rent of $10K, but receives $3K from a sub-tenant, then it can include only $7K of rental expense on its loan forgiveness application.

Similarly, interest expense on a covered mortgage can be forgiven only to the extent it relates to the borrower’s use of the underlying property. For example, if a borrower pays interest on a covered mortgage on a building and it uses only 75% of the building, leasing out the remaining 25%, then it can include only 75% of the interest on its loan forgiveness application.

The last subpart addresses borrowers that work out of their home. For these borrowers, nonpayroll costs eligible for forgiveness include only those costs that were deductible on their 2019 tax returns, or for new businesses, that will be deductible on their 2020 tax returns. Also, borrowers engaged in home-based businesses cannot include household expenses on their loan forgiveness applications.

The third and final rule addresses related party payments for rental and interest expenses. Rental payments to a related party are eligible for forgiveness if (i) the amount of rent does not exceed the amount of mortgage interest owed on the property during the covered period that is attributable to the space being rented and (ii) the lease and mortgage were both in effect prior to February 15, 2020. No definition of related parties is given in the IFR, but it states that related parties include any common ownership between the borrower and the property owner. The IFR also states that a borrower must provide to its lender the related party’s mortgage interest documentation as part of the borrower’s loan forgiveness application. The SBA left unstated if rental expenses can be forgiven if there is no mortgage on the underlying property.

In a surprising twist, the IFR states that mortgage interest payments to a related party are not eligible for forgiveness. The IFR announces this rule even though it provides no authority to support the distinction between related party rental payments and related party interest payments.

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OSHA UPDATE
7th Annual National Safety Stand-Down to Prevent Falls Rescheduled for September 14-18, 2020

The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) announced today that the 7th annual National Stand-Down to Prevent Falls in Construction has been rescheduled for September 14-18, 2020. While OSHA postponed the event earlier this year due to the coronavirus pandemic, the agency continues to encourage employers to promote fall safety virtually or while employing social distancing practices among small groups.

OSHA is partnering with other safety organizations in 2020 to encourage employers to provide safety demonstrations on fall protection equipment, conduct talks regarding fall-related hazards, safety policies, goals and expectations, and promote the event by using the #StandDown4Safety on social media.

"This national initiative brings much needed attention to falls, which continue to be the leading cause of fatalities in construction," said Principal Deputy Assistant Secretary of Labor for Occupational Safety and Health Loren Sweatt. "Since OSHA began doing fall prevention stand-down events six years ago, nearly 10 million workers have been reached by our message that falls are preventable. These efforts have been successful in raising awareness of the recognition, evaluation, and control of fall hazards."

Extensive resources are available on OSHA’s Fall Prevention Stand-Down webpage at http://www.osha.gov/StopFallsStandDown and are presented in various languages, including English, Spanish, Russian, and Portuguese. Resources include:

  • A brief video entitled “5 Ways to Prevent Workplace Falls,” which encourages employers to educate and train workers on fall protection equipment;

  • A series of fall prevention publications, with an emphasis on construction, and fall prevention videos;

  • OSHA's Fall Prevention Training Guide, which provides a lesson plan for employers, including several Toolbox Talks; and

  • Guidance on ladder and scaffolding safety.

Employers are also encouraged to provide feedback after their events, and obtain a personalized certificate of participation.

The national safety stand-down is part of OSHA's fall prevention campaign, and was developed in partnership with the National Institute for Occupational Safety and Health, National Occupational Research Agenda, and The Center for Construction Research and Training.

Under the Occupational Safety and Health Act of 1970, employers are responsible for providing safe and healthful workplaces for their employees. OSHA's role is to help ensure these conditions for America's working men and women by setting and enforcing standards, and providing training, education and assistance. For more information, visit www.osha.gov.

The mission of the Department of Labor is to foster, promote and develop the welfare of the wage earners, job seekers and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.

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Member News
JM Electrical Gets NECA Safety Award

For the third time in five years, JM Electrical Company, Inc., a firm specializing in advanced automated building system installations, has been selected by the National Electrical Contractors Association (NECA) to receive the 2020 NECA Safety Excellence Award.

The award is presented to member companies who consistently record injury and fatality rates lower than the industry standard and implement internal company safety practices above and beyond basic industry compliance.

“We are honored to be recognized for our practices from such a highly respected industry association, particularly an award that highlights our commitment to the safety, health, and well-being of our employees,” said Matthew Guarracino, principal at JM Electrical. 

Last year, JM Electrical – one of only four Greater Boston companies to receive this honor – safely logged over 150,000 man-hours on job sites. All JM electricians hone their skills at the NECA/IBEW joint training center, one of the most intensive electrical training programs in the country. In addition, each electrician completes 10,000 hours of classroom and on-the-job training through the National Joint Apprenticeship Training Committee.

“Throughout our company’s history, JM Electrical has made safety – on job sites and in the workplace – our utmost priority for our colleagues, and we actively promote that culture through a number of internal programs,” added Guarracino.

As a prominent electrical company in the Boston area and a New England provider of specialized electrical construction work, JM offers its team all of the support and resources necessary to ensure that adequate health, safety, and environmental protocols are fully implemented every project.

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Do You Have A Legal Question? Accessing The ASM Hotline

As an employer, you face a myriad of issues including employee leave, discrimination, wage and hour rules, hiring and termination.  As a construction business, you face a host of issues through the life of a project, including bidding, contract terms, payment and more. When issues arise, it’s often hard to know what to do. There is an easy way to get quick answers to your questions – ASM’s Hotline –FREE to ASM Members.

How do I access the Hotline? Send an email to mail@associatedsubs.com. We will forward your question to the appropriate attorney who will respond by phone or email.

Who are the attorneys?

Construction questions are referred to JohnM. Curran, Esq. at the law firm of Corwin & Corwin LLP, which has served as legal counsel to ASM for more than 65 years.

Employment questions are referred to David B. Wilson, Esq. and Catherine E. Reuben,Esq., at the law firm of Hirsch Roberts Weinstein, LLP.


Insurance questions are referred to David M. O’Connor, Esq. at the law firm of O’Connor & Associates, LLC.
 


What if I already have my own lawyer?
You can still call the Hotline. It is a privilege of membership in ASM.

What kind of help can I expect?
The attorney will typically spend 5-15 minutes addressing questions that can be answered easily based on years of experience in their areas of practice. You will receive information to help you determine whether to handle the issue yourself or to seek professional help to pursue legal action. The Hotline is limited in scope and does not include research or document preparation.

To pursue legal action, do I have to use the Hotline attorney? No. You are free to use your own attorney or you may retain a hotline attorney. The choice is up to you and it is a private matter between you and the attorney.


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ASM Associate Members are your Trusted Partners

Are you looking for services from a trusted partner? Consider contacting an ASM Associate Member. Our Associate Members include suppliers, law firms, insurance companies, financial advisors and more. Click here for a list of our Associate Member firms.


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Are You Following ASM On Social Media?

ASM is now on Instagram. Check us out, follow us, and comment on our photos!

Please also like the ASM Facebook page and follow us on Twitter and LinkedIn.

 



 

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Published by:

Associated Subcontractors of Massachusetts, Inc.
15 Court Square, Ste. 840
Boston, MA 02108

617-742-3412

 
http://www.associatedsubs.com