Friday, April 03, 2020

2021 NYS State Budget Enacts Paid Sick Leave Law

On April 2, 2020, Governor Cuomo announced the 2021 New York State Budget which includes a statewide paid sick leave law. The new law states, in summary, as follows: 
  • Every employer is required to provide employees with annual sick leave beginning on January 1, 2021; the amount and pay required is dependent on the number of employees:
    • Employers with four (4) or fewer employees and a net income of less than one (1) million dollars in the prior tax year must provide up to forty (40) hours of unpaid sick leave per year. 
    • Employers with 5-99 employees (and employers who have four (4) or fewer employees and a net income greater than one (1) million dollars) must provide up to forty (40) hours of paid sick leave per year. 
    • Employers with a 100 or more employees must provide fifty-six (56) hours of paid sick leave per year.
  • Sick leave accrues at a rate of one (1) hour for every thirty (30) hours worked. Employers may provide all of the required hours at the beginning of the year. 
  • Employees may use sick leave under the following circumstances:
    • Employee has a a mental or physical illness or injury (regardless if it has been diagnosed or employee requires medical care). 
    • To care for a family member who has an illness or injury. 
    • To take various precautionary measures; seek treatment or services as a result of the employee or family member being a victim of domestic violence. 
  • Employers who deny employees sick leave or retaliate against an employee for taking sick leave may be liable for substantial damages including but not limited to: back pay, front pay, attorneys' fees, civil penalties and liquidated damages up to $20,000.

Paycheck Protection Program - Regulations Explained

The Coronavirus Aid, Relief, & Economic Security Act (CARES Act), signed into law on 3/27/2020, includes expeditious relief for America's small businesses through loans funded at $349 billion.

§1102 of the CARES Act establishes the Paycheck Protection Program (PPP) under the SBA 7(a) Loan Program & §1106 provides forgiveness of up to the full principal of loan.

To fulfill the expeditious intent of providing relief to small businesses, the SBA issued its final rule on 4/2/2020 without the typical 30-day delay for effectiveness. 

We will be discussing the PPP in great detail on Real Estate Investing with Andrew Lieb this Sunday at noon on LI News Radio (WRCN / FM103.9) - If you are in business, don't miss this important segment - it could save your financial life. 

Here is a Summary of the Interim Final Rule found at 13 CFR Part 120
  • Loan Terms:
    • No collateral
    • No personal guarantee
    • No fees
    • Loan payments deferred 6 months (interest accrues)
    • 2-year maturity
    • 1% interest rate
    • Maximum loan $10MM
  • Loan Amount (calculation methodology):
    1. Aggregate payroll costs from last 12 months
    2. Subtract amounts paid to employee over $100K
    3. Divide net of steps 1 & 2 by 12
    4. Multiply step 3 by 2.5
    5. Add outstanding amount of an Economic Injury Disaster Loan made from 1/31/2020 to 4/3/2020 less advances
  • Loan Forgiveness Availability:
    • Employees are on the payroll for 8 weeks 
    • Money used for payroll, rent (lease dated before 2/15/2020), mortgage interest (obligation incurred before 2/15/2020), or utilities (service agreement before 2/15/2020)
    • 75% of loan forgiven must be used on payroll
    • Payroll includes:
      • Small business = Salary, wages, commission, cash tips, vacation / parental / family /medical / sick leave, allowance for separation / dismissal, employee benefits (health / retirement), state / local employment tax
      • Independent Contractor = wage, commission, income, or net earnings
    • Payroll doesn’t include: 
      • Employee with principal residence outside US
      • Salary over $100k (prorated)
      • Fed employment tax from 2/15/2020 to 6/30/2020
      • Qualified sick & family leave wages
    • To prove proper payments, lenders can rely on borrower’s documentation without any verification requirements
  • Application:
    • SBA Form 2483 (lender submits SBA Form 2484)
    • Applicant certifies that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.
    • Available from 4/3/2020 to 6/30/2020 or until exhausted
    • Borrower can only get 1 loan
    • First-come, first service
    • E-signature / consent permitted
  • Eligibility:
    • Must be small business, non-profit, independent contractor (sole proprietor)
    • Must have < 500 employees (certain exceptions if bigger) with principal place of residence in US
    • Must be in operations on 2/15/2020 with W2 employees
    • Must submit proof of eligibility of:
      • Payroll processor records
      • Payroll tax filings
      • Form 1099-Misc
      • Income & expenses for sole proprietorship
      • If don’t have above, bank records to demonstrate qualifying payroll
  • Ineligibility:
    • You are engaged in illegal activity under federal, state or local law (no legal marijuana) 
    • Household employer of nannies / housekeepers
    • Owner of 20% or more is incarcerated, on probation / parole, subject to indictment, criminal information, arraignment, or convicted of felony in last 5 years
    • Delinquent / defaults on SBA loan within last 7 years
  • Misuse Penalties:
    • Knowingly using loan for unauthorized purposes is fraud
    • False statements on application is up to 5 year imprisonment / up to $250K fine + up to 2 years imprisonment / up to $5K fine + up to 30 years imprisonment / up to $1MM fine
  • Lenders Fees Paid from SBA:
    • 5% of loans up to $350K
    • 3% of loans over $350K & less than $2MM
    • 1% of loans at least $2MM  
  • Agent Fees Paid by Lender from its Fees:
    • 1% of loans up to $350K
    • 0.5% of loans over $350K & less than $2MM
    • 0.25% of loans at least $2MM
·        Questions should be made to Lender Relations Specialist at the local SBA Field Office 

Thursday, April 02, 2020

“Unemployment on Steroids”: Cares Act Extends Unemployment Coverage to Independent Contractors and Provides an Additional $600 to Individuals Receiving NYS Benefits

In response to many workers losing their jobs as a result of COVID-19, the federal government is providing unemployment insurance assistance in addition to what is currently offered by the States. Some members of Congress aptly referred to the new law as “unemployment on steroids.” The law provides the following additional unemployment insurance benefits:
  • Extends eligibility to independent contractors, individuals who are self-employed, or cannot work (individuals who can telework are not covered) for a reason directly related to COVID-19. In order to apply for Pandemic Unemployment Assistance ("PUA"), you must first apply and be determined ineligible to receive New York State unemployment insurance benefits.
  • Provides an additional $600 a week to all individuals receiving State unemployment insurance benefits. In New York State, if you are receiving the minimum benefits, the maximum benefits ($504 per week) or somewhere in between, you will receive an additional $600 per week. The federal benefits are retroactive to January 27, 2020 and expires on July 31, 2020. It is unclear from the information currently available whether you are entitled to the additional $600 if you are receiving partial unemployment benefits from New York State (hours/salary are reduced by employer).
  • Provides an additional 13 weeks of benefits (NYS currently offers 26 weeks of unemployment benefits).

According to NYSAR - Real Estate Brokers Can Conduct Showings - What Are Your Business Ethics?

According to NYSAR, Empire State Development clarified that "[t]he following functions of real estate and/or realtors (sic) are considered essential: residential home and commercial office showings; home inspections; and residential appraisers."

Now that it's permissible, the question turns to whether real estate salespersons / associate brokers should be conducting showings?

This is the biggest ethical question for real estate brokers today.

Ironically, Lieb School is in the midst of creating a new CE course on ethical business practices, which is a required course for license renewal on and after 7/1/2021. We are now incorporating this situation into the course as a case study for our students to determine their own business ethics in real estate brokerage.

Unlike laws, business ethics refers to appropriate business practices on controversial subjects that are driven by moral concerns. Showing a house during the coronavirus pandemic is a practice that needs to be driven by your moral concerns.

When it comes to morals and values there is not a one size fits all answer to any question. This is the answer that I gave to a friend in response to his text requesting my take on the fact that "realtors were just declared essential services:"
It's not on the empire state development webpage so it's probably a responsive email to a clarification request from NYSAR. We got one today that my law firm can do in- person closings. That being said, we are trying to avoid them at all costs and have our office working remotely. It's good and bad that the clarification was issued. It's good that smart brokers are authorized to help people in need, but it unfortunately gives permission to the idiots in our industry to spread coronavirus and put their lives and the lives of others in jeopardy all for a dollar. I would not show a senior's house if they live there. I would not show an immunocompromised person's house if they live there. I would not do public open houses. I would limit my in-person contact to the extent necessary while always wearing PPE. If not for the business ethics that require it, at least for the fact that I refuse to bring coronavirus to my family. We will get through this, but we must be smart and pick health over money at each turn for money without health is useless. Stay safe my friend.
If you would like to further explore this topic, we have a special guest on our radio show this Sunday at noon on WRCN (FM 103.9) - - (LI News Radio).

Stay safe my friends.

Wednesday, April 01, 2020

LIEB Permitted to Close Real Estate Deals by NYS

On April 2, 2020 we received word from NYS Empire State Development that "[r]eal estate law practices are deemed essential if it is necessary to be in-person to do the work."

LIEB can close your deals in-person. 

Make no mistake, we are a leader in remote closings, but sometimes lenders and title underwriters won't permit such a closing and we have been struggling to find a solution. So, rather than guessing, we made request of the Empire State Development to tell us. This is something every business must do before acting because the penalties are outrageous for non-compliance

We just got our answer and we are already scheduling closings. 

Some people might say that this is a terrible move for a public health advocate. However, my favorite professor during my Master's program taught me to never ignore any of the dimensions of health while only focusing on physical health. Yes, the physical dimension is important. Yet, one can never ignore the spiritual, emotional, social and mental dimensions as well. To that end, there are people who need to close their real estate deal to be healthy. They may be living in limbo with no place to go, there can be financial stress of continued home ownership, there could be too many people occupying one space, or a plethora of other reasons that a closing is necessary.

Remember not to judge someone else's circumstances. 

We will be sure to keep social distance and avoid any gatherings to never forget the physical health needs of our team, our clients and ever other individual who is involved in our closing process.