Webinar report: NAFBiz NY – COVID19 and US businesses – 30 March 2020

TABS Webinar Report

NAF-Biz NY – COVID-19 and US business

30 March 2020

Speakers:

• Dolph Hogewoning, Consulate General of The Netherlands NY
• Jan Joosten, Baker McKenzie
• Robert Lewis, Baker McKenzie
• Steve Maggi, SMA Law
• Jacob Willemsen, TABS Inc.

Dolph Hogewoning, Consul General of the Netherlands, NY
We are closely monitoring the situation in terms of guidelines, legislation and other changes. We are here to help employees of Dutch companies who have to deal with travel restrictions. Our consular staff can assist you for medical emergencies that can arise or other humanitarian reasons if you do need a visa or extension of your passport.

We can help Dutch corporates and smaller companies with:

• Dealing with the governor’s office.
• Helping with dealing with the guidelines and interpreting the guidelines new (for example what qualifies as an essential business).

Jan-Joosten, Baker McKenzie | COVID-19: U.S. Legal Issues and Strategies
“Force Majeure”
A force majeure is an event or series of events beyond the parties’ control that has the potential to excuse contractual performance where performance becomes too difficult or impossible. The effect: a party invoking force majeure (where a contract or circumstance allows it) may suspend, defer or be released from its duties to perform contract obligations without liability. Events that are typically listed are war, terrorist attacks, famine, earthquakes, floods, strikes, fire,  epidemics and government orders (martial law).

Most contracts require the party asserting force majeure to give notice to the counterparty.

The starting point is looking at your contract. First you will have to check what is the governing law. Is it the Netherlands law or U.S. law? Check if there is a force majeure clause, a change of law clause or sometimes there is a material adverse effect clause.

Dutch law
Under Dutch law (and this is different in the U.S.) if there is no specific provision it will provide statutory force majeure (“overmacht”). In Dutch contracts general principles of “reasonableness and fairness” apply (“redelijkheid en billijkheid”).

U.S. law
U.S. law is usually harsher. Under New York law force majeure classes are interpreted narrowly. They look at the language of the contract, the precise words of the contract. Even the “Catch-all” provisions may be limited to events similar to the matters listed. If the contract is silent there is no “statutory force majeure” (“overmacht”) such as in the Netherlands.

If the force majeure class is not going to help you there are some other theories that could possibly apply.

What should you do?

• Analyze your contracts (check governing law, rights, remedies and requirements)
• Meet notice requirements
  Provide notice in a timely manner and supplement notice as additional information becomes available
• Carefully document force majeure events
  Carefully document your force majeure of if you think that the other party might claim a force majeure, you should document that. Document what steps you have taken to try all other possibilities so that you have on record that you did the best you could.
• Plan and document
  In case you haven’t had to declare a force majeure yet develop a contingency plan and catalog efforts to comply with contract terms if you face risk of negative effects of COVID-19.
• Anticipate litigation
  Be prepared for litigation. People can get lawyers here on a no cure no pay basis. In the U.S. there is something called discovery where they will have the right to read all of your internal emails except for emails with your lawyers.
• Know the law
  Know/learn local regulatory actions and restrictions to determine if your company must act in a way that affects contractual commitments.
• Consistent response
  Consider force majeure clauses across all contracts. You can not claim on one contract that it is impossible to perform and on the other contract that everything is alright.
• Draft new contracts very carefully
  • Include a very restrictive force majeure clause in your contract with your Asian supplier.
  • Include an escape clause for visa issues for Dutch technicians.

Robert P. Lewis, Baker McKenzie | COVID-10: US Employment Issues and Strategies
Us Employment Law Overview- “At Will” Employment
There is “At Will” employment in 49 out of 50 states, including NY, however, there are exceptions such as the risk of discriminations.

Cost-cutting strategies

• Layoffs
  Federal WARN Act (Workers Adjustment and Retraining Notification Act) which covers employers with at least 100 employees and requires 60 days’ prior notice of termination for a “mass layoff” or a “plant closing”.
• WARN Act
  New York has its own “Mini” WARN Act. It is broader than the federal WARN act. It requires 90 days’ prior notice of termination. There are many other states that have mini-WARN Acts. The exception for the WARN Act obligations that might apply in this situation is the Unforeseen Business Circumstances exception. Remember: even in this situation it cannot be discrimination. If the layoff doesn’t affect every employee, you need to be careful about the possible employment discrimination.
  Furthermore, no severance pay is required (unless by contract or company policy)
  Unemployment Benefits are available to terminated employees. The 7-day waiting period has been waived. New York maximum weekly benefits are $504/week.
• Furloughs (temporary suspension of work)
  Mandatory period of time off work without pay initiated by the employer and intended to be for a temporary or limited duration. Nonexempt employees (are employees who are entitled to overtime pay) only need to be paid for hours that are actually worked. Employers can also reduce hourly rate or salary, but never below minimum wage, and always notify employees prospectively. Exempt employees (are not entitled to overtime pay) if they work any time to their workweek then they are entitled to their entire weekly pay. It is very important that they are instructed in writing that they cannot do any work. If the employer wants them to work part time or with a reduced salary, the employer has to notify the employee that this will happen before they will reduce it.
• Shortened workweek / reduced hours
• Salary reductions
  Please make sure that when your employees are working from home you are aware of wage and hour obligations and policies, for example a meal period / rest break requirements. Establish a procedure to make sure employees are actually working. Furthermore, companies need to establish protocols to enable employees to maintain the confidentiality of information of clients.

Steve Maggi, SMA Law Firm | An Update for Dutch Companies- U.S. Immigration and Travel
In immigration law everything is federal law, there is no state law involved here.

USA re-entry restriction does not apply to:

• Nationals and permanent residents of the USA.
• The spouse of a US national and spouse of a permanent resident.
• Parents of US citizen or permanent resident who is unmarried and under 21.
• A few visa holders, mainly crewmembers and diplomats. The only exception is the E-1 visa.

The U.S. Consulate General in Amsterdam has suspended routine consular services. U.S. Citizenship and Immigration Services (USCIS) are temporarily suspended routine in-person services.

If you decided to let go a Dutch employee, they have a 30 days grace period to leave the U.S. If you do so, you have to let the consulate know. In case of H1-B visas, you must notify the USCIS.

Rules governing foreign workers and legal status

• Working off-site will be temporarily allowed.
• Changing employees’ hours from full-time to part-time.
• Flexible rules for students.

Jacob Willemsen, TABS Inc | An update for Dutch Companies
Coronavirus Aid, Relief, and Economic Security (CARES) Act

• $2 trillion economic infusion approved (3/27/2020)

Tax filing & payment extensions, and tax relief measures
The tax filing for 2019 has been moved to July, 15 2020. The estimated tax payments for FY2020 have been extended and are not due until October, 15. Most States & Local authorities follow federal deadlines.

Paycheck Protection Program (PPP)
Initiated by the government to keep people on the payroll. Businesses with less than 500 employees are eligible. Loans are a maximum of 2.5 months or $10 Mio. These are SBA loans that can be used for payroll support, employees’ salaries, mortgage payments, insurance premiums or other debt. It’s a short-term loan with a deferred interest. No collateral and no personal guarantees required.

Emergency Economic Injury Loans and Grants
A $10K emergency advance available, which they give you within 3 days. It is a loan which can be used for paid sick leave, maintaining payroll, covering increased costs due to additional supply chain cots and to pay off business obligations such s rent and mortgage. The interest rate is 3.75%.

Local NYC programs

• NYC Small Business Continuity Fund.
• NYC Employee Retention Grant Program.

A lot of states have their own local programs. You can find additional information about these programs on the TABS website (www.tabsinc.com).

• Keep in mind that even though the tax filing deadline has been extended, you may want to file your taxes after all to show 2019 has been a good year for you to support the loan application. Certainly if 2018 has been an investment year.
• You should be able to show that your US operations has seen a decrease in revenue of at least 20% since the COVID-19 outbreak.
• The IRS is being overwhelmed, the current ITIN application time might take a bit longer.

Click here for access to the webinar slides and to watch the recordings.