Family Law and COVID-19: Alimony and Child Support

What do you do if the novel coronavirus has shut down your employer, caused a furlough or your termination, or has otherwise suddenly left you without income to pay child support and/or alimony? What do you do if you are the recipient of alimony or child support and now have to figure out how to pay bills and make ends meet without support from your child’s parent or ex-spouse?

A pandemic like this has far reaching economic consequences in these family law issues and can significantly strain both the payor and the payee.

In general, New Jersey law states that a temporary change in economic circumstances does not qualify for a change in the alimony or child support obligation of the payor, even temporarily.

However, given the worldwide attention and knowledge as to the widespread and unprecedented economic effect this pandemic has already shown, and the sudden closing of many offices and businesses through the state, a court of equity, such as the Family Court, may very well provide relief to the payor.

This is particularly likely if both the payor and the recipient of support are equally struggling. A look at the totality of each parties’ financial circumstances would be required.

Compromise may be appropriate, though you must take care to properly articulate the entire agreement to avoid interpretation or enforcement issues later, and legal counsel is strongly advised.

However, in cases where parents cannot reconcile their differences and find compromise, those parents may need to seek court intervention or some form of virtual alternate dispute resolution, and should also seek legal counsel immediately.

Stark & Stark’s family law attorneys are available throughout this crisis to assist with your legal needs. Check out our most recent family law articles to stay up-to-date on other topics or new developments.

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Employers Beware: Retaliating Against Employees Who Exercise Their Rights in Response to COVID-19

As businesses continue to traverse the unchartered waters created by the COVID-19 outbreak across the country, the law constantly is evolving, and employers must grapple with new limitations created by both Congress and state and local governments on what seems like a daily basis. Employers must take care to learn, understand, and comply with the emergency legislation being passed at all levels of government. In so doing, employers must remain mindful of the penalties and enforcement of violations of the substantive benefits provided by these coronavirus-inspired laws, and must exercise care to avoid violating the anti-retaliation provisions included in these new laws.

For example, at the Federal level, employers should take care not to violate the anti-retaliation provisions of the recently enacted Families First Coronavirus Response Act (“FFCRA”). As described in greater detail here, the FFCRA provides certain benefits to eligible employees of covered employers, including requiring paid sick leave under certain scenarios for employees impacted by COVID-19, as well as expanded/enhanced FMLA benefits related to COVID-19 that apply to employers and employees not previously covered by FMLA.

In addition, employers are prohibited from discharging, disciplining, or otherwise discriminating or retaliating in any manner against an employee who takes paid sick leave or expanded FMLA leave under the FFCRA, files a complaint or institutes a proceeding under or related to the FFCRA, or testifies – or will testify – in such a proceeding. An employer that violates the FFCRA, including the proscriptions against discrimination and retaliation, will be subject to the penalties, enforcement provisions, and remedies thereunder.

Likewise, employers need to steer clear of potential violations of anti-retaliation laws at the state level. On March 20, 2020, New Jersey Governor Phil Murphy signed into law new anti-retaliation legislation with respect to the novel coronavirus, Assembly Bill No. 3848, which prohibits employers in the state from discharging, demoting, or otherwise penalizing an employee for requesting or taking time off, based on the recommendation of a licensed medical professional, because he or she has, or is likely to have, COVID-19.

The law also includes a job restoration requirement, prohibiting employers from refusing to reinstate an employee to the position he or she held when the leave commenced, with no reduction in seniority, status, benefits, pay, or other terms or conditions of employment. In addition to providing a private right of action to any employee aggrieved by a violation of this new anti-retaliation act, an employer may be subject to a fine of $2,500 for each violation thereof.

Beyond those specific anti-retaliation proscriptions written into law as a result of the coronavirus pandemic, employers need to remain mindful of other pre-COVID-19 laws of general application that may be implicated by this crisis, including but not limited to state “whistleblower” protection statutes such as New Jersey’s Conscientious Employee Protection Act (“CEPA”), N.J.S.A. 34:19-1, et seq. Under CEPA, New Jersey employees enjoy great whistleblower protection that is among the broadest, most robust and comprehensive in the country. The act prohibits all public and private employers in New Jersey from retaliating against any employee because that employee has engaged in certain protected activities set forth in the statute, which includes, in relevant part and among other things, an employee who:

• Discloses, or threatens to disclose, to a supervisor or a public body an activity, policy, or practice of the employer that the employee reasonably believes violates the law;
• Provides information to, or testifies before, any public body conducting an investigation, hearing or inquiry into any violation of law by the employer; or
• Objects to, or refuses to participate in any activity, policy, or practice which the employee reasonably believes violates the law or is incompatible with a clear mandate of public policy concerning the public health, safety, or welfare.

One significant way in which CEPA may be triggered is if an employer discharges or takes other adverse employment action against an employee who has complained about, objected to, or disclosed (or threatened to disclose) an employer’s practices or activities that the employee reasonably and in good faith believes violate the stringent limitations and restrictions imposed by way of Governor Philip Murphy’s executive order(s), including Executive Order 107, issued on March 21, 2020 (summarized here). Indeed, Governor Murphy has expressly encouraged and invited employees (and others) to report potential violations of Executive Order 107 to the State’s attention by filling out this form to file a complaint through the State’s website.

There are any number of different scenarios in which CEPA could come into play in the context of an employer who takes adverse action in retaliation for, or in response to, an employee’s objection to, complaint about, or actual or threatened disclosure of an employer practice the employee reasonably believes violate Executive Order 107—even if, in actuality, the employer has complied in full therewith (CEPA requires only that the employee’s belief that a violation has occurred be objectively reasonable under the circumstances). By way of example, an employee may object to continuing to work at his or her employer’s brick-and-mortar premises on the basis that the employee reasonably believes it is not an essential retail business as set forth in Executive Order 107 and, therefore, should not be remaining open to the public. Or, perhaps more likely, in the case of an essential retail business whose brick-and-mortar premises remain open to the public, an employee may take issue with his or her employer’s failure to take reasonable and necessary efforts to ensure its workforce and/or customers abide by appropriate social distancing practices to the extent practicable. Another possibility is that an employee may not see eye-to-eye with his or her employer in terms of whether it is necessary for that employee (or some or all of his or her co-workers) to be physically present in the office as opposed to working remotely.

Executive Order 107 requires that all businesses that remain open and operating must “accommodate their workforce, wherever practicable, for telework or work-from-home arrangements,” and further provides that “[t]o the extent a business . . . has employees that cannot perform their functions via telework or work-from-home arrangements, the business . . . should make best efforts to reduce staff on site to the minimal number necessary to ensure that essential operations can continue.” Whether a particular employee needs to be physically present at his or her work site in order to perform his or her duties may be a fact-sensitive determination—one with respect to which reasonable minds could differ—but an employer who discharges or disciplines an employee for objecting or complaining about the employer’s determination in that regard may be subjecting itself to litigation and exposure to liability under CEPA if the employee as an objectively reasonable belief that the employer’s practices violate Governor Murphy’s order.

Employers should not take the possibility of enforcement and liability under CEPA lightly; the statute has sharp teeth. The rights and protections afforded to whistleblowers under CEPA are accompanied by an arsenal of remedies. Under CEPA, an employee may file suit against an employer for taking retaliatory action against the employee in reprisal for exercising his or her rights, and where a violation is established, the employee may obtain, among other remedies, compensatory damages (such as lost wages, benefits and other remuneration), damages for emotional distress, punitive damages, attorneys’ fees and costs, as well as appropriate equitable or injunctive relief to redress violations, including but not limited to reinstatement of position, seniority and fringe benefits. Courts have discretion to assess a civil fine for violations under CEPA, as well.

Under the present circumstances, employers should tread cautiously before taking disciplinary action against an employee for any reason relating to the coronavirus that is not required due to business, financial or economic necessity, or some other legitimate business reason. This is especially true with respect to employees who have exercised their rights or engaged in protected activity under state or federal law in connection with ongoing coronavirus pandemic.

If you are an employer with questions regarding your obligations to your workforce or otherwise, or if you are an employee who believes you have been wrongfully discharged or retaliated against for exercising your rights related to the novel coronavirus, the Labor and Employment attorneys at Stark & Stark are ready to help. Contact us by phone at 609-895-7278 or via email at employmentlaw@stark-stark.com.

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Stimulus Payments – When Do I Get Mine?

The federal government is only beginning to develop the system to issue the stimulus payments authorized by the CARES Act (Coronavirus Aid, Relief, and Economic Security Act). Scammers, however, are already trying to steal money from Americans.

The FBI, multiple state attorneys general, and other agencies are warning Americans not to fall for phone calls, emails, texts, or websites that ask for personal or financial information in order to receive the stimulus payment.

In a statement issued on March 28^th, New York Attorney General Letitia James stated that, “If someone claims to be from the government with a check for you, it may be a phishing scam that is illegally trying to obtain your bank account or other personal information.” She went on to tell Americans not to pay anyone who promises to expedite or obtain a payment or a loan for them. “If you are eligible for relief, you will not need to make any up-front payment or pay any fee to receive a stimulus payment.”

The amount of your stimulus payment is based on your income. For single taxpayers who had income of $75,000 or less, you will receive $1,200 plus $500 for every qualifying child. For a married couple that files a joint return, they will have a $150,000 threshold, and receive $2,400. Above the $75,000/$150,000 income amounts, the amount of the stimulus payment is gradually reduced up to thresholds of $99,000/$198,000. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible to receive a stimulus payment.

Most people do not need to do anything to receive their payments. If you have already filed your 2019 income tax return, the IRS will use that return to calculate the amount of your stimulus payment. If you have not, the IRS will use the information from your 2018 return. If you provided your bank information for direct deposit, the stimulus amount will be deposited to the same bank account. For those who did not previously provide their direct deposit information, the Department of Treasury is developing a web-based portal for individuals to provide their banking information to the IRS, so that their payments can be paid electronically.

For those of you who are not typically required to file a tax return (such as low-income taxpayers, Social Security recipients, some veterans, and individuals with disabilities), continue to check www.IRS.gov/coronavirus. This website will soon provide information instructing individuals in this group on how to file a 2019 tax return with necessary information so that you can receive the stimulus payment.

The stimulus payments are on their way. Continue to check with the IRS website, and do not fall for any scammers claiming to be from the IRS. As always, do not give out personal or financial information by phone or email, unless you initiated the contact.

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NYC – Financial Assistance for Businesses Impacted by COVID-19

On March 8^th, Mayor De Blasio announced New York City will provide two forms of relief for small businesses across the City seeing a reduction in revenue due to COVID-19. Below are summaries and eligibility requirements for the two programs.

NYC Small Business Continuity Loan Fund

Businesses meeting the below criteria may receive zero-interest loans up to $75,000.

Eligibility:

1. Business must be located within the New York City five boroughs;
2. Demonstrate that the COVID-19 outbreak caused at least a 25% decrease in revenue;
3. Must have fewer than 100 employees;
4. No outstanding tax liens or legal judgments;
5. Demonstrate ability to repay the loan.

As part of the applications, you will be required to demonstrate a revenue decrease by providing documentation such as: point-of-sales reports, bank statements, quarterly sales tax filings, 2019 tax returns, or CPA-certified profit & loss statements.

NYC Employee Retention Grant Program

The City is also offering small businesses with fewer than 5 employees a grant to cover 40% of payroll costs for two months to help retain employees. Non-profits may also be eligible for this grant.

Eligible businesses may receive a grant for up to $27,000.

Eligibility for the NYC Employee Retention Grant Program:

1. Be located within the New York City five boroughs;
2. Demonstrate that the COVID-19 outbreak caused at least a 25% decrease in revenue;
3. Employ 1-4 employees in total across all locations;
4. Has been in operation for at least 6 months;
5. No outstanding tax liens or legal judgments.

Supporting documentation:

• Financial documents for at least two months in 2020 demonstrating revenue decrease due to COVID-19.
• Financial documents showing your revenue for the same two months in 2019 (unless you were not in business at that time).
• Financial documents showing your revenue for the full 2019 calendar year.

Your most recent two months of payroll records (to determine your grant amount).

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The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”): What It Could Mean For You

The federal government has provided new hope for employees affected by the novel coronavirus pandemic by way of an economic stimulus package that includes, among other things, enhanced unemployment benefits.

On Friday, March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES” Act), which expands the situations in which an employee is eligible to receive unemployment compensation. In addition, the CARES Act provides an enhanced unemployment benefit to employees impacted by COVID-19, enabling employees to receive up to an additional $600.00 per week in unemployment insurance benefits through Federal Pandemic Unemployment Compensation.

Furthermore, individuals may receive unemployment benefits for up to 39 weeks due to partial or full unemployment caused by COVID-19 during the period of January 27, 2020 to December 31, 2020, and the law is retroactive, so employees who lost their jobs due to COVID-19 prior to March 27, 2020 may be eligible to receive these enhanced benefits. The CARES Act applies to all employers and employees regardless of job sector or size.

Notably, under the CARES Act, individuals who are eligible for unemployment benefits under state or federal law will receive $600 per week in addition to their regular unemployment compensation under state law, through July 2020, even if, with this enhanced benefit, the employee ends up receiving more money through unemployment than their pre-unemployment earnings level. For example, in New Jersey the current maximum state unemployment benefit is $713/week for 26 weeks. The CARES Act could create a weekly unemployment insurance benefit up to $1,313/week under certain circumstances.

The CARES Act also eliminates waiting periods for unemployment. While some states already have waived this requirement, if a state waives its standard waiting period and employees begin receiving unemployment compensation benefits immediately upon qualifying for them, the federal government will fund that first week of those benefits. In addition, the federal government will fund up to an additional 13 weeks of eligibility for benefits, increasing the unemployment benefit period from the 26-week maximum that is customary under most states’ unemployment paradigms and increasing it to 39 weeks (at a rate of $600/week for that additional 13-week period).

The CARES Act also expands the reasons for which an employee may become eligible to receive unemployment benefits due to COVID-19. The Act provides additional funds to states that permit individuals to receive unemployment benefits where an individual is (i) unemployed, (ii) partially unemployed, or (iii) unable to work, because of any of the following coronavirus related reasons:

• The individual has been diagnosed with COVID-19 or is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
• A member of the individual’s household has been diagnosed with COVID-19;
• The individual is providing care for a family or household member who has been diagnosed with COVID-19;
• The individual is the primary caregiver for a child or other person in the household who is unable to attend school or another care facility due to COVID-19, and the individual requires such school or care arrangement to be able to work;
• The individual cannot work because of a quarantine imposed as a direct result of COVID-19;
• The individual cannot work because a health care provider has advised the individual to self-quarantine due to COVID-19 concerns;
• The individual was scheduled to begin employment and either does not have a job or cannot commence employment with the new job as a direct result of COVID-19;
• The individual has become the breadwinner or major support for a household because the head of household has died as a direct result of COVID-19;
• The individual has been forced to resign from employment as a direct result of COVID-19;
• The individual’s place of employment has closed as a direct result of COVID-19.

Again, while the CARES Act has expanded the categories for which an unemployed, or partially unemployed, individual may qualify to receive these enhanced unemployment benefits, all of the categories are predicated on the fact that the individual is not able to work, or telework, and is not receiving other paid sick leave or other paid leave benefits.

The CARES Act extends coverage to employees who are self-employed, seeking part-time employment, do not have sufficient work history, or otherwise might not have qualified for regular unemployment under state or federal law, but who became unemployed or cannot find work due to COVID-19. In that regard, the Act also extends coverage to independent contractors. Furthermore, whereas an individual generally must demonstrate that he/she is actively seeking work in order to receive – or continue to receive – unemployment benefits under most state law requirements, the CARES Act does not require it.

Given the enormous volume of unemployment applications that have been filed since the pandemic arrived in the United States and state quarantines and lockdowns began, the CARES Act could not come soon enough. The Act certainly raises concern for abuse; employees afraid to report to work (out of fear of contracting the virus) could attempt to take shelter under the Act’s expanded basis for eligibility. On the other hand, the Act presents a strategic vehicle for employers who might want to help those same employees but, prior to the passage of the Act, did not want to hurt those employees by terminating their employment for failing to report to work. In other words, the CARES Act could present a win-win scenario for employers and employees alike under certain scenarios.

If you have any questions about the new enhanced, expanded unemployment benefits created by the CARES Act, please contact the Labor and Employment attorneys at Stark & Stark by phone at 609-895-7358 or via email at employmentlaw@stark-stark.com.

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New Jersey Small Business Economic Development Authority – Small Business Assistance re: COVID-19

The New Jersey Economic Development Authority (NJEDA) has approved a series of aid packages for small/mid-size businesses in the amount of $75 million, which could grow to $100 million depending on matching grants.

The NJEDA programs focus on businesses that have been hit the hardest by COVID-19. The initiatives include a grant program for small businesses, a zero-interest loan program for mid-size companies, support for private-sector lenders and a variety of resources providing technical support.

The NJEDA hopes the initiatives will provide relief to 3,000 and 5,000 small and mid-size businesses in the State. Some of these NJEDA programs will begin accepting applications as early as March 30^th. Below you will find each of the NJEDA’s programs, a summary of each program and eligibility requirements.

Small Business Emergency Assistance Grant Program

A $5 million program that will provide grants up to $5,000 to small businesses in retail, arts, entertainment, recreation, accommodation, food service and other services — such as repair, maintenance, personal and laundry services — and nonprofits to stabilize their operations and reduce the need for layoffs or furloughs. The focus of this round of funding is on the smallest enterprises in industries that are among the most adversely impacted by the COVID-19 containment measures.

• The Small Business Emergency Assistance Grant Program will be provided to small businesses that have between 1–10 full time equivalent employees (“FTE”). The grant funding is targeted as unrestricted payroll and working capital support, and cannot be used for any capital expenses, including construction.
• Grant values are calculated at $1,000 per FTEs reported on business’ WR-30 filed with the New Jersey Department of Labor and Workforce Development.
  • Minimum grant amount (per application): $1,000
  • Maximum grant amount (per application): $5,000
• Total available funding of up to $5 million of which $3 million of the program funds will be set aside for small businesses with 5 or fewer FTEs.
  • Eligible businesses for the Small Business Emergency Assistance Loan:
    • Have between 1 and 10 FTEs. This means non-employee companies (holding), companies that have between 1-10 FTE utilizing 1099 employees, and larger firms are not eligible for this round of grant funding;
    • Have a physical commercial location in the State of New Jersey. Home-based businesses are not eligible for this round of grant funding;
    • Are classified in one of the following industries: Retail (NAICS codes starting with 42 or 43); Accommodation & food services (NAICS codes starting with 72); Arts, entertainment & recreation (NAICS codes starting with 71); Other services (only those with NAICS codes starting with 811 and 812);
    • Are registered to do business in the State of New Jersey;
    • Must certify that the company is in good tax standing with the State;
    • Are in good standing with the Department of Labor and Workforce Development, with all decisions of good standing at the discretion of the Commissioner of the Department of Labor and Workforce Development.
    • The CEO of the business must certify that the business:
      • Will make a best effort not to furlough or lay off any individuals from the time of application through six months after the end of the declared state of emergency. (Small businesses that have already furloughed or laid off workers must make a best-effort pledge to re-hire those workers as soon as possible.) Any material breach of its best efforts certification may result in the NJEDA seeking repayment of the grant.
      • Has been negatively impacted by the COVID-19 declared state of emergency in Executive Order 103 (e.g., has been temporarily shut down, has been required to reduce hours, has had at least a 20% drop in revenue, has been materially impacted by employees who cannot work due to the outbreak, or has a supply chain that has materially been disrupted and therefore slowed firm-level production).
      • Has a material financial need that cannot be overcome without the grant of emergency relief funds at this time (e.g., does not have significant cash reserves that can support the small business during this period of economic disruption.
• Non-profit organizations are eligible for this program. Eligible non-profits must have status of 501(c)(3), 501(c)(4), 501(c)(7).
• The following businesses are not qualified (“Non-Eligible Businesses”):
  • Related to gambling or gaming activities
  • Related to the purveyance of “adult” (i.e., pornographic, lewd, prurient, obscene) activities, services, products or materials (including nude or semi-nude performances or the sale of sexual aids or devices)
  • Auction or bankruptcy or fire or “lost-our-lease” or “going-out-of-business” or similar sale.
  • Traveling merchants.
  • Christmas tree sales or other outdoor storage.
  • Any other activity constituting a nuisance.
  • Illegal under the laws of the State of New Jersey
• Applications are anticipated to be opened on the week of March 30th. Completed applications will be considered on a first come, first serve rolling basis.

Small Business Emergency Assistance Loan Program

A $10 million program that will provide working capital loans of up to $100,000 to businesses with less than $5 million in revenues. Loans made through the program will have 10-year terms with zero percent for the first five years, then resetting to the EDA’s prevailing floor rate (capped at 3%) for the remaining five years.

• The program provides a 50% guarantee, not to exceed a total NJEDA exposure of $100,000 to Premier Lenders that will issue working capital loans or lines of credit to support business continuity for a range of COVID-19 related impacts to businesses (reduced revenue, employee shortage, supply chain impact, etc.) There are no NJEDA fees associated with applying for this program.
• Eligible businesses:
  • Have a physical commercial location in the State of New Jersey. Home-based businesses are not eligible for this round of grant funding;
  • Have been in existence for at least one full year ;
  • Have $5 million or less in annual revenue;
  • Can demonstrate a negative impact on business due to the COVID-19 outbreak;
  • Can provide CEO certification that you are making a best-effort to not lay off employees or will re-hire employees as soon as possible;
  • Are registered to do business in NJ and must certify that the company is in good tax standing with the State;
  • Are in good standing with the New Jersey Department of Labor and Workforce Development.
  • Businesses that do not qualify à Non-Eligible Businesses (see above)

Community Development Finance Institution (CDFI)

All CDFIs are certified by the Community Development Financial Institutions Fund at the U.S. Department of Treasury for the purpose of providing credit and financial services to underserved markets and populations. NJEDA has created two programs, the CDFI Emergency Assistance Grant Program and the CDFI Loan Loss Reserve Fund to help local CDFI’s scale their lending to micro and small businesses, especially in communities and business segments that are traditionally underserved.

• CDFI Emergency Assistance Grant Program: A $1.25 million program that will provide grants of up to $250,000 to CDFIs to scale operations or reduce interest rates for the duration of the outbreak.
• CDFI Emergency Loan Loss Reserve Fund: A $10 million capital reserve fund to take a first loss position on CDFI loans that provide low-interest working capital to microbusinesses. This will allow CDFIs to withstand loan defaults due to the outbreak, which will allow them to provide more loans at lower interest rates to microbusinesses affected by the outbreak.
  • Each CDFI will have to comply with specific loan program parameters to fit into this program:
    • Made to a company that certifies it has been adversely impacted by the emergency (e.g., closed, reduced hours, 20% reduction in revenue, 25% reduction in staff availability, material disruptions to its supply chain)
    • Focused on working capital needs of a micro or small business
    • Each loan cannot exceed $75,000
    • Interest rates on all loans must be lower than 3.75%
    • Their loans must provide flexible loan structures (e.g. deferred payments, moratoriums or interest only for up to 6 months)
    • Their loans cannot exceed a term of five years
  • A CDFI may receive a grant under this program and also participate in CDFI Loan Loss Reserve Fund and the Small Business Emergency Assistance Guarantee Program (although those programs cannot be used for the same loan).
  • The following types of businesses are not eligible à Non-Eligible Businesses (see above)
  • List of Community Development Finance Institutions (CDFIs)
    • UCEDC – United Counties (Union County) Development Corp.
    • GNEC – Greater Newark Enterprises Corp.
    • RBAC – Regional Business Assistance Corp.
    • NJCLF – New Jersey Community Loan Fund
    • CBAC – Cooperative Business Assistance Corp.

NJ Entrepreneur Support Program

A $5 million program that will encourage investment by encouraging private sector investors to provide additional working capital loans to NJ-based entrepreneurial businesses in which the investor is already an equity holder and temporarily support a shaky market by providing 80% loan guarantees for working capital loans to entrepreneurs and cannot exceed $200,000 per NJ entrepreneurial company.

• The program provides a guarantee of an investor loan advanced for working capital to an entrepreneurial company that has been impacted by COVID-19. The investment must have been made after the date of emergency (March 9, 2020, as per the Governor’s Executive Order 103). This program will be retroactive to that date.
• The entrepreneurial business must:
  • Have a minimum of 50% of employees in NJ
  • Have less than 25 total employees at the time of application
  • Have under $5 million in revenues
  • Have corporate headquarters in New Jersey (including at least one C suite member with a principal office in New Jersey)
  • Fall under one of the eight sectors outlined in Governor Murphy’s economic plan (advanced manufacturing, information/technology, life sciences, finance and insurance, clean energy, food and beverage, advanced transportation, food and beverage, film and digital media)
  • Be registered to do business in NJ and must certify that the company is in good tax standing with the State
  • Be in good standing with the Department of Labor and Workforce Development
• Investor Eligibility:
  • Investors can include, but are not limited to, individuals, trusts, and corporations
  • Investors must already have equity interest and equity position in the company
  • Qualified investors are not required to be New Jersey residents
• Applications will be accepted in the coming weeks. Completed applications will be considered on a first come, first serve rolling basis.

Moratorium/Loan Fee Forgiveness

NJEDA has approved a 3-month payment moratorium for eligible businesses on direct loans and premier lender participation loans (pending approval by agency bank). NJEDA is also allowing collateral releases, subordinations and substitutions on business assets for businesses impacted by COVID-19, and waiving late fees on loan repayments and loan modification fees for impacted businesses.

• Businesses are eligible if:
  • Are able to demonstrate negative impact related to COVID-19 on or after March 9th, 2020
  • Are not in active litigation with NJEDA
  • Have not been delinquent on existing loan for 120 days

Emergency Technical Assistance Program

A $150,000 program that will support technical assistance to New Jersey-based companies applying for assistance through the U.S. Small Business Administration. The organizations contracted will be paid based on SBA application submissions supported by the technical assistance they provide.

Economic Injury Disaster Loans

All NJ counties are now approved for federal disaster assistance. These are working capital loans to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster. These loans are intended to assist through the disaster recovery period.

• To be eligible for EIDL assistance, New Jersey-based small businesses or private non-profit organizations must have sustained economic injury, as well as being located in a disaster-declared county or contiguous county, which all New Jersey counties currently are.
• Credit Requirements
  • Credit History – Applicants must have a credit history acceptable to SBA.
  • Repayment – Applicants must show the ability to repay the loan.
  • Collateral – Collateral is required for all EIDL loans over $25,000. SBA takes real estate as collateral when it is available.
  • SBA will not decline a loan for lack of collateral, but SBA will require the borrower to pledge collateral that is available.
• Interest Rates – The interest rate is determined by formulas set by law and is fixed for the life of the loan. The maximum interest rate for this program is 3.750 percent.
• Loan Terms – The law authorizes loan terms up to a maximum of 30 years. SBA will determine an appropriate installment payment based on the financial condition of each borrower, which in turn will determine the loan term.
• Loan Amount – The law limits EIDLs to $2,000,000 for alleviating economic injury caused by the disaster. The actual amount of each loan is limited to the economic injury determined by SBA, less business interruption insurance and other recoveries up to the administrative lending limit. SBA also considers potential contributions that are available from the business and/or its owner(s) or affiliates.

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What to Know About the CARES Act

As of Friday March 27^th, the US Congress has voted to advance the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), that will create an estimated $2 trillion emergency relief package to aid millions of individuals, the public health sector, hard-hit industries, and small businesses effected by COVID-19.

The CARES ACT will allocate $350 billion to provide relief to certain businesses through 100% guaranteed Small Business Administration (SBA) loans, a portion of which the SBA would forgive based on the employer meeting certain criteria.

Below you will a summary of provisions in the proposed legislation applicable to businesses. This client alert is based on the non-final version of the legislation, press reports and other summaries.

Loan Program

• Paycheck Protection Program: $349 billion allocated for the Paycheck Protection Program, which is meant to help small businesses (fewer than 500 employees) impacted by the pandemic and economic downturn to make payroll and cover other expenses from February 15, 2020 to June 30, 2020. Notably, small businesses may take out loans up to $10 million—limited to a formula tied to payroll costs—and can cover employees making up to $100,000 per year. Loans may be forgiven if a firm uses the loan for payroll, interest payments on mortgages, rent, and utilities and would be reduced proportionally by any reduction in employees retained compared to the prior year and a 25 percent or greater reduction in employee compensation.
• Eligibility:
  • Any business concern, nonprofit organization, veterans’ organization if it employs no more than (i) 500 employees (includes full-time, part-time and those employed on other bases); or (ii) if applicable, the size standard in number of employees established by the SBA for the industry in which the entity operates.
  • Special Eligibility Rule for Hospitality and Dining businesses – For those with more than one physical location if it employs 500 or fewer employees per location and is assigned to the accommodation and food services section under NAICS.
  • SBA regulations on entity affiliations (under 13 CFR 121.103) are waived for the covered period for business concerns, non-profits, and veterans’ organizations for:
    • Businesses in Sector 72 under the NAICS with 500 or fewer employees;
    • Franchise businesses with SBA franchisor identifier codes; and
    • Any business that receives financial assistance from a company licensed under section 301 of the Small Business Investment Act.
      • privately organized and privately managed investment firms that provide venture capital to small independent businesses
  • Sole proprietors, independent contractors, and eligible self-employed individuals (as defined in Congress’s last COVID-19 bill, the Families First Coronavirus Response Act (Families First Act)) are eligible for loans, subject to some documentation requirements to substantiate eligibility.
  • Borrower Eligibility Requirement:
    • Good-faith certification that:
      • The loan is needed to continue operations during the COVID-19 emergency;
      • Funds will be used to retain workers and maintain payroll or make mortgage, lease, and utility payments;
      • The applicant does not have any other application pending under this program for the same purpose; and
      • From 2/15/20 until 12/31/20 the applicant has not received duplicative amounts under this program.
  • Permissible Uses
    • Payroll costs
      • Includes: compensation to employees, such as salary, wage, commissions, cash, etc.; paid leave; severance payments; payment for group health benefits, including insurance premiums; retirement benefits; state and local payroll taxes; and compensation to sole proprietors or independent contractors (including commission based compensation) up to $100,000 in 1 year, prorated for the covered period.
      • Excludes: Individual employee compensation above $100,000 per year, prorated for the covered period; certain federal taxes; compensation to employees whose principal place of residence is outside the US; and sick and family leave wages for which credit is allowed under the Families First Act.
    • Group Healthcare benefits during period of paid sick, medical or family leave and insurance premiums;
    • Salaries, commissions or similar compensation;
    • Rent/lease agreement payments;
    • Utilities; and
    • Interest on any other debt obligations incurred before the covered period.
  • Loan Maximum
    • The maximum loan amount (capped at $10 million) is the lesser of:
      • (A) 2.5 times average total monthly payroll costs incurred in the one year period before the loan is made (or for seasonal employers the average monthly payroll costs for the 12 weeks beginning on 2/15/2019 or from 3/1/19 to 6/30/19); Plus the outstanding amount of a loan made under the SBA’s Disaster Loan Program between 1/31/2020 and the date on which such loan may be refinanced as part of this new program; OR
      • (B) Upon request, for business that were not in existence during the period from 2/15/19 to 6/30/19 – 2.5 times the average monthly payroll payments from 1/1/2020 to 2/29/2020; Plus the outstanding amount of a loan made under the SBA’s Disaster Loan Program between 1/31/2020 and the date on which such loan may be refinanced as part of this new program; OR
      • (C) $10 million.
• Loan Forgiveness and Payment Deferral Relief
  • Regarding loan payment deferral rights, the CARES Act provides that businesses that were operating on February 15, 2020 and that have a pending or approved loan application under this program are presumed to qualify for complete payment deferment relief (for principal, interest, and fees) for six months to one year. Lenders are required to provide such relief during the covered period (if secondary market investors decline to approve a lender’s deferral request, the SBA must purchase the loan).
  • Indebtedness is forgiven (and excluded from gross income) in an amount (not to exceed the principal amount of the loan) equal to the following costs incurred and payments made during the covered period:
    • Payroll costs;
    • Interest payments on mortgages;
    • Rent; and
    • Utility payments.
  • Forgiveness amounts will be reduced for any employee cuts or reductions in wages.
    • There is relief from these forgiveness reduction penalties for employers who rehire employees or make up for wage reductions by June 30, 2020. Specifically, in the following circumstances, the foregoing forgiveness reduction rules will not apply to an employer between February 15, 2020 and 30 days following enactment of the CARES Act – where
      • The employer reduces the number of full time equivalent employees (FTEE) in this period and, not later than June 30, 2020, the employer has eliminated the reduction in FTEEs; or
      • There is a salary reduction, as compared to February 15, 2020, during this period for one or more employees and that reduction is eliminated by June 30, 2020.
    • The CARES Act clarifies that employers with tipped employees (as described in the Fair Labor Standards Act) may receive forgiveness for additional wages paid to those employees.
    • Loan Forgiveness Procedure: There are some required processes to apply for loan forgiveness. Borrowers seeking forgiveness of amounts must submit to their lender:
      • Documentation verifying FTEE on payroll and their pay rates;
      • Documentation on covered costs/payments (e.g., documents verifying mortgage, rent, and utility payments);
      • Certification from a business representative that the documentation is true and correct and that forgiveness amounts requested were used to retain employees and make other forgiveness-eligible payments; and
      • Any other documentation the SBA may require.
    • Lenders who rely on documentation and accompanying certifications are held harmless from SBA enforcement actions and penalties relating to the loan forgiveness.
    • Forgiveness amounts that would otherwise be includible in gross income, for federal income tax purposes, are excluded.

Unemployment Benefits

• Expanded Unemployment Insurance – $600 per week increase in benefits for up to four months and federal funding of Unemployment Insurance benefits provided to those not usually eligible for Unemployment Insurance, such as self-employed, independent contractors, and those with limited work history. The federal government is incentivizing states to repeal any “waiting week” provisions that prevent unemployed workers from getting benefits as soon as they are laid off by fully funding the first week of UI for states that suspend such waiting periods. Additionally, the federal government will fund an additional 13 weeks of unemployment benefits through December 31, 2020 after workers have run out of state unemployment benefits.

Tax Provisions

• Tax Relief for Businesses
  • Employers are eligible for a 50 percent refundable payroll tax credit on wages paid up to $10,000 during the crisis. It would be available to employers whose businesses were disrupted due to virus-related shutdowns and firms experiencing a decrease in gross receipts of 50 percent or more when compared to the same quarter last year. The credit is available for employees retained but not currently working due to the crisis for firms with more than 100 employees, and for all employee wages for firms with 100 or fewer employees.
  • Employer-side Social Security payroll tax payments may be delayed until January 1, 2021, with 50 percent owed on December 31, 2021 and the other half owed on December 31, 2022. The Social Security Trust Fund will be backfilled by general revenue in the interim period.
    • Employee Retention Credit
      • The CARES Act provides eligible employers – including tax-exempt organizations but not governmental entities – a refundable credit against payroll tax (Social Security and Railroad Retirement) liability equal to 50% of the first $10,000 in wages per employee (including value of health plan benefits). Eligible employers must have carried on a trade or business during 2020 and satisfy one of two tests:
        • Have business operations fully or partially suspended operations due to orders from a governmental entity limiting commerce, travel, or group meetings; or
        • Experience a year-over-year (comparing calendar quarters) reduction in gross receipts of at least 50% – until gross receipts exceed 80% year-over-year.
      • For employers with more than 100 full-time employees, only employees who are currently not providing services for the employer due to COVID-19 causes are eligible for the credit. The employee retention credit is effective for wages paid after March 12, 2020, and before January 1, 2021.
  • Firms may take net operating losses (NOLs) earned in 2018, 2019, or 2020 and carry back those losses five years. The NOL limit of 80 percent of taxable income is also suspended, so firms may use NOLs they have to fully offset their taxable income. The bill also modifies loss limitations for non-corporate taxpayers, including rules governing excess farm losses, and makes a technical correction to the treatment of NOLs for the 2017 and 2018 tax years.
    • Treatment of Losses
      • Certain changes to the loss provisions made by the Tax Cuts and Jobs Act (TCJA) are suspended in an effort to allow companies to utilize greater losses as well as to claim refunds for certain losses. Specifically, the CARES Act:
        • Suspends the TCJA’s 80% of taxable income limit on net operating loss (NOL) carryovers for three years, so that the limit would not apply to tax years beginning in 2018, 2019, and 2020;
        • Allows NOLs arising in 2018, 2019, and 2020 to be carried back five years; and
        • Suspends the limitations on excess farm losses and on the use of a pass-through business’ losses against non-business income for three years, so that the limits would not apply to tax years beginning in 2018, 2019, and 2020.
  • Firms with tax credit carryforwards and previous alternative minimum tax (AMT) liability can claim larger refundable tax credits than they otherwise could.
  • The net interest deduction limitation, which currently limits businesses’ ability to deduct interest paid on their tax returns to 30 percent of earnings before interest, tax, depreciation, and amortization (EBITDA), has been expanded to 50 percent of EBITDA for 2019 and 2020. This will help businesses increase liquidity if they have debt or must take on more debt during the crisis.
  • Delay of Employer Payroll Taxes
    • The CARES Act postpones the due date for depositing employer payroll taxes and 50% of self-employment taxes related to Social Security and Railroad Retirement and attributable to wages paid during 2020. The deferred amounts would be payable over the next two years – half due December 31, 2021, and half due December 31, 2022.
  • Limitation on Business Interest Expense
    • The CARES Act would temporarily increase the limitation on interest deductions imposed by the TCJA. Specifically, the Act would increase the 30% of adjusted taxable income (ATI) threshold to 50% of ATI, for tax years beginning in 2019 and 2020. (Special tax year 2019 rules would apply to partnerships.) It would also allow a taxpayer to elect to use tax year 2019 ATI in lieu of tax year 2020 ATI for the purpose of calculating its tax year 2020 limitation.
• State and local government:
  • $454 billion in emergency lending to businesses, states, and cities through the U.S. Treasury’s Exchange Stabilization Fund.
• Executive Compensation Restrictions
  • In order for an eligible borrower to participate in CARES Act funding programs, the borrower must agree to cap all employee compensation (including salary, stock, and bonuses) for a period ending one year after the loan is repaid. For employees receiving more than $425,000 per year, (i) these employees cannot receive more compensation than they received in 2019; or (ii) severance pay or other benefits upon termination cannot exceed twice the 2019 compensation amount. Officers or employees receiving more than $3 million per year cannot receive total compensation in excess of (i) $3 million plus (ii) 50% of the excess over $3 million.

Expansion of SBA Disaster Loan Program

• The covered period for this section is January 31, 2020-December 31, 2020. In addition to current eligible entities, the following may receive SBA disaster loans:
  • A business with 500 or fewer employees;
  • Sole proprietorships, with or without employees, and independent contractors;
  • Cooperatives with 500 or fewer employees; and
  • Employee Stock Ownership Plans with 500 or fewer employees.
• The CARES Act makes the following additional changes to the SBA Disaster Loan program during the covered period for loans made in response to COVID-19:
  • Waives rules related to personal guarantees on advances and loans of $200,000 or less for all applicants;
  • Waives the “1 year in business prior to the disaster” requirement (except the business must have been in operation on January 31, 2020);
  • Waives the requirement that an applicant be unable to find credit elsewhere; and
  • Allows lenders to approve applicants based solely on credit scores (no tax return submission required) or “alternative appropriate methods to determine an applicant’s ability to repay.”
• Entities applying for loans under the Disaster Loan Program in response to COVID-19 may, during the covered period, request an emergency advance from the Administrator of up to $10,000, which does not have to be repaid, even if the loan application is later denied. The Administrator is charged with verifying an applicant’s eligibility by accepting a “self-certification.” Advances are to be awarded within three days of an application.
  • Advances may be used for purposes already authorized under the SBA Disaster Loan Program, including:
    • Providing sick leave to employees unable to work due to direct effect of COVID-19;
    • Maintaining payroll during business disruptions during slow-downs;
    • Meeting increased supply chain costs;
    • Making rent or mortgage payments; and
    • Repaying debts that cannot be paid due to lost revenue.
  • If an entity that receives an emergency advance transfers into, or is approved for, a loan under the SBA Business Loan Program (described above), the advance amount will be reduced from any payroll cost forgiveness amounts.

Banking

• Suspension of GAAP for COVID-19 Loan Modifications: The CARES Act allows financial institutions to make loan modifications related to COVID-19 or it effects without being categorized as a troubled debt restructuring. Such suspensions are applicable for the term of the loan modification, and may be made from March 1, 2020 through the earlier of (i) 60 days after the expiration of the national emergency declaration or (ii) December 31, 2020.
• Credit Reporting Relief: The CARES Act requires reports to credit reporting agencies to show accounts as “current” even when there has been an account forbearance or agreement to modify payments on an account impacted by COVID-19. This will apply from January 31, 2020 through the later of 120 days after (i) enactment, or (ii) expiration of the national emergency declaration.
• Debt Guarantee Authority: Section 4008 of the CARES Act amends Section 1105 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to allow for a guarantee of deposits held by insured depository institutions to be treated as a debt guarantee program. Specifically, through December 31, 2020:
  • The FDIC may establish a program to guarantee obligations of solvent insured depository institutions or solvent depository institution holding companies; and
  • The National Credit Union Administration may temporarily increase the share insurance coverage on any non-interest-bearing transaction account in any federally-insured credit union.
• Community Banks: The CARES Act requires prudential banking agencies to adopt an interim final rule reducing the community bank leverage ratio from nine percent to eight percent and providing a grace period for qualifying community banks to satisfy the requirement. The interim final rule will expire the earlier of (i) the expiration of the national emergency declaration, or (ii) December 31, 2020.
• Tax Treatment of Loans: The CARES Act treats loans made or guaranteed by Treasury as debt for federal income tax purposes. It also instructs Treasury to issue guidance ensuring that ownership interests arising from loans and loan guarantees provided by the federal government under the CARES Act do not trigger a change in ownership for section 382 purposes.

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Staying the Course: Assessment Collection During (and After) the Coronavirus Pandemic

The coronoavirus pandemic, with its stay at home mandates and work restrictions, is hitting the economy hard. Community association boards and managers should anticipate adverse impacts in the collection of assessments as early as April and must be prepared to address these delinquencies.

Increased Delinquency

Many people are out of work because their employers have had to suspend or reduce operations. These people are not receiving a paycheck. Some may be receiving unemployment benefits, if they can manage to file a claim on the overloaded system, and some may receive a stimulus check from the federal government, but those benefits will not replace their prior income. When deciding which bills are a priority, your members may make the difficult decision that association assessments are paid last or not at all. Expect to see a sharp increase in delinquencies.

Assessment Collection Policies and Budgets

Boards and managers are concerned – certainly for the well-being of their members but also for the well-being of the association – and have asked whether their collection policies should be relaxed. Now is not the time to relax those policies. Community associations can only operate with assessment revenue. As an example, the snow vendor that will clear the roads and sidewalks in December must be paid and if the association does not collect assessments it will not be able to make those critical payments. While there may be discretionary budget items that can be cut – certain projects may be delayed if they do not involve health and safety and some expenses may be extras, such as mums in the fall – most items on the community association budget are critical operations.

Accordingly, in order to address increased delinquency and meet critical budget items, we recommend that community associations keep their current collection policies in place. Hardship cases can be handled as they are presented on a case by case basis. Some members will need a repayment plan and we have every expectation that association boards and managers will work with those with true hardship. Keep in mind that not all individuals who miss assessment payments have been impacted by the economy. Some individuals may not have missed a single paycheck but may still receive a stimulus check from the federal government as part of the $2 trillion stimulus plan.

Recording Liens

County offices are closed for now. However, in many counties clerks are working remotely to do e-recording. We are able to e-record liens once an account has been setup to do so. This allows title agencies, mortgage lenders, lawfirms, and other businesses to record documents, and to check the status of filed documents on-line. Also assisting associations in carrying out their collection process is the Remote Notary Bill, which was recently passed (pending signature by Gov. Murphy) to allow notaries public to perform certain acts remotely. The bill allows notaries to notarize documents, such as liens, by using communication technology to obtain satisfactory evidence of the identity of the individual signing the document. Liens can be signed and notarized remotely, and then recorded with the county clerk via e-recording.

Impact on Litigation

Similarly, courts have been closed. While cases can be commenced and are proceeding in the interim – by efile, telephonic motions, etc. – there will be some delays in cases. This should not stop associations from making the decision to file litigation when necessary. Waiting to pursue litigation until the delinquency balance is very high could put the association in a dire financial situation.

Few community associations will avoid at least some adverse financial impact of the coronavirus pandemic. However, those which stay the course in assessment collection will have a better chance at emerging from it in a better financial position.

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Family Law and COVID-19: Legal Custody and Parenting Time

Legal custody is the hallmark of co-parenting. Both parents should confer and attempt to agree on issues pertaining their child’s health, safety, education, and welfare, all in the name of their child’s best interests. The decisions you and the other parent make about your child during this coronavirus pandemic may or may not place them at a higher risk of contracting the virus, which certainly makes these decisions more critical and imparts upon the duty to discuss these decisions with your child’s other parent. Surely, if a child or parent contracts the disease, legal custody would mandate that joint legal custodians discuss and agree upon how to handle any parenting time and health related issues, but it also remains prudent to discuss and attempt to agree upon a plan of action ahead of time.

New Jersey, along with the majority of the United States, has declared a state of emergency. Most, though not all, activities requiring people to congregate have been temporarily prohibited. However, some people are clearly still gathering together, and there are differences of opinion as to how, and with whom, socialization should be occurring.

You may be asking yourself many questions.

Are all social gatherings unsafe? Is your child allowed to see his or her friends? Are you restricted from taking your young child outside of your home entirely? What about birthday parties or religious functions? Does the particular living situation of your child’s other parent cause you some concern? Under what conditions should parenting time exchanges take place? Does one or both parents’ remote work obligation interfere with or preclude assisting the child with their own remote learning and schoolwork?

As the risk of the coronavirus is better defined, these are parental decisions and judgment calls you will need to assess on behalf of your child. Assuming you share joint legal custody of your child with the other parent, legal custody seems to demand that these issues are broached with the other parent and that you attempt to find a compromise to align with both of your perspectives. When doing so, you must keep in mind that the “best interests of the child” should guide the analysis.

Flexibility, compromise, a united motive to act in the best interest of your child, and a united message to your child will strengthen your co-parenting relationship and potentially minimize conflict with and about your child. However, in cases where parents cannot reconcile their differences and find compromise, those parents may need to seek court intervention or some form of virtual alternate dispute resolution, and should often seek legal counsel immediately.

Stark & Stark’s Family Law Department is available throughout this crisis to assist with your child related legal needs.

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Marvel Actor Seeks Reduction in Child Support Due to Coronavirus – Should You?

Yesterday, news broke that Jeremy Renner, well known for his role as Hawkeye, asked the Los Angeles court to lower his child support payments as a result of his unexpected financial strain from the coronavirus. The Marvel actor claims that his income will be substantially lower due to the fact that the film and television industry has either cancelled or postponed filming due to the coronavirus. As a result, he is asking the court to modify his child support obligation.

Renner’s situation is not unlike that of many Americans across the country who may find themselves unemployed due to the shutdown of some businesses as states attempt to “flatten the curve” of the coronavirus. But, is unemployment enough to request the court to modify your child support obligation? The answer in New Jersey is not that straight forward.

New Jersey case law requires a parent seeking a modification in child support to demonstrate a change in circumstances. That change, however, is generally not one that can only be temporary. Thus, a parent who loses their job under ordinary circumstances must demonstrate that it is not solely a short-term loss in order for their child support obligation to be modified. Evidence of a parent’s diligent efforts to secure new employment must be presented. In addition, if a parent is unable to find comparable employment to his or her prior position but is able to find employment that results in a reduction in income, that parent should be prepared to provide the court with evidence of their good-faith efforts.

Currently, coronavirus has halted many business in the State of New Jersey – but no one knows when things will get back to normal. As a result, if you have recently lost your job due to the coronavirus pandemic, requesting a modification of child support may be premature. But these are extraordinary times and the Court may look at applications with a different eye. If you are worried that you will not be able to find comparable employment, make sure to document your efforts so that a Court may be able to provide you with relief during these uncertain times.

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Sometimes Words Have Two Meanings: Court Rules Stairway to Heaven’s Troubled Copyright History

In November of 1971, Led Zeppelin released its iconic song, “Stairway to Heaven.” Since it made its debut, there have been lots of claims about the song: it has been played on the radio 2.8 million times; it is one of the greatest songs of all time; if you play it backward, you will hear a hidden Satanic message; and, perhaps most interestingly, that the famous intro was plagiarized.

Plagiarism claims and a history of litigation

The plagiarism claim linked the intro’s origins to a lesser-known 70s rock band, Taurus, and their song, “Spirit.” Michael Skidmore, a trustee for the estate of Randy California, the guitarist for and composer of Taurus, brought a lawsuit in 2014 alleging that Zeppelin stole the guitar intro for “Stairway” from Spirit. The lawsuit alleges that the two bands toured together in the late 1960s, and therefore, Zeppelin had “access” to Spirit’s songs.

Skidmore’s lawsuit charged Jimmy Page and Robert Plant with copyright infringement, but a jury found them not guilty following a full trial. Skidmore appealed, and in 2018 a Ninth Circuit ordered a new trial after finding that the original trial had “erroneous jury instructions.”

A new trial was held in September of 2019. Plaintiff’s main argument focused on the fact that the original trial did not compare the recorded versions of “Stairway to Heaven” and “Taurus.” To some, this might seem odd, but both “Stairway” and “Spirit” were copyrighted under a 1909 law that only protects sheet music turned into the U.S. Copyright Office. More recent copyright laws extend copyright protection to sound recordings.

Plaintiff protested that judging the songs by their sheet music was misleading because Jimmy Page himself does not read sheet music. “Why are we looking at this artificial analysis that never happened in the real world?” Plaintiff’s attorney said, per the Associated Press. “It’s wrong, it’s artificial, it’s imaginary. What we do know, and what we proved at trial, is that Jimmy Page has five of Spirit’s albums in his record collection.”

Inverse Ratio Rulings

This line of argument ties into another major aspect of the case – the inverse ratio rule. The inverse ratio rule, adopted by the Ninth and Sixth Circuits, makes it easier to prove similarity between two works based on evidence that a copyright infringer had “access” to a copyrighted work. If there is substantial evidence of access, less evidence of similarity needs to be shown.

This rule has been controversial in copyright law. In fact, it was applied to one of the most talked-about copyright infringement cases, the “Blurred Lines” case, which saw Pharrell Williams and Robin Thicke accused by Marvin Gaye’s family for infringing on Gaye’s 1977 “Got To Give It Up.”

In that case, artists Williams and Thicke openly admitted to being inspired by Gaye’s entire body of work and to having had a “high degree of access” to “Got To Give It Up.” According to Thicke, his artistic goal with “Blurred Lines” was to recreate the feeling of Gaye’s work. “I must’ve been channeling that feeling, that late-’70s feeling,” Thicke said on the stand.

Although there was little similarity when comparing the sheet music from both songs, the “feeling” of the song was enough to cause jurors to hand down a verdict in favor of Marvin Gaye’s family. The ruling has been heavily criticized for using overly broad strokes to define copyright parameters and has unnerved artists and copyright holders alike on its impact on pending and future lawsuits.

Zeppelin course correction

In last week’s ruling on “Stairway,” the Ninth Circuit Court quoted from the dissent in the “Blurred Lines” case noting “Authors borrow from predecessors’ works to create new ones, so giving exclusive rights to the first author who incorporated an idea, concept, or common element would frustrate the purpose of the copyright law and curtail the creation of new works.”

Although this may not have been enough to overturn the ruling in “Blurred Lines,” it was sufficient to help Led Zeppelin prevail in the lawsuit against him. “We have never extended copyright protection to just a few notes,” the court commented. “Instead we have held that ‘a four-note sequence common in the music field’ is not the copyrightable expression in a song.”

Copyright infringement cases can be difficult to untangle. Contact the experienced copyright attorneys at Stark & Stark for your free consultation to learn about how we can help you resolve your case.

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COVID-19 Forces Modell’s to “Mothball” Chapter 11 Efforts

In an ironic bankruptcy twist, the COIVD-19 outbreak is thwarting Modell’s Sporting Goods’ ability to liquidate. Modell’s filed its bankruptcy case on March 11^th and announced that it was closing all 134 of its stores. The chain was founded by Morris A. Modell in 1889, with a single store on Cortlandt Street in Manhattan. Modell’s followed in the footsteps of The Sports Authority, Gander Mountain, Eastern Mountain Sports, and other sporting goods retailers who have struggled mightily in recent years, and have landed in Chapter 11. Modell’s intention was to complete all liquidation sales by the end of April. The budgets filed with the bankruptcy court reveal no line item for lease expenses starting in May.

The spread of COVID-19 coupled with the recent imposition of government orders directing the closure of non-essential retailers has rebuffed Modell’s efforts to liquidate. Indeed, on Monday, citing to the COVID-19 outbreak, Modell’s filed an emergent application with the Bankruptcy Court in New Jersey, to suspend its Chapter 11 case. In the application, Modell’s notes that it has “… no choice but to temporarily “mothball” their operations to preserve value, with the hope that…” they can restart operations in the near future in order to liquidate their inventory.

In its emergent filing, Modell’s seeks to cease operations at all 134 of their retail stores as well as fulfillment of orders on their e-commerce site, and to terminate store and distribution center employees. Modell’s has also asked to cease all in-person operations at their corporate headquarters as well as termination of most corporate employees.

Modell’s is hopeful that the requested suspension will provide them with a breathing spell necessary to later implement store closing sales. Where the requested suspension leaves the rights and claims of employees, landlords, trade creditors, and other constituents remains unclear. However, forecasting potential future legal positions, through its filings, Modell’s seeks to reserve rights to argue that obligations accrued during the suspension do not have to be paid based upon force majeure and other applicable legal rights. While Modell’s efforts to suspend its operations during the pandemic overwhelming the nation appear warranted, parties impacted by the chapter 11 case should be diligent in protecting their rights. Modell’s’ was in a liquidation mode prior to COVID-19, and should not use this virus as an excuse to further trample what limited rights its employees, trade vendors, landlords, and other constituents may have.

Stark & Stark has been counsel to landlords and trade creditors in the Sports Authority, Pier 1, Art Van’s Furniture, Fairway Market, Mattress Firm, Toys “R” Us, Payless, Eastern Outfitters (EMS Part 2), EMS, Golfsmith, RadioShack, General Wireless (RadioShack 2), Gander Mountain, A&P, Joyce Leslie, rue21, and Central Grocers chapter 11 bankruptcy cases.

For more information on how Stark & Stark can assist you, please contact Joseph Lemkin, Shareholder, at (609) 791-7022 or jlemkin@stark-stark.com or Thomas Onder at (609) 219-7458 or tonder@stark-stark.com.

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Possible Security Risks of Working from Home

Unfortunately bad actors are leveraging the current Coronavirus epidemic for malicious intent. It has escalated so quickly that the United States Secret Service issued a press release.

As you might imagine, the phishing attacks exploit our concerns regarding COVID-19.

One widespread campaign includes a poisoned PDF document labelled “CoronaVirusSafetyMeasures_pdf“ which, if opened, can give full administrative control of your computer to the attacker.

Another uses a three-page coronavirus-themed Microsoft Office document purported to be from the Center for Disease Control to drop a backdoor onto a victim’s computer. The fake message includes calls to urgency; “the coronavirus has “officially become airborne” and there “have been confirmed cases of the disease in your location.””

Accordingly, it is critical that you follow good email practices. If you have the slightest doubt about an email, DO NOT OPEN IT. Instead, please contact the help desk for instructions.

Another area of concern is malicious COVID-19 websites.

Check Point Threat Intelligence has identified over 300 websites that are malicious/suspicious.

Corona virus maps are being used to compromise systems.

Accordingly, we recommend that you only visit well known sites (e.g., CDC.gov, nytimes.com, etc.) for your corona virus news.

Working from home also potentially increases your exposure to “vishing” attacks.

Beware calls from Microsoft or your Internet Service Provider that indicate that there is a problem with your connection (e.g., poor quality, your machine is sending malicious data, etc.). Their intent is to gather information about you and your systems with the ultimate goal of getting you to allow them to connect to your machine remotely to “troubleshoot” the issue.

Accordingly, do not give out information to any party calling without positively identifying them. The best approach is to call them back at a number you find listed on that companies website.

Please report any phishing or vishing attacks immediately to the help desk. Stay healthy & safe, both physically & digitally.

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New Jersey Property Tax Appeal Filing Deadline Extended to May 1st

As a result of the COVID-19 coronavirus public health crisis, on March 19, 2020, the New Jersey Supreme Court issued an order extending the filing deadline for local property tax appeals from April 1^st to at least May 1^st.

Pursuant to the terms of the order, the filing deadline was extended to May 1, 2020 or 30 days following a determination by the governor that the State of Emergency declared under Executive Order No. 103 has ended.

The order applies to the County Board of Taxations across the state. The County Board has exclusive jurisdiction of tax appeals where the assessed value of property is at or below $1,000,000. The order also applies to the State Tax Court, which has concurrent jurisdiction, with the County Boards, for tax appeals where the assessed value of the property is above $1,000,000.

The Tax Court utilize the New Jersey eCourts filing system, so all state court complaints may be filed online. Some County Board of Taxations have electronic filing systems, but most do not. For counties that do not utilize electronic filing, appeal petitions must be received prior to the filing deadline. The petitions may be mailed or hand delivered. However, given the COVID-19 pandemic, prior to filing via hand delivery, it is important for the tax payer to review their county’s board of taxation website to verify operating hours, if any.

If you have any questions about the order or filing a 2020 tax appeal in New Jersey, Stark & Stark’s tax appeal group is here to assist you. Please call (609) 219-7449.

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Updated Resource & Guide to COVID-19: Emergency Orders, State Lockdowns, and the Families First Coronavirus Response Act

How things have changed since I published my Employer’s Guide to COVID-19 less than a week ago. While the guidance, recommendations, and issue-spotting set forth in that article have not changed, the legal landscape concerning the novel coronavirus has. State governors have issued emergency orders. New laws have taken, or will take, effect. Non-essential business have been instructed to close their doors and convert to remote work arrangements, if possible. People have been advised to stay home. Here’s an update on what’s changed and how it impacts you, your business, and your employees.

The Families First Coronavirus Response Act

On March 18, 2020, the President signed into law the Families First Coronavirus Response Act (“FFCRA” or the “Act”). The Act, which applies to all employers having less than 500 employees as well as government employers with limited exceptions, imposes significant obligations on employers related to COVID-19. The law takes effect no later than Thursday, April 2, 2020, but employers are advised to comply with the new requirements immediately. The FFCRA’s requirements expire December 31, 2020, assuming we’re through this pandemic by then.

In brief summary, the FFCRA requires the payment of sick leave by all employers to their employees under certain scenarios, and the Act creates new enhanced paid FMLA requirements related to COVID-19, which applies to employers and employees not previously covered by FMLA. In addition, the law creates tax credits equal to 100% of the FFCRA-mandated paid leave payments made by an employer to its employees each calendar quarter, and the law allows broader access to unemployment insurance for employees laid off or away from work for certain reasons caused by the coronavirus. The FFCRA also mandates that COVID-19 testing be provided at no cost to employees under their health care plans.

The Paid Sick Leave Requirements

The FFCRA establishes a new paid sick leave requirements for employees impacted by COVID-19. This paid leave is available to employees for immediate use regardless of the employee’s length of employment. An employee qualifies for paid sick leave under the FFCRA, provided the employee cannot work or telecommute, for any of the following pertinent reasons: (1) the employee has been diagnosed with COVID-19 or advised by a health care professional to self-quarantine; (2) the employee is experiencing symptoms of the virus and is seeking a medical diagnosis; (3) the employee is caring for an individual who has been required to quarantine; or (4) the employee must care for a child because of the closing of the child’s school or childcare program due to COVID-19 precautions. Full-time employees are eligible to receive up to ten days (80 hours) of paid sick leave; part-time employees are entitled to receive the average number of hours they work over a two-week period as defined under the Act. The quantum of pay the employee is entitled to receive depends on the situation. Employees required to self-quarantine under the first two scenarios (above) are entitled to receive their full pay up to a maximum payment of $511 per day (and $5,110 in the aggregate for the 10 days). Employees who must take leave to care for another must be paid the lesser of two-thirds (2/3) their full rate of pay or $200 per day ($2,000 in the aggregate).

While the FFCRA imposes these new requirements on employers and gives new paid leave rights to employees, it does not interfere with or trump the employer’s preexisting policies, nor does it replace otherwise applicable law. Employers must recognize the interplay between the FFCRA, other applicable laws (such as the ADA, FMLA, and any state-mandated earned sick leave laws), contracted rights under employment contracts or collective bargaining agreements, and the employer’s own policies and procedures, all of which theoretically could come into play in a particular employee leave situation. For instance, as the FFCRA makes clear, an employee affected by COVID-19 has the right to use paid emergency sick leave before using existing PTO benefits; an employer cannot require an employee to use PTO prior to receiving paid sick time under the FFCRA.

The law prohibits employers from requiring an employee to find a replacement when using COVID-19 qualifying paid sick leave. On the other hand, the law requires that an employee return to work as soon as the need for leave ends, even if the employee has not used all of the paid sick time available under the Act.

Emergency/Enhanced FMLA Provisions

In addition to guaranteeing paid sick leave as explained above, the FFCRA amends the FMLA to provide emergency paid family leave to all employees of small and mid-sized businesses (full and part-time employees of companies having 500 employees or less) who are unable to work (or telework) in order to care for a child during this national emergency. The standard 50-75 test (50 employees within a 75-mile radius) to determine FMLA applicability does not apply to the enhanced paid leave provisions for COVID-19 related childcare. In addition, the FMLA requirement that an employee work for at least 12 months and 1,250 hours to be eligible for FMLA leave is not required for E-FMLA; rather, an employee must be employed for only 30 days to qualify for job-protected leave for coronavirus-related emergency family leave, and there is no minimum hour baseline.

An employee may avail himself/herself of paid leave under the E-FMLA if the employee cannot work because the employee must care for his/her child under 18 years of age because the child’s school has been closed or customary child care provider is not available due to COVID-19. While the FFCRA amendment to the FMLA does not mandate payment for the first 10 days of E-FMLA, an employee may elect to use PTO or earned sick leave for the unpaid portion of leave, or can seek paid leave under the emergency paid sick leave provision of the Act. Employers cannot force an employee to use PTO or earned sick time, take emergency paid sick leave, or take unpaid leave for the first 10 days of E-FMLA; the employee decides.

For this emergency caregiver paid leave, after the first 10 days of leave, the employee is entitled to receive two-thirds (2/3) of the employee’s regular rate of pay for the remaining E-FMLA leave time taken by the employee (up to the 12-week maximum). However, the Act provides a cap on the daily payment at $200 per day, and a total cap of $10,000 (ten weeks, or 50 days, at $200/day). As with the COVID-19 paid sick leave, employers receive a dollar-for-dollar tax credit for payments made for paid E-FMLA leave.

As with the FMLA, employees who exercise their right to receive paid E-FMLA leave to care for a child due to a loss of childcare because of the coronavirus are entitled to job restoration to the same or a substantially equivalent position provided they can return to work within the protected leave period. There is, however, a limited exception for employers having less than 25 employees. For these smaller businesses, E-FMLA does not guarantee or require job restoration if the following conditions are met: (i) the position held by the employee no longer exists due to economic conditions or other changes in the business conditions of the employer; (ii) the employer can demonstrate it made reasonable efforts to restore the employee, but cannot; and (iii) the employer must make reasonable efforts to contact the employee if an equivalent position becomes available for up to one-year from the earlier of (a) the date on which the qualifying need related to a public health emergency concludes, or (b) the date that is 12 weeks after the date on which the employee’s leave commenced.

Important Considerations for Both Provisions

There are certain considerations that come into play for both the paid sick leave provision and the emergency childcare leave provision of the FFCRA. Those considerations include:

• If the need for leave is foreseeable, an employee must provide notice as soon as practicable;
• Small business exemptions are possible. The U.S. Secretary of Labor may issues regulations to exempt small businesses having fewer than 50 employees if these new requirements will jeopardize the viability of the business as a going concern;
• Employers of certain health care providers or emergency responders may elect to exclude such employees from the application of this rule. In other words, while health care providers and emergency responders may elect to offer these paid leave benefits to their employees, they are exempt from the Act;
• Employers are prohibited from discriminating or retaliating against any employee who takes paid leave under the Act, has filed a complaint or instituted a proceeding under or related to this Act, or has testifying – or will testify – in such a proceeding; and
• Employers will be required to display a poster, which the USDOL is in the process of issuing.

Summarizing, the FFCRA provides some incredible new benefits for employees affected by COVID-19, whether it’s paid sick leave for the employee who must quarantine himself/herself due to exposure or diagnosis, or paid family leave to the employee who must care for a child whose school has closed or whose regular childcare provider is unavailable due to this national emergency. These impositions on employers are onerous and may create incredible strain on their viability. In turn, the law creates some new benefits for employers, including tax credits for 100 percent of what they pay out to employees (subject to the noted limits), and the law creates certain exemptions, or potential exemptions for the smallest employers impacted by the Act.

New State Lockdowns and Office Closings

In addition to having to learn, understand and comply with the emergency legislation being passed by Congress, employers must grapple with the new limitations on business created by state governments. Within the last few days, the Governors of both New Jersey and Pennsylvania imposed stringent new limitations on non-essential businesses operating in their states.

New Jersey Mandates

On March 16, 2020, Governor Philip Murphy issued Executive Order 104, which, among other things: established statewide social mitigation strategies; limited the scope of service and hours of operation for restaurants and certain retail establishments; and deemed certain businesses “essential,” including grocery stores, pharmacies, healthcare providers and gas stations, to name a few. On March 21^st, Governor Murphy issued Executive Order 107, which promulgates extraordinary new precautionary measures to combat COVID-19. Executive Order 107 imposes the following on all employers, employees and residents of the State of New Jersey:

• All New Jersey residents must remain home – “sheltered” – unless they are: (1) obtaining goods or services from essential retail businesses; (2) getting takeout food; (3) seeking medical attention, essential social services, or assistance from law enforcement or emergency services; (4) visiting family or other individuals with whom the resident has a close personal relationship (e. caretaker or romantic partners); (5) reporting to, or performing, their job; (6) exercising or engaging in outdoor activities with immediate family members, caretakers, household members, or romantic partners while adhering to social distancing practices with other individuals; (7) leaving the home for an educational, religious, or political reason; (8) leaving because of a reasonable fear for health or safety; or (9) leaving at the direction of law enforcement or other government agency.
• Gatherings such as parties, celebrations or other social events are prohibited.
• The use of public transportation is prohibited unless an individual has no other reasonable alternative.
• The brick-and-mortar of all non-essential retail businesses, and all recreational and entertainment businesses must close (for the full list, see the Order).
• All businesses, including non-profits, in New Jersey must accommodate their workforce, wherever practicable, for telework arrangements. To the extent remote work arrangements are not feasible, employers must make their best efforts to reduce staff on site to the minimum number of essential employees.
• All schools in the State are closed to in-person education or instruction.
• Certain businesses or services are excluded from the Executive Order, including health care providers, food banks, and law enforcement agencies, to name a few.
• Penalties for violations may be imposed.

Executive Order 107 took effect on Saturday, March 21, 2020, at 9:00 p.m., and shall remain in effect until revoked or modified by Governor Murphy.

In addition, on March 19, 2020, Governor Murphy signed into law a new anti-retaliation law with respect to the novel coronavirus. The new law prohibits employers in the state from firing, demoting or otherwise punishing workers if they take time off because they have, or are likely to, have COVID-19.

In relevant part, the anti-retaliation law, which took effect immediately, provides as follows: “An employer shall not … terminate or otherwise penalize an employee if the employee requests or takes time off from work based on the written [ ] recommendation of a medical professional licensed in New Jersey that the employee take that time off for a specified period because the employee has, or is likely to have, an infectious disease, which may infect others at the employee’s workplace.” In addition, the new law requires an employer to reinstate the employee to the position the employee held when the employee’s leave commenced with no reduction in seniority, status, benefits, pay or other terms or conditions of employment. Notably, while this new state law does not provide paid leave to an employee, it provides a job restoration requirement that exceeds the protections afforded under the FFCRA (discussed above).

In addition to providing a private right of action to any employee aggrieved by a violation of this new anti-retaliation act, an employer may be subject to a fine of $2,500 for each violation of the act.

On March 16, 2020, the New Jersey Department of Labor and Workforce Development also created a chart on COVID-19 scenarios and benefits available to employees, which New Jersey employers may find helpful when it comes to navigating the unchartered territory we’ve entered.

Pennsylvania Mandates

Like New Jersey, Pennsylvania has implemented extraordinary measures to combat the coronavirus. On March 19^th, Governor Tom Wolf issued an Executive Order closing all non-life sustaining businesses.

Effective March 19^th at 8:00 p.m., Governor Wolf indicated that enforcement actions will be taken against restaurants and bars that continue their dine-in business, and only carry-out, delivery and drive-through food and beverage service may continue so long as social distancing measures are practiced.

In addition, effective March 21^st at 12:01 a.m., any business in the Commonwealth of Pennsylvania that is not life-sustaining may not operate any brick-and-mortar or physical operation, regardless of whether the business is open to members of the public. The Order does not apply to virtual or telework operations, where no physical presence is required. In other words, if your Pennsylvania business is not life-sustaining, the physical operation of the business must close and only telework operations may continue. In conjunction with this Order, the State of Pennsylvania issued a spreadsheet identifying businesses that may continue their physical operations and those which may not. Again, enforcement actions may be taken against businesses that fail or refuse to comply with Governor Wolf’s Order by continuing their physical operations if the business is not “life-sustaining.”

The Commonwealth of Pennsylvania has provided online guidance to responding to COVID-19 in Pennsylvania.

If you have any questions about the new paid sick leave provisions or emergency family leave requirements imposed by the Families First Coronavirus Response Act, new state requirements, the impact these new measures may have on your business or employment, or what your rights and interests are related to the novel coronavirus, the Labor and Employment attorneys at Stark & Stark are ready to help. Contact us by phone at 609-895-7358 or via email at employmentlaw@stark-stark.com.

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