FLB NEWS
Insights and Views from the attorneys at FLB APRIL 2021
1 MERGERS & ACQUISITIONS
How Should Businesses Prepare for the Brighter Days Ahead?
2 EMPLOYMENT & LABOR LAW Can Employers Mandate that Employees Receive the COVID-19 Vaccine?
3 BANKRUPTCY
How Should Businesses Prepare for the Brighter Days Ahead? by Colin J. Keefe | ckeefe@flblaw.com A bright dawn approaches for the economy of the Lehigh Valley, and the country as a whole. As the first quarter of 2021 ends, economists are nearly universally predicting a very strong third quarter for the U.S. economy. Three main factors are expected to combine to get the economy roaring by mid-summer:
Supreme Court Ends Debate Over Bankruptcy Question
• A successful and intensifying vaccine rollout, projected to reach a large portion of American adults by the Fourth of July, per President Biden.
BUSINESS Pennsylvania Entities – Time to Get Your Decennial Filings Ready
• The realization of pent-up demand from the pandemic. While some demand for goods, services, etc. destroyed by the pandemic will never return, much demand was merely deferred, and will be realized once daily economic life returns to near-normal. • Federal stimulus, including the recently enacted American Rescue Plan Act, has added fuel to the fire by giving individuals and businesses greater spending power in the coming months.
4 ESTATES
Limitations on Enforcing Due on Sale Clauses
Lehigh Valley businesses would be wise to use the second quarter to get their house in order in expectation of busy times ahead. While some sectors and businesses weathered the storm better than others, the pandemic has affected nearly every business in ways that will take planning to unwind and restore.
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• Supply chains have been disrupted or permanently altered. Alternate sources of supply need to be located, or capacity reserved from existing sources. • Personnel has been lost. Many businesses need to hire to meet increased demand, and in many sectors, there may be a shortage of qualified personnel. • Capital improvements have been deferred. Equipment and resources may need to be improved to meet increased demand. • Contracts and relationships with customers have expired or grown stale. As the economy comes back online, existing relationships may need to be reinforced and contracts may need to be extended or renewed.
5 BUSINESS
Access for All: Ensuring Your Website is ADA and WCAG Compliant
7 BUSINESS
American Rescue Plan (ARP) Act of 2021 Notes and Highlights
Fitzpatrick Lentz & Bubba, P.C. Two City Center 645 West Hamilton Street, Suite 800 Allentown, PA 18101 (610) 797-9000 www.flblaw.com
A common theme to the above is that they often require the assistance of legal advisors, which is where FLB enters the picture. We anticipate the brighter times ahead, and stand ready to assist with all your contractual, transactional, employment, and other legal needs as you prepare to take advantage of them.
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Can Employers Mandate that Employees Receive the COVID-19 Vaccine? by Stephanie A. Koenig | skoenig@flblaw.com
Of course, the EEOC guidance does not answer all questions related to the vaccine, and it prompts many other questions regarding the development and implementation of vaccination policies.
With the distribution of the COVID-19 vaccines well underway, employers remain concerned about the extent to which they may or must mandate employee vaccination. In tacit recognition of those concerns and the complexities associated with vaccinating the American workforce, the Equal Employment Opportunity Commission (EEOC) issued guidance for employers on handling those complexities. As a baseline, the EEOC guidance confirms that employers can protect the health and safety of workers against exposure to the COVID-19 virus, and that requiring employees get vaccines is a reasonable means of protecting against virus exposure. Separately, the Occupational Safety and Health Administration has said that employers have a general duty to protect the health and safety of their employees from known hazards, such as COVID-19. So, generally, an employer has the ability to require non-union workers in the private sector to get vaccinated, so long as the employer accommodates medical conditions and religious beliefs. Some states (though, to date, not Pennsylvania) are considering proposals to prevent employers from requiring employees to be vaccinated. As with most general rules, there are exceptions. According to the EEOC, if a worker cannot be vaccinated because of a medical condition or disability, the employer must prove that an unvaccinated worker would pose a “direct threat” to other workers that cannot be eliminated or mitigated by a reasonable accommodation. The EEOC guidance encourages employers to engage in a “flexible, interactive process to identify workplace accommodations that do not constitute an undue hardship.” An employer must also provide a reasonable accommodation “for the religious belief, practice, or observance” that prevents the worker from receiving the vaccine under Title VII, unless that accommodation poses more than a “de minimis” cost or burden.
Employers should heed this guidance and consider the practical realities affecting vaccine availability, employee apprehension, and other factors in developing an appropriate employee vaccination policy. One thing is clear: prior to implementing an employee vaccination policy, it is vital that the employer develop and implement a written policy and include training that plainly addresses the legal and human resource questions related to vaccines.
Workplace vaccination policies are not one-size-fits-all. Some questions that employers should consider when developing a vaccine policy or protocol include:
• Whether the employer will incentivize/recommend employees to get vaccinated, rather than mandate vaccination; • Whether the employer will pay for the cost of the vaccine; • Whether the employer will compensate the employee for the time spent receiving the vaccine; • Will the employer administer the vaccine or will a third party administer the vaccine; • Will (and how will) the employer require proof of vaccination; • What will occur if an employee refuses the vaccine; • What types of pre-screening questions are legal or even advisable prior to administering a vaccine; and • What is the risk to employers if an employee develops side effects from receiving a required vaccine.
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Supreme Court Ends Debate Over Bankruptcy Question by Douglas J. Smillie | dsmillie@flblaw.com
In October 2019, the Court of Appeals for the Third Circuit issued a decision addressing an often-asked question in bankruptcy: whether it is a violation of the automatic stay to retain a vehicle that was repossessed pre-bankruptcy? The Court of Appeals answered in the negative, as addressed in this article, posted on this site on December 11, 2019. At the time, I stated, “the Court of Appeals’ decision in DenbyPeterson serves to amplify the division among the Circuit Courts of Appeals, which usually means that the issue will be headed to the Supreme Court for final resolution.” As predicted, the issue reached the United States Supreme Court, which resolved the split among the Circuits on January 14, 2021 in Chicago v. Fulton, holding that mere retention of estate property after the filing of a bankruptcy petition does not violate §362(a)(3) of the Bankruptcy Code.
The Court’s decision removes uncertainty and brings the law into conformity in all judicial circuits. Where property is repossessed prior to a bankruptcy filing, and this happens most frequently (but not exclusively) with vehicles, the burden is now on the debtor to seek the intervention of the bankruptcy court to seek relief, or reach a satisfactory agreement with the creditor. The bankruptcy court can still order the return of the collateral, but at the same time will consider the creditor’s request for adequate protection or the imposition of any other conditions that may be appropriate to protect the interests of both the debtor and the creditor. At the same time, the repossessing creditor will not have to be concerned with the threat that its actions in retaining the property constitute a violation of the bankruptcy stay, with the attendant risk of sanctions.
Pennsylvania Entities – Time to Get Your Decennial Filings Ready by Justin K. Abodalo | jabodalo@flblaw.com It’s 2021, so that means it’s time for Pennsylvania businesses and organizations to get their decennial filings ready. Every ten years, Pennsylvanian entities must submit a decennial filing or decennial report during the years ending with the numeral “1”, (i.e., 2011, 2021, 2031). The objective of these filings is for the state to reissue names that are no longer being used. This requirement applies to virtually all for-profit and nonprofit entity and organization types that have not made any new or amended filings with the Bureau of Corporations and Charitable Organizations between January 1, 2012 and December 31, 2021. Businesses or nonprofits required to file decennial reports should receive a postcard dated January 15, 2021. However,
failure to receive this postcard does not relieve a party of its obligation to make its decennial filing. If a notice is not received, additional information can be found on the Pennsylvania Department of State website. There is a $70 filing fee that must be submitted with the official form, the Decennial Report of Association Continued Existence. Any entities that fail to file a decennial report between January 1, 2021 and December 31, 2021 will no longer have exclusive use of their names after January 1, 2022. Even though the entity itself will continue to exist, the name will become available for any other entity to use while conducting business within Pennsylvania.
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Limitations on Enforcing Due on Sale Clauses by Peter E. Iorio | piorio@flblaw.com “Due on Sale” clauses found in many mortgages generally allow a lender to demand payment in full of a loan, upon the transfer of an interest in the mortgaged property. The Garn St. Germain Act (12 U.S.C. Section 1701j-3) provides that regardless of the agreement between a borrower and lender, a lender may not enforce the due on sale clause in a residential mortgage if one of the following exceptions occurs: • • • •
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A transfer was made by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety; A transfer was made to a relative resulting from the death of a borrower; A transfer was made where the spouse or children of the borrower become an owner of the property; A transfer was made resulting from a decree of a dissolution of marriage, legal separation, or property settlement agreement, where the spouse of the borrower becomes an owner of the property; or A transfer into a trust in which the borrower remains a beneficiary and that does not relate to a transfer of rights of occupancy in the property.
Following the transfer of property qualifying under the Garn St. Germain Act, the subsequent owner of the property takes it subject to the terms of the existing mortgage. This means that the new owner is not required to refinance the terms of the mortgage, and as long as timely payments continue to be made, the loan will not be in default. This is especially beneficial in situations where the new owner has a low credit score or otherwise would not be able to obtain a mortgage on his/her own. In the administration of an estate, this law can greatly benefit children of a Decedent, where one child inherits the residence and desires to take over mortgage payments. It is possible for the Estate to survive the probate process with the mortgage still in effect, which allows for greater flexibility in the administration of an Estate. In short, federal law prohibits financial institutions from demanding immediate payment of a residential loan if a transfer of real property is an allowable exception.
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Access for All: Ensuring Your Website is ADA and WCAG Compliant by Justin K. Abodalo | jabodalo@flblaw.com Is your website ADA or WCAG compliant? If not, you could face legal difficulties. Broadly speaking, the Americans with Disabilities Act (ADA) prohibits discrimination against individuals with certain disabilities in various contexts such as employment, education, transportation, access to buildings, and even telecommunications. An often-overlooked subject of the ADA compliance is the Internet.
ADA & The Internet
Since the ADA was passed in 1990, the Internet has become essential to modern life. Unfortunately, the government has not kept pace when it comes to issuing guidance for creating websites that are ADA compliant, particularly for people who are blind or visually impaired. Currently, there are virtually no regulations from any administrative agencies on this topic.
Potential Legal Ramifications of Non-Compliance
Despite the lack of clear guidance, businesses can still face consequences if their websites are not accessible to people who are disabled. For example, a case is currently being litigated in Pennsylvania where the plaintiff, an individual who is legally blind, is suing an automobile dealer alleging the dealer’s website violates the ADA because it is not properly accessible to people who are visually impaired. The defendant auto dealership filed a motion to dismiss, which was denied by the Court. The dealership will now have to reach a settlement with the plaintiff or incur more litigation costs in a case that exemplifies a growing trend of similar classaction cases being filed throughout the country. Consequences for companies and other institutions found to violate the ADA range from attorneys’ fees to, in extreme circumstances, punitive damages. Perhaps more harmful is the added sting of negative publicity and the reputational damage that may follow.
Use WCAG Guidelines as a Guide
Regardless of the federal government’s lack of clear, uniform authority outlining when a website is or is not ADA compliant, some measures exist that can be proactively taken. For instance, federal government agencies and their contractors must comply with the Web Content Accessibility Guidelines (WCAG). These guidelines were developed by individuals and organizations around the world, with a goal of providing a single shared standard for web content accessibility that meets the needs of individuals, organizations, and governments internationally. Because these guidelines must be adhered to at the federal level, they are generally regarded as a safe proxy until more targeted legal guidance is issued for private businesses.
Good Faith Efforts at Compliance
Similar to physical locations, the emerging cases alleging ADA discrimination against defendants’ websites have a recurring theme: reasonable accessibility. Some other examples of good-faith efforts that businesses and administrators can undertake with their website developers to facilitate reasonable accessibility for people with disabilities may include: • • • •
Closed Captioning for videos Making design improvements such as sizing, colors, contrasts, saturation, and fonts, making the website easier to navigate and view Enabling Keyboard Navigation for users with motor impairments Confirming the website is compatible with external screen reader, voice over, and narrator software
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Attorney & Firm News more at flblaw.com/blog
FLB Welcomes New Shareholders: Lauren Sorrentino is Chair of the Firm’s Family Law Group. Her practice focuses on matrimonial and family law, including divorce, equitable distribution, alimony, prenuptial and property settlement agreements, child support, child custody, and protection from abuse. Lauren earned her Bachelor’s degree, summa cum laude, from Columbia University and her Juris Doctor degree from Boalt Hall School of Law, University of California at Berkeley. Amy Kruzel is a shareholder in the Firm’s Family Law Group. She represents clients in all aspects of family law, including divorce, custody stipulations, agreements in support, prenuptial and postnuptial agreements, and property settlement agreements. Amy draws on her mediation experience to achieve amicable resolutions whenever possible. She earned her Bachelor’s degree from Dickinson College and her Juris Doctor degree from The Pennsylvania State University, Dickinson School of Law. Catherine “Kate” Curcio is a shareholder in the Firm’s Family Law and Real Estate, Land Use and Development practices, working with her clients to solve a variety of family law challenges. In addition, she has a robust residential and commercial real estate practice, representing real estate owners and developers in a broad range of real estate transactions. She earned her Bachelor’s Degree from Lafayette College and her Juris Doctor degree from New York Law School.
FLB Congratulates: Stephanie A. Koenig was named a Shareholder of the Firm, effective January 1, 2021.
Marie K. McConnell was elected CREW Lehigh Valley President for the 2021 term.
Maraleen D. Shields was named a 2021 “Woman of Influence” by Lehigh Valley Business and named to the National Black Lawyers Top 100 list.
Christopher J. Kalbfell joined the Literacy Center Board of Directors.
Jane P. Long was recognized and honored at the 2021 Annual LVEDC meeting for her commitment to LVEDC and the Lehigh Valley.
Fitzpatrick Lentz & Bubba has been named a Top Workplace in the Lehigh Valley for 2021 by The Morning Call, marking the 8th consecutive year the Firm has been recognized for its strong culture and employment practices. FLB’s Real Estate team obtained rezoning approval for client Manhattan Building Company in its plan to redevelop numerous properties near the Allentown riverfront. FLB’s Litigation & Trial practice secured another win for the City of Allentown on appeal in a case stemming from a 2015 slip and fall on a pedestrian bridge in Joseph Daddona Park. Marie K. McConnell was named Solicitor to Easton Arts Academy, a local charter school.
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American Rescue Plan (ARP) Act of 2021 Notes and Highlights The American Rescue Plan Act of 2021 (the “ARP”) is the latest in Coronavirus relief legislation. On March 10, 2021, the House of Representatives passed the bill as amended by the Senate. President Biden signed the ARP into legislation on March 11. Below is a summary of the provisions that will have a direct impact on most, if not all, of FLB’s clients, their businesses, and their families.
Reauthorization of the State Small Business Credit Initiative (SSBCI) Act of 2010 The SSBCI established a seven-year initiative administered by the Department of the Interior to allocate federal funds to participating states with capital access programs. The SSBCI required such programs to extend credit to borrowers with less than 750 employees up to $20 million. Rather than the years 2008 and 2009, the SSBCI has been amended to apply to the years 2020 and 2021.
Modifications to the Paycheck Protection Program (“PPP”) An additional $7.25 billion has been designated to the Small Business Administration (SBA) for the PPP. Additionally, the PPP program has been expanded and the SBA now has authority to grant PPP loans to tax-exempt nonprofits except for those described in subsections (3), (4), (6), and (19); i.e., nonprofit corporations or foundations, civic leagues, business leagues, and Armed Forces posts, respectively. However, these nonprofit organizations must have less than 500 employees per physical location and it must not receive more than 15 percent of its receipts from lobbying activities and the cost of its lobbying activities cannot exceed $1,000,000. The SBA now has the authority to grant PPP loans to Internet Publishing Organizations as well. These organizations must have an NAICS code of 519130 or certify in good faith as an internet-only periodical publisher and engage in collecting and distributing local, regional, or national news. These organizations must also have less than 500 employees in order to qualify.
Economic Injury Disaster Loan (“EIDL”) Advances The ARP provides additional economic assistance to covered entities and severely impacted small businesses. By this the ARP means companies that employ 10 or less individuals and have suffered an economic loss of more than 50%. These businesses may qualify for grants of up to $10,000 from the SBA. For federal income tax purposes, EIDL advances are not included in gross income of the persons who will receive them, so they will not be taxed, but as an added bonus, expenses used with the proceeds of these advances can be deducted and used to create other tax attributes as well. As applied to partnerships and S Corporations, these advances shall also be tax exempt for partners and shareholders.
Provisions Specific to the Restaurant Industry A new grant has also been delegated to the SBA specific to restaurants - the Restaurant Revitalization Fund. Though the ARP says “restaurant” this should not be read literally. Under this provision saloons, taverns, food carts and food trucks also qualify for assistance from the SBA, so long as they have been in business since March 13, 2020. However, this aid specific to restaurants keeps with the ARP’s overarching purpose of helping small businesses. Entities that are owned by state or local governments, own
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or operate more than 20 locations, are publicly traded, or received a grant under Section 324 of the Economic Aid Act (i.e., Shuttered Venue Operators) do not qualify. Any eligible restaurants must also certify to the SBA that the uncertain economic conditions have necessitated the grant request and that approving the request is critical to the continuation of the restaurant. These grants cap at $5 million per physical location and $10 million for an eligible entity. Similar to the tax treatment of EIDL advances, any grants received from the SBA through the restaurant grant is not treated as taxable income with the added benefit of being able to deduct expenses paid for with proceeds from these grants.
Shuttered Venue Operators As briefly touched on above, the Economic Aid Act passed last December provided assistance for shuttered venues. The ARP is now providing an additional $1.25 billion in relief for these venues.
Credits for Paid Sick and Family Leave Employers are provided a credit against employment taxes for each calendar quarter equal to 100% of the qualified sick leave wages paid during the quarter. The credit itself cannot exceed the applicable employment taxes incurred on the wages paid during that quarter, but in circumstances where this limitation is exceeded, the excess amount can be treated as an overpayment and refunded. For state and local governments providing this benefit, the eligibility is also expanded. This credit is available through September 30, 2021.
Employee Retention Credit Employers who are severely financially distressed can obtain a credit against employment taxes up to 70% of qualified wages for each quarter. The credit is limited to $10,000 per employee, but any excess past the limit can be refunded similar to the sick and family leave credit discussed above.
TWO CITY CENTER
645 West Hamilton Street, Suite 800 Allentown, PA 18101 Phone: (610) 797-9000 • info@flblaw.com
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