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The Leadership Pivot In A Time Of Crisis

Posted: May 14th, 2020

Originally published by Express News Group

When I let go of what I am, I become what I might be.
— Lao Tzu

Leaders aren’t born — they are made by the times they exist in and how they rise to the occasion.

Let me back up.

The richness of Long Island lies not only in its real estate and school districts but also in its innovative businesses, restaurants and hospitality. Small businesses are the backbone of our economy and must survive.

Like many of you, I have spent my entire career helping to build Long Island — and, also like you, I am not willing to sit back and watch these businesses be destroyed without a fight.

The only way to move forward is for us to be leaders.

Leading through this pandemic requires both an acceptance of reality and being adaptable and agile to our ever-changing circumstances. The “pivot,” if you will — on steroids.

On Monday, March 16, shell-shocked business owners and employees, my team included, headed home with stacks of folders, remote login instructions, and barely a clue that the world had just changed forever.

Personally, I felt like I had been hit in the head with a bat, and I wasn’t alone. My next few days were filled with panicked calls from clients and friends who simply had no idea what the future held and how their businesses could survive. The fear was palpable, and it paralyzed some of the strongest people I know.

By Friday, March 20, most people were in one of two camps: overtaken by panic (not sure what to do, so doing nothing), or in total denial (refusing to accept the reality of where we are now, which is understandably difficult, because everybody just wants this to go away).

I was trained in the U.S. Marine Corps that no one is coming to help me. So I did the only thing that made sense to me: worked with my team to help cut through that static, and take action.

By Saturday morning, we had launched a first-of-its-kind coronavirus relief hotline, open to all members of the business community, regardless of whether they were CMM clients.

We set up a dedicated phone number and email address where businesses could submit questions about the impact of the pandemic on their businesses. The calls were then routed to the appropriate CMM attorney, who promptly followed up with guidance, at no charge.

Over those first few weeks, we answered hundreds of questions about everything on the business community’s mind: sick leave, workplace safety, cash flow, stimulus questions, and eventually the Paycheck Protection Program application and forgiveness. The list was endless.

Our simple pivot from providing legal services to clients to providing targeted business guidance to the larger business community enabled us to empower these businesses with the knowledge they needed to move forward and make critical decisions impacting their survival.

I truly believe that this work helped many businesses stay open when they otherwise wouldn’t have made it.

Our next pivot involved our charitable foundation, CMM Cares Inc. Before the pandemic hit, we were focused on fundraising initiatives; once we realized the gravity of the situation, our focus shifted from trying to raise awareness of us to raising awareness of others. There were so many good people doing so many good things out there, and we knew we needed to highlight those other organizations so that people could access all the resources available, not just ours.

We immediately launched a donation drive for comfort care items (granola bars, drinks, lotions, etc.) for the health care heroes fighting on the front lines at Stony Brook Medicine, helping to fulfill a critical need with a low-value ask.

We also started an aggressive social media campaign for CMM Cares, where we highlight a mix of charitable initiatives, mental health resources, businesses adapting to the changes, and ways people can help in a crisis that makes us feel powerless. In doing so, we were able to connect hundreds of people to these resources — which is exactly the reason we started the foundation in the first place.

None of us knows where this next chapter leads us, but we can all control our responses. We must be patient, focused, disciplined, hopeful, optimistic and zealous.

We must continue to endure the most stressful conditions we will likely face in our lifetime.

We have to look at a macro level, accept, and adapt.

We must help others along the way, including making sure we are taking care of our own physical and mental health.

We must be able to change and react to brand new circumstances that may arise without warning.

We must find ways to bring value to our new ecosystem.

In short, we must all be leaders to survive.

Governor Issues Executive Order Regarding Masks for Essential Workers

Posted: April 14th, 2020

Tags: coronavirus, labor & employment

Governor Cuomo issued Executive Order 202.16 on April 12 requiring that as of Wednesday, April 15 at 8 p.m., any employees present in the workplace of all essential businesses shall be provided and shall wear face coverings when in direct contact with customers or members of the public. Businesses must provide these face coverings at their own expense for their employees. Local governments and local law enforcement shall enforce the requirement.

Read the full Executive Order, which also addresses antibody testing, the Multiple Dwelling Law, and others, here.

Please call us with any questions regarding how this Executive Order affects your business.

Coronavirus-Related Suspension of NYS Laws – UPDATED April 7, 2020

Posted: April 7th, 2020

Tags: coronavirus

On April 7, 2020, Governor Cuomo signed Executive Order 202.14 to continue the modification and suspension of certain New York State laws relating to the COVID-19 disaster.

In relevant part, the Executive Order extends the provisions tolling the statute of limitations until May 7, 2020 (tolling previously went through April 19, 2020).

Further, the statewide restriction on all non-essential businesses and functions, including the operation of schools, has been extended an additional two weeks to April 29, 2020.

The Executive Order also clarifies the requirements for remote signing of documents such as deeds, wills, powers of attorney, and healthcare proxies. The law authorizes the use of audio-visual technology for witnessing if:

• The person requesting that his or her signature be witnessed, if not personally known to the witness, must present valid photo ID to the witness during the video conference (not before or after);
• The video conference must allow for direct interaction between the person and the witness (and the supervising attorney, if applicable);
• The witness must receive a legible copy of the signature page, which may be transmitted via fax or electronically, on the same date that the pages are signed by the person;
• The witness may sign the transmitted copy of the signature page and transmit the same back to the person; and
• The witness may repeat the witnessing of the original signature page as of the date of execution provided the witness receive such original signature pages together with the electronically witnessed copies within thirty days after the date of execution.

The text of the full Executive Order is available here.

Mediation Is Having Its Moment

Posted: April 6th, 2020

By: Scott Middleton, Esq. email

Tags: commercial litigation, coronavirus, negligence

Back in normal times – loosely defined as early March 2020 and before – mediation could be either a great tool to move beyond an impasse or – if the parties were too far apart and unrealistic – a colossal waste of time and money. Now that the court system has effectively shut down due to the COVID-19 pandemic, however, mediation has emerged as a critical tool to resolve disputes that keep marching on even as the world around us has stopped.

Alternative dispute resolution (known as “ADR”) is the settling of disputes outside the courtroom. Non-binding mediation is a voluntary form of ADR in which a neutral third party, the mediator, works to help the parties come to a mutually acceptable resolution to their dispute. (Unlike arbitration, mediation is not binding and mediators are not empowered to make or enforce decisions.)

In general, without the proper approach and preparation to mediation, the parties may be pushed further apart. Consider this example: a couple of years ago, my client was amenable to settling but the plaintiff, in the lead-up to the mediation, was less than forthcoming. He led me to believe that he was looking to settle for less than six figures. Based upon this understanding, my client agreed to mediation. We prepared our submission for the mediator and attended the mediation with the goal of resolving the case. At the mediation table, however, the plaintiff’s counsel increased his prior settlement demand and then acted indignantly when the offer presented was, in his mind, inadequate. While the mediator sided with us when it came to valuation, there was no reasoning with the plaintiff and needless to say, the case did not settle and we all moved forward to trial more frustrated than before.

Considering situations like that one, our office generally moves a case into mediation only when there is a glimmer of hope for a resolution. But remember, mediation is a tool to avoid trial in an effort to resolve matters reasonably. Well, regardless of how badly we may want to go to trial on a matter, for the foreseeable future in New York, that’s an impossibility. But the disputes that led litigations to be filed in the first place have not gone on hiatus. Therefore, in just a few [long] weeks, mediation has emerged as a vital tool to resolve disputes that were previously headed for trial before the coronavirus upended life as we know it.

In normal times, if the parties are reasonable and amenable to settling, mediation can be an economical way to resolve a matter before fully preparing for a long and costly trial. When we are prepared and the parties are close enough to make it worthwhile, mediation is almost always a success. Now that litigation is temporarily off the table, mediation is a more important tool than ever to achieve a final resolution when the parties need it. Please contact us to discuss whether the time is right to mediate.

Paycheck Protection Program Update

Posted: April 2nd, 2020

Tags: coronavirus, labor & employment

Guest Post by Alan R. Sasserath, CPA, MS, Sasserath & Zoraian, LLP

Note: Please visit the S&Z blog here for additional information current as of April 3, 2020.

As you are aware, there is a lot of confusion surrounding the Paycheck Protection Program (“PPP”) – maybe more confusion than certainty.

Many of you have taken advantage of our workbook to calculate the loan amount under the PPP. We have adjusted our workbook as described below based on questions we have received:

Q: What period should be used to calculate the “Average Monthly Payroll”?

A: Based on our reading of the law, you are to use the 12 months ending on the date of the loan applications. From a practical perspective, the banks may require you to use calendar year 2019 as indicated in the instructions to the SBA Application. You should contact your lender for guidance.

Q: Are Independent Contractor Payments included in the definition of Payroll Costs used to determine “Average Monthly Payroll”?

A: Based on our reading of the law, they are included. This is open to interpretation, however; this Borrower Summary indicates that they are as does guidance on the JP Morgan Chase FAQ regarding the CARES Act.

Q: What is included in the definition of “Group Health Care Benefits” used to calculate Payroll Costs? Does it only include medical or does it include vision and dental among others benefits?

A: This is subject to interpretation as there is no additional guidance in the CARES Act. We will provide additional information as it becomes clearer.

Q: How is the $100,000 cap on per employee payroll computed?

A: Unfortunately, this too is confusing with no clear guidance. Please see “PPP Information Sheet: Borrowers.” We have highlighted several sections of the sheet that discuss this issue. Here are the areas of this document causing confusion:

The first highlighted sentence indicates: “Payroll costs are capped at $100,000 on an annualized basis for each employee.”

The next highlighted sentence indicates: “Payroll costs include: Salary, wages, commissions or tips (capped at $100,000 on an annualized basis for each employee)” and then goes on to add group health care benefits among other costs to the calculation of payroll costs and does not mention the $100,000 limitation on Payroll costs.

The third highlighted sentence states: “Payroll costs will be capped at $100,000 annualized for each employee.”

How do we interpret that? Are salary, wages, commissions or tips capped at $100,000 annualized for each employee or are Payroll costs capped at $100,000 annualized for each employee? Are both capped? The wording on the JP Morgan Chase site referred to above parrots the language in the PPP Information Sheet: Borrowers. Unfortunately, we don’t have a clear answer on that yet but we will keep you updated.

Because of the questions above, our workbook has been updated as follows:

Independent contractors can be entered in the workbook by using the dropdown menu on tabs 2a and 2b, line 12. That functionality has always been there. Choose “Other” to enter independent contractor information.
With regard to the $100,000 cap on employee payroll, we have two separate workbooks as follows:
1. PPP loan calculation V1.1 033020 calculates the cap based on payroll costs per employee.
2. PPP loan calculation V2.0 040220 calculates the cap based on Salary, wages, commissions or tips per employee and will yield a higher loan amount because of that.

Please note that the workbooks are meant to be used as a guide to calculate the loan amount. Please consult with your advisor and bank regarding the final amount of the loan.

Negotiating from a Distance

Posted: April 2nd, 2020

By: Joe Campolo, Esq. email

Published In: HIA-LI Reporter

Tags: negotiation

Clammy handshakes, a scratched mahogany table with papers strewn about, laptops fighting for space with half empty cups of coffee, and that awful fluorescent lighting above – sounds pretty great right about now, doesn’t it?

In this unprecedented time of social distancing due to the coronavirus pandemic, negotiations are still happening every day (and they must, for our economy to recover) – they just look different. Critical tools in the negotiator’s toolbox involving nonverbal cues, such as body language and emotional expression, take a back seat during negotiations that take place by phone, videoconference, or even [shudder] email. Research has shown that in-person negotiations yield better results than negotiations that happen via screen, but don’t get discouraged – just reframe your thinking.[1] Here are some tips to make the most of your virtual negotiations until we’re back in the conference room.

Go back to basics. You still can’t skimp on the preparation, folks. You still need to do your homework. Gathering as much information as possible is key to identify and make sense of the issues in your negotiation. Spending the time on preparation will open more doors for you to create value.

Be an active listener. While leaning in or using other body language may be off the table, you can still show your interest in your adversary’s point of view by paraphrasing their phrases back to them and peppering the conversation with simple phrases such as “yes,” “I see,” and “I understand.” Actively listening encourages your opponent to continue talking – and the more that happens, the more control you have over the negotiation.

Build affiliation. You may be separated by screens, but if there were ever a time to bond with someone you may otherwise have nothing in common with, it’s now. In normal circumstances, I find mindless banter about the weather and traffic to be a waste of time you could instead be building a connection that can help you negotiate. But now… the rules have changed. People are hurting, anxious, and overwhelmed. Ask your adversary how he or she is holding up, and take the opportunity to share what’s going on in your world. Don’t cut right to the chase. By creating rapport, you create value.

Mix it up. Modern technology enables us to be connected 24/7/365, and the COVID-19 crisis has proven it. While you may not be meeting face to face, you still have a wealth of options to get in touch. If you’re negotiating with someone you don’t know well or if the negotiation has just begun, consider a videoconference as the next closest thing to an in-person meeting. As the negotiation progresses, the timing may be right to negotiate by phone. I really believe that email, which is about as impersonal as things can get, is a last resort when negotiating – but it’s still an appropriate choice, of course, to settle simple issues and share documents.

To lift ourselves out of the economic fallout of COVID-19, continuing to make deals and negotiate is critical. In that way, the negotiations that take place during this period are among the most important of our lives. Keep focused and keep moving forward so we can get back to those fluorescent lights and clammy handshakes as soon as possible.

[1] Read more on Harvard Program on Negotiation Blog.

The CARES Act Paycheck Protection Program

Posted: March 31st, 2020

Tags: coronavirus, labor & employment

Guest Post by Alan R. Sasserath, CPA, MS, Sasserath & Zoraian, LLP

On Friday, March 27, the President signed the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) into law. There are a myriad of tax changes and economic stimulus provisions in addition to unemployment, health care, health system as well as other stimulus and stabilization provisions.

Cash flow is critical right now for all businesses, especially small businesses. We are still at the point where it is the most critical issue and will continue to be the most critical issue for at least the short term. In our estimation, the most significant business provision in the CARES Act is the Paycheck Protection Program (“PPP”) which falls under the U.S. Small Business Administration’s (“SBA”) 7(a) loan program.

Because it is so significant from the cash flow perspective, we have spent the better part of the last few days analyzing the PPP. The tax and other cash flow provisions in the CARES Act are important and we expect to take a deeper dive into those this week; however, they don’t come close to comparing to the cash flow significance of the PPP.

The most significant provision of the PPP is the provision that it is a loan that can be forgiven under certain circumstances.

Here is a high-level overview of the PPP:
• It generally applies to businesses with fewer than 500 employees.
• The amount of the loan is the lesser of (1) the average monthly payroll (salary, wage, commission, tips, vacation, group health benefits, certain other payments, etc.) up to $100,000 on an annualized basis per employee/payee for the 12 months preceding the date of the loan multiplied by 2.5 plus the balance of any pre-existing emergency loan, or (2) $10,000,000.
• The loan proceeds may only be used for payroll as defined above, interest on any mortgage obligation, rent, utilities and interest on any other debt obligations that were in place before February 15, 2020 (“Covered”).
• In evaluating the eligibility of a borrower, the lender shall consider whether the borrower was in operation on February 15, 2020; had employees; or paid independent contractors as reported on Form 1099-MISC.
• No personal guarantee requirement.
• No collateral requirement.
• Forgiveness: The amount that can be forgiven include the amounts paid by the borrower during the 8-week period following the loan origination date for:

• Covered payroll costs – Generally including payroll as defined above up to $100,000 per employee/payee on an annualized basis. In other words, the amount of loan forgiveness available is limited to $1,923.07 per week or $15,384.56 over an 8-week period per employee.
• Interest on a “Covered” mortgage obligation.
• “Covered” rent obligation.
• “Covered” utility obligation.
• Any amount not forgiven will become a term loan for up to 10 years with a maximum interest rate of 4%.

The loan forgiveness can be reduced either based on a reduction in employees or a reduction in salaries of certain employees if their salaries are less than $100,000 on an annualized basis.

Even if you have laid people off, you are still entitled to the loan based on prior year payroll. If you lay people off during the period February 15, 2020 – April 26, 2020 and hire them back by June 30, 2020, then you will not be penalized as discussed in the paragraph above. Remember, even if you are penalized, the penalty is that the term loan remains in effect and is not forgiven. Please note that the penalties related to the forgiveness of the loan is a complicated area of this program and beyond the scope of this writing.

We are suggesting that everyone should analyze this loan as it pertains to their circumstance. If you aren’t sure, take it. There is no penalty to prepay it.

It is going to take a little while for the banks to gear up to be able to make these loans. We don’t know how long. As of Friday, one banker mentioned that they were waiting from the SBA for guidelines. Treasury Secretary Mnuchin said that he wants loans to start by Friday. We’ll see.

With the program’s dependence on banking relationships, those businesses who lacked strong relationships prior to the coronavirus pandemic may get left behind if they don’t act quickly. We can help you with this. In the meantime, if you do have a banking relationship, call your bank and make sure they know you are on top of this and want it as soon as it is available.

Here is a workbook to assist in the calculation of the amount of the loan. Please call us if you need assistance and we will walk you through it.

It’s the start of a new week, and we are now one week closer to getting through this ordeal. Keep moving forward. Look at the shovel, don’t look at the mountain.

Thank you for your time.

Note: This workbook is provided by Sasserath & Zoraian, LLP and is intended solely for general informational and educational purposes. It is not intended in any way as financial, securities, insurance, tax or legal advice or services, or as a solicitation for any financial, securities, insurance, tax or legal product or service. Please consult with your financial, securities, insurance, tax and/or legal advisors for advice regarding your specific circumstances. The calculations herein are estimates based on our interpretation of the bill signed into law on March 27, 2020 under the CARES Act.

Shareholder Liability for Unpaid Wages

Posted: March 29th, 2020

By: Arthur Yermash, Esq. email

Tags: coronavirus, labor & employment

As the coronavirus pandemic continues to spread around the world and particularly in New York, business owners are being challenged like never before to keep their companies, employees, and their own families afloat. As we shared in a recent article, litigants must reach an extraordinarily high bar to be able to “pierce the corporate veil” of a business and shift a company’s liabilities to the owner personally. One notable exception to be aware of, however, concerns unpaid wages for New York employees. This issue is of particular concern as business owners grapple with challenging decisions in light of business shutdowns and other challenges brought on by the deadly COVID-19 virus.

Pursuant to changes to the Limited Liability Company (LLC) Law and Business Corporation Law (BCL) enacted about five years ago, the 10 LLC members with the largest membership interest, as well as the 10 largest shareholders of a foreign (non-New York) corporation with New York employees, may be held jointly and severally liable for “all debts, wages, or salaries” due to “any of its laborers, servants or employees… for services performed by them for [the entity].” (The 10 largest shareholders of New York corporations were already on the hook for such wages under the BCL prior to the other law changes five years ago.)

Such imposition of liability on the 10 largest shareholders/members creates an exception to the general shielding of a shareholders/members for claims made against the corporate entity. The definition of “wages or salaries” includes all compensation and benefits payable by an employer to an employee, such as overtime, vacation, holiday and severance pay, employer contributions to pension funds, and insurance payments.

A New York employee seeking payment for unpaid wages must first seek payment from the business itself. If payment is not made, the top 10 shareholders/members may be held liable for any unsatisfied judgments. Note, the employee must provide notice to the shareholders/members within 180 days after his or her employment terminates.

As many business owners are facing harsh realities and extremely difficult business decisions in light of the deadly COVID-19 virus, it is important to keep some of these issues in mind. Asking employees to work without pay, or even where employees volunteer to work without pay still creates potential financial exposure (including penalties) to the employer and its principals in these trying times. Any decision regarding reduced or no pay should be carefully evaluated in light of applicable law.

With today’s economic uncertainty, business owners should be aware of any potential liability they may face so they can plan accordingly and take steps to mitigate. Please call us for guidance on your specific situation. We are here to help your business get through these challenges.

Complying with the Governor’s Executive Order Regarding E-Notarization

Posted: March 25th, 2020

Tags: coronavirus

In response to the COVID-19 pandemic, Governor Cuomo has issued Executive Order No. 202.7 authorizing notary services via audio-visual technology. Even during these trying times, business must continue. Here are the steps for valid e-notarization (courtesy of NYS Academy of Trial Lawyers):

Set up a video conference allowing for direct, live interaction between the signatory and the notary.
The signatory must present a valid photo ID.
The signatory must affirmatively state that he or she is present in the State of New York.
The signature must then sign, and on the same date, email or fax the document to the Notary.
The Notary may then notarize the emailed or faxed copy and send it back to the signatory.

If a fully executed original is needed, the original and e-notarized documents must be sent to the Notary within 30 days. The Notary may then notarize the original using the e-notarization date.