As you are probably aware, yesterday afternoon, March 25, 2020, Minnesota Governor Tim Walz announced Executive Order 20-20 (the “Order”), directing Minnesotans to stay at home. As set forth in the order, beginning at 11:59 pm on Friday, March 27, 2020 through 5:00 pm, Friday, April 10, 2020, all persons currently living within the State of Minnesota are ordered to stay at home or at their place of residence except to engage in activities or work for critical sectors as outlined in the Order.  The 21-page Order lists Financial Services as a critical service, which includes workers at banks. As a result, bank employees will be permitted to leave their homes to come to work.

Banks should consider providing each employee commuting to the office with a letter outlining that they are an employee of an institution deemed essential under the Order. Though not required, we have found this can be valuable for employees if they are questioned about their purpose being outside of their home. Winthrop has starting drafts of these letters and we would be happy to work with you to prepare the necessary letters for the bank’s workforce.  If you have any questions about preparing these letters for your workforce, or other matters related to COVID-19, please contact us.

The below information was updated on April 3, 2020, to include information on the Interim Final Rule and updated application.  A link to our alert regarding the takeaways from Interim Final Rule is available here. This article was originally published under the title “Congress Poised to Pass Massive Loan Program for Small Businesses – What You Need to Know”.

H.R. 748, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) is now law, after the President signed it on March 27, 2020.  Among other stimulus relief, the CARES Act authorizes $349 billion in forgivable Section 7(a) SBA loans under the “Paycheck Protection Program”, which loans would be issued by qualified SBA lenders.  The SBA will be issuing guidance and rules in the coming days or weeks that will permit small businesses to obtain these loans to fund their payroll and other expenses.

This Paycheck Protection Program is separate from and in addition to the SBA’s Economic Injury Disaster Loan Program (“EIDL”) passed in connection with the Families First Coronavirus Response Act, as described in our client alert.  Businesses will be eligible to borrow under both the EIDL program and to refinance their EIDL loans through Paycheck Protection Program Section 7(a) Loans.  This is a huge loan program and a massive subsidy to small businesses.  For context, SBA loans of any type totaled $29 billion in FY2019.

Executive Summary of the Paycheck Protection Program

• $349 billion in authorized Section 7(a) SBA loans, to be issued directly by banks and 100% guaranteed by the SBA.
• Businesses with fewer than 500 full or part time employees will be eligible, with higher employee limits for hotels, restaurants and other industries approved by SBA.
• No personal guaranties or collateral.
• Loan amounts will be 2.5 times avg. monthly payroll costs, up to a $10m cap + the amount of a refinanced EIDL loan.
• Interest will be 1% and payments of principal and interest deferred for 6 months.
• Loans will be forgiven in an amount equal to 8 weeks of payroll, mortgage interest, rent, and utility expenses, with the amount of forgiveness reduced if employee headcount or compensation is decreased.

Program Overview

The Paycheck Protection Program operates as a form of subsidy equal to 2.5 months of payroll costs for small business.  Early indications are that demand for these loans will be very high, because of the financial need in this current economic climate and the favorable terms of the loans.  The Section 7(a) SBA loan program has been used as a framework for issuing loans in the Paycheck Protection Program, but many of the traditional limitations of a Section 7(a) loan have been done away with – for example, lenders will not be required to obtain SBA approval of a credit determination, borrowers will include many companies that would not typically be “small business concerns” eligible for a 7(a) loan, and there are no personal guaranty or collateral requirements.  Lenders will be incentivized to issue loans; the SBA will reimburse processing costs at a rate between 2% and 5% of the principal amount of the loan, with the rate dependent on the size of the principal.

Eligible Borrowers—Borrowers eligible for Paycheck Protection Program loans include all “business concerns” with fewer than 500 employees.   All borrowers will need to have been actively conducting a trade or business on February 15, 2020, and must be able to demonstrate that the borrower had incurred payroll costs or 1099 payment obligations at that time.

Other types of eligible borrowers are as follows:

• Businesses with more than 500 employees operating primarily in industry NAICS Codes starting in 72 (i.e. restaurants, hotels and casinos) are also eligible, as long as not more than 500 employees work at any single location.
• Other industries are subject to employee size standards greater than 500, as determined by the SBA.
• Independent contractors, self-employed persons or sole proprietorships.
• 501(c) nonprofits.
• Veterans’ organizations or Tribal business concerns.

The affiliation rules of 13 CFR 121.301 may, in some circumstances, limit eligibility for these loans to the extent that “affiliates” of a borrower may be aggregated for purposes of determining the number of the business concern’s employees.  Affiliates generally include businesses under common control with a borrower, and control may result from the power to direct management of the borrower, or in the negative, such as an investor who has the right to prevent a borrower from taking action under the terms of borrower’s charter, bylaws, or other agreements among the owners of the borrower.  The affiliation rules will not apply to those businesses with NAICS codes starting with 72 (hotels, restaurants, or casinos), franchises registered with the SBA, or those with existing financing from a Small Business Investment Company (“SBIC”).

Loan Certification—Borrowers will not need to make any special showing of economic necessity to obtain a loan, and the “no credit elsewhere” rules have been waived for these loans.  The form SBA loan application includes a number of represenations, including the following:

• The uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient;
• Acknowledging that funds will be used to retain workers and maintain payroll, or make mortgage payments, lease payments and utility payments; and
• Eligible recipient does not have an outstanding loan or pending application for a loan under this subsection for the same purpose and duplicative amounts.

Eligible Loan Amount—The maximum loan amount under the Payroll Protection Program is equal to 2.5 times the borrower’s average monthly payroll costs, up to a $10m cap.  The average payroll costs will be calculated from the 1 year period preceding loan origination, except that seasonal employers may elect a different testing period. Payroll costs include salary, wages, commission, paid leave, allowance for dismissals, benefits, and state or local taxes.  Payroll costs exclude compensation to any single employee in excess of $100k annually and any payments to persons that are not U.S. residents. An eligible borrower may also increase the amount borrowed under a Paycheck Protection Program loan to pay off an outstanding EIDL (made under Section 7(b)(2) of the Small Business Act) that the borrower wishes to refinance.

Independent contractors will be eligible to borrow 2.5 times monthly average income, not to exceed $100,000 on an annualized basis. The maximum amount an independent contractor could borrow to replace the independent contractor’s income would be $20,833 ($100,000 / 12 to find the monthly average of $8,333.33, multiplied by 2.5).

Uses of Borrowed Funds—While loan eligibility is based solely on payroll costs, funds may be used to pay employee or contractor compensation (even in excess of $100k), plus mortgage interest, rent, utility expenses and payments on indebtedness incurred prior to date of issuance.

Interest and other Payment Terms—Interest will be charged at 1%.  Borrowers may defer payments on these loans for the six (6) month period commencing on the origination date.  SBA loan fees have also been waived.

Forgiveness—The loans would be forgiven in an amount equal to payroll, rent, mortgage interest and utility expenses for the 8 week period commencing at loan origination, up to the entire principal amount of the loan. Seventy-five percent (75%) of a borrower’s expenses eligible for forgiveness must consist of payroll costs, and rent, mortgage interest, and utilities may only constitute 25% of the forgiven amount in the aggregate. The amount of the loan forgiven would be reduced under two circumstances:

• Forgiveness will be reduced at the ratio that (x) the borrower’s average full-time employee headcount during the period from the 8-week period commencing on the date of disbursement of the loan bears to (y) the average number of full-time employees during the period between Feb 15, 2019 – Jun 30, 2019 or, if elected by the borrower, Jan 1, 2020 – Feb 29, 2020.  The average will be based on the number of employees included in each pay period.
• Forgiveness will be reduced on a dollar-for-dollar basis by reductions to compensation in excess of 25% for any employee earning less than $100k annually.

Borrowers who have already reduced employee headcount or compensation after February 15, 2020 will be able to eliminate the effects of any reduction to loan forgiveness eligibility if the number of employees or compensation reductions are returned to February 15 levels on or before June 30, 2020.

To obtain forgiveness, a borrower will need to provide the following documentation:

• Payroll tax filings
• State income, payroll and unemployment insurance filings
• Documentation verifying mortgage, rent, or utility payments, such as cancelled checks payment receipts, transcripts of accounts or other documents

The borrower will also certify that the documentation provided is true and correct and that the proceeds of the loan were used to pay payroll costs, rent, mortgage payments or utilities.

The afternoon of March 25, 2020, Minnesota Governor Tim Walz announced Executive Order 20-20, directing Minnesotans to stay at home. According to the order, “Beginning on Friday, March 27, 2020 at 11:59 pm through Friday, April 10, 2020 at 5:00 pm, all persons currently living within the State of Minnesota are ordered to stay at home or in their place of residence except to engage in the Activities and Critical Sector work set forth” later in the order.

The 21-page order includes the CISA Guidance on the Essential Critical Infrastructure Workforce, as well as a lengthy list of exemptions to the order. Further information, and a link to apply for a special exemption, can be found on the Minnesota Department of Employment and Economic Development (DEED) website:

https://mn.gov/deed/newscenter/covid/business-exemptions/

In addition to the above order, Governor Walz also issued Executive Order 20-18, extending the existing closure of “bars, restaurants and other places of accommodation” until May 1, and Executive Order 20-19 directing schools to use distance learning through May 4.

Note: This information is current as of 8:00 a.m. on April 1, 2020.

The Small Business Administration’s Economic Injury Disaster Loan Program (EIDL) is providing up to $2 million in long-term disaster-relief loans to qualifying small businesses for economic injury suffered due to the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) has opened up the EIDL program to more types of small businesses, relaxed some of the personal collateral requirements, and streamlined the application process. The expanded EIDL program also offers small businesses up to a $10,000 emergency cash advance that may not need to be paid back.

Loans under the EIDL program are separate and distinct from loans under the new Paycheck Protection Program (the “PPP”) established by the CARES Act, which we summarized here. For many small businesses, we believe that the PPP loans will be a more attractive financing option. In limited circumstances, it could make sense to obtain loans under both programs. Please contact us to discuss whether this makes sense for your business.

The following FAQs provide information about qualification and the application process. For more information from the SBA:

• Click here to access SBA resources and apply online
• Click here to access the SBA’s size standards tool if unsure whether you qualify as a small business.

Does my business qualify?

First, your business must qualify as a small business. Generally speaking, you are considered a “small business” if you either (a) have 500 or fewer employees, or (b) have more than 500 employees but are otherwise considered “small” under the SBA’s size standards. Size requirements vary by industry and are usually determined by your number of employees or average annual receipts. For information and tools to determine the size of your business, visit the SBA’s size standards tool linked to above, or find more information at “Table of Size Standards”. Certain other types of businesses may also qualify – see the loan application for more details.

Second, you must be able to demonstrate that the COVID-19 pandemic is the result of your economic injury or hardship, and demonstrate how you expect it to continue to impact your business, especially for the next six months. Most eligible businesses should be able to easily satisfy this requirement.

Is this the best option for my business?

If your business is experiencing financial hardship due to the COVID-19 pandemic, the EIDL may be right for you. However, you should give careful consideration to the personal collateral requirements, to the extent they apply, and whether a PPP loan would be a better option. As noted above, some businesses may want to apply for loans under both programs.

How much can I borrow?

The SBA will determine the exact amount you can borrow based on cash flow projections and demonstrated need, up to $2 million, with the goal being to keep your business solvent. As stated above, the loan amount may also depend on factors including the financial position of the principal owners of the business.

We recommend providing as much financial detail as possible as part of the loan application and, if possible, being very specific about the amount you are seeking to borrow, with corresponding projections showing why this amount is necessary for you to be able to pay your bills and make payroll in the ordinary course of business. Practically speaking, with millions of applications pouring in over the next few weeks, it seems unlikely that the SBA’s loan officers will have the bandwidth to critically scrutinize your application and challenge any reasonable assumptions included in your financial projections.  In short, you want to give the loan officer reasons to say “yes” instead of reasons to say “no.”

What are the loan terms?

Unlike the PPP loans and other traditional SBA loans, which are handled by third-party banks, EIDLs are underwritten, administered, and serviced directly by the SBA. Term length is either 15 or 30 years. We have received guidance from the SBA that the “default” term is 15 years, but that it may be extended to 30 years if the business demonstrates that it needs to minimize its monthly P&I payments under the loan. Current interest rates are 3.75%, but may change as the program continues to evolve. If interest rates go down, the expectation is that the reduced interest rate will apply retroactively to all borrowers under the program.

Borrowers can defer principal and interest payments for the first 11 months of the loan, with the first payment becoming due 12 months from the loan date. It is not expected that any portion of the loan will be forgiven. There are no prepayment penalties.

Are there restrictions on how the loan proceeds can be used?

Yes, funds can be used only to pay expenses that arise in the ordinary course of business, not for expansion, development, CapEx items, or other similar projects. Loan proceeds also may not be used to pay down long-term liabilities, refinance existing debt, or make distributions or other payments to owners. You will need to keep track of how you used the proceeds for 3 years in case of an SBA audit.

What are the collateral requirements?

As mentioned above, the CARES Act waives the personal guaranty requirement for loans less than $200,000. However, businesses borrowing more than $200,000 under this program should expect to provide personal guaranties from any person who owns more than 20% of the business. In addition, if the business is owned by another business or entity, the SBA will require a personal financial statement (and corresponding personal guaranty and/or pledge of personal assets) from the individual(s) who ultimately own the business.

Based on current guidance from the SBA and the new streamlined EIDL application, it is unclear if the SBA is still seeking pledges of personal collateral from the principal owners for loans less than $200,000 or if the provision in the CARES Act that waived the personal guaranty requirement was also intended to waive the personal collateral requirement. For loans over $200,000, business owners may still be required to provide (in addition to a personal guaranty) a pledge of personal assets as collateral to secure the loan, which may include mortgages on real estate in which the owner has significant equity, including any personal residence. Historically, this was a requirement for the EIDL program, but it is not clear how strictly the SBA is enforcing it in light of the current crisis. To the extent that the SBA does, in fact, require a personal guaranty and/or a pledge of personal assets, it is very important to carefully think through the legal implications, especially in light of the current economic climate.

How do I apply?

Applicants can find more information at https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources and apply online at https://covid19relief.sba.gov/ or by phone at 1-800-659-2955 through the SBA Customer Service Center.

How long until applications are processed and funds are available?

Current processing and funding time is around three weeks after application, with expectations of a dramatic increase in processing times as application numbers continue to grow. We have heard that millions of applications have already been submitted in the past few weeks.

What if I need the money now?

Applicants to the EIDL program can now apply for an EIDL loan advance of up to $10,000. This advance does not have to be repaid and successful applications will have funds made available to them within three (3) days of applying.

We have spoken to several commercial banks (including several of our banking clients) who may be willing to provide short-term bridge loans to eligible businesses that have applied for an EIDL but are still waiting for it to be funded. We would be happy to connect you with the right people if you’d like to explore this further.

Conclusion

If an EIDL appears to be right for your business, it is advisable to apply as soon as possible and provide as much information as possible to help the loan officer quickly evaluate and approve your application. If funded, your business can decide whether to proceed based on the EIDL offer and terms.

Note to Minnesota businesses: Qualifying Minnesota small business applicants may also apply for the Small Business Emergency Loan Program for emergency relief loans from $2,500-$35,000. More information is available here: https://mn.gov/deed/business/financing-business/deed-programs/peacetime/.

Governor Tim Walz ordered any Minnesota business, nonprofit or non-hospital health care facility to take an inventory of any supplies of PPE, ventilators, respirators or anesthesia machines no later than Wednesday, March 25, 2020, and report it using the following form: https://mn.gov/ppe. The order mandates that such facilities and businesses must not use any of these supplies other than for use in delivering critical health care or other essential services and must be prepared to either donate the supplies to a local coordinating entity or to “be prepared for the possibility” of donating or selling them for use by critical health care workers.

The order references dental, veterinary, construction and institutes of higher learning or “other” as facilities and businesses to which the order may apply. The definition appears to be deliberately broad, and we expect that there may be further clarification as to the scope of its applicability.

View the full order here.

At 2:00 today, March 20, 2020, Minnesota Governor Tim Walz announced three new Executive Orders. The first addressed price gouging, while the other two focused on ensuring that Minnesotans in need of services administered through and overseen by the Department of Human Services (DHS) are able to continue to access those services.

Executive Order 20-10: Ban on Price Gouging

Minnesota does not have a law specific to price gouging, which has become a problem in recent weeks. This order prohibits businesses from engaging in price gouging while the peacetime emergency is in place.

Executive Order 20-11: Waive Federal Requirements as Needed

This order directs DHS to seek all federal 1135 waivers available. While the federal government has already made available a variety of blanket waivers, 1135 waivers are available to states during a declared Public Health Emergency, and allow for the waiving of certain Medicare, Medicaid and Children’s Health Insurance Program (CHIP) provisions under Section 1135 of the Social Security Act. To date, Florida and Washington state have been granted 1135 waivers due to the COVID-19 pandemic. The federal government is encouraging states to apply.

Executive Order 20-12: Waiving State DHS Requirements as Needed

Executive Order 20-12 grants DHS temporary emergency authority to waive or modify various existing statutes and administrative rules that set standards intended to protect the health and safety of Minnesotans. Scores of service providers have expressed the need to loosen these standards in order to provide for continuity of service while maintaining health and safety standards related to COVID-19.

In these difficult times, we are certain that you are focused on the health and safety of your families and employees.  At the same time, we understand you are concerned about the devastating impact that restaurant or franchise unit closures due to COVID-19 will have on your business’s financial condition and your contractual obligations to landlords, vendors and lenders.  This Client Alert discusses the rights you may have to suspend, postpone or modify your performance under your real estate leases due to what is commonly referred to as a “force majeure” clause.

Buried in the back of many contracts, including real estate leases, you may find provisions known as “force majeure” clauses that generally provide for relief to a landlord or tenant to the extent that their performance is materially and adversely affected by an event that constitutes “force majeure.”  The more traditional events or circumstances that are thought of as “force majeure” events are floods, tornados, hurricanes or other so called “Acts of God.”  It can certainly be argued, however, that a pandemic should likewise be treated as an event of “force majeure” which may, under certain circumstances, justify postponement of rental payments or excuse for performance under a real estate lease.

Language found in QSR leases varies greatly from lease to lease, and whether you can successfully prevail on a claim that you should be permitted to postpone or modify your payment obligations to your landlords will depend on the precise language set forth in each lease.  In order to get your arms around this issue, our recommendations to our franchise clients are as follows:

1. Review each lease agreement to identify those that have “force majeure” clauses or similar clauses that address the impact on a party’s obligations due to the occurrence of events beyond your reasonable control, such as fire, casualty, Acts of God or other events.  Please note that not all leases will use the phrase “force majeure;” instead, there may be provisions that operate in the same manner, but use different terms such as “events beyond the parties control,” “Acts of God,” or similar terminology.
2. Identify any language that appears to be specifically “on point” with respect to our current crisis.  You may find that some more recent leases mention the impact to a party due to “epidemics,” “pandemics,” or “disease.”  That is the most favorable language you might find, but the absence of these specific types of events does not necessarily mean you would not be entitled to some relief under our current circumstances.
3. Pay close attention to any notice provisions or other procedural requirements you must follow in order to take advantage of the relief provided by these types of clauses.  For example, we have seen a number of leases that require that a party intending to rely on the relief afforded by these provisions must provide its landlord with 10-15 days’ notice after the occurrence of the event constituting “force majeure.”  If a party fails to provide timely notice, some of the provisions we have seen state that the rights will be deemed to have been waived.
4. Please be aware that, even if you have provisions in your lease addressing “force majeure” or “events beyond your reasonable control,” such provisions will not automatically excuse performance on your part.  Before performance is excused or can be postponed, you will likely need to be prepared to demonstrate that your financial position has been dramatically impacted by the event in question so that it is virtually impossible for you to make your lease payments in a timely manner.  Please note that some courts have not granted relief under a “force majeure” clause if a party’s performance has merely been rendered impracticable or economically difficult.  Therefore, we do not recommend unilaterally withholding rent payments before carefully reviewing the specific terms of your lease and seeking advice on its legal implications.

Summary

Leases and other contracts with vendors or lenders may contain “force majeure” or other similar provisions that will support your claim to postpone or modify your performance obligations to your landlords and other parties if your ability to perform has been severely impacted by the current crisis.  In all events, we recommend that you review your leases and other material contracts carefully as soon as reasonably possible to make sure you preserve your rights to be able to take advantage of these types of provisions.  This should help you avoid the risk of inadvertently waiving your rights to do so by waiting too long to bring up this issue to landlords or other contracting parties.

As always, we are available to answer questions and assist our clients in any way possible with respect to these types of lease issues or any other employment or financing problems facing your business in these difficult times.

COVID-19 has presented businesses in the United States and around the globe with unprecedented challenges in supply chain and business continuity and performance of contractual obligations. In this uncertain time, an often overlooked “boilerplate” contract provision may be key to understanding your rights and obligations under your business contracts: a force majeure clause. This information may be important to any business facing issues related to contract performance – whether it involves another party’s ability to perform its contractual obligations or your own ability to perform under any of your contracts. This could include important business contracts such as leases, supply agreements, or services agreements.

WHAT YOU NEED TO KNOW

• What is force majeure?
• Is a force majeure clause in your contract and what does it mean?
• How can performance be suspended under my contract?
• What if there is no force majeure clause?

What is force majeure?

Many business contracts contain force majeure or other similar provisions that may support the claim by one party to postpone or modify its performance obligations to the other party under the contract. A force majeure typically means “an event or effect that can be neither anticipated nor controlled.” Depending on the exact language in the contract (see below), force majeure events may include natural disasters, national emergencies, strikes, shortages, government orders, epidemics, or pandemics. When the conditions in the clause are met, a party’s performance under the contract may be suspended or delayed because the circumstances that prevented performance were beyond its reasonable control or unforeseeable at the time the parties entered into the contract.

Please note that not all contracts will use the phrase “force majeure;” instead, there may be provisions that operate in the same manner, but use different terms such as “events beyond the reasonable control of a party,” “Acts of God,” or similar terminology.

Is there a force majeure clause in my contract and what does it mean?

If your contract includes a force majeure clause, then the precise language of the contract will control whether and under what circumstances nonperformance is excused; some force majeure clauses contain an extensive list of events that qualify, while others are more restrictive and are limited to a few specific events. In other words, whether the contract’s force majeure clause applies to issues caused by the COVID-19 pandemic likely hinges on the exact language in the contract, and the exact language used in a force majeure provision varies greatly from contract to contract.

In our current environment, if the force majeure clause explicitly includes epidemics, pandemics, or government orders that specifically apply to one of the contract parties, then the affected parties’ obligations under the contract may be postponed or excused. If those types of events are not explicitly mentioned in the contract (or if the force majeure clause is ambiguous), then performance may still potentially be excused based on the facts and circumstances of each individual situation.

How can performance be suspended under my contract?

The force majeure clause also may include notice, duration, and mitigation requirements that must be met or followed to excuse nonperformance. Further, the extended nonperformance may apply to some, but not all, of your obligations under the contract. It is critical to read the clause carefully to understand each party’s obligations to be sure the necessary steps are taken and documented. For example, we have seen a number of contracts that require a party intending to rely on the relief afforded by these provisions to provide the other party with 10-15 days’ notice of the occurrence of the event constituting “force majeure.”

Before performance is excused or can be postponed, the affected party will probably need to be prepared to demonstrate that its financial position has been dramatically impacted by the event in question, and that it has taken reasonable steps to avoid or mitigate the negative impact from the virus.

Alternatively, consider if the delay or disruption could be addressed through negotiations with the other party rather than a formal invocation of force majeure rights. You should consult with an attorney prior to initiating such discussions to ensure that you are not inadvertently waiving critical rights or harming your ability to seek recourse, should amicable resolution not be possible.

What if there is no force majeure clause?

If recent events and disruptions have made performance under the contract extremely difficult or impossible, then common law doctrines of impossibility or impracticability may still apply to afford you some relief.

Whether these doctrines apply will depend on the type of contract, the precise language in the contract, and the state law that governs the contract.

Key Takeaways and Action Items

In order to get your arms around this issue, our recommendations are as follows:

1. Review your material business contracts carefully and as soon as reasonably possible to identify those that have force majeure or other similar provisions.
2. Identify any language that appears to be specifically “on point” with respect to the COVID-19 crisis, especially if there are any explicit mentions of “epidemics,” “pandemics,” or “disease.”  That is the strongest language that would excuse performance under the contract, but the absence of these specific types of events does not necessarily mean that the affected party is precluded from claiming relief based upon a force majeure event.
3. Pay close attention to any notice provisions or other procedural requirements that must be followed in order to take advantage of the relief provided by these types of clauses.  If a party fails to provide timely notice, some of the provisions state that the rights will be deemed to have been waived.
4. Please be aware that, even if the contract has a force majeure provision, it will not automatically excuse performance by the affected party.  We do not recommend unilaterally ceasing performance under any contract before carefully reviewing the specific terms of the contract and seeking advice on its legal implications.

H.R. 6201, the Families First Coronavirus Response Act is second major legislative response by Congress to the COVID-19 virus.  This legislation was passed in the House on March 14, 2020 and in the Senate on March 18, 2020.  President Trump signed H.R. 6201 on March 18, 2020.  In addition to a range of appropriations to provide funding for various federal departments, grants, and programs, H.R. 6201 also includes several key legislative provisions impacting employers and their employees.

Many of the provisions of interest to employers require administrative actions and decisions by the Executive, in particular the Department of the Treasury.

To read the full text, please click here.

In the latest in a series of Executive Orders aimed at mitigating the impact of the COVID-19 virus on Minnesota’s health care system, Governor Walz today issued an order directing that all non-essential and elective surgeries and procedures – medical and dental – that utilize ventilators or personal protective equipment (PPE) be postponed. The prohibition goes into effect starting no later than 5:00 p.m. on Monday, March 23, 2020, and will continue until the current peacetime state of emergency is lifted or the order is otherwise terminated. According to the order, non-essential surgeries or procedures are those that can be delayed “without undue risk to the current or future health of a patient.” The order gives examples of criteria to consider in making this determination, including (a) whether the patient’s life is at risk if the surgery or procedure is not performed; (b) the threat of permanent dysfunction of an extremity or organ system, including teeth and jaws; and (c) the risk of metastasis or progression of the disease stage absent the surgery or procedure.

A violation of this and the other Executive Orders issued during this peacetime emergency is a misdemeanor punishable by a fine of up to $1000 or imprisonment of up to 90 days.

You can access and read the Executive Order here.