Industry News

Homepage News

Paper Markets Tighten in 2021

By Geoffrey Eisenberg, COO, Tidewater Direct
If 2020 was anything but business as usual in the world of direct mail, 2021 is most certainly cut from the same cloth. From lockdowns in the beginning of the year to – what appears to be – a sharp economic rebound, the Covid-19 economic roller coaster is ever-present in the acquisitional direct mail markets. At the time of this release, we have seen paper supplies become constricted and schedules move out, all while marketers appear to be clamoring to reach their consumers (flush with cash and new-found freedoms) in reliable and effective ways. Direct mail contractors that understand today’s paper market, forge and maintain strong alliances with their vendors, and understand the importance of schedule will be far better equipped to fair the tumultuous seas of 2021.

Paper markets have become increasingly tight in 2021. An across-the-board mill increase at the end of March signified that demand justified some attention. A typical healthy mill operating rate may be 94-95%, which ensures that the mills’ expenses will be met and will be profitable, but still retain some flexibility for its customers. Poor operating rates tend to be in the high 80s to low 90s, signifying an excessive supply that suppresses paper prices and, in some cases, causes mill closures and “right-sizing”. For a decade, mills have been shuttering doors one-by-one to try to control the supply-demand equation. Today, however, mill operating rates are well above 95%, have put all its customers on allocation (which prevents hoarding and is typically a function of historic usage), and have little to no flexibility in scheduling. It’s widely expected that mills will have another increase this summer (some are announcing at the release of this memo) and that schedules will stay tight through the end of the year. The takeaway for direct mail manufacturers and brokers is to align with printers and envelope converters that have good mill relationships and involve these partners in the early stages of planning to secure stock for your upcoming projects.

Strong relationships with suppliers have never been more important. A direct mail contractor’s greatest weakness is its worst supplier.  Whether a commercial printer, label manufacturer, or envelope converter, one weak link in the chain prevents a job from getting in the mail on time. A relationship that values loyalty and longevity will prove beneficial when schedules are tight, and supplies are low. Likewise, a direct mail contractor should seek vendors who uphold the same values and relationship with their raw material suppliers. Printers that constantly change their suppliers for price find themselves in precarious circumstances in allocation environments and provide inconsistency from job to job. Loyalty with quality suppliers ensures a more dependable source to satisfy usage requirements, but it ensures that supply chains remain common from run to run, providing a more consistent and reliable product over time.

Scheduling in today’s market can sometimes be more important than price. Involving vendors early in the scheduling process will produce reliable results and lock in more sustainable pricing. Weekly and monthly projects should be calculated and planned, with schedules reserved and materials ordered. Its common practice in “normal times” for quick lead times and rush jobs to be fulfilled with ease.  When capacities are tightened, those orders become much more difficult to fill. Just as important as creating the schedule is keeping the schedule. A direct mail contractor that pushes for approvals on time should expect on-time deliveries from its suppliers. Commanding the schedule from the end-user and its vendors is perhaps the most vital key to success for any direct mail contractor.  Treating recurring jobs with the respect of schedule for all vendors will assure your customers that their campaign will be produced within the parameters they expect during the tightest markets.

The good news is that 2021 will be a stronger year than anticipated for many direct mail contractors and its suppliers, providing the economic recovery stays its course – a welcome change for most after 2020. Relationships strengthen when the entire supply chain bands together, and it often results in a better product as a byproduct. With a basic knowledge of the paper markets, strong supplier relationships, and plan-ahead collaborative scheduling, direct mail contractors can come through 2021 stronger than ever with valuable relationships.  

Excellence in Print 2022

Dear PGAMA Member

 

2022 Excellence in Print……Now More Than Ever

You have heard it before but 2020 was truly a year that was unprecedented and the challenges are still being felt within our country, world and certainly within our industry.  The continued economic and health ambiguity were the compelling reasons behind our decision to present our next Excellence in Print on Thursday, May 11, 2022 at Martin’s West in Baltimore.

 

Although our virtual presentation on December 9, 2020 was met with great success, the committee believed that, more than the award presentations, EIP was the best opportunity of the year to network, meet with colleagues and friends, and celebrate our industry. The committee recognized that it was not possible to have a live 2021 event due to the still active economic and health crisis as well as the fact that it would have been tone deaf, in our opinion, to ask you to stop from your focus and have you review projects for entry into a 2021 Excellence in Print.  The committee would like to congratulate, one more time, the 2020 EIP winners, The Xerox Grand Q- HBP, The Canon Solutions America Digital Q- Westland Printers, and The Standard Graphics Mid Atlantic -Printers and Binding and Finishing Q- Raff Embossing and Foilcraft

 

By the time our awards banquet is presented in the spring of 2022, we will be more than ready to celebrate print, meet and greet our friends and colleagues and show the world that print industry is on the road to recovery. 

Now is the time to begin putting aside projects that you wish to enter for next year’s awards.

 

Remember all projects produced between January 1, 2020 and November 30, 2021 are eligible and we urge you to support your industry, your company, and your employees by participating in 2022!

 In the coming months, more details will follow in e-newsletters, e-blast and mailed material.

 

Wishing you great success.

 

The PGAMA Excellence in Print Committee

MD Relief Act Summary

Maryland RELIEF Act Summary

*sources: Comptroller’s Office, Governor’s Office, DLS

  • Sales and Use Tax Credit – Authorizes eligible vendors to retain an increased vendor tax credit for the three consecutive months following the enactment of the law. The amount of the vendor credit allowed is equal to the lesser of the amount of sales and use tax collected during the month the vendor qualifies for the increased credit or $3,000, not to exceed $9,000 in three months.
    • Eligibility: a vendor must file a timely sales and use tax return or consolidated return, and; the gross amount of sales and use tax remitted with the return may not exceed $6,000, and; a vendor must choose to forgo the standard vendor credit in order to claim the enhanced vendor credit.
    • When? Credits will be granted during the months of March, April, and May 2021. If you file returns quarterly, claim the March credit on the return you file in April, and claim the April and May credits on the return you file in July.
    • Amount: Eligible vendors may claim a credit against their sales and use tax for either the amount of the sales and use tax collected during the month for which the vendor claims the credit or $3,000, whichever is less.
  • Business Tax Relief
    • Unemployment Tax Relief for Small Businesses
      • An employer’s 2021 unemployment tax rate will be calculated based on their non-pandemic experience by excluding the 2020 fiscal year, and instead by using the last three fiscal years of 2017, 2018, and 2019. This was already in effect via executive order but a change in law was necessary for it to remain in play beyond the state of emergency.
      • Small businesses and nonprofits with fewer than 50 employees will be allowed to defer unemployment insurance tax payments in calendar year 2021 to January 2022
    • The RELIEF Act’s loan and forgiveness plan safeguard Maryland business owners against any tax increase triggered by the use of state loan or grant funds.
  • Unemployment Assistance - $1,000 one-time grant payments to certain individuals whose unemployment claims have been in adjudication for 30 days
    • Eligibility: The Department of Labor determines the recipients of the grants and will submit to the Comptroller a list of individuals who will receive payment
    • When? Payments will be sent to qualified individuals from March-July, dependent upon when the eligibility is determined by the Department of Labor
  • Unemployment Insurance Income Tax Subtraction - The RELIEF Act provides a State Income Tax Exemption for Unemployment Insurance (UI) Benefits for qualifying filers. UI payments are currently subject to federal and state income taxation. Beginning with Tax Year 2020 and including Tax Year 2021, the Act exempts from the state income tax the UI benefits received by an individual earning less than $75,000, and couples filing jointly or individual heads of households earning less than $100,000.
  • Grant and Loan Programs – New grant and loan programs for businesses and nonprofits to be administered by several state agencies, and local governments (see attached for local programs)
  • Maryland Economic Development Assistance Authority and Fun
    • Grant program for businesses in distressed communities to assist the businesses in setting up an online sales framework and offering employees telework opportunities

Other provisions:

  • Authorizes the Department of Commerce to forgive up to $50,000 of a loan, if the loan was made to a small business under the Equity Participation Investment Program with the Maryland Small Business Development Financing Authority. This provision applies only to fiscal 2021 and 2022 loans provided to relieve the adverse effects of the coronavirus pandemic.
  • Creates a $420 million fund within the Department of Budget & Management to be used for:
    • Financial assistance to individuals, businesses, and nonprofit organizations
    • Funding for the Department of Health and UI program
    • The restoration of Department of Transportation transit services and highway maintenance funding.

Joint Letter to the Postmaster General

February 19, 2021

The Honorable Louis DeJoy

Postmaster General

United States Postal Service

475 L’Enfant Plaza SW

Washington DC 20260

Dear Postmaster General:

As representatives of your customers, the undersigned are writing to you in an effort to clearly convey the fragility of customer confidence in the Postal Service, given the recent collapse in service, and the danger of increasing prices under such circumstances.

We understand the impact of the pandemic – our member companies and nonprofit organizations, and their customers, are experiencing it as well – and of other factors that have impaired USPS operations and delivery. As the Postal Service has acknowledged, that impairment was worsened by internal failures to maintain control over inventory and follow established procedures and operating plans.

As a result, customers have experienced delays of not just a few days but weeks – even months – in getting their personal correspondence, greeting cards, statements, advertising mail, newspapers, magazines, and packages to their recipients. In turn, many customers, from the clients of commercial mailers to everyday users of retail services, now question whether they can depend on the Postal Service in the future. The collapse of service experienced in recent months has the potential to significantly accelerate the abandonment of mail; it has already resulted in messages to consumers encouraging them to “go paperless.”

In this context, increasing prices for substandard service should not even be considered. Any action that would drive away already skeptical customers would worsen the Postal Service’s challenges. Any short-term increase in revenue from an over-CPI price change would be outweighed by its long-term business impact. We believe there are better measures that could be undertaken to restore financial equilibrium.

As you have noted, the burdens imposed by Congress could be alleviated through successful discussions with legislators; reform legislation could remove unnecessary retirement prefunding obligations; USPS employee costs could be reduced through more disciplined negotiations; and operational efficiencies can be implemented that do not require diminishing service standards. Yes, those would be more difficult than simply raising prices, but also would yield greater and more long-lasting benefits – without imperiling mail volume.

The Postal Regulatory Commission has provided greater pricing authority to the Postal Service. When the commissioners concluded the USPS was not financially stable, the tool they used to remedy that condition was alteration of the rate-setting mechanism to enable greater price increases. The challenges facing our industry require a more thoughtful and comprehensive approach than for the Postal Service to mechanically maximize its rate authority, separately or as part of a broader plan, simply because it was provided with the opportunity to do so. Moreover, the availability of $10 billion in funding under recent legislation, and the ongoing positive income derived from increased parcel volume, lessen the urgency to seek additional revenue from ratepayers.

The Postal Service’s financial condition did not develop overnight and is not simply due to inadequate revenue – nor can it be remedied simply by raising prices, particularly through an unanticipated increase at a time when customer allegiance has been so severely compromised by poor service. Customers already prepared to walk out the door should not be asked to pay more – now or in the future – for something whose value they concurrently have reason to doubt.

We look forward to working with you to strengthen the Postal Service and ensure its future. We are also prepared to collaborate on an integrated and comprehensive approach to the challenges we face together. We stand ready to discuss these and other issues at your convenience.

Sincerely, Stephen Kearney

Executive Director

Alliance of Nonprofit Mailers

Hamilton Davison

President and Executive Director

American Catalog Mailers Association

Mark Pitts

Executive Director

American Forest & Paper Association

Steve Krejcik

President

Association for Mail Electronic Enhancement

Michael Plunkett

President and Chief Executive Officer

Association for Postal Commerce (Postcom)

Rita D. Cohen

Senior Vice President, Legislative and Regulatory Policy

MPA – The Association of Magazine Media

Christopher Oswald

Senior Vice President, Government Relations

ANA – Association of National Advertisers

Michael Plunkett

President

Delivery Technology Advocacy Council (DTAC)

Maynard Benjamin

President

Envelope Manufacturers Association

George White

President

Greeting Card Association

Kate Muth

Executive Director

International Mailers’ Advisory Group

Leo Raymond

Managing Director

Mailers Hub

Todd Haycock

President

Major Mailers Association

Robert Galaher

Executive Director

National Association of Presort Mailers

Tonda Rush

General Counsel

National Newspaper Association

Arthur B. Sackler

Executive Director

National Postal Policy Council

Paul Boyle

Senior Vice President / Public Policy

News Media Alliance

Jim Cochrane

Chief Executive Officer

Parcel Shippers Association

Donna Hanbery

Executive Director

Saturation Mailers Coalition

MD Dept of Labor Detected Over 156,000 Potentially Fraudulent Unemployment Claims Since January

**FOR IMMEDIATE RELEASE**

Maryland Department of Labor Detected Over 156,000 Potentially Fraudulent Unemployment Claims Filed Since January
States Across the Nation Experiencing Significant Spike in Fraud
Over 87% of Claims Investigated in Maryland Confirmed as Fraudulent

BALTIMORE, MD (February 11, 2021) - The Maryland Department of Labor (Labor) today provided an update about the department’s ongoing unemployment insurance fraud detection, prevention, and investigation efforts.

Over 156,000 Potentially Fraudulent Claims Detected Since Beginning of January

With the record number of unemployment insurance claims filed and the additional federal benefits available during the COVID-19 pandemic, states across the nation have continued to see bad actors and fraudsters using illegally obtained data to file fraudulent unemployment insurance claims. 

However, since the passage of the Continued Assistance for Unemployed Workers Act (CAA), which expanded the federal CARES Act programs and most notably offered an additional $300 a week to eligible claimants through the Federal Pandemic Unemployment Compensation (FPUC) program, states have seen a significant spike in fraudulent activity. 

Of the 243,186 new claims filed in Maryland since January 1, 2021, 156,403 claims (64.31%) have been flagged as being potentially fraudulent due to new and existing aggressive security measures in place to protect taxpayers and the integrity of the state’s program. As fraudsters are becoming more brazen and adapting their tactics, Maryland continues to add new technology and safeguards to prevent and detect fraud. 

Over 87% of Claims Flagged and Investigated Confirmed as Fraudulent

With aggressive security measures in place, Labor continues to investigate potentially fraudulent in-state and out-of-state claims. With over 87% of claims flagged and investigated being confirmed as fraudulent, it is critical that the department reviews and verifies documentation manually.*

  • Of the 161,897 out-of-state claims that have been identified as potentially fraudulent, 147,305 (90.99%) have either not uploaded the verification documentation requested or their documentation has been reviewed and denied.
  • Of the 226,933 in-state claims that have been identified as potentially fraudulent, 191,358 (84.32%) have either not uploaded the verification documentation requested or their documentation has been reviewed and denied.
  • Of the 388,830 claims flagged, there are currently 14,348 (3.69%) in-state and out-of-state potentially fraudulent claims pending manual review and verification by a team of specialists.

*Note that these numbers are subject to change as the department continues to flag potentially fraudulent claims. Labor continues to coordinate its investigation with the U.S. Department of Labor’s Office of the Inspector General (OIG) and the U.S. Attorney’s Office.

Report Unemployment Insurance Fraud on Quarterly Employer Statements

The department recently emailed all employers about potentially fraudulent charges appearing on their fourth quarter benefit charge statement because of an increase in the number of claims fraudulently filed in the names of people who are actively working. 

This means that claims may be fraudulently filed for an employer’s employee, even though the employee is still working and is not unemployed. Please note that employers will not be charged for any fraudulent benefits associated with their account. All employers should carefully review their current and previous benefit charge statements to ensure that all claimant benefits charged to their account are accurate. 

If an employer believes a fraudulent claim has been charged to their account, they should immediately file a benefit charge protest throughtheir BEACON employer portal located atemployer.beacon.labor.md.gov. The department will investigate their protest and will remove charges that are deemed fraudulent. For additional assistance, employers can contact the Employer Call Center by calling 410-949-0033.

Report Other Unemployment Insurance Fraud

If you believe that your information has been used to fraudulently file an unemployment insurance claim, please contact the Division of Unemployment Insurance’sBenefit Payment Control Unitby completing a “Request for Investigation of Unemployment Insurance Fraud” form and e-mailing it to This email address is being protected from spambots. You need JavaScript enabled to view it..

If you received a 1099-G tax form, but did not apply for unemployment insurance benefits in Maryland in 2020, then please complete anAffidavit Formand submit it along with picture ID to the Benefit Payment Control Unit by emailingThis email address is being protected from spambots. You need JavaScript enabled to view it..

If you are a claimant and believe funds have been fraudulently withdrawn from your Bank of America unemployment insurance debit card, please contact Bank of America directly by calling 1-855-847-2029.

If you believe you have been a victim of identity theft, please read the Maryland State Police's Identity Theft Protection Quick Guideto find additional resources and learn more about the next steps you should take to protect your identity. For more information, visitMDunemployment.com. 

FMLA & The Hybrid School Calendar

The DOL has addressed the expanded FMLA and the hybrid school calendar, and related to choosing an all-online option if available. 

  • If your child is on a hybrid plan, then expanded intermittent FMLA is available for the days they are learning at home.
  • If your employee has opted to go entirely online despite school being open (hybrid or completely), the DOL says you can use expanded FMLA on the days your child would be doing online learning anyway because the school is “closed” to that family on those days of online learning.

The new guidance is below:

·  My child’s school is operating on an alternate day (or other hybrid-attendance) basis. The school is open each day, but students alternate between days attending school in person and days participating in remote learning. They are permitted to attend school only on their allotted in-person attendance days. May I take paid leave under the FFCRA in these circumstances? (added 08/27/2020)

Yes, you are eligible to take paid leave under the FFCRA on days when your child is not permitted to attend school in person and must instead engage in remote learning, as long as you need the leave to actually care for your child during that time and only if no other suitable person is available to do so. For purposes of the FFCRA and its implementing regulations, the school is effectively “closed” to your child on days that he or she cannot attend in person. You may take paid leave under the FFCRA on each of your child’s remote-learning days.

 

·  My child’s school is giving me a choice between having my child attend in person or participate in a remote learning program for the fall. I signed up for the remote learning alternative because, for example, I worry that my child might contract COVID-19 and bring it home to the family. Since my child will be at home, may I take paid leave under the FFCRA in these circumstances? (added 08/27/2020)

No, you are not eligible to take paid leave under the FFCRA because your child’s school is not “closed” due to COVID–19 related reasons; it is open for your child to attend. FFCRA leave is not available to take care of a child whose school is open for in-person attendance. If your child is home not because his or her school is closed, but because you have chosen for the child to remain home, you are not entitled to FFCRA paid leave. However, if, because of COVID-19, your child is under a quarantine order or has been advised by a health care provider to self-isolate or self-quarantine, you may be eligible to take paid leave to care for him or her. See FAQ 63.

Also, as explained more fully in FAQ 98, if your child’s school is operating on an alternate day (or other hybrid-attendance) basis, you may be eligible to take paid leave under the FFCRA on each of your child’s remote-learning days because the school is effectively “closed” to your child on those days.

 

·  My child’s school is beginning the school year under a remote learning program out of concern for COVID-19, but has announced it will continue to evaluate local circumstances and make a decision about reopening for in-person attendance later in the school year. May I take paid leave under the FFCRA in these circumstances? (added 08/27/2020)

Yes, you are eligible to take paid leave under the FFCRA while your child’s school remains closed. If your child's school reopens, the availability of paid leave under the FFCRA will depend on the particulars of the school’s operations. See FAQ 98 and 99.

Sanitation Guidelines

Protecting the health and safety of employees during the COVID-19 pandemic outbreak is essential to ensure the spread of the virus is stopped and it does not spread within the workplace. The emergence of the COVID-19 virus has created a situation where every printing operation needs to institute a cleaning and disinfection program that will minimize the possibility of an employee becoming infected. The information presented below is based on the guidelines issued by the Center for Disease Control for businesses.

Sanitation FAQs

Letters for Essential Businesses

Below please find two letter templates, one for your employees and one for your suppliers in case they are questioned in regards to whether or not they are involved with an essential business.  Feel free to alter in any way you choose,  this is just suggested copy.

ESSENTIAL BUSINESS ACTIVITY
  
Date
 
To Whom It May Concern:
 
The bearer of this document is an employee of [company name].  The company is a printing and packaging company that supports and/or serves Essential Businesses.  As such [company name] conduct Essential Activities and is critical to the operations of Essential Businesses.  Pursuant to the Governor’s order of March 23, 2020, we are “needed to maintain continuity of operations of the federal critical infrastructure sectors” and thus exempt from closure.
 
[Company Name] applies best practices in its effort to limit the spread of COVID-19.  As possible, employees are required to follow the latest guidelines for social distancing and personal hygiene.  Where possible, employees are working remotely.  Only those employees whose job requires tools, machinery, etc. are working onsite.  In some cases, an employee may be required to work on site temporarily such as to process payroll, administer cash receipts and cash disbursements which are consider Minimum Basic Operations required for the Company to continue operations in support of Essential Businesses.
 
If you have any questions, please contact:
 
Officer Name
Company Address
Telephone Number
 


ESSENTIAL BUSINESS ACTIVITY- supplier
 
 
Date
 
To Whom It May Concern:
 
The bearer of this document (NAME OF SUPPLIER) is a supplier to [company name) and provides us with materials necessary to manufacture our crucial products. It is essential that we continue to receive these materials on a timely basis in order to fulfill our customer’s need in these critical times. Without the products provided by SUPPLIER, we will be hard pressed to meet the needs of our clients who are doing work that is necessary in the fight against COVID-19
 
We have been assured that [Company Name] applies best practices in its effort to limit the spread of COVID-19.  As possible, their employees are required to follow the latest guidelines for social distancing and personal hygiene. 
 
If you have any questions, please contact:
 
Officer Name
Company Address
Telephone Number

Virginia Response FAQ

SOME OF THE FREQUENTLY ASKED QUESTIONS ADDRESSED BY THE GOVERNOR’S OFFICE REGARDING GOVERNOR NORTHAM’S EXECUTIVE

ORDER 53 ISSUED MARCH 23, 2020

When does this order go into effect? What areas of the state are covered?

The order is in effect from Tuesday, March 24, 2020 at 11:59 PM until Thursday, April 23 at 11:59 PM. It applies to the entire Commonwealth of Virginia.

Will this order be changed?

 

            Governor Northam, in consultation with State Health Commissioner Oliver, may adjust this order or issue new orders as needed, given the quickly-changing public health situation.

Can I leave my house?

            Yes. However, Governor Northam is urging Virginians to limit all non-essential travel outside the home, if and when possible. If you choose to go to the park, for a walk, or exercise outside, please practice strict social distancing and keep six feet apart from others. All public and private gatherings of more than 10 people [PGAMA Note: Employment settings are not considered gatherings for purposes of Executive Order 53] are banned.

 

Are you limiting interstate travel:

 

            No. Our roads and highways will remain open to move essential personnel and critical supplies.

Are there restrictions for any other categories of business?

            All other categories of business [PGAMA NOTE: We believe Virginia printers fall in this classification for purposes of Executive Order 53] should utilize teleworking as much as possible. Where telework is not feasible, such businesses must adhere to social distancing recommendations, enhanced sanitizing practices on common surfaces, and other appropriate workplace guidance from state and federal authorities while in operation.

            The following sources provide workplace guidance for operations that remain open:

  • Virginia Department of Labor and Industry Guidance:

https://www.doli.virginia.gov/wp-content/uploads/2020/03/Coronovirus-Hazard-Alert.pdf

Do I still have to pay taxes?

            Yes. Businesses impacted by COVID-19 can also request to defer the payment of state sales tax due, March 20, 2020, for 30 days. When granted, businesses will be able to file no later than April 20, 2020 with a waiver of any penalties.

            The Virginia Department of Taxation has extended the due date of payment of Virginia individual and corporate income taxes. While filing deadlines remain the same, the due date for individual and corporate income tax will now be June 1, 2020. Please note that interest will still accrue, so taxpayers who are able to pay by the original deadlines should do so.

I have to lay off employees. Will I be penalized when they apply for unemployment benefits?

 

            Regional workforce teams have been activated to support employers that slow or cease operations. Employers who do slow or cease operations will not be financially penalized for an increase in workers requesting unemployment benefits.

2595014

Covid-19: The Maryland Response

COVID-19 – Maryland Response – PGAMA FAQ & Resources March 24th, 2020 _____________________________________________________________________


1. If someone is showing mild symptoms of illness and you’ve asked them not to work out of an abundance of caution, what benefits are available to help them maintain their income?

Federal Law: Emergency legislation, entitled H.R. 6201; entitled, Families First Coronavirus Response Act was signed into law today (3.19.20). The new law provides paid sick leave, free coronavirus testing, expands food assistance and unemployment benefits, and requires employers to provide additional protections for health care workers.

• Emergency paid sick leave: Small businesses will be required to provide two (2) weeks of paid sick leave to an employee that: o Has a current diagnosis of COVID–19, or is under quarantine at the instruction of a health care provider, employer, or a local, State, or Federal official. o Is engaged in caregiving for an individual who has a current diagnosis of COVID–19 or is under quarantine. o Is engaged in caregiving, because of the COVID–19-related closing of a school or other care facility or care program, for a child or other individual unable to provide self-care. o This does not apply to businesses with over 500 people and small businesses with under 50 employees may avoid the requirements if they “would jeopardize the viability of the business as a going concern”. o These provisions would expire at the end of calendar year 2020. • Family medical leave: The bill expands the Family and Medical Leave Act to include leave needed to care for an employee’s child whose school or care provider is closed due to COVID-19. o This leave can be used by employees who have been employed by their current employer for at least 30 days. This applies to any private sector employers under 500 employees.


o The first 10 days of FMLA leave may be unpaid — beyond that time employers must compensate employees for the remainder of FMLA-leave taken (up to 10 work weeks) at 2/3 of their regular rate of pay. o FMLA paid leave is capped at $200 per day and $10,000 per employee total. • Tax credits for paid family and medical leave: The legislation has a refundable tax credit equal to 100% of paid family or medical leave wages paid by the small business each quarter. o The credit can be used against the employer’s social security taxes and applies to amounts paid to employees who are sick or quarantined. A smaller credit applies to amounts paid to employees caring for a family member or for a child whose school or place of care has been closed. o Individuals who are self-employed also qualify for refundable credits. The tax credits would offset not just the 6.2% Social Security portion of payroll taxes on affected wages, but also the separate 1.45% Medicare tax. Limits apply. • Emergency unemployment stabilization o Provides $1 billion for emergency grants to states for activities related to processing and paying unemployment insurance benefits. o $500 million will be used to provide immediate additional funding to all states for staffing, technology, systems, and other administrative costs, so long as they met basic requirements about ensuring access to earned benefits for eligible workers. Those requirements are: ▪ Require employers to provide notification of potential unemployment insurance eligibility to laid-off workers. ▪ Ensure that workers have at least two ways (for example, online and phone) to apply for benefits. ▪ Notify applicants when an application is received and being processed and if the application cannot be processed, provide information to the applicant about how to ensure successful processing. o $500 million will be reserved for emergency grants to states which experienced at least a 10% increase in unemployment. o States that experience an increase of 10% or more in their unemployment rate (over the previous year) and comply with all the beneficiary access provisions will qualify for 100% funding for Extended Benefits. o Extended benefits are triggered when unemployment is high in a state and provide up to an additional 26 weeks after regular unemployment insurance


benefits exhausted. This section also suspends the financial penalty for states that waive the usual one-week waiting period for benefits. Maryland Law: Governor Larry Hogan signed emergency legislation (HB1663) passed by state lawmakers during the final days of the 2020 Legislative Session. The legislation ensures protections and assistance for Marylanders affected by COVID-19. The COVID-19 Public Health Emergency Protection Act allows the governor to prohibit cost-sharing by insurance carriers for COVID-19 testing, establish or waive telehealth protocols and require insurers to cover a COVID-19 vaccine when one is available. Other provisions of the law provide: • The Sec. of Labor may authorize employment benefits for employees, who need not leave the employ of their company, if: o (1) the business temporarily ceases operations, o (2) the individual is in temporary quarantine, or o (3) the individual leaves employment due to risk of exposure or to care for a family member. 2. If your business has remained open but you have people in a high-risk group that have decided to shelter at home to protect themselves or high risk loved ones, are there benefits available to help them maintain their income? See above.

3. What is the criteria for getting back to normal? We really don’t know the true number of people affected because so many experience mild to no symptoms and we’re only testing those we meet very specific criteria. I read an article that we’ve shut everything down without using data, so how do the authorities know when it’s safe to reopen?

The State of Maryland is using a combination of data gathered by the CDC and the Maryland Department of Health to determine public risks and safety. As indicated by the health experts and elected leaders, the numbers are projected to be at its peak this week. Due to the uncertainties, it is difficult for anyone to predict when it will be considered “safe” for nonessential businesses to re-open.

4. We’ve told our folks that they are considered essential and we plan to remain open, they’re asking for some type of letter they can show if they’re stopped by police on the way to work. (I told them he has not ordered shelter in place but they’re still concerned.)

At this time, Governor Hogan has not issued an Executive Order for statewide shelter. However, as expressed in today’s press conference (on 3.23.20) and his recent Executive

Order, all businesses that are considered “non-essential” to the COVID-19 response are mandated to close at 5 pm, Monday, March 23rd.

The Office of Legal Counsel issued a letter of interpretation for guidance listing sectors (and industries) that are considered “essential” and therefore remain open. The list does not fully list all these types of businesses and it’s advised to review the guidelines produced by the Department of Homeland Security.

For more information, visit: https://governor.maryland.gov/2020/03/23/governorhogan-announces-closure-of-all-non-essential-businesses-175-million-reliefpackage-for-workers-and-small-businesses-affected-by-covid-19/

5. Will there be any funding available to assist us with payroll?

Yes. The Secretaries of Commerce and Labor announced small business and labor relief efforts. Details can be found at https://businessexpress.maryland.gov/ Relief programs include grants, unemployment funding, and zero and low-interest small business loans.
o If you are a Maryland-based business impacted by the Coronavirus with under 50 full- and part-time employees, or a Maryland manufacturer, check out the programs below to see if you qualify for assistance.
▪ Maryland Small Business COVID-19 Emergency Relief Loan Fund - This $75 million loan fund (for for-profit businesses only) offers no interest or principal payments due for the first 12 months, then converts to a 36-month term loan of principal and interest payments, with an interest rate at 2% per annum.
▪ Maryland Small Business COVID-19 Emergency Relief Grant Fund - This $50 million grant program for businesses and non-profits offers grant amounts up to $10,000, not to exceed 3 months of demonstrated cash operating expenses for the first quarter of 2020.
Small Business Administration – Economic Injury Disaster Loan Program: The State of Maryland has received official designation from the U.S. Small Business Administration (SBA) for its Economic Injury Disaster Loan (EIDL) program, which provides low-interest federal disaster loans for small businesses impacted by the COVID-19 pandemic.

o According to the SBA, the loans will help alleviate financial strain and allow businesses to: o pay bills, o payroll, and o accounts payable, with long-term payments stretching up to 30 years.

o The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support


to small businesses to help overcome the temporary loss of revenue they are experiencing. For more information, visit: https://www.sba.gov/funding-programs/disasterassistance

6. We will be laying off some of our staff. What resources are available for us to assist our employees? Yes.

• Workforce Development and Adult Learning COVID-19 Layoff Aversion Fund: The State has launched the new COVID-19 Layoff Aversion Fund, which is designed to support businesses undergoing economic stresses due to the pandemic by preventing or minimizing the duration of unemployment resulting from layoffs.

o The award (up to $50,000 per applicant), will be a quick deployable benefit and customizable to the specific needs of your business to minimize the need for layoffs.

o Labor is accepting grant applications from small businesses for awards from now through 30 days after the State of Emergency ends (subject to funding availability).

o The fund can provide: ▪ Strategies to reduce or eliminate the need for layoffs in the small business community. ▪ Training or professional development opportunities for employees to avoid layoffs; ▪ Paying for liability insurance for restaurants that convert to delivery while under emergency circumstances; ▪ Cover the costs of cleaning/sanitization services so that small businesses are able to keep employees at work on site, but only if a frequent deep cleaning to prevent exposure occurred; ▪ Supporting businesses that take advantage of the Unemployment Insurance Work Sharing Program by supplementing the employee’s income and benefits; ▪ Purchasing software or programs that an employee would need to use from home; and ▪ Purchasing remote access (ex. computers, printers, etc.) equipment to allow employees to work remotely from home versus being laid off.

o For more information, visit: http://www.labor.maryland.gov/employment/covidlafund.shtml

7. Would they benefit in just applying for unemployment benefits right away on their own?


An employee would have to file for unemployment benefits individually – no other person or entity are permitted to do it for them. In Maryland, unemployment benefits are made immediately upon employee filing an application. Employees laid off will be paid that same day.

8. Operating capital: Will there be any funding to assist us in paying leases or purchasing raw materials (paper, consumables, etc.)?

Maryland Small Business COVID-19 Emergency Relief Loan Fund: This COVID-19 Emergency Relief $75M Loan Fund offers working capital to assist Maryland for-profit small businesses disrupted operations due to COVID-19. Loan assistance is intended to provide interim relief complementing actions with its bank, business interruption insurance, and financial partners.

GENERAL TERMS AND CONDITIONS o Loans up to $50,000 (not to exceed three months of cash operating expenses) open to Maryland businesses impacted by the COVID-19 with fewer than 50 employees. o 0% for the first 12 months, and 2% for the remaining 36 months. o Deferral of any payments for the first 12 months, and straight amortization beginning in the 13th month through the 36th month. o Business must be established prior to March 9, 2020 and in good standing. o Applicants must have employees on their payroll for whom they have had payroll taxes withheld (i.e. W-2 employees). o Two years of historical financial statements and most recent interim statement to benchmark revenue against (if available). o Six month pro forma of estimated lost revenue or other documented loss evidence. o Minimum personal credit score of 575. o No collateral requirements. o Eligible uses include: working capital to support payroll expenses, rent, mortgage payments, utility expenses, or other similar expenses that occur in the ordinary course of operations.

The business must demonstrate financial stress or disrupted operations, which may include but are not limited to: o Notices from tenants closing operations and not paying rent caused by loss of income. o Notice of inability to pay rent or make loan payments due to reduced sales, suspended operations. o Increased cost related to COVID-19 prevention measures. o Notice of disrupted supply network leading to a shortage of critical inventory or materials. o Other circumstances subject to review on a case by case basis.

Maryland Small Business COVID-19 Emergency Relief Grant Fund: This COVID-19 Emergency Relief $50M Grant Fund offers working capital to assist Maryland small businesses and nonprofits with disrupted operations due to COVID-19. Grant assistance is

intended to provide interim relief complementing actions with its bank, business interruption insurance, and financial partners.

GENERAL TERMS AND CONDITIONS o Grants up to $10,000 not to exceed 3 months of cash operating expenses for Maryland businesses and nonprofits impacted by the COVID-19 with 50 or fewer employees. o Must be established prior to March 9, 2020. o Business must be in good standing. o Applicants must have employees on their payroll for whom they have had payroll taxes withheld (i.e. W-2 employees). o Annual Revenues of the business or nonprofit not to exceed $5 million as evidenced by Financial Statement or other financial documentation. o Business or nonprofit is expected to seek longer term funding through its bank, SBA, or other source. o Eligible uses include: working capital to support payroll expenses, rent, mortgage payments, utility expenses, or other similar expenses that occur in the ordinary course of operations.

The business or nonprofit must demonstrate financial stress or disrupted operations, which may include but are not limited to:

o Notices from tenants closing operations and not paying rent caused by loss of income. o Notice of inability to make loan payments due to reduced sales, suspended operations. o Increased cost related to COVID-19 prevention measures. o Notice of disrupted supply network leading to shortage of critical inventory or materials. o Other circumstances subject to review on a case by case basis.

9. Trying to get an idea on terms and length of any potential funds (loans) available. – See above.

Your Financial Health During Covid-19

General comments are provided below (specific planning should be based on your company’s distress level, financial needs, resources and access to capital).

Q: Given the swift adverse effect on my business, should I borrow $$ from other sources (other than this forgivable loan) to keep my employees?

A: NO. The federal government will be providing forgivable loans (Paycheck Protection Program) totaling 2.5 months of your payroll costs, based on average monthly payroll costs for the 1-year period before the loan, times 2.5.

Payroll costs are defined as gross pay up to 100k per employee plus state and local payroll taxes, group health benefits and premiums.

Q: When will the federal government provide cash relief for my company?

A: It is expected to be several weeks after the Act is signed (3/27/20) before a same day application/cash transfer can take place.

  

Q: Will 100% of the loan be forgiven?

A: Possibly, as long as you retain the same level of (FTE) employees as before the CV crisis and not reduce salaries by more than 25% (excluding employees with salaries over 100k/year). If you have less (FTE) employees by June 30, 2020, or have cut pay by more than 25%, then the amount forgiven will be a pro-rata % of the loan (for example…if you receive a $1 mil loan and retain only 80% of employees, then 80%, or 800k will be forgiven).

 

Details:

-the amount of the loan to be forgiven is based on the lesser of, subsequent expenditures for payroll costs, interest, rent and utilities for 8 weeks after the loan date, or the loan amount.

-the calculation for change in # of (FTE) employees is based on a comparison of (FTE) employees for the period 2/15/19 through 6/30/19 or the period 1/1/20 through 2/29/20, then compared with the period 2/15/20 through 6/30/20 or 30 days after the CARES act is signed: 4/26/20 through 6/30/20 (which allows a benefit for rehires).

-  Repayment terms on the balance not forgiven, if any, are up to 10 years, maximum of 4% interest, no payment for 6 months to 1 year, no prepayment penalties, no collateral and no personal guarantees.

Q: How do I apply for this  federal government forgivable loan?

A: These are SBA funded loans to be administered and applied for through your bank. It is expected that the application and funding will occur on the same day, several weeks after the CARES act is signed by the President (3/27/20).

Q: Should I pursue loans and/or grants being offered by my state government or loans that currently are offered through the SBA?

A: Perhaps, but first assess the amount of federal government funding which may be forgiven then pursue other options if there are remaining needs. Most of the state and SBA “disaster funding loans”, at this time, are subject to normal lending criteria, fixed repayment terms, interest and personal guarantees if the loan is over 200k. There are state grants available, but at much smaller amounts.

Q: What should I be doing in the meantime before federal government $$ is available to my company?

A: Suggest downsizing as much as possible to meet your cash inflows while also gauging prospective sales. Also limit cash payments wherever possible to vendors and for all non-essential items.

Q: Should I furlough employees while awaiting the forgivable loans?

A: That’s a close call. It is helpful to know that the CARES Act provides for significant increases in unemployment benefits, so the pain to furloughed employees will be lessened and possibly eliminated. It also may be beneficial to rehire furloughed employees up to 30 days after the Act is signed (by 4/27/20)  to maximize the loan forgiveness.

Q: Are banks and other note holders offering any help with payments, if I ask?

A: Yes, most will provide 60 to 90 days of interest only and some are providing “forbearance” (no payment at all) for 60 to 90 days, though the interest will be added to the principal balance.

Q: How should I plan for the “other side of the curve” when activity is expected to pick back up?

A: LIQUIDITY, LIQUIDITY, LIQUIDITY

Your goal is to maximize cash and credit now, in order to be able to fund working capital for inventory and labor when the business comes back.

Q: Any other helpful provisions in the CARES act for my business?

A: Yes

1)If your company is losing more than 50% of revenue or has to close because of the crisis, then special payroll tax reduction provisions and deferrals are available when you reopen.

2)Tax losses in 2018, 2019 or 2020 can now be carried back 5 years and without a limitation against income        

3)Building improvements can be expensed (fully depreciated in year incurred) and prior year tax returns can be amended

4)C-Corp estimated taxes for 2020 are deferred until 10/15/20

Q: How do I navigate the myriad of financing options, loan applications and planning considerations?

A: Feel free to contact us. We are here to help.

The government will be issuing further guidance, corrections and clarifications in the coming weeks and months,

so stay tuned for further updates.

FAQ: Coronavirus & HR

FREQUENTLY ASKED QUESTIONS ABOUT HR AND CORONAVIRUS SUMMARY OF THE FAMILIES FIRST CORONAVIRUS RESPONSE ACT
New laws addressing critical human resources issues have just been enacted in response to the coronavirus (COVID-19) pandemic. This legislation is called the Families First Coronavirus Response Act.
The new laws include refundable tax credits for employers that are required to offer emergency FMLA or paid sick leave.
WHAT DOES THE NEW EMERGENCY FMLA FEDERAL LEGISLATION REQUIRE?
The new legislation in response to coronavirus—which applies to businesses with FEWER than 500 employees—requires:

• Twelve weeks of job protection under the revised Family and Medical Leave Act

• The leave applies when o An employee is unable to work or telework in order to care for a minor child if the child’s school or child care has closed or is unavailable due to a public health emergency

• The first 10 days of leave can be unpaid. o The employee can use PTO (vacation, sick, and/or personal). o Employers cannot require use of PTO for this leave.

• The remaining FMLA leave MUST be paid by the employer as follows: o Pay should be at 2/3 of the employee’s regular rate. o Number of hours paid should be those that the employee would be otherwise scheduled to work. o Pay can be capped at $200 per day. o Pay can be capped at $10,000 total.

• The employee has job protection to return to their position or an equivalent position after their leave expires or their need for leave is resolved.

• Exception to job protection for employers with fewer than 25 employees: o If the employee’s position has been eliminated due to operational changes resulting from a public health emergency, the employer does not have to provide a position for the employee at the end of their leave. 

CRITICAL INFORMATION:
For companies with fewer than 50 employees:

• If the required leave provisions of this new legislation will jeopardize the viability of the company’s business, the company can be excluded from the requirements of this Emergency FMLA legislation.


WHAT DOES THE NEW EMERGENCY FEDERAL PAID SICK LEAVE LEGISLATION REQUIRE?
The new legislation in response to coronavirus—which applies to businesses with FEWER than 500 employees—requires:

• All full-time employees are entitled to 80 hours of paid sick time.

• All part-time employees are entitled to paid sick time hours equivalent to the typical number of hours they are scheduled to work in a two-week time period.

• This sick time may be used by employees in the following circumstances: o Subject to a federal, state, or local quarantine or isolation order related to COVID19 o Following the advice of a healthcare provider to self-quarantine because of COVID-19

More Articles ...

  1. Spring Print Matters
  2. PGAMA Staff Working Remotely
  3. Upcoming Events
  4. PGAMA is here to help.

Login Form