National Restaurant Association Resources and Federal Guidance
The restaurant industry is home to more than 15 million trained and skilled employees in restaurants across the country serving the public every day. The restaurant industry is open and the tables at America’s 1+ million restaurant and foodservice locations are always a great place to gather with friends and family. To ensure that restaurants have the latest information about coronavirus, we created this industry-specific guidance for owners and operators. The industry works day in and day out at food safety. You can find out more about ongoing ServSafe training and certification programs here.
Blueprint for Revival
From the beginning of this pandemic, the National Restaurant Association has led the charge in Washington for a comprehensive solution to our industry. We have made steady progress, but Congress needs to do much more for the nation’s second-largest private-sector employer.
By the thousands, you responded to our survey identifying the priorities you need for this industry. By a 50/50 tie vote, you identified a $120 billion recovery fund and a second round of Paycheck Protection Program (PPP) funding as the top goal we should pursue in our advocacy agenda.
We heard you – and we are proud to release our new Blueprint for Revival for the industry. It represents a strong, far-reaching plan for how Congress can advance restaurants in every city and town in this country.
Restaurants have lost more revenue and jobs than any other industry, but there are a lot of competing interests before Congress. We are shouting here in Washington, but policymakers need to hear your voice directly.
SBA Releases Updated PPP Loan Forgiveness Rules
Last night, the Small Business Administration (SBA) and U.S. Department of Treasury released updated Loan Forgiveness rules. The improvements of the PPP Flexibility Act, new details on loan forgiveness timing, and required documentation for “business activity” exemptions from loan forgiveness reduction are detailed below:
Improvements to PPP:
- Extends the PPP covered period from eight to 24 weeks, or an additional 16 weeks for current PPP recipients.
- PPP recipients who obtained a loan before June 5, 2020 can choose to use the original eight-week period.
- To maximize forgiveness, 60% of PPP loan funds must be spent on payroll expenses (this updates the previous 75% requirement).
- For loan maturity, the minimum maturity is five years for PPP loans made on/after June 5, 2020. Lenders and borrowers can extend the maturity date of earlier PPP loans by “mutual agreement.”
- A restaurant can submit its loan forgiveness application before the end of the covered period if the restaurant has used all of the loan funds for which the business is seeking loan forgiveness.
- The lender has 60 days after receiving a PPP loan forgiveness application to issue a decision on forgiveness to the SBA.
- In turn, the SBA will remit the appropriate forgiveness amount to the lender, plus any interest accrued through the date of payment, no less than 90 days after the lender issues its decision on PPP loan forgiveness to the SBA.
- The lender must inform the borrower of the loan forgiveness amount and the date on which the borrower’s first payment is due, if applicable.
- PPP recipients must certify in “good faith” documentation that their reduction in business activity during the PPP covered period is due to compliance with COVID Requirements or Guidance.
- If PPP recipient maintains this documentation, they are exempt from any reduction in loan forgiveness due to a reduction in FTE employees during the covered period.
- SBA and Treasury believe this includes “both direct and indirect compliance with COVID Requirements or Guidance,” because much of the reduction in business activity due to COVID Requirements or Guidance is the result of state/local government closure orders that are based in part on guidance from the three federal agencies.
For example, if a borrower’s business activity during the covered period was reduced compared to its activity before February 15, 2020 due to compliance with COVID Requirements or Guidelines (such as the prohibition on on-site dining and the social distancing requirements once restaurants were allowed to open back up), the borrower satisfies the PPP Flexibility Act’s exemption and will not have their forgiveness amount reduced because of a reduction in FTE count during the covered period, if the borrower in good faith maintains records regarding the reduction in business activity and any governmental order that reference a COVID requirement or guidance as described above.
PPP Fixes Signed by President Trump
On June 5, 2020, President Trump signed the Paycheck Protection Flexibility Act into law. The legislation makes key changes to the PPP, including:
- Extension of the covered period to 24 weeks
- Changing the 75/25 split to a 60/40 split
- Loan forgiveness for FTE changes – Loan forgiveness will not be reduced due to a low FTE count if an employer:
- Makes an effort to rehire an employee but is turned down
- Shows an inability to hire “similarly qualified employees before Dec. 31, 2020
- Shows an inability to return to the “same level of business activity as prior to Feb 15. 2020
- Payroll tax deferment
While the legislation extends aspects like the 24 week period, June 30th is the final day for those who have not previously (you cannot get two) received a PPP loan to be issued one. If you have not previously received or been approved for a PPP loan but are interested in applying, please contact your lender quickly to ensure you can meet the June 30th deadline.
Guidance on PPP Loan Forgiveness Application
ARA Accounting Partner, Henry+Horne have published guidance on the new PPP loan forgiveness Application.
On May 15th, the SBA released the PPP loan forgiveness application. The application provides additional guidance on the forgiveness calculation. Instructions on calculating FTE (full-time equivalent) employees, calculating wage reductions during the covered period based on the 1st quarter 2020 pre COVID wages earned by employees, and further clarification on expenses incurred and/or paid are included. There are also new items such as an alternative payroll period date, which provides some flexibility for calculating payroll costs during the covered period, and additional FTE reduction exemptions for employees not returning to work after a good faith offer.
Coronavirus Aid, Relief, and Economic Security ACT (AKA Phase-III)
On March 25, 2020 the U.S. Senate voted 96-0 to pass the Coronavirus Air, Relief, and Economic Security Act (CARES Act). The CARES Act represents phase-III of congressional action on the Coronavirus pandemic. The House is expected to pass the measure tomorrow by a voice vote.The final language provides:
- $349 billion in federally guaranteed loans to businesses
- A fix to the Qualified Improvement Property (QIP) to allow businesses to immediately write off improvement costs
- Employee retention tax credit
- Modifications for Net Operating Losses (NOL)
- Delay of payment of employer payroll taxes
- $454 billion for loans, loan guarantees, and investments to the Federal Reserve for businesses
- Additional tax relief
List of resources:
Families First Coronavirus Response Act (AKA Phase-II)
On March 18, 2020 President Trump signed the Families First Coronavirus Act (FFCRA), also know as the phase-II bill. The act aims to provide paid sick leave and expanded family and medical leave for COVID-19 related reasons and creates the refundable paid sick leave credit and the paid child-care leave credit for eligible employers. Eligible employers are businesses and tax-exempt organizations with fewer than 500 employees that are required to provide emergency paid sick leave and emergency paid family and medical leave under the act. Eligible employers will be able to claim these credits based on qualifying leave they provide between the effective date and Dec. 31, 2020. Equivalent credits are available to self-employed individuals based on similar circumstances.
The Arizona Restaurant Association and the National Restaurant Association are still waiting for guidance from the U.S. Department of Labor on the provisions of FFCRA as many critical questions still remain unanswered surrounding the paid sick leave and expanded family and medical leave portions of the bill. On March 20, 2020, the National Restaurant Association sent a letter to the Secretary of the Department of Labor, Eugene Scalia asking for clarification on a series of questions.
On April 1, the U.S. Department of Labor issued a temporary rule detailing their regulations for the Emergency Paid Sick Leave (EPSL) and the Emergency Family and Medical Leave (EFML) provisions of the Families First Coronavirus Response Act (FFCRA). As part of this release, DOL also updated their Q&A document which helps to guide employers and employees on the implementation of these programs. . We encourage all businesses owners and operators to read the entire Q&A document (linked below), but some key points we think are important is outlined below:
- Key provisions:
- Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis.
- Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a health care provider), or care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor.
- Effective Date: the paid leave provisions of the FFCRA is April 1, 2020.
- Employers impacted: employers with 500 or more employees, including employees across all separate establishments and divisions of a corporation.
- Reasons for leave:
- An employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19, or is caring for someone subject to the order.
- An employee has been advised by a health care provider to self-quarantine related to COVID-19, or is caring for someone subject to a self-quarantine.
- An employee is experiencing COVID-19 symptoms and is seeking a medical diagnosis.
- An employee is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19.
- Other reasons specified by the Secretary of Health and Human Services – Note: not other reasons have been identified at this time.
- Duration of Leave: A full-time employee is eligible for up to 80 hours of leave, and a part-time employee is eligible for the number of hours of leave that the employee works on average over a two-week period. Except an employee, caring for child whose school or place of care is closed, is eligible for up to 12 weeks of leave at 40 hours a week for full-time employees and a part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work over that period.
- Calculation of Pay:
- Employees subject to a quarantine, self-quarantine or are experiencing symptoms of COVID-19 shall be paid at either their regular rate or the applicable minimum wage, whichever is higher, up to $511 per day and $5,110 in the aggregate (over a 2-week period).
- Employees caring for an individual that is subject to a quarantine or self-quarantine shall be paid at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2,000 in the aggregate (over a 2-week period).
- Employees taking leave to care for a child whose school or place of care is closed shall be paid at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $12,000 in the aggregate (over a 12-week period—two weeks of paid sick leave followed by up to 10 weeks of paid expanded family and medical leave).
Key Questions Answered by DOL
- As an employer, how do I know if my business is under the 500-employee threshold and therefore must provide paid sick leave or expanded family and medical leave? You have fewer than 500 employees if, at the time your employee’s leave is to be taken, you employ fewer than 500 full-time and part-time employees within the United States, which includes any State of the United States, the District of Columbia, or any Territory or possession of the United States. In making this determination, you should include employees on leave; temporary employees who are jointly employed by you and another employer, and day laborers. Typically, a corporation (including its separate establishments or divisions) is considered to be a single employer and its employees must each be counted towards the 500-employee threshold.
- If I am a private sector employer and have 500 or more employees, do the Acts apply to me? No. Private sector employers are only required to comply with the Acts if they have fewer than 500 employees.
- If providing child care-related paid sick leave and expanded family and medical leave at my business with fewer than 50 employees would jeopardize the viability of my business as a going concern, how do I take advantage of the small business exemption? To elect this small business exemption, you should document why your business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations. You should not send any materials to the Department of Labor when seeking a small business exemption for paid sick leave and expanded family and medical leave.
- When does the small business exemption apply to exclude a small business from the provisions of the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act? An employer, including a religious or nonprofit organization, with fewer than 50 employees (small business) is exempt from providing (a) paid sick leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons and (b) expanded family and medical leave due to school or place of care closures or child care provider unavailability for COVID-19 related reasons when doing so would jeopardize the viability of the small business as a going concern. A small business may claim this exemption if an authorized officer of the business has determined that:
- The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
- The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
- There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.
- If I am a small business with fewer than 50 employees, am I exempt from the requirements to provide paid sick leave or expanded family and medical leave?A small business is exempt from certain paid sick leave and expanded family and medical leave requirements if providing an employee such leave would jeopardize the viability of the business as a going concern. This means a small business is exempt from mandated paid sick leave or expanded family and medical leave requirements only if the:
- employer employs fewer than 50 employees;
- leave is requested because the child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; and
- an authorized officer of the business has determined that at least one of the three conditions described in Question 58 is satisfied.
The Department encourages employers and employees to collaborate to reach the best solution for maintaining the business and ensuring employee safety.
- Will DOL begin enforcing FFCRA immediately?The Department will not bring enforcement actions against any public or private employer for violations of the Act occurring within 30 days of the enactment of the FFCRA, i.e., March 18 through April 17, 2020, provided that the employer has made reasonable, good faith efforts to comply with the Act. If the employer violates the Act willfully, fails to provide a written commitment to future compliance with the Act, or fails to remedy a violation upon notification by the Department, the Department reserves its right to exercise its enforcement authority during this period. After April 17, 2020, this limited stay of enforcement will be lifted, and the Department will fully enforce violations of the Act, as appropriate and consistent with the law.
- Does the non-enforcement position mean businesses do not need to comply with the FFCRA from the effective date of April 1, 2020 through April 17, 2020?No, the FFCRA’s paid leave provisions are effective April 1, 2020. Private sector and public employers must comply with the provisions on the effective date even though the Department has a limited stay of enforcement until April 17, 2020. Once the Department fully enforces the Act, it will retroactively enforce violations back until the effective date of April 1, 2020, if employers have not remedied the violations.
The ARA is still analyzing how the Phase-III relieve measure will impact these provisions. Once more information is available, we will provide an update.
National Restaurant Association Resources:
COVID-19 Resources by State – includes requirements by state, city, or county as it relates to restaurants and coronavirus measures (Updated 3/23/20)
To visit the National Restaurant Association’s resource page, please click here.
U.S. Centers for Disease Control and Prevention
Occupational Safety and Health Administration
Small Business Administration
World Health Organization