Eric Tanenblatt
Phone: +1 404 527 8114 Email: eric.tanenblatt@dentons.com

With a keen understanding of the American political process, Eric Tanenblatt is the co-practice leader of Dentons' US Public Policy and Regulation practice and a leader of the global Government sector team and global Public Policy and Regulation practice, focusing on governmental affairs at the federal, state and local levels.


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Georgia’s 2020 Primary Election Results

The 2020 Georgia Primary is behind us. Unfortunately, in some respects, the administrative process has overshadowed the results. Adjusting to the new normal caused by the COVID-19 pandemic, problems with getting absentee ballots to folks wishing to vote by mail, a new electronic voting machine system, difficulties with training new poll workers, and long lines and delays at Primary Election Day precincts have led to finger pointing between the Georgia Secretary of State’s office and local county election boards. All of this will need to be worked out before the November General Election.

There are still thousands of absentee votes still to be counted statewide so many close races are still in play. With that said, here are some of the more interesting election results from Tuesday’s primary that we know at the present time:

Presidential Primary

As expected, Joe Biden won handily with 83% in the Democratic Primary. Still, Bernie Sanders received 10% despite having dropped out of the race and conceding in March.

US Senate — Democratic Primary

Despite a crowded seven way primary, Jon Ossoff has a commanding lead hovering back and forth at the needed 50% + 1 position to avoid a runoff against his second place rival former Columbus Mayor Teresa Tomlinson at 15%. If late returns cannot push him over 50%, he will be forced into an August 11th runoff against Tomlinson. The winner will take on incumbent Senator David Perdue in November.

Contested Supreme Court Races

Two Supreme Court appointees by former Governor Nathan Deal beat back challenges to win a full term. Justice Sarah Warren easily won with 78% while Justice Charlie Bethel beat back a strong challenge from former State Representative Beth Beskin 53% to 47%.

Congressional Races

Georgia has three open congressional races — the 7th in Gwinnett and Forsyth Counties, the 9th in the mountains of North Georgia, and the 14th in Northwest Georgia. The 7th is most likely to be a close race in November given the fact that retiring Republican Rob Woodall only squeaked to re-election in 2018 by a few hundred votes.  Woodall’s 2018 Democratic challenger Georgia State Professor Carolyn Bourdeaux holds a commanding lead in a crowded race over second place finisher State Representative Brenda Romero, 46 to 14%. A runoff between Bordeaux and Romero will be held August 11th. On the Republican side, former Army doctor Rich McCormick won his crowded primary with 55%.

In the 9th Congressional race, State Representative Matt Gurtler and Gun Store Owner Andrew Clyde, with 22 and 19% respectively, edged out a crowded Republican field for runoff spots on August 11th. The winner of the runoff will face Brooke Siskin in November in this historically overwhelmingly Republican district.  

In the 14th Congressional Race, Tea Party favorite Marjorie Greene and Rome Doctor John Cowan are headed to a Republican Party runoff August 11th. There is no Democrat running in November.

One other Congressional race is likely to draw attention in November. Former Republican Congresswoman Karen Handel won her primary easily to set up a rematch against Congresswoman Lucy McBath in the 6th Congressional District. McBath defeated Handel in 2018.

State Legislative Races

Several incumbent legislators — including Democratic Senator Ed Harbison and Republicans Brandon Beach and Jeff Mullis, as well as House Minority Leader Bob Trammell — faced stiff primary opponents on Tuesday but appear to have beat back their challengers. However, Brunswick Republican Representative Jeff Jones was defeated by Buddy DeLoach, and five term Conyers Democrat Representative Pam Dickerson was beaten by newcomer Sharon Henderson. Also, three longtime Democratic Representatives Sharon Beasley-Teague and Michele Henson and Democratic Senator Horacena Tate were forced into runoffs for the first time in many years.

While many incumbents faced tough reelections, one veteran high profile legislator is making a return. Former State Representative and 2016 Gubernatorial Candidate Stacey Evans won a decisive primary victory in an Atlanta State House district. She has no Democratic opponent in the fall.  

Fulton County District Attorney Incumbent Paul Howard, who has run unopposed for Fulton County District Attorney since 2000, is currently trailing to primary challenger Fani Willis. Neither of the two are likely to break the 50% mark, Willis with 41% of the vote and Howard with 34% of the vote, and will be headed to a runoff.

Status of Executive Orders in Georgia – April 24, 2020

On March 13, President Donald Trump declared a national emergency due to the rapidly spreading coronavirus. Since that time the virus has exploded in the United States leading to four federal relief bills and a litany of executive orders on the state level. Georgia, home to over 22,000 cases, is beginning to open businesses pursuant to health and safety regulations laid out by Governor Kemp.

A Partial Summary of the State Executive Orders

Several State Executive Orders concerning COVID-19 have been executed by Governor Kemp since March 14. 

March 14th

The first executive order declared a Public Health Emergency, with the General Assembly concurring on March 16. Pursuant to that order broad powers were given the Governor per O.C.G.A. Sec. 38-3-51. The Governor used those powers to specifically direct the Georgia Department of Public Health and the Georgia Emergency Management Agency to fully activate their operations to address the emergency. Among other things, temporary health care licenses were authorized as well as other issues pertaining to infrastructure.  The second Executive Order authorized National Guard troops to aid in the preparation, response and recovery to this pandemic.

March 16th

The Governor closed elementary, secondary and post-secondary schools effective March 18.  This action was extended twice through the remainder of this academic year.

March 20th and 23rd

The Department of Community Health and other health care licensing Boards were granted additional emergency authority. The March 23 Order directed that the Department of Public Health mandate that persons with serious underlying health conditions “shelter in place.”  Bars were ordered closed and businesses could not allow more than ten persons to be gathered in a single location with everyone 6’ apart.  DPH was authorized to close non-compliant businesses and the State Patrol was authorized to assist in the enforcement of the Order.

April 2nd

All residents and visitors were required to “shelter in place,” unless they conducted or participated in “Essential Services,” the minimum basic operations of a business, performed necessary travel e.g. grocery shopping and doctor visits, or were a part of the workforce for “Critical Infrastructure.”  All businesses, essential and non-essential, were directed to screen and evaluate workers who exhibited signs of illness and enhance sanitation practices, as well as provide alternative points of sale e.g. curb pick-up.  Dine-in restaurant service was discontinued as well as gyms and the like.  The Governor also suspended any existing or future local government restrictive Orders.

April 3rd

Sheriffs were similarly authorized to enforce the prior Orders. 

April 8th

The Public Health State of Emergency was extended through May 13.

April 14th

The Governor proclaimed that employees, staff and contractors of healthcare institutions and facilities were considered auxiliary emergency management workers per O.C.G.A. Sec. 38-3-35, thus enhancing liability protection to those individuals and entities.

April 20th

The Governor authorized “elective” healthcare procedures to commence operation, as well as permitting gyms, hair salons and the like to open Friday, April 24 as long as they follow strict guidelines.  The ten-person, 6’ apart guidelines remain.  DPH entered into an agreement with Augusta University Health System to provide screening and testing services.  EMT providers and the like were similarly afforded auxiliary health status too. 

The April 23 Executive Order

Governor Kemp has issued new guidelines for the gradual opening of businesses. As it relates to the public, social distancing is still mandated with individuals strongly encouraged to wear face coverings while outside their home.  No businesses shall allow gatherings of persons. “Shelter in place” remains for all individuals at higher risk of severe illness, to include those persons who are 65 years of age or older, while still permitting grocery shopping etc.

With regard to Restaurants and dining services, effective Monday, April 27, no more than 10 patrons can be in a restaurant per 500 sq. ft. of public space [including waiting and bar areas]. 

All such restaurants and dining rooms must institute the following measures[1]:

  • Screen and evaluate workers who exhibit signs of illness, such as a fever over 100.4  degrees, cough, or shortness of breath;
  • Require such workers to not report to work or seek medical attention;
  • Implement teleworking for all possible workers;
  • Hold all meetings virtually, whenever possible;
  • Train all employees on the importance and expectation of increased frequency of handwashing and use of hand sanitizers, avoid touching hands to face;
  • Require all employees to wear face coverings at all times, cleaned or replaced daily;
  • Increase physical space between workers and patrons;
  • Discontinue the use of salad bars and buffets;
  • Thoroughly clean and sanitize the entire facility before resuming dine-in services and continue to do so regularly;
  • Between diners, clean and sanitize tabletops, commonly touched areas, and discarding single-use items;
  • Use rolled silverware and eliminate table presets;
  • Remove self-service drink, condiment and the like items;
  • Disposable paper menus are strongly encouraged;
  • Clean and sanitize restrooms regularly;
  • Implement procedures to increase cleaning and sanitizing of surfaces in the back-of-house;
  • Update floor plans for dining areas, ensuring at least 6’ of separation from seating to  seating;
  • Limit party size at tables to no more than 6;
  • Where practicable, consider a reservations-only business model;
  • Post signage that no one with a fever or other symptoms of COVID-19 is permitted in the facility;
  • Provide hand sanitizer for use by patrons;
  • Use technological solutions where possible to reduce person-to-person interaction such as mobile ordering and contactless payment options; and,
  • Seek to design a process for patron separation while waiting to be seated, going to the restroom, and/or entering or exiting the premises.

Retail food businesses shall:

  • Limit the number of patrons inside the store to 50% of fire capacity or 8 patrons per 1,000 sq. ft.
  • Encourage patrons to use hand sanitizer upon entering
  • Encourage non-cash payments when possible
  • Sanitize the doors at least 3 times each day
  • Install protective screens or like mitigation measures where worker-patron interactions are likely
  • Provide additional hand sanitizer within the business.

Food establishments shall:

  • Encourage scheduling specific hours of operation for vulnerable populations to shop without other patrons
  • Reduce store hours to increase cleaning and sanitation while the store is closed
  • Encourage social distancing such as protective screens at service counters and at cash registers
  • Signage and decals on social distancing, and the use of one-way aisles. 
  • Workers should be given PPE as available and patrons should be encouraged to wear face coverings
  • Discontinuing sampling or cooking stations
  • Closing self-serve salad bars and buffets
  • Restrooms should be checked and cleaned/sanitized regularly
  • Allow time for frequent hand washing for employees
  • Adding hand sanitizing stations around stores for patrons and employees.

Gyms shall implement additional measures to prevent the spread of COVID-19, to include:

  • Signage restricting use by patrons that have been diagnosed with the virus, had symptoms or contact with a person that has or is suspected to have COVID-19
  • Enhance sanitation procedures
  • Screen patrons at the entrance for fever cough or shortness of breath
  • Limiting occupancy to enforce social distancing
  • Halting group classes, in-facility child care services
  • Closing pools, basketball courts, hot tubs etc. within the facility
  • Cleaning and sanitizing bathrooms and locker room regularly

Hair designers, massage therapists and the like shall:

  • Provide their services by appointment only
  • Require patrons to sanitize their hands upon entering the facility and before any treatment
  • Post signs that at the entrance and at each workstation that any patron who has symptoms must reschedule their appointment
  • Requiring patrons to wait in their car until their service prover is ready
  • Staggering or spacing workstations more than 10’ apart
  • Staggering work schedules so that no more than 50% of the normal number of employees providing services will be in the business at a time
  • Requiring PPEs as available
  • Sanitizing all equipment used by employees and patrons between each visit
  • Utilizing disposable materials and supplies as much as practicable
  • Training all employees on additional measures.

Indoor movie theatres shall:

  • Have each patron at least 6’ apart
  • Seats must be thoroughly sanitized before and after each showing
  • Assure social distancing
  • Party rooms may not host parties or gatherings
  • Close any playgrounds or arcade rooms.

Bowling alleys shall:

  • Assure similar social distancing and sanitizations
  • Allow groups of 6 or less per lane, seated 6’ apart
  • Score keeping machines must be thoroughly sanitized before and after each use
  • Bowling balls and shoes must be thoroughly sanitized before and after each use.

People working outside without regular contact with other persons shall only be required to practice social distancing and implement sanitation processes.

Dentists and Optometrists must follow their Association guidelines.

Ambulatory Surgical Centers have the similar restrictions to include screening patients before visits and monitoring their health prior to starting surgery, requiring staff to self-monitor and screen for viral symptoms daily, continue to use PPE, follow waiting room spacing guidelines social distancing and face masking. To the extent possible, hospitals, healthcare institutions, medical facilities and nursing homes should offer in-room dining.

Critical Infrastructure can continue in-person operations with implementation of the enhanced measures listed above, e.g. Screening and evaluating workers, enhanced sanitation, disinfecting common surfaces regularly, prohibiting gatherings, implementing teleworking for all possible workers, and suspending the use of Personal Identification Number [PIN] pads, electronic signature capture and the like.

All non-Critical Infrastructure businesses that continue in-person operations shall implement the same types of measures.

All businesses should implement the following measures:

  • Provide Personal Protective Equipment as available;
  • Provide disinfectant and sanitation products for workers to clean their workspace and equipment; and,
  • Increase physical space between worksites to at least 6’.

Public swimming pools, performance venues and amusement rides shall remain closed.

Any law enforcement officer, after providing reasonable notice and issuing at least two citations for violations, is authorized to mandate the closure of such establishment.

The Order is in effect from May 1 until May 13.  In the meantime, local governments can make, amend or rescind order related to emergency management as long as they are not inconsistent with the Governor’s Orders or DPH.

Conclusion

The latest Order loosens restrictions for the fitness and food industries but keeps the balance of restrictions in place through May 13. Concerns raised by President Trump, White House Economic Adviser Larry Kudlow and our own Lt. Gov. Geoff Duncan, warrant serious discussion of legislation at the federal and state levels to limit the liability of businesses that follow strict guidelines but still have customers or employees become infected with COVID-19.  Such businesses, following the pandemic, certainly don’t have the resources to face an onslaught of such suits.  Liability protections may be necessary to re-start our state and national economy.


[1] This is a partial list and does not relate to the operation of dine-in services in hospitals, healthcare facilities, nursing homes or long-term care facilities.

Georgia COVID-19 Update

Introduction

As of April 2nd 2020 the State of Georgia has 5,444 confirmed cases of COVID-19 and has suffered 176 deaths. Yesterday, Governor Kemp issued a state-wide stay at home order via Executive Order to Ensure a Safe and Healthy Georgia. This most recent executive order rescinds and replaces the executive order issued on March 23rd and suspends any local ordinances passed since March 1st that were adopted with the stated purpose or effect of responding to the COVID-19 crisis. In short, this is operative law in the entire state. Highlights of the executive order include:

  1. State-wide stay at home order for all residents
  2. Restrictions on all visitors to those under stay at home orders
  3. Limiting all travel outside of the home unless fulfilling essential services as defined in the order
  4. Constraining business to minimum basic operations as defined in the order, but for Minimum Basic Business Operations and “critical infrastructure” as defined by the US Department of Homeland Security
  5. Prohibits dine-in service at restaurants and social clubs but permits takeout, curbside, pick-up and delivery services

The Georgia Department of Economic Development has been authorized to issue guidance to any business, corporation, organization or trade group regarding its status as critical infrastructure.

In regard to enforcement, the Georgia National Guard and Department of Public Safety are tasked with providing the resources as requested to assist with the enforcement of the Order. Moreover, the Department of Public Health, the Department of Public Safety, or any other state department or state officer deputized by the Governor or Georgia Emergency Management and Homeland Security are authorized to mandate the closure of any business, establishment, corporation, non-profit corporation or organization that does not comply with the Order for a period not to extend beyond the term of the Order.

Any person who violates the Order will be guilty of a misdemeanor.

Notably, the Order, which goes into effect on Friday April 3, only extends until April 13th. That is, in part, due to the fact that the state of emergency, declared on March 14th, is only in place for a maximum of 30 days per OC.G.A. 38-3-51 9 (a). That being said, the resolution passed by the Georgia General Assembly did not place a time limit on further concurrence should the Governor extend the State of Emergency. However, it did assert their right to terminate the state of emergency at any time. As such, there is a good argument that the General Assembly has given the governor the power to renew after 30 days without the necessity of it reconvening to ratify the renewal. 

Executive Order to Ensure a Safe and Healthy Georgia

Per the April 2nd Executive Order All residents and visitors of the State of Georgia shall practice social distancing and sanitation in accordance with this Order and guidelines published by the Centers for Disease Control and Prevention

  1. No business, establishment, corporation, non-profit corporation, organization, or county or municipal government is permitted to allow more than ten (10) persons to be gathered at a single location if such gathering requires persons to stand or to be seated within six (6) feet of any other person. This does not apply to cohabitating persons outside of their homes, family units or roommates residing together in private homes, or entities defined as “Critical Infrastructure”
  2. All residents and visitors of the State of Georgia are required to shelter in place within their homes or places of residence, meaning remaining in their place of residence and taking every possible precaution to limit social interaction to prevent the spread or infection of COVID-19 to themselves or any other person, unless they are:
    • Conducting and participating in Essential Services
    •  Performing Necessary Travel
    • Are engaged in the performance of, or travel to and from, the performance of Minimum Basic Operations for a business, establishment, corporation, or organization not classified as Critical infrastructure; or
    • Are part of the workforce for Critical Infrastructure and are actively engaged in the performance of, or travel to and from their respective employment
  3.  Essential Services permitted pursuant to the provisions of this Order are limited to the following:
    • Obtaining necessary supplies and services for family or household members, such as food and supplies for household consumption and use, medical supplies or medication, supplies and equipment needed to work from home, and products needed to maintain safety, sanitation, and essential maintenance of the home or residence. Preference should be given to online ordering, home delivery, and curbside pick-up services wherever possible as opposed to in-store shopping.
    • Engaging in activities essential for the health and safety of family or household members, such as seeking medical, behavioral health, or emergency services.
    • Engaging in outdoor exercise activities so long as a minimum distance of six (6) feet is maintained during such activities between all persons who are not occupants of the same household or residence.
  4. Necessary Travel permitted under this Order is limited to such travel as is required to conduct or participate in Essential Services, Minimum Basic Operations, or Critical Infrastructure as defined by this Order.
  5. Minimum Basic Operations are limited to:
    • The minimum necessary activities to maintain the value of a business, establishment, corporation, non-profit corporation, or organization, provide services, manage inventory, ensure security, process payroll and employee benefits, or for related functions. Such minimum necessary activities include remaining open to the public subject to the restrictions of this Order.
    • The minimum necessary activities to facilitate employees or volunteers being able to work remotely from their residences or members or patrons being able to participate remotely from their residences.
    • Instances where employees are working outdoors without regular contact with other persons, such as delivery services, contractors, landscape businesses, and agricultural industry services.
  6. All businesses, establishments, corporations, non-profit corporations, or organizations that are not Critical Infrastructure shall only engage in Minimum Basic Operations as defined in this Order during the effective dates of this Order. Such entities shall also implement measures which mitigate the exposure and spread of COVID-19 among its workforce. Such measures shall include the following:
    • Screening and evaluating workers who exhibit signs of illness, such as a fever over 100.4 degrees Fahrenheit, cough, or shortness of breath;
    • Requiring workers who exhibit signs of illness to not report to work or to seek medical attention;
    • Enhancing sanitation of the workplace as appropriate;
    • Requiring hand washing or sanitation by workers at appropriate places within the business location;
    • Providing personal protective equipment as available and appropriate to the function and location of the worker within the business location;
    • Prohibiting gatherings of workers during working hours;
    • Permitting workers to take breaks and meals outside, in their office or personal workspace, or in such other areas where proper social distancing is attainable;
    • Implementing teleworking for all possible workers;
    • Implementing staggered shifts for all possible workers;
    • Holding all meetings and conferences virtually, wherever possible;
    • Delivering intangible services remotely wherever possible;
    • Discouraging workers from using other workers’ phones, desks, offices, or other work tools and equipment;
    • Prohibiting handshaking and other unnecessary person-to-person contact in the workplace;
    • Placing notices that encourage hand hygiene at the entrance to the workplace and in other workplace areas where they are likely to be seen;
    • Suspending the use of Personal Identification Number (“PIN”) pads, PIN entry devices, electronic signature capture, and any other credit card receipt signature requirements to the extent such suspension is permitted by agreements with credit card companies and credit agencies;
    • Enforcing social distancing of non-cohabitating persons while present on such entity’s leased or owned property;
    • For retailers and service providers, providing for alternative points of sale outside of buildings, including curbside pick-up or delivery of products and/or services if an alternative point of sale is permitted under Georgia law;
    • Increasing physical space between workers and customers;
    • Providing disinfectant and sanitation products for workers to clean their workspace, equipment, and tools;
    • Increasing physical space between workers’ worksites to at least six (6) feet.
  7. The term “Critical Infrastructure” shall refer to businesses, establishments, corporations, non-profit corporations, and organizations as defined by the US Department of Homeland Security as “essential critical infrastructure workforce,” in guidance dated March 19, 2020, and revised on March 28, 2020, and those suppliers which provide essential goods and services to the critical infrastructure workforce as well as entities that provide legal services, home hospice, and non-profit corporations or non-profit organizations that offer food distribution or other health or mental health services. The operation of Critical Infrastructure shall not be impeded by county, municipal, or local ordinance. Critical Infrastructure that continues in-person operation during the effective dates of this Order shall implement measures which mitigate the exposure and spread of COVID-19 among its workforce. Such measures may include, but shall not be limited to:
    • Screening and evaluating workers who exhibit signs of illness,  such as a fever over 100.4 degrees Fahrenheit, cough, or shortness of breath;
    • Requiring workers who exhibit signs of illness to not report to work or to seek medical attention;
    • Enhancing sanitation of the workplace as appropriate;
    • Requiring hand washing or sanitation by workers at appropriate places within the business location;
    • Providing personal protective equipment as available and appropriate to the function and location of the worker within the business location;
    • Prohibiting gatherings of workers during working hours;
    • Permitting workers to take breaks and lunch outside, in their office or personal workspace, or in such other areas where proper social distancing is attainable;
    • Implementing teleworking for all possible workers;
    • Implementing staggered shifts for all possible workers;
    • Holding all meetings and conferences virtually, wherever possible;
    • Delivering intangible services remotely wherever possible;
    • Discouraging workers from using other workers’ phones, desks, offices, or other work tools and equipment;
    • Providing disinfectant and sanitation products for workers to clean their workspace, equipment, and tools;
    • Prohibiting handshaking and other unnecessary person-to-person contact in the workplace; and
    • Placing notices that encourage hand hygiene at the entrance to the workplace and in other workplace areas where they are likely to be seen; and
    • Suspending the use of Personal Identification Number (“PIN”) pads, PIN entry devices, electronic signature capture, and any other credit card receipt signature requirements to the extent such suspension is permitted by agreements with credit card companies and credit agencies.
  8. The Georgia Department of Economic Development is authorized to issue guidance to any business, corporation, organization, or industry trade group regarding its status as Critical Infrastructure. This guidance shall not require a finding of fact but shall be in writing and shall be considered a final agency action for the purpose of proceedings under Code Section 50-13-19.
  9. All restaurants and private social clubs shall cease providing dine-in services. Takeout, curbside pick-up, and delivery are permitted in accordance with the provisions of this Order. This provision shall not limit the operation of dine-in services in hospitals, healthcare facilities, nursing homes, or other long-term care facilities; however, to the extent possible, such facilities should offer in-room dining.
  10. All gyms, fitness centers, bowling alleys, theaters, live performance venues, operators of amusement rides as defined by Code Section 25-15-51, body art studios permitted pursuant to Code Section 31-4o-2, businesses registered pursuant to Code Sections 43¬10-11 and 43-10-18, estheticians as defined by Code Section 43-10¬1(8), hair designers as defined by Code Section 43-10-1(9), persons licensed to practice massage therapy pursuant to Code Section 43¬24A-8, and businesses which possess a license to operate as or otherwise meet the definition of “bar” as defined by Code Section 3¬1-2(2.1), shall cease in-person operations and shall close to the public while this Order is in effect.
  11. Persons required to shelter in place under any provision of this Order shall not receive visitors, except as follows:
    • Visitors providing medical, behavioral health, or emergency services or medical supplies or medication, including home hospice;
    • Visitors providing support for the person to conduct activities of daily living or instrumental activities of daily living;
    • Visitors providing necessary supplies and services, such as food and supplies for household consumption and use, supplies and equipment needed to work from home, and products needed to maintain safety, sanitation, and essential maintenance of the home or residence; or
    • Visitors received during end-of-life circumstances.
  12. To the extent practicable under the circumstances, visitors shall maintain a minimum distance of six (6) feet between themselves and all other occupants of the person’s home or residence. Any visitors visiting for the sole purpose of delivering medication, supplies, or other tangible goods shall, to the extent practicable, deliver such items in a manner that does not require in-person contact or require the deliverer to enter the person’s home or residence.
  13. The provisions of this Order related to visitors listed in the immediately preceding paragraph shall be strictly enforced against nursing homes or other long-term care facilities, including inpatient hospice, assisted living communities, personal care homes, intermediate care homes, community living arrangements, and community integration homes.
  14. The Department of Public Health, the Department of Public Safety, or any other state department or state officer deputized by the Governor or the Georgia Emergency Management and Homeland Security Agency are, after providing reasonable notice, authorized to mandate the closure of any business, establishment, corporation, non-profit corporation, or organization not in compliance with this Order for a period not to extend beyond the term of this Order.
  15. Pursuant to Code Section 38-3-51, the powers of counties and cities conveyed in Titles 36 and 38, including those specific powers enumerated in Code Sections 36-5-22.1 and 36-35-3 are hereby suspended to the extent of suspending enforcement of any local ordinance or order adopted or issued since March 1, 2020, with the stated purpose or effect of responding to a public health state of emergency, ordering residents to shelter-in-place, ordering a quarantine, or combatting the spread of coronavirus or COVID-19 that in any way conflicts, varies, or differs from the terms of this Order. Enforcement of all such ordinances and orders is hereby suspended and no county or municipality shall adopt any similar ordinance or order while this Order is in effect, except for such ordinances or orders as are designed to enforce compliance with this Order

Critical Infrastructure

The Executive Order exempts “Critical Infrastructure” from the shut-down order and stay at home provisions. “Critical Infrastructure” refers to businesses, establishments, corporations, non-profit corporations, and organizations as defined by the US Department of Homeland Security as “essential critical infrastructure workforce,” in guidance dated March 19, 2020, and revised on March 28, 2020. It also includes those suppliers which provide essential goods and services to the critical infrastructure workforce as well as entities that provide legal services, home hospice, and non-profit corporations or non-profit organizations that offer food distribution or other health or mental health services. The order makes it clear that the operation of Critical Infrastructure shall not be impeded by county, municipal, or local ordinance.

The US Department of Homeland Security Guidance that is referenced in the executive order exempts businesses in the following industries:

  • Health Care/Public Health
  • Law Enforcement, Public Safety, and Other First Responders
  • Food and Agriculture
  • Energy (including electricity, petroleum, natural gas, natural gas liquids, propane and other liquid fuels)
  • Water and Wastewater
  • Transportation and Logistics
  • Public Works and Infrastructure Support Services
  • Communications and Information Technology
  • Other Community or Government Based Operations and Essential Functions
  • Hazardous Materials
  • Financial Services
  • Chemical
  • Defense Industrial Base
  • Commercial Facilities
  • Residential/Shelter Facilities and Services
  • Hygiene Products and Services

Select Industry Profiles

Residential: The Department of Homeland Security exempts residential construction workers in relation to activities to ensure additional housing units that can be made available to combat the nation’s existing housing supply shortage.

Commercial Facilities: Workers who support the supply chain of building materials from production through application/installation, including cabinetry, fixtures, doors, cement, hardware, plumbing, electrical, heating/cooling, refrigeration, appliances, paint/coatings, and employees who provide services that enable repair materials and equipment for essential functions are exempt. Additionally, workers supporting ecommerce through distribution, warehouse, call center facilities, and other essential operational support functions and workers in hardware and building materials stores, consumer electronics, technology and appliances retail, and related merchant wholesalers and distributors – with reduced staff to ensure continued operations are exempt. Finally, those distributing, servicing, repairing, installing residential and commercial HVAC systems, boilers, furnaces and other heating, cooling, refrigeration, and ventilation equipment are exempt.

Critical Manufacturing: Any manufacturing facility that produces materials necessary to sustain other “critical infrastructure” is exempt. This includes manufacturing facilities that produce materials for medical supply chains, industrial minerals and metals, critical chemicals, food and agriculture etc.

Transportation: The exemptions provided to the transportation industry are focused on maintaining logistical networks to sustain the critical industries. Additionally, mass public transit service workers are permitted to continue work as they provide a portion of the population with needed mobility.

Financial: Any workers need to provide, process and maintain systems for processing, verification, and recording of financial transactions and services, including payment, clearing, and settlement; wholesale funding; insurance services; consumer and commercial lending; and capital markets activities.

Emergency Order Powers

As previously mentioned, the action taken by Governor Kemp in relation to COVID-19 today is pursuant to the State of Emergency Order issued on March 14th which was ratified by the General Assembly, two days later, on March 16th

Under O.C.G.A. §38-3-51, the Governor can declare a State of Emergency due to a health crisis but must also call the General Assembly into a special session “for the purpose of concurring with or terminating the public health emergency.”  The state of emergency remains in effect for 30 days unless expressly extended by the Governor.

Among the powers enumerated by O.C.G.A. §38-3-51, the state of emergency gives the governor considerable power to deal with our present health care crisis. For more information on the powers given to the Governor and Department of Health via the State of Emergency order see our March 14th Soapbox blog post, “Georgia Governor Brian Kemp Declares State of Emergency to Deal with Coronavirus Pandemic and Calls a Special Session of the General Assembly”.

DPH Administrative Orders

Pursuant to the Georgia Code and expanded powers granted under the Emergency declaration, the Department of Public Health issued two Administrative Orders, one on March 23rd and one on March 27th. Further regulatory announcements will likely come due to the latest stay at home executive order.

The March 23rd order addressed isolation and quarantine policies and procedures. Now that the Governor has put in place a state-wide stay at home order that applies to everyone, these administrative regulations are no long applicable.

Similarly, much of the March 27th administrative order is no longer relevant aside from administrative regulations on the staff of any Nursing, Long-Term Care Facilities and Early Child Education Programs, Non-profit food services and any other businesses licensed and monitored by DHS. Said regulations were reaffirmed and in some cases strengthened in the executive order.

Conclusion

The state-wide stay at home Order ends what was a local government driven process that resulted in a myriad of restrictions throughout the state. However, the Executive Order will certainly be followed up by regulations from the Department of Public Health and the publication of a process by which the Department of Economic Development will determine critical versus non-critical business in relation to the US Department of Homeland Security Guidance. As previously mentioned the Executive Order extends through April 13.

If you have any questions please contact the Dentons Public Policy Team.

State election and voting changes/updates

As COVID-19 spreads throughout the country, large gatherings and group activities have increasingly been altered, postponed or cancelled altogether. The voting process is no different. After several states delayed primaries, there has been continued preparation for the possibility that the 2020 presidential election season will look vastly different than normal. The Dentons team, along with our Dentons 50 partners, will continue to track elections developments throughout the year. As a primer, below is state by state overview of the next planned election, mail-in voting status and COVID-19 specific updates. Please contact us with any questions.

STATE UPCOMING ELECTIONS AS = As Scheduled PP = Previously Postponed MAIL VOTING STATUS Specific Exception = 1 Time Change No Special Exceptions Yet = Absentee Requirements not Relaxed COVID-19 UPDATES Link to Release/Order Dictating
Election Changes
Alabama July 14, 2020 (PP: Primary Runoff) Absentee/Mail Voting Permitted (Specific Exception) SOS Merrill Press Release
Alaska August 18, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting DOE Press Release
Arizona August 4, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting SOS Hobbs Press Release
Arkansas March 31, 2020 (AS: Primary Runoff) Limited (2x year) Absentee (No Special Exceptions Yet) SOS Thurston Press Release
California May 12, 2020 (AS: CD 25 Special General; State SD 28 Special General) No Excuse Absentee/Mail Voting SOS Padilla Press Release
Colorado June 30, 2020 (AS: Primary Election) All Mail Voting SOS Griswald Info Center
Connecticut June 2, 2020 (PP: Pres. Pref. Primary) August 11, 2020 (AS: Primary Election) Prerequisite Absentee
(No Special Exceptions Yet)
SOS Merrill Press Release
Delaware June 2, 2020 (PP: Pres. Pref. Primary) September 15, 2020 (AS: Primary Election) Absentee/Mail Voting Permitted (Specific Exception) SEC Albence Press Release
Florida August 18, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting SOS Lee Press Releases
Georgia May 19, 2020 (PP: Pres. Pref. Primary; AS: Primary Election) July 21, 2020 (AS: Primary RunoffElection) No Excuse Absentee/Mail Voting SOS Raffensperger Press Release
Hawaii August 8, 2020 (AS: Primary Election) All Mail Voting SOE News Releases
Idaho May 19, 2020 (AS: Primary
Election)
No Excuse Absentee/Mail Voting SOS Denny Press Release
Illinois November General Election No Excuse Absentee/Mail Voting SBE Press Release
Indiana June 2, 2020 (PP: Primary Election) Absentee/Mail Voting Permitted (Specific Exception) SOS Lawson Press Release
Iowa June 2, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting SOS Pate Press Release
Kansas August 4, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting SOS Schwab Press Release
Kentucky June 23, 2020 (PP: Primary Election) Prerequisite Absentee
(No Special Exceptions Yet)
SOS Adams Press Release
Louisiana June 20, 2020 (PP: Pres. Pref. Primary) July 25, 2020 (PP: Municipal Primary Election) Prerequisite Absentee
(No Special Exceptions Yet)
SOS Ardoin Press Release
Maine June 9, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting SOS Dunlap News Center
Maryland April 28, 2020 (AS: CD7 Special General) June 2, 2020 (PP: Pres. Pref.; AS: Primary Election) 4/28: All Mail Voting (Specific Exception) 6/2: No Excuse Absentee/Mail Voting BOE Chair Cogan Statement
Massachusetts May 19, 2020 (PP: Senate Specials) June 2, 2020 (PP: House Specials) September 1, 2020 (AS: Primary Election) 5/19 & 6/30: Absentee/Mail Voting Permitted (Specific Exception) 9/1: Prerequisite Absentee (No Special Exceptions Yet) SOC Galvin Press Release
Michigan May 5, 2020 (AS: Municipal Election) August 4, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting (All Mail Pending) SOS Benson Press Release
Minnesota August 11, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting (Changes Pending) SOS Simon Press Release
Mississippi April 21, 2020 (AS: State HD 88 Special Election) June 23, 2020 (PP: Primary Runoff Election) Prerequisite Absentee
(No Special Exceptions Yet)
SOS Watson Press Release
Missouri June 2, 2020 (PP: Municipal Election) August 4, 2020 (AS: Primary Election) Prerequisite Absentee
(No Special Exceptions Yet)
SOS Ashcroft Press Release
Montana June 2, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting SOS Stapleton Update Election Calendar
Nebraska May 12, 2020 (AS: Primary
Election)
No Excuse Absentee/Mail Voting SOS Evnan Press Release
Nevada June 9, 2020 (AS: Primary Election) All Mail Voting (Specific Exception) SOS Cegavske Press Release
New Hampshire September 8, 2020 (AS: Primary Election) Prerequisite Absentee
(No Special Exceptions Yet)
SOS Gardner Press Releases
New Jersey May 12, 2020 (PP: Municipal & Special Elections) June 2, 2020 (AS: Primary Election) 5/12: All Mail Voting (Specific Exception) 6/2: No Excuse Absentee/Mail Voting Gov. Murphy Press Release
New Mexico June 2, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting SOS Oliver Press Release
New York June 23, 2020 (PP: Pres. Pref. Primary; AS: Primary Election) Prerequisite Absentee
(No Special Exceptions Yet)
BOE Website
North Carolina June 23, 2020 (PP: CD11 Primary) No Excuse Absentee/Mail Voting BOE ED Bell Recommendations
North Dakota June 9, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting SOS Jaegar Vote Portal
Ohio April 27, 2020 (PP: Pres. Pref. & Primary Election) All Mail Voting (Specific Exception) SOS Larose Press Release
Oklahoma April 7, 2020 (PP: Local Elections) June 30, 2020: (AS: Primary Election) No Excuse Absentee/Mail Voting EBS Ziriax Press Release
Oregon May 19, 2020 (AS: Primary
Election)
All Mail Voting SOS Clarno Press Release
Pennsylvania April 28, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting SOS Boockvar Press Release
Rhode Island June 2, 2020 (PP: Pres. Pref. Primary) September 8, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting SOS Gorbea Press Release
South Carolina ? May 1, 2020 (PP: Municipal Elections) June 9, 2020 (AS: Primary Election) Prerequisite Absentee
(No Special Exceptions Yet)
SEC Press Releases
South Dakota June 2, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting SOS Barnett Press Release
Tennessee August 6, 2020 (AS: Primary Election) Prerequisite Absentee
(No Special Exceptions Yet)
SOS Hargett News
Texas July 14, 2020 (PP: Primary Runoff) Prerequisite Absentee
(No Special Exceptions Yet)
Gov. Abbot Declaration
Utah June 30, 2020 (AS: Primary Election) All Mail Voting (In Person Optional) Gov. Herbert Press Release
Vermont August 11, 2020 (AS: Primary Election) No Excuse Absentee/Mail Voting SOS Condos Press Release
Virginia May 5, 2020 (AS: Municipal Elections) June 9, 2020 (AS: Primary Election) 5/5: Absentee/Mail Voting Permitted (Specific Exception) 9/1: Prerequisite Absentee (No Special Exceptions Yet) DOE Release
Washington August 4, 2020 (Primary Election) All Mail Voting SOS Wyman Press Release
West Virginia April 28, 2020 (AS: Special
Election) – Change Pending
May 12, 2020 (AS: Primary
Election)
Absentee/Mail Voting Permitted (Specific Exception) SOS Warner Press Release
Wisconsin April 7, 2020 (AS: Spring Election) No Excuse Absentee/Mail Voting ECA Wolfe Press Release
Wyoming May 5, 2020 (AS: Municipal Elections) August 18, 2020 (AS: PrimaryElection) No Excuse Absentee/Mail Voting SOS Buchanan Media Releases

Senate Approves US$350 billion for Small Business Grants

The Senate has passed a bill that will provide up to US$350 billion in forgivable loans to small business concerns, non-profit and veterans organizations and self-employed individuals to cover their expenses during the COVID-19 crisis.

Select Updates

  • Size test is the greater of (a) 500 employees or (b) the size standard by industry sector (NAICS code) established by the SBA
  • Employees defined to include individuals employed full-time, part-time or other basis (includes gig economy workers)
  • Small businesses that were not in business during 2019 can calculate monthly payroll costs using average from January 1, 2020 and February 29, 2020
  • SBA regulations may require affiliated companies’ employees (and their portfolio companies) to be combined for purposes of eligibility.  Implications to VC/PE backed companies.
  • Maximum loan amount remains 250% of monthly payroll costs (including commissions) plus any amount outstanding on an Economic Injury Disaster Loan (EIDL) originated during the period from January 31, 2020 until the date of origination of the new loan
  • Use of proceeds that are permitted now include interest payments on mortgages and/or other debts but not principal payments
  • Previously originated EIDL loans may be refinanced into forgivable loans
  • Eligibility considerations no longer include whether the applicant has been substantially impacted by public health restrictions related to the Coronavirus

Existing Federal Economic Assistance Options for Small Businesses Affected by the Coronavirus (COVID-19): Part 1

This alert focuses on the existing federal economic assistance option with the U.S. Small Business Administration (“SBA”) called Economic Injury Disaster Loans (“EIDLs”).  Dentons will provide updates on the EIDL discussed below, as well as updates on additional economic assistance options, notably the anticipated Small Business Interruption Loan Program (see our most recent client alert on that program here), as new information becomes available. 

U.S. Small Business Administration – Economic Injury Disaster Loan

While the SBA’s EBILs have existed for some time, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (P.L. 116-123) increases the amount made available to the SBA to use for EBILs to $197.2 million. 

What Is The EIDL?

The EIDL is a low-interest federal disaster loan of up to $2 million offered by the SBA to small businesses, as well as private, non-profit organizations to help alleviate economic injury directly caused by the coronavirus in certain approved areas. 

Which States Are Eligible?

As of March 23, 2020, small business owners in the following designated states are eligible to apply for a loan: Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Illinois, Indiana, Louisiana, Maine, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington, and West Virginia.

Certain contiguous counties located in the following states are also eligible: Alabama, Arizona, Arkansas, Idaho, Iowa, Kentucky, Mississippi, Missouri, North Dakota, Oregon, Texas, Vermont, Wisconsin, and Wyoming.

The most current list of states and contiguous counties can be found here.

What Is An Eligible “Small Business?”

There unfortunately is no single SBA guideline when it comes to size of the business.  Factors taken into account vary by industry and may include:

  • Average annual revenue (depending on the industry, annual revenue may not exceed $1 million or $30 million); or
  • Average annual number of employees (depending on the industry, the maximum number of employees might be 250 or 1,500).

See 13 C.F.R. § 121.201 (setting forth a table of SBA size standards identified by North American Industry Classification System (NAICS) codes).  Moreover, when calculating the size of your business, the SBA requires including the revenue and employees of any affiliates (i.e., a business that controls or has the power to control another, or a third party that controls or has the power to control both businesses).  The SBA offers online a Size Standards Tool for prospective applicants to check if their organization qualifies as a small business.

Additionally, a “business concern” for the purposes of EIDL is: (1) a business entity organized for profit; (2) with a place of business located in the United States; and (3) which operates primarily within the United States, or which makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor.”  13 C.F.R. § 121.105(a).  The business concern may be:

  • An individual proprietorship;
  • A partnership;
  • A limited liability company;
  • A corporation; or
  • A joint venture, association, trust, or cooperative, except that where the form is a joint venture there can be no more than 49% participation by foreign business entities in the joint venture.

13 C.F.R. § 121.105(b). 

Importantly, your organization is not eligible for the EIDL if, for example, your organization is:

  1. Engaged in lending, multi-level sales distribution, speculation, or investment (except for real estate investment with property held for rental when the disaster occurred);
  2. A non-profit or charitable concern, other than a private non-profit organization;
  3. A consumer or marketing cooperative;
  4. Deriving more than one-third of gross annual revenue from legal gambling activities;
  5. A loan packager which earns more than one-third of its gross annual revenue from packaging SBA loans;
  6. Principally engaged in teaching, instructing, counseling, or indoctrinating religion or religious beliefs, whether in a religious or secular setting; or
  7. Primarily engaged in political or lobbying activities.

13 C.F.R. § 123.301. 

Use of EIDL Proceeds?

EIDL proceeds are working capital loans and may be used to pay fixed debts, payroll, accounts payable, and other bills that cannot be paid due to the impact of the coronavirus.  See 13 C.F.R. § 123.303(a).

Importantly, loan proceeds may not be used to:

  • Refinance existing debt;
  • Repay other SBA loans or loans from another federal agency;
  • Pay, directly or indirectly, any taxes, fines or penalties;
  • Repair physical damage; or
  • Pay dividends or other disbursements to owners, partners, officers or stockholders, except for reasonable remuneration directly related to their performance of services for the business. 

13 C.F.R. § 123.303(b).

What Are The Conditions?

  • The interest rate is 3.75% for small businesses and 2.75% for private, non-profit organizations. 
  • The SBA offers loans with long-term repayment options, up to a maximum of 30 years; however, the term ultimately will be determined on a case-by-case basis, depending on the borrower’s ability to pay. 

The Application Process and Timing?

The application for the EIDL is a three-step process:

  • Apply for a loan;
  • Verify property and make loan processing decision; and
  • Close loan and disburse funds. 

The timing of the first step is largely in the control of the applicant as it consists of filling out the forms listed below.  With respect to the second step, it has historically taken the SBA loan officers up to three weeks to make a decision.  As to the third step, the SBA will prepare and send loan closing documents for signature upon approving the application.  Once the loan closing documents are received, an initial disbursement of $25,000 has historically been made within five days.  The loan will be fully disbursed in subsequent disbursements pursuant to a schedule determined by a case manager assigned to work with the borrower. 

When Do I Need To Apply By?

  • The deadline to apply for the EIDL is nine months from the date of the state governor’s disaster declaration. 
  • While the deadline may seem like months away, if your organization needs access to capital immediately, your organization may wish to consider applying for the EIDL sooner, rather than later, because processing applications may take a considerable amount of time.  
  • Prospective applicants should also be mindful that the SBA likely will experience significant backlog in processing applications, or that the SBA could deny the application, which would delay relief.

How To Prepare?

Review the following forms and collect information prior to starting the application:

Gather the following information or documents:

  • Year-end and current profit and loss statements;
  • A monthly breakdown report of sales; and
  • Complete copies of the business’s most recent Federal income tax returns (typically the last three).

Where Can I Apply?

Prospective borrowers may submit an online application here.  While the SBA prefers online applications, prospective borrowers can also call contact the SBA disaster assistance customer service center at (800) 659‑2955 (TTY: (800) 877‑8339) or e-mail disastercustomerservice@sba.gov and request a paper application by mail. 

Small Business Loan/Grant Support working its way through Congress

Negotiations ongoing for currently proposed US$350 Billion in loans as part of the Third Economic Relief Bill

  • Who – US small businesses and certain other organizations who employ no more than 500 employees. Also independent contractors and self-employed individuals.
  • What – Forgivable loans up to 2.5 times monthly payroll expenses, capped at $10 million
  • When – Bill signing expected before March 27, 2020 with funds available TBD in April
  • Where – Anywhere in the United States
  • Why – To support small businesses, non-profits, veterans organizations, independent contractors and self-employed individuals through the COVID-19 crisis.
  • For What – Funds to be used to retain workers, maintain payrolls and/or make mortgage, lease and utility payments.
  • Loan Forgiveness – Up to 100% of the loaned amount may be forgiven under certain circumstances if workers are retained through June 30, 2020

Executive Summary

The coronavirus outbreak and resulting quarantine measures have led to widespread business disruptions in the United States. As part of the federal response, the Congress is expected to approve this week a bill that would provide relief of up to $350 billion in forgivable loans to small business concerns, non-profit and veterans organizations and self-employed individuals to cover their expenses during the crisis.

This alert is based on draft legislative language as of March 22, 2020 and remains subject to revisions during the legislative process. There will most certainly be changes and revisions to the current proposal, as negotiations are ongoing with respect to, among other things, size and scope, before the Congress considers and passes the third economic relief bill.

Stay tuned for further developments.  We will be hosting a briefing call
Thursday, March 26, 2020 at 2 p.m. EST. Please RSVP here.

As soon as the bill becomes law, we can work with you to identify SBA-approved lenders and assist in the preparation and submission of a business interruption loan application. It is critical to leverage our experienced public policy experts in D.C. to best position applications for success, including guiding them through the approval process, given the expected intense competition for limited resources, as well as working with you to sort through the interplay with business interruption insurance, existing credit arrangements and other related complexities. We will keep you posted as the bill moves through the Senate, the House and then as it is signed into law, and provide further details so you may access the program, if you are eligible.

Details

Eligibility

Any small business concern, non-profit organization or veterans organization1 is eligible provided that it employs no more than 500 employees and was in operation on February 15, 2020.2 In addition, any applicant that meets certain size standards established by the SBA may be eligible. All prospective borrowers are presumed to have been adversely impacted by COVID-19.

Self-employed individuals, sole proprietors and independent contractors are also eligible if they have documented payroll tax filings with the IRS. In addition, business concerns with more than one (1) physical location are eligible if they employ not more than 500 employees per physical location and they operate in the hotel, restaurant and/or bar sectors.3

Maximum Amount

The maximum loan amount to be guaranteed is an amount equal to two and a half (2.5) times the borrower’s total monthly payments for payroll (calculated as an average per month over the 12 months prior to the date of the applicable loan)4, capped at $10,000,000.00 per borrower. The SBA will waive all fees or reduce fees to the maximum extent possible.

Payroll costs are defined as the sum of all payments for compensation, including salary, wage, cash tips, paid time off (vacation, parental, sick leave), severance, health care benefits, state or local taxes. For sole proprietors or independent contractors, payroll costs are defined as the sum of all compensation payments including wages, commissions or similar compensation capped at $100,000 per year. Payroll costs shall not include compensation of any individual employee in excess of $100,000, any compensation of an employee whose principal place of residence is outside the United States, or any sick leave or family leave covered under the Families First Coronavirus Response Act.

Use of Proceeds

The loan proceeds can be used to provide payroll support, including paid sick leave, group health care benefits, employee salaries, mortgage payments, rents, utilities and payments on other debt obligations. The SBA will require lenders to provide complete payment deferment relief for a period of not more than 1 year.5 The program covers the period from February 15, 2020 through June 30, 2020.

Other Matters

The proposed bill provides other details, including with respect to loan forgiveness, an increase in SBA guarantee to 100% until January 1, 2021 and eligibility details.

In order to qualify for full loan forgiveness, a borrower must maintain, during a period beginning on February 15, 2020 and ending on June 30, 2020 an average monthly number of employees that is not less than the average monthly number of employees for the same period in 2019.

The bill is still under negotiation and this summary does not describe all of the details that may be applicable to any specific borrower. Please reach out to your Dentons contact for information specific to your circumstances.

Illustrative Example

By way of illustration, a company applies for a loan with fewer than 500 employees, $200,000 in monthly payroll and $100,000 in monthly rent and utilities. Its total loan may be for 2.5 times the company’s payroll, or in this instance, $500,000. If workers are retained, lender will be required to forgive an amount determined pursuant to a formula that takes into account the number of employees retained, equal to up to eight weeks of the companies expenses, including payroll, rent, mortgage and/or utilities (approximately $600,000). By retaining employees, the company would not have to repay the loan and the lender will be covered by the SBA’s guarantee.


1 As defined in Section 501(c)(19) of the Internal Revenue Code.

2 A small business is ineligible under this program if it already receives assistance under section 7(b)(2) of the Small Business Act relating to COVID-19. A non-profit organization is ineligible if it qualifies under Medicaid for payments for certain items and services furnished under a State plan.

3 Business concerns are eligible if they are assigned a North American Industry Classification System code beginning with 72 at the time of disbursal. https://www.bls.gov/iag/tgs/iag72.htm

4 Seasonal employers will average payroll expenses by month over the period from February 15, 2019 or March 1, 2019 through June 30, 2019.

5 Subject to guidance from the SBA to be drafted no later than 30 days after passage of this legislation.