Employee Retention Credit

The employee retention credit was created to encourage businesses to retain workers on their payroll. The tax credit results in a refund of up to 40% of up to $10,000 in wages paid by a qualifying employer who has had its business impacted by the COVID-19 pandemic. The only businesses exempted from this credit are local and state governments as well as small businesses that receive small business loans. 

Qualifying employers must have their business fully or partially suspended by the government as a result of the pandemic and the employer’s gross receipts must be 50% below the comparable quarter in 2019. Employers who can retain staff during the pandemic should not hesitate to utilize this credit.

The Paid Sick Leave Credit

The paid sick leave credit was created to allow businesses to obtain a credit for a worker who cannot work as a result of either COVID-19 isolation or self-quarantine. These workers are qualified to receive paid sick leave of up to 10 days at a maximum of 80 hours at the worker’s regular rate of up to $511 a day and $5,110 in total. Employers can immediately be reimbursed for this credit by reducing the required amount of payroll taxes owed. 

The Family Leave Credit

Employers can also receive a credit for workers who cannot work because the worker is caring for a family member with COVID-19 or because a child’s school or place of care is closed. Workers who fall under this category are entitled to receive paid sick leave of up to two weeks at a maximum of 80 hours at two-thirds of their regular pay rate with a cap-off at $200 a day or $2,000 in total. Qualifying employers can immediately redeem this credit, as well. 

Credits are Optional

Remember, payroll tax credits are optional. As a result, eligible employers need not feel required to claim the credits. If employers do claim the credits, however, it is critical to include the amount of credits by the employer in its gross income when federal income taxes are reported. One of the best ways to decide whether these credits are worth claiming is to speak with your corporate lawyer.

Speak with a Knowledgeable Business Law Attorney

Planning for your business’s continued success is more important now than it ever was. One of the best ways to make sure that you take tax laws into full consideration is to obtain the help of an experienced business lawyer. Contact Resnick Law today to schedule a free case evaluation.  

What Constitutes Force Majeure

When a “force majeure” event occurs, it prevents a party from performing its obligation under a contract in that either the event could not have been foreseen or could not have been prevented even with care and diligence. While many people think of natural disasters when considering force majeure clauses, this category can also pertain to wars, government actions, and pandemics.

Just because a specifically enumerated event occurs, does not mean that a force majeure clause becomes effective. Instead, for the force majeure clause to come into play, an event must result in “extreme and unreasonable” difficulty or hardship. 

A force majeure event will also not excuse a performance if the failure to perform is the result of a party’s negligence instead of the event itself. If a party to a contract could have prevented the force majeure event, the force majeure will likely not be effective. 

The Role of Force Majeure in Business Contracts

There are several ways that parties can be protected if there is a force majeure in their contract. If a contract’s purpose is frustrated or incapable of being performed, the clause can protect a person through the doctrines of impracticability or impossibility. 

Force Majeure and the Coronavirus

Because force majeure can encompass government actions that make contract performance impossible, these clauses are likely to come into play in various contracts during the COVID-19 pandemic. In this setting, a force majeure might take the form of a lockdown order or other government action that makes it impossible to perform a contract. 

Advice When Considering the Use of a Force Majeure Clause

Some helpful strategies that parties navigating force majeure clauses should remember to follow include:

• If you plan to use the COVID-19 pandemic as a reason to not perform under a force majeure clause, make sure to give the other contracted party ample notice.
• Remember to discuss potential business solutions with the other party. While the coronavirus has resulted in delays in shipment, reduced supplies, and other hardships, it might still be possible to arrive at an acceptable arrangement.
• The strongest arguments that a force majeure event has occurred and made the terms of a contract impossible often involve government actions taken to control COVID-19 as well as unanticipated disruptions of the supply chain. 
• Force majeure is a temporary defense and only applies for the time that the event restrains a party’s performance under a contract. 
• To learn even more about the relationship between force majeure clauses and the coronavirus pandemic, considering reading the American Bar Association’s recent article “Is the Coronavirus a Force Majeure that Excuses Performance of a Contract?”

Speak with a Knowledgeable Corporate Law Attorney

How “force majeure” applies to the COVID-19 pandemic remains largely unsettled. Fortunately, an experienced corporate law attorney can help you navigate this important issue and many others. Contact Resnick Law PC today to schedule a free case evaluation.