COVID-19 Update for Restaurants

So… lots going on. Based on various conversations I have had with insurance representatives and attorneys, below are some thoughts about what types of actions you should be considering. Please always check directly with your insurance carrier and labor attorney for direction.

Operating Hours

Not sure what your decision is regarding operating. Obviously the only option is curbside or delivery. If you do decide to stay open for these activities please make sure you follow the directives from the health department:

All restaurants and retail food facilities are prohibited from serving food for consumption on-premises. Restaurants and retail food facilities may continue to operate for purposes of preparing and offering food to customers via delivery service, to be picked up or for drive-thru. For those establishments offering food pick-up options, proprietors are directed to establish social distancing practices for those patrons in the queue for pick-up.

Inventory

As far as recommendations for documenting – please do a hard inventory count today. Inventory loss will probably not be covered on your insurance policy because the cause is not a covered event. Almost all policies, unless otherwise negotiated, exclude virus outbreak, pandemic from business interruption coverage. Having said that- you should contact your carrier and put in a claim, the worst thing that can happen is its denied. Would like to have a hard inventory count in case some type of relief appears that we could take advantage of.

Also- if you donate any product or allow employees to take home product – please document that.

Employees

If you are continuing to have employees/management on the payroll please practice normal payroll processes. We believe that there will be some relief in the form of tax credits for payroll during this emergency. We are waiting for the Senate to vote and for the President to sign the Families First Coronavirus Response Act- attached for your review. It is tied up right now in the Senate- so we will keep an eye out for the final version and send to you when available. There are sections that would allow for Emergency Sick Pay, Emergency Paid leave and Emergency Unemployment Insurance Stabilization and Access.

Please update your employee contact list- phone numbers and email addresses so you can communicate with everyone. As you all know.. you can’t require an employee to access information as part of their job duties when not working, but it would be important to know how the employee would like you to communicate what is going on.

Below is some sample language for a partial closure. It can be used as talking points to employees. The primary decision is whether you want furlough them (i.e., short-term layoff but still technically keep them as employees) versus a longer-term layoff and end of employment. In the latter situation (true layoff/term), the final check is due upon notice to the employee. With a furlough, you have an argument they are still employees (just not active ones) and thus no final paycheck is immediately due. However, it is still a grey area. If you can get final checks ready and you also do not expect to call them back right away, you may opt for the formal termination route. There is also pending legislation in the Senate for an additional 14 days of paid sick leave for all employees. If you have 51 or more employees, the company pays for it. 50 or less employees and the government will reimburse you for it. We will have to see what the final language will actually be as it is debated on the Senate floor.

During this anticipated short-term furlough, you should be eligible for unemployment benefits through the California Employment Development Department (“EDD”). Please note that your employment is not being terminated, and that we anticipate the furlough of work to be finite. Given the severity of the situation, the Governor has taken steps to waive the normal one-week waiting period for benefits. We recommend you file today so that you can be eligible for the earliest benefit window possible. Additional information can be found on the EDD’s website, which also provides for the quickest processing of claims (https://www.edd.ca.gov/). We would, of course, provide assistance in processing claims and helping to ensure the receipt of timely benefits.

Employee Resources:

The CA EDD is permitting Unemployment Insurance claims for those who have been laid-off or furloughed. The 1 week waiting period has been waived for now, so employees can begin receiving payments for the first week. Visit: CA EDD – COVID 19

There have been many articles published, and you can easily Google them or consult your labor attorney, on the differences of a furlough or lay-off. Consider both carefully. Link here to a Littler article that was shared with me by a colleague: Littler Law Article on COVID-19

EDD Relief

You can request relief from the EDD for an extension for filing and paying payroll taxes. Of course if no one is working then this will not amount to a lot- but every relief helps and I would encourage you to do this. You will need to work with your payroll provider if given the extension.

https://www.edd.ca.gov/about_edd/coronavirus-2019/faqs.htm

What if I can’t file or pay my payroll taxes on time because of COVID-19?

With the Governor’s emergency declaration, if your business is directly affected by COVID-19, you can request up to a 60-day extension to file your state payroll reports and deposit state payroll taxes without penalty or interest. The written request for extension, noting the impact of COVID-19, must be received within 60 days from the original delinquent date of the payment or return. For the address to send the request, along with other information, please see the State of Emergency or Disaster Fact Sheet (DE 231SED) (PDF).
You can also call the EDD Taxpayer Assistance Center with any questions you may have about your payroll tax responsibilities.
• Toll-free from the U.S. or Canada: 1-888-745-3886
• Hearing impaired (TTY): 1-800-547-9565
• Outside the U.S. or Canada: 1-916-464-3502

Landlords

Start the conversation immediately by phone- not email. Full abatement, partial abatement- whatever you can get them to consider. The Force Majeure provision in your lease will not usually help you in this situation as it most likely does not include “Acts of God”, so your best strategy is an honest conversation about what you are going to need to do to stay in business.

Financial Resources

On March 12, the SBA announced that it will work with state governments to provide targeted, low-interest disaster recovery loans to small businesses severely impacted by the outbreak. You can find out more about these loans and how to access them here: SBA Loan Info
Please see the information flyer we have prepared for our clients at the following link: https://www.krostcpas.com/accounting-news/how-to-secure-an-sba-loan-if-your-business-is-impacted-by-the-coronavirus-covid-19

Please feel free to call me at anything with questions or concerns. We are here to assist you and help you survive this challenge. You, as our client are incredibly important to us both personally and professionally. We will work with you through this crisis and help all of us get back to normal as soon as possible. We continue to work on all our clients’ accounts to ensure that you have good and accurate financial data to use for the various “reliefs” that will present themselves. We are monitoring every possible advantage that we can find for our clients and their business.

Stay safe and healthy- we are here if you need us.