WHAT EMPLOYERS NEED TO KNOW ABOUT THE EMERGENCY FAMILY AND MEDICAL LEAVE EXPANSION ACT (“EFMLEA”)

April 8, 2020

Have you provided the required notice?

In addition to the Emergency Paid Sick Leave Act, employers with fewer than 500 employees are required to provide eligible employees with Emergency Family and Medical Leave (“Emergency Leave”) under the Emergency Family and Medical Leave Expansion Act, which went into effect as part of the Families First Coronavirus Response Act on April 1, 2020.   

Employees are eligible for these benefits if they have been on the payroll for at least 30 calendar days before seeking Emergency Leave. Employers who employ health care providers or emergency responders may elect to exclude such employees.

Employees are entitled to Emergency Leave if they are unable to work because they need to care for one or more school-aged children whose school or daycare is closed for COVID-19 related reasons. All eligible employees are entitled to up to 12 weeks of leave. The first ten days of Emergency Leave may be unpaid, although employees may choose to use their EPSLA leave or any other paid leave for which they are eligible during their first ten days.

Employees are entitled to two-thirds of their regular rate of pay during their Emergency Leave (up to a maximum of $200 per day). In addition, employers with 25 or more employees are required to reinstate employees who take Emergency Leave upon their return, to either the same or equivalent positions.

Employers with fewer than 25 employees will be required to make reasonable attempts to reinstate their employees in the year following their employee’s leave. These employers, however, will not be required to reinstate any employees whose positions are eliminated as a result of the COVID-19 crisis, including economic reasons.

All Emergency Leave expires on December 31, 2020.

Eligible employers are required to post the following notice immediately: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf Employers can comply with the posting requirement by emailing or direct mailing the notice to employees, or by posting on their internal or external website.   

Retaliation against employees related to Emergency Leave is strictly prohibited and employers face double damages and attorneys’ fees for violations related to the EPSLA.

About the Author: Meaghan Kramer assists clients with employment law and commercial litigation matters. Meaghan is advising clients on workplace related legal issues arising from COVID-19. Meaghan writes about employment issues, including safeguarding workplace confidences, and creating work environments that are free from discrimination and harassment. mkramer@eblawyers.com | 602.222.4995

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.

WHAT EMPLOYERS NEED TO KNOW ABOUT THE EMERGENCY PAID SICK LEAVE ACT (“EPSLA”)

April 8, 2020

Have you posted the required notice?

In the wake of the COVID-19 pandemic, employers with fewer than 500 employees are required to provide eligible employees with Emergency Paid Sick Leave. Employees are eligible if they meet any of the following criteria (regardless of how long they have been employed):

  1. the employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
  2. the employee has been advised by a health care provider to self-quarantine because of COVID-19;
  3. the employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;
  4. the employee is caring for an individual subject or advised to quarantine or self-isolate;
  5. the employee is caring for a son or daughter whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 precautions; or
  6. the employee is experiencing substantially similar conditions as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

Full-time employees are entitled to 80 hours of paid sick time, and part-time employees are entitled to the equivalent of the average hours that they would work over a two-week period. Employees who take EPSLA leave because of their own illness or quarantine, must be paid their regular rate of pay, subject to a maximum of $511 per day and $5,110 total. Employees who take EPSLA leave to care for a family member or a school-aged child (due to illness or a school/daycare closure) are to be paid two-third of their regular rate of pay, subject to a maximum of $200 per day and $2,000 total.

Employees are permitted to use EPSLA hours before they dip into their Arizona Paid Sick Time. Any unused EPSLA hours will expire on December 31, 2020.

All employers subject to the EPSLA are required to post the following notice: https://www.dol.gov/sites/dolgov/files/WHD/posters/FFCRA_Poster_WH1422_Non-Federal.pdf Employers can satisfy this posting requirement by emailing or direct mailing the notice to employees, or by posting on their internal or external website. 

The Act prohibits retaliation and employers face double damages and attorneys’ fees for violations related to the EPSLA.

About the Author: Meaghan Kramer assists clients with employment law and commercial litigation matters. Meaghan is advising clients on workplace related legal issues arising from COVID-19. Meaghan writes about employment issues, including safeguarding workplace confidences, and creating work environments that are free from discrimination and harassment. mkramer@eblawyers.com | 602.222.4995

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.

AM I (OR THE OTHER PARTY) EXCUSED FROM CONTRACTUAL DUTIES AFTER COVID-19?

April, 7, 2020

Introduction to Force Majeure, and the Doctrines of Impracticability and Frustration of Purposes

The COVID-19 pandemic has rendered many contractual obligations difficult, or impossible, to perform. While some businesses have utilized telework technology to continue operations relatively uninterrupted, that is not an option for the sectors of our economy that provide in-person services, such as restaurants, hotels, and others in the hospitality industry. Many businesses will face weeks, if not months, without sufficient revenue or staff to satisfy existing contractual obligations. This will cause a ripple effect of contract defaults affecting vendors, landlords, lenders, and everyone in between.

How should parties address these inevitable defaults? Can the defaulting party use the emergent nature of present circumstances to avoid liability? These questions are particularly difficult to answer where one of the parties has already incurred costs and/or partially performed. To prepare for this situation, parties should review their contracts for force majeure provisions (discussed below), and also become familiar with the legal doctrines of “impracticability” and “frustration of purposes,” to determine whether they might permit either party to avoid liability under the contract.

Force Majeure – Review your contract to see if it includes a “force majeure,” a clause that excuses a party’s failure to perform when an unforeseen event outside that party’s control makes performance impossible. Not all force majeure provisions are identical, so analyze the provision closely to determine whether it actually works in your favor. A few specific things to consider when evaluating a force majeure provision:

  • Who does it benefit? Some force majeure provisions apply equally to all parties to the contract, but some specifically only apply to one party. A robust force majeure provision will be no help to you if it only excuses the other party from performing.
  • When is it triggered? Force majeure provisions typically list the types of events that trigger the clause – i.e., war, weather events, etc. Does your provision include “pandemic,” “state of emergency,” “quarantine,” or something similar as a triggering event? If not, does your provision include “catch-all” language that could include the COVID-19 pandemic, such as “acts of God” or “including but not limited to”?
  • Does the triggering event make performance impossible? The party invoking a force majeure clause to excuse its failure to perform must generally show that the triggering event actually made performance impossible. If the triggering event merely made performance more costly, for example, the force majeure provision likely will not excuse performance. However, some force majeure provisions use a lower standard than impossibility, for example by excusing performance if it has become commercially unreasonable.
  • Was the triggering event foreseeable or contemplated by the parties? Force majeure clauses generally only excuse performance if the parties did not know the triggering event had occurred or would occur.
  • Is the force majeure clause exclusive? As described below, there are common law doctrines that may excuse performance under certain conditions. However, those common law doctrines are probably unavailable if your contract includes a force majeure provision, which presumptively excludes non-contract common law doctrines. However, read the contract carefully to determine whether the force majeure provision is meant to be read in conjunction with, and not exclusive of, other legal doctrines.

If your contract does not include a force majeure provision, then you should consider whether performance may be discharged under the legal doctrines of ‘impracticability” or “frustration of purposes,” which were embraced by the Arizona Court of Appeals in a case called 7200 Scottsdale Rd. Gen. Partners v. Kuhn Farm Mach., Inc.[i]

Doctrine of Impracticability

The doctrine of impracticability, also sometimes called the doctrine of impossibility, is defined as follows:

Where, after a contract is made, a party’s performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.

Traditionally, the doctrine applies to three categories of supervening events: (1) death or incapacity of a person necessary for performance, (2) destruction of a specific thing necessary for performance, and (3) prohibition or prevention by law. The third supervening event appears to be the most relevant to the COVID-19 pandemic, which has resulted in a number of regulatory actions and executive orders prohibiting a variety of business activities.

Doctrine of Frustration of Purposes

The doctrine of frustration of purposes differs from the doctrine of impracticability because it applies when circumstances have intervened to essentially destroy the expected value of the contract, even when performance is technically still possible. The doctrine is generally defined as follows:

Where, after a contract is made, a party’s principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.

In Arizona, there are four factors that must exist before the doctrine applies:

  1. The purpose that is frustrated must have been a principal purpose of that party;
  2. The frustration must be substantial, i.e., so severe that it is not to be regarded as within the risks assumed under the contract;
  3. The non-occurrence of the frustrating event must have been a basic assumption of the parties when they formed the contract;
  4. The contract does not place the risk of the frustrating event on the party seeking relief.

In conclusion, the applicability of these doctrines and/or any force majeure provision is going to be very fact specific, and will require a careful analysis of the contract language, the purpose of the contract, the obligations and intended benefits of the parties, and how the COVID-19 pandemic has impacted all of these elements. If you find yourself dealing with a breach of contract related to COVID-19, contact your attorney.


[i] 184 Ariz. 341, 347, 909 P.2d 408, 414 (Ct. App. 1995)

About the Author: Michael Rolland is a member of the civil litigation and commercial transactions practice groups with the law firm of Engelman Berger, P.C. Michael has a special interest in the intersection of technology and the law, and writes on tech law issues. mpr@eblawyers.com | 602.222.4977

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.

CONSIDERATIONS IN SERVICE PROVIDER CONTRACTS DURING THE COVID-19 CRISIS

April 6, 2020

In the context of many contracts for services, potential exposure to the Coronavirus must be on the mind of both the service provider and the recipient of the services / customer.  The parties must consider liability allocation between one another, and, in addition, possible liabilities that could flow to third parties related to the provided services.

In light of the risks, the service provider and customer should carefully consider allocating risks at the inception of the contract, by included provisions for requirements and/or limitations as follows:

  • Holding one party or each other harmless and agreeing to indemnification provisions for liabilities/damages relating to the Coronavirus;
  • Disclaiming of warranties by service provider;
  • Requiring customer to deep clean area where services are to be performed;
  • If services require entering customer’s premises, requiring customer to provide premises in accordance with CDC guidelines related to the Coronavirus, such as ensuring social distancing when services are being performed;
  • Acknowledging that that premises where services being performed will not be made virus free;
  • Requiring that the Service Provider perform its duties in accordance with  CDC guidelines related to the Coronavirus;
  • Suspending obligations under the Agreement if Coronavirus makes it impossible or impractical to perform services;
  • Allowing either party to terminate the contract if their ability to perform the services or otherwise fulfill contractual obligations is or will be delayed for a prolonged time-period; and
  • Addressing other specific concerns or potential liabilities depending on the type and nature of the services being performed.

The Parties to a service contract also should examine any applicable insurance policies related to the services or the Premises where the services are to be performed, to determine if losses resulting from the Coronavirus are a covered risk.  However, it is common for insurance policies to exclude coverage for losses resulting from disease or pandemics.

About the Author: Bill Anger assists clients in structuring business, real estate, loan and water rights transactions. He also represents business and public clients as an advocate in litigation and appeals. Utilizing his more than 37 years of experience on both the buyer and the seller side of deals, Bill guides clients in structuring transactions that withstand the test of time. wha@eblawyers.com | 602.222.4972

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.

ACTIONS TO CONSIDER TO GET YOUR REAL ESTATE DEALS CLOSED DURING THE COVID-19 CRISIS

April 6, 2020

Updated: April 8, 2020

The Coronavirus Disease 2019 (COVID-19) pandemic and the resulting elective and government-mandated shelter-in-place orders have complicated the path to closing of even routine real estate transactions.  In order to ensure timely closings and perhaps avoid a technical breach of contract, parties to real estate transactions should consider the following:

Execution of Closing Documents

Determine in advance whether the authorized signatory is available and where “wet” signatures are required, the signatory’s physical location.  Be aware that escrow companies, if open at all, generally are conducting signings and closings by advance appointment only.  If possible, as a back-up provide for multiple authorized signatories in the company’s closing resolution.

Confirm that the signatory has access to a notary.  If an in-person notary is not feasible, consider whether remote online notarization (“RON”) via video-conferencing is available.  About one-half of all states adopted RON prior to the COVID-19 pandemic (note that Arizona’s RON statute, A.R.S. 41-371 et seq., goes into effect July 1, 2020*), and several states have recently adopted temporary emergency RON orders. In addition, federal legislation is pending to authorize RON nationwide.  Confirm with your title company whether it will accept RON.

Many people who are working remotely for the first time do not have access to printers and scanners.  Consider accepting electronic signatures, if permitted by the parties and the title company.

Delivery of Documents and Closing Funds

Many title and escrow companies’ offices are closed, with escrow officers working remotely, so it is important to confirm the location to which to deliver the original executed closing documents.  .  Because of extraordinary demands on overnight and other delivery services, it is prudent to allow several additional days for delivery of documents.  Wires of closing funds may also be delayed and arrangements should be made well in advance.

Recording Office Closures

Confirm that the pertinent governmental recording office is open, is accepting recordings and is not anticipating any unusual delays.  Although electronic recording is widely offered, there are still jurisdictions that accept only in-person recordings, and there are a number of jurisdictions in which both electronic and public offices are experiencing delays or closure.  

Title Policy Gap

Delays in recording or in the recording office processing recorded documents after acceptance can create a longer than usual (and possibly indefinite) gap period.  Confirm with the title company that the title insurance policy will be issued without an exception for the gap period (or the form of indemnity that will be required to remove the exception).

*April 8, 2020 Update: Arizona Governor Ducey today issued Executive Order 20-26, accelerating the establishment of RON, to be effective April 10, 2020. The Arizona Secretary of State will begin accepting notary applications for RON on April 10, 2020. The application requirements and links to the administrative rules (A.A.C. R2-12-1301 et seq.) may be found at https://azsos.gov/business/notary-public.

About the Author: Kurt Peterson assists clients in the areas of real estate, commercial finance and general business law. Drawing on over 30 years of experience, Kurt’s commercial transactional practice includes real estate acquisitions, financing, leasing, operation and disposition as well as a diverse general business practice representing business owners on corporate formation, risk management, acquisitions, contracts and operational matters. kap@eblawyers.com | 602.222.4951

Disclaimer: This article is not legal advice and is only for general, non-specific informational purposes. It is not intended to cover all the issues related to the topic discussed. If you have a legal matter, the specific facts that apply to you may require legal knowledge not addressed by this article. If you need legal advice, consult with a lawyer.

Engelman Berger Celebrates our 21st Year By Volunteering at the Sojourner Center

This past week, Engelman Berger celebrated our 21st year by stepping away from our desks for our annual social services day at the Sojourner Center. Each year, our team picks an organization that is making a large and beneficial impact in the state of Arizona and spends the day giving back to the community.

The Sojourner Center helps over 10,000 Arizonans every year, half of whom are children. Since 1977, the Sojourner Center has transformed the lives of over 60,000 Arizona men, women, and children affected by domestic violence by providing them with a safe haven and the necessary support and shelter services. This impactful organization has a residential program that provides Arizona adults and children who are affected by domestic violence with 124 shelter beds and 32 transitional housing apartments.

In an attempt to create a world that is free from domestic violence, the Sojourner Center is extending their housing and protection services to include education and prevention within the community.

We are grateful and thank the Sojourner Center for providing us with the opportunity to give back to the community and spend the day helping get the facility ready for new women and families to arrive.

EB Congratulates Attorney Tamalyn Lewis for Being Sworn in at the U.S. Supreme Court

Engelman Berger would like to congratulate attorney Tamalyn Lewis for being sworn in at the U.S. Supreme Court in Washington, D.C. Tami was among the 50 individuals of whom participated in this special and honorable event hosted by the National Conference of Bankruptcy Judges. The three other participating individuals from Arizona (pictured) were United States Bankruptcy Judge Daniel P. Collins, United States Bankruptcy Judge Brenda K. Martin, and Polsinelli attorney Lindsi M. Weber.

The National Conference of Bankruptcy Judges is an association comprised of Bankruptcy Judges of the United States that aims to provide judges, lawyers, and other involved professionals with continuing legal education and to promote cooperation among Bankruptcy Judges. The association also strives to secure and encourage a larger degree of quality and uniformity in the administrative side of the Bankruptcy system as well as improve the practice of law specifically in the Bankruptcy Courts of the United States.

Engelman Berger Welcomes Paralegal Kathryn Hardy to the EBTeam!

Engelman Berger welcomes new hire and paralegal, Kathryn Hardy, to the EBTeam! Kathryn brings over 24 years of experience and paralegal expertise to our office having worked in a wide range of practice areas in both California and Arizona. Kathryn is a litigation specialist and has worked in the areas of bankruptcy litigation, civil and commercial litigation, media and constitutional law, white-collar defense, creditor representation, and intellectual property law. Born and raised in Virginia, Kathryn attended the University of Virginia where she received her bachelor’s degree in Communications. She then went on to obtain her post-baccalaureate Paralegal Specialist Certificate in Litigation from the University of West Los Angeles School of Paralegal Studies. Kathryn will be working closely with attorneys Damien Meyer and Meaghan Kramer.

At Engelman Berger, we are proud to offer our employees both a diverse and united community environment. Having worked at small, medium and large firms, Kathryn wished to join a smaller firm where the practice areas and socialization weren’t lost due to the size of the firm. She was looking for a community of dedicated and integrated individuals, and we are excited to make her a part of our firm.

Welcome to the EBTeam, Kathryn!

EB Expands Our Public Finance Department with the Addition of Joan Hubbert

Engelman Berger is expanding our Public Finance department with the hire of paralegal Joan Hubbert to work with attorneys Julie Arvo MacKenzie and Brigitte Finley Green. Joan brings over 19 years of experience in the area of public finance and has worked with a number of firms in both her home state of New Jersey as well as Arizona.  She earned her bachelor’s degree in Business Management with a Finance concentration from Rutgers University and her Paralegal Certificate from Fairleigh Dickinson University.

EB Attorney Rachel Phillips Accepted to the Ladder Down Arizona’s Class of 2020

At the beginning of the New Year, Engelman Berger attorney Rachel Phillips was selected to be a part of the 2020 Federation of Defense & Corporate Counsel Ladder Down Arizona Class of 2020.  Currently in its eighth year in Arizona, Ladder Down is a year-long program that provides training and career development to empower women lawyers in three critical areas: leadership, business development, and mentoring.  Congratulations, Rachel! We are excited to see how you learn and grow through this excellent program.