Pub. 5 Issue 3

13 Felix Chevrolet is permitted to keep its service department open, as an automotive repair and maintenance facility qualify- ing as an “essential” business according to state rules. But its sales department doesn’t qualify. About 25 employees are on the job in the service bays, but another 73 have been furloughed. For business owners like Holter, the features of the government coronavirus rescue programs can be divided into two categories: good and confusing. Start with the mandated paid sick leave provisions of the Families First Coro- navirus Relief Act, signed by President TrumpMarch 18. The measure mandated 80 hours — that is, 10 average working days — of paid sick leave. “We looked at it and we told the employees we fur- loughed at Felix that they would be get- ting this,” Holter says. But the Department of Labor subse- quently issued rules stating that the leave would only be available to employees who lose work because they’ve been diagnosed with COVID-19, the disease caused by the virus, showed symptoms, were quar- antined or isolated by government order or a doctor’s advice, or cared for a family member in those situations — and that documentation of the government order or doctor’s opinion would be required. Those are more stringent requirements than they seemed at first. Among other things, they say that sick leave isn’t due to those who lose their jobs because their employers have been shut down. To comply with the rules, Felix won’t pay their sick leave. The dealership says it will, however, cover their 10% share of health care premiums through the month. And the workers will be eligible for the enhanced unemployment benefits—$600 a week in addition to California’s maxi- mumbenefit of $450— funded in the most recent rescue legislation. As for the SBA loan program, desig- nated the Paycheck Protection Program, the application is gratifyingly stripped down. It’s a two-page form asking for a business’ average monthly payroll and number of employees (pre-virus). Banks aren’t required to verify the informa- tion upfront, and they can lend up to 2.5 times the average monthly payroll to cover wages, utilities and mortgage interest or rent. The program’s key feature is that bor- rowers won’t have to repay the principal to the extent theymaintain their payroll or promptly rehire employees they’ve let go. That’s an incentive to keep paying workers even while a business has shut down. But it’s also a source of confusion. Holter understands that the loan program is designed so that if a business maintains 100% of its workforce through June 30, the entire loan principal is for- given; if it retains half its workforce, 50% is forgiven and so on. “What I don’t know, and nobody seems to have an answer: At what point is this determined? Do I have to start hiring people as of the other day, or between now and June 30, or can I hire them all on June 28?” The government hasn’t provided de- tailed guidance on these rules. But Holter says he hopes to put his workers back on the payroll as soon as possible. As important as the goal is of main- taining payroll, the loan program is un- necessarily complicated. Compare it to Denmark’s program, in which the gov- ernment is simply making grants to busi- nesses covering 75% of workers’ pay, up to about $52,000 a year, during an expected three-month economic deep freeze, pro- vided those workers stay home. That’s much simpler than the Ameri- can program, which anticipates workers being furloughed and rehired, and leaves the chance that businesses may discover later that they don’t qualify for loan for- giveness. The rollout of the SBA loan program, moreover, has been a mess. The Treasury Department didn’t provide participating banks with the program’s rules until Thursday when it issued a 31- page directive. Even large commercial banks were saying Friday that they were so swamped with applications that they might not be able to process them all until the coming week. There’s no question that the govern- ment has thrown businesses like Holter’s a lifeline. But he points out that they need a lifeline because the U.S. govern- ment has forsaken its responsibilities to Americans and placed them on the pri- vate sector’s shoulders. “All this stuff is supposed to be done by the private sector — health care, pen- sions, getting face masks and ventilators — I’m dealing with life and death issues for my employees, and that’s what’s going on all over the country, rather than having a system that’s more rational and more cost-effective. I’d like people to actually learn something from this. It’s unfair for employees and employers.”  Michael Hiltzik Pulitzer Prize-winning journalist Michael Hiltzikwrites adaily blog appearing on latimes.com . His business columnappears inprint every Sunday and occasionally on other days. As a member of the Los Angeles Times staff, he has been a financial and technology writer and a foreign correspondent. He is the author of six books, including “Dealers of Lightning: Xerox PARCand theDawnof theComputer Age” and “The New Deal: A Modern History.” Hiltzik and colleague Chuck Philips shared the 1999 Pulitzer Prize for articles exposing corruption in the entertainment industry.  LA BUSINESS — continued from page 12