Vermont Legislative Update Quick Links
New incentive pay program proposed for essential workers
The Senate Appropriations Committee met on Friday to consider a new grant program that would provide incentive pay to essential workers identified in Executive Orders issued by Gov. Phil Scott. Committee Chair Jane Kitchel, D-Caledonia, said that a special work committee established by Senate President Tim Ashe, D/P-Burlington, is attempting to address the issue of essential workers who continue to work, risking exposure to the COVID-19 virus, but who are in a worse financial position than individuals who held similar jobs and choose not to work and receive unemployment benefits.
The voluntary program would be employer-based and would require employees to meet certain criteria. Employers would have to verify employee information. Monthly grants would be provided to eligible workers at the end of each month.
Eligible employees would include frontline workers earning $20 an hour or less as a base wage who are employed by nursing homes, residential care homes, assisted living residences, home health agencies, health care facilities, community health centers, therapeutic community residences, dental and physician offices, child care facilities, ambulance services, grocery stores, pharmacies, mortuaries, and certain retail entities.
Kitchel told the committee that the program would be paid for with federal COVID-19 relief funds. Given the urgent nature of the problem, the committee would like the program set up quickly to begin making the payments and backfill the funds when federal funds arrive.
The committee will meet again early next week to consider whether $20 an hour is an appropriate base wage or if it should be higher, and whether an employee would be excluded from the grant if their employer has already provided a financial incentive.
The Senate has begun discussions with the House and the governor in an effort to expedite the proposal. Committee members questioned if this could be done faster administratively versus through the legislative process.
Senate committee takes up diversion of important drugs
A Senate committee took testimony this week on the availability of medications that are used to treat specific chronic diseases such as lupus and rheumatoid arthritis that have been diverted for the treatment of COVID 19 patients.
President Trump has recommended hydroxychloroquine repeatedly, despite warnings from his own health officials that there is little data to support its widespread use as a treatment against coronavirus. Legislators have been hearing from constituents with chronic autoimmune diseases who are concerned they will not be able to access their medications. Legislators wanted to ensure that there is an adequate supply for those individuals.
Officials from the University of Vermont Medical Center testified that the hospital has put in place policies to restrict providers from ordering hydroxychloroquine for off-label indications and has developed a treatment algorithm to guide physicians on when a COVID patient should receive the drug.
The Office of Professional Regulation and State Board of Medical Practice General issued an Emergency Regulatory Order to Vermont pharmacies and pharmacists to curb inappropriate prescribing of several drugs believed to be under investigation for COVID-19 indications. Guidance already released by the Vermont Department of Health had effectively influenced the conduct of in-state physicians, but Vermont border pharmacies were reporting troubling stories of scripts for large numbers of hydroxychloroquine tabs. The Emergency Order empowers pharmacists and puts a halt on inappropriate prescribing activity.
Committee considers presumptive workers’ compensation coverage for COVID-19
The Senate Economic Development, Housing and General Affairs Committee is considering a bill that would significantly expand workers’ compensation coverage for individuals who contract COVID-19 “in the course of employment.”
The Vermont Department of Labor has issued two orders in response to the COVID-19 crisis that limit the ability of insurance carriers to deny the payment of benefits and discontinue benefits. The pandemic has complicated the workers’ compensation claims process due to the difficulty claimants have in meeting work-search requirements and scheduling and attending medical appointments. The interim orders suspend those requirements during the crisis, but according to Steve Monahan, Director of Workers’ Compensation for the Department of Labor, the department’s orders rest on questionable legal grounds and are subject to legal challenge.
The Vermont trial lawyers association has proposed legislation that would codify the Department’s orders and create a presumption of workers’ compensation eligibility for anyone who contracts COVID-19 during employment and either –
- had in-person contact with members of the general public;
- had in-person contact with an individual diagnosed with COVID-19; or
- performed services in a health care facility.
The presumption could be rebutted if the employer can show by a preponderance of the evidence that the disease was caused by non-employment-connected exposure.
The committee plans to take up the bill next week.
PPP – Be careful what you certify
Although the original $349 billion funding for the SBA’s Payroll Protection Program as part of the CARES Act has run dry, businesses and lending institutions continue to prepare applications for the PPP in anticipation of additional Congressional appropriations to extend the program.
While the program guidelines are unclear and incomplete, businesses owners are becoming familiar with the basics of the PPP: Businesses and non-profits with under 500 employees can apply for the loan maximum of $10 million. They must calculate average monthly payroll and related costs, then multiply by 2.5 to determine potential loan amount; upon approval and disbursement, the loan can be forgiven if the employer uses 75 percent of the funds to maintain payroll over the following eight weeks; the remaining 25 percent can be used for mortgage interest, rent and utility payments; the number of employees and payroll must be brought back to pre-COVID numbers by June 30, 2020.
A small business that has a monthly payroll of $10,000 could be eligible for a $25,000 loan, for example. The amount of salary over $100,000 for any individual is not included in the loan calculation. Still, larger organizations could receive funds into the millions – all potentially forgivable.
“What sounds too good to be true is, in fact, true,” Paul Ode, Director, Downs Rachlin Martin PLLC told a business group this week. “For businesses that intend to retain their employees, this program can seem like magic, but there are unanswered questions and concerns.” Although loans are being processed and disbursed, the U.S. Department of the Treasury has not issued final guidelines for loan forgiveness. Also, said Ode, businesses need to pay careful attention to the timing of the eight-week period when funds are to be spent, and that funds are not used on expenditures outside of allowable purposes.
Of particular concern, says Ode, is the requirement of a “necessity certification” when applying for the PPP. Unlike normal SBA guaranteed loans, banks are not required to perform the usual diligence in verifying company records and documents, and the applicant does not have to demonstrate need. Instead, determination relies heavily on business owners certifying that the “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.” Ode posed the question, “If you’re a business that can continue operations, is the loan truly necessary? Are you comfortable making that certification?”
There’s been no clarification from the SBA on what the necessary certification means, and little if any talk about penalties for falsely certifying. But with the rules changing rapidly, Ode cautions businesses to diligently document their rationale for how they made the necessary certification.
Business casualties in the path of COVID-19
Legislative committees heard from representatives of the business community this week regarding their challenges in the wake of COVID-19. Among many other issues, Vermont supply chain manufacturers that have had to cease operations are concerned that their customers have gone elsewhere for needed components and may not return once they are able to get back to work.
Adam Grinold, President of Regional Development Corporations, testified before the House Commerce and Economic Development Committee on the problems facing small businesses that have been forced to shut down. The RDCs are working to support this sector in their regions but are seeing major challenges. The smaller the businesses, the less liquidity they are likely to have and the less ability to get new capital. This, coupled with the very rocky rollout of federal support and state unemployment delays, has many Vermonters barely able to pay bills and put food on their tables. Grinold shared sobering facts regarding the number of businesses that may not survive the state’s business shutdown.
Access to financial support is crucial for small and medium employers. The Payroll Protection Program doesn’t benefit those with few employees or with businesses that can’t reopen, and the Economic Injury Disaster Loan is not designed for all. The result is a group of Vermont businesses that are not going to benefit from federal programs for stabilization and recovery. In order to survive they need a financial bridge. While employers staying at home understand the need for social distancing to provide safety for others, they are deservedly anxious regarding their own financial survival.
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