Traditionally, a food brokerage is a company that represents different food brands and leverages its own network to scale sales and marketing. My new approach to food brokerage comes from my tech experience and my international travels in Colombia. As an up and coming broker, I’m bringing in digital literacy to innovate the space and using technology like cloud services to manage customer data, ecommerce, and social media strategy to build an omnichannel sales system, and implementing machine learning bots to solve the problems of supply chain management and inventory waste management.
As I build out Artisan Wyn, my focus is on empowering the BIPOC food entrepreneurs. As the middleman in negotiation for trade and distribution, my job is to understand every part of the food system so that I can efficiently navigate deals between the producers and customers. This extends into a myriad of services including client management, supply chain management, distribution, and volume management.
The missing piece is not enough folks in the food systems space, especially BIPOC, are thinking of omnichannel marketing strategies in the digital realm. Most try to go straight for a retail space and in doing that, they are putting the nail onto their coffin. Without leveraging prior sales figures nor being aware of all the hidden fees that go into listing their product, food entrepreneurs will actually go broke before making it to the coveted retail space. Potentially, this can bankrupt their business. In essence, I work as a consultant to help educate my client on different sales channels such as CSAs, or online marketplaces such as shopify. This is due to historically marginalization and a lack of access to information and digital literacy.
COVID made me realize why I needed to create this food brokerage. As we shifted to quarantine restrictions, the food industry was hit the hardest. Food insecurity became the forefront issue during the pandemic and I felt the need to take action. I started volunteering that summer at Soltree Alchemy to distribute organic produce to the neighborhood of west Oakland. As I continued to work alongside them, they needed someone in San Francisco to help with picking up the donations from the SF farmer’s market at Fort Mason, and that’s where I met with all the farm vendors. On one fateful day, there wasn’t anyone beside me who was able to pick up the food donations and I decided to branch out from the usual farm stands and speak with Matteo from Avila Farms. It was an exceptionally windy day at the farmers market and Matteo was the only one working at the Avila Farm booth. I came up to him and asked if he had any leftover produce to give for donations and he replied that he would be glad to assist but would need help cleaning and packing up his inventory. And so without a second thought, I decided to help him out and befriend him. Afterwards, he asked me if I could show up on Sundays to help him with his business and I agreed. From that day forward, I was learning about the food systems on a micro level when dealing with customers at the Fort Mason Farmers market and listening to all of Matteo’s struggles and challenges as a Farmer.
Trained in Travel
Once I landed in Colombia, I noticed a difference in food systems. There were a lot more street vendors and fruit carts or fruit stalls. People would use microphones to advertise their products as they pushed their carts filled to the brim with avocados the size of a baseball.
As compared to the farmers market in America, the Plaza Minorista is a collective Colombian food experience that operates daily and is the heart of the community in Medellin. The space itself is a mega warehouse where you’ll find your wholesale deals. Imagine the Colobian version of Costco except with more exotic fruit and vegetable options.
In Colombia, delivery is dominated by a service called Rappi, where everything is delivered by people on motorcycles making it more cost effective than the Uber eats model using cars. For a time, there were others in the competitor space like Uber Eats, but they all fell because Rappi has an extended reach in the Colombian markets. Currently, Rappi holds 60% of the total market share in terms of food delivery apps which is followed by its next competitor, domicilios, at 26%; it’s no surprise that it has become the de facto way of life. So I think for a future system in the food systems space, food orders and groceries can be automated so that food entrepreneurs can more efficiently deliver their product with or without a retail space.
I found a glimpse into the future of revolutionizing the food system when I came into contact with a startup company, Lastfood, whose founder, Miguel, uses machine learning from an automated bot software designed to take orders en masse from customers that want food at a reduced price. The process is fairly simple, the customer messages the business on Facebook/Whatsapp/Instagram and the bot then responds with the options and processes their order with the restaurant, this in turn helps restaurant owners sell off their food that would’ve otherwise gone to waste. And because this concept has been proven to work in the Colombian food systems, it has the potential to innovate the food systems in the United States and potentially internationally.
During my travels to the rural part of Colombia, I met a family who owns a dehydrated fruit and yogurt company. One of the owners, Javier, gave me a tour and shared samples of their dried fruit and dried fruit teas. They have been established in the Colombian markets for the last 20 years, but now their goal is to expand to international markets. A partnership was forged between myself and Sensafruit to import their fruit products over to the US.
My goal is to disrupt the current food systems model by applying what I’ve learned in digital fluency and my experiences in Colombia to build an efficient network between BIPOC entrepreneurs, producers, vendors, distributors, as well as software developers.
The coronavirus pandemic has upended many sectors of the economy in unprecedented ways. Supply chains are disrupted. Businesses that rely on face to face interaction with their customers such as retailers and restaurants, are subject to financial distress. In turn, companies that supply products to businesses impacted by COVID-19 may also experience pressure as their customers delay or cancel purchases or are unable to pay their bills.
These stresses are likely to cause some owners of distressed businesses to explore their legal options. Bankruptcy is only one alternative for a struggling company Two other options are an assignment for the benefit of creditors (ABC) and a voluntary workout. These strategies are available to address a failing company; which can be faster and equally or more effective, at a lower cost, without the publicity of a bankruptcy filing. Business owners should be aware of these non-bankruptcy options and the circumstances in which they can be useful.
Any discussion of bankruptcy alternatives must start with bankruptcy. Bankruptcy is the most widely known insolvency proceeding and, as the usual course taken by a failing company, forms the baseline. Any alternative should be compared to the likely outcome of a bankruptcy case. The business owner then can balance the bankruptcy and non-bankruptcy alternatives available to him or her to choose a strategy that is the best fit.
One useful alternative to bankruptcy is an assignment for the benefit of creditors. This procedure, commonly known as an ABC, is a recognized state law procedure to sell the assets of a failing business while shielding the purchaser from liability for the old company’s debts. Usually, a distressed company is running out of cash and has limited runway to sell itself; an ABC provides a non-bankruptcy method to effectuate a prompt sale of the business.
In an ABC, the company, called the assignor, transfers its assets to a third party, called the assignee, that typically is selected by the company. In legal terms an ABC is a trust in which the assignor transfers title to its assets to the assignee in trust for its creditors. The assignee is a fiduciary tasked with selling the assets and paying the proceeds pro rata to creditors. The assignee must give notice to creditors of the assignment and of the deadline to file claims and creditors can file claims with the assignee.
In California, no court filing is required to commence an ABC. This lowers the publicity dramatically. The proceeding is not secret or confidential, but it is not public in the way that filing a bankruptcy case is. Instead, an ABC is a matter of contract between the distressed company and the proposed assignee. The company’s board and shareholders must approve the ABC.
The process is fast and flexible. Because the company picks the assignee, an ABC lends itself well to pre-packaging. A distressed company seeking a prompt sale, a potential buyer of the business, and the proposed assignee can negotiate a sale in advance of the ABC occurring on the understanding that the sale will be completed through the ABC. All parties know what to expect and the process can proceed on the parties’ schedule, with no delays imposed by court processes or availability. This enables a sale of a distressed business as a going concern to take place quickly with little uncertainty and minimal disruption to operations.
Used in this manner, an ABC is a viable alternative to a sale of the business in a bankruptcy chapter 11 case. The speed and flexibility of the ABC process are its chief virtues. Since there is no court the process is usually less expensive than a chapter 11 bankruptcy case and the sale can often be completed more quickly than would occur in a chapter 11. The process provides an efficient method to sell a small to medium size failing company on a going concern basis.
The ABC process is not without its downsides. A distressed business must weigh these downsides against the speed, flexibility and lower transaction costs of the ABC process. The most important is that the purchaser will not get a court order validating its purchase as it would in a bankruptcy. The purchaser must rely on the integrity of the process to shield it from the distressed company’s creditors. Furthermore, there is no automatic stay to restrain foreclosure as there would be in a bankruptcy case, so the cooperation of the assignor’s secured lenders is essential. Unlike in a bankruptcy case, there is no power to assign leases or contracts without consent. This can cause complications if the company’s contractual relationships are a major asset. Finally, by handing the company to the assignee, the business owner will lose control. This is not necessarily a negative, as it enables the business owner to move on to new opportunities.
Another useful option is for the distressed company to attempt a voluntary workout with its creditors. This is not a formal process. Instead, a workout is a matter of negotiation between the distressed company and its creditors. The usual concept is to engage in a process that is substantially similar to what would occur in a chapter 11 bankruptcy case by agreement of the parties, without filing a bankruptcy case and without incurring the large legal fees or impact on the business that will result if a bankruptcy case is actually commenced. Chapter 11 thus forms the backdrop for the negotiations.
Typically, in a voluntary workout the debtor will invite its creditors to a meeting. At the meeting, the debtor will make a presentation to the creditors in attendance regarding its financial condition, how it got there, and what the debtor intends to do to extricate itself from its predicament. The debtor will request that the creditors agree to a moratorium on collection action, similar to the automatic stay in a bankruptcy case, and that the creditors appoint a committee of creditors to negotiate a workout plan with the debtor. In return, the debtor will usually offer to be completely transparent with its creditors, to provide information regarding the business, and to refrain from engaging in any out of the ordinary course transactions. This creates a structure that mirrors what would occur in a chapter 11 case.
The goal of the process is for the debtor and the appointed committee to negotiate a repayment plan on behalf of all creditors. The plan can take whatever form the parties negotiate. Often the plan will consist of the debtor’s agreement to pay a percentage or even all of its profits or positive cash flow to its creditors over a period of time in exchange for the creditors agreeing to discount their debts in some amount. Another common structure is for the creditors to agree to a discount in return for an immediate cash payment funded by new capital contributed by a new investor.
Once the debtor and committee have negotiated a plan, the plan is circulated to creditors to accept or reject it. Participation is voluntary. Only creditors that accept the plan are bound, so the debtor generally will insist that a high percentage of creditors accept the plan in order for it to go into effect. If a sufficient number of creditors accept the plan, it will go into effect. If the required majority do not accept, the debtor likely will end up in a chapter 11 case. The plan thus needs to provide a result that is at least as good, if not better, than the result would be in a chapter 11 case.
The voluntary workout thus can be a viable alternative to a chapter 11 case. The benefits of the process are its flexibility and reduced legal fees which can mean more funds available for creditors. A workout often is faster than a chapter 11 case, there is no public filing and therefore less publicity, and the business owner remains in control. On the other hand, a workout depends upon cooperation between the debtor and its creditors. If that cooperation is absent because creditors do not trust the debtor or for other reasons, a voluntary workout might not be possible. The process also depends upon creditors cooperating with one another and accepting equal treatment. There is no automatic stay, so creditors are free to pursue collection actions and to attempt to jump to the head of the line. If some creditors pursue collection actions and seek to improve their position relative to other creditors, the process can break down. Finally, creditor participation in a plan is voluntary. There is no way to bind creditors that reject the plan. Holdouts thus can create major hurdles.
The selection of the non-bankruptcy alternative depends upon the result the business owner desires to achieve. If the goal is to sell the business as a going concern, an ABC is a useful tool. Usually a distressed company is running out of cash and has limited runway to sell itself, and the ABC provides a non-bankruptcy method to effectuate a prompt sale. On the other hand, if the business owner’s objective is to retain his or her stake in the enterprise and to negotiate a payment plan with creditors globally, a voluntary workout can be a less costly way to achieve this goal.
Bankruptcy is not a one size fits all solution. There are other routes available to a distressed business which can be just as effective at a far lower cost. Owners of troubled companies should be aware of these options and should evaluate whether one of them might provide a better fit.
Bennett G. Young is a partner at the law firm of Jeffer Mangels Butler & Mitchell LLP. He represents parties in insolvency matters and has extensive experience in workouts, restructurings, bankruptcies, and assignments for the benefit of creditors. Ben is a member of the Bench-Bar Liaison Committee for the United States Bankruptcy Court for the Northern District of California and is a former Chair of the California State Bar’s Insolvency Law Committee, a past president of the Northern California Chapter of the Turnaround Management Association, and has been a member of the Board of Directors of the Bay Area Bankruptcy Forum. He is recognized by Best Lawyers in America® in the area of bankruptcy. Contact Ben Young at BYoung@jmbm.com.
COVID-19 has had a devastating effect on the American economy, and agriculture has been especially hard hit. To help provide economic relief, various federal legislation has been enacted, including the Coronavirus Aid, Relief and Economic Security (CARES) Act. As part of the CARES Act, the Small Business Administration (SBA) received funding and authority to establish the “Paycheck Protection Program” (PPP). The PPP is a forgivable loan program that was established as an incentive for small businesses to keep their workers on payroll during this financially difficult time. As of June 5, 2020, the SBA had received total funding from Congress in the amount of $659 billion, and had approved 4,525,081 loans totaling approximately $511 billion.
If you are one of the many small business owners in the agricultural industry that has received a forgivable PPP loan, you must apply for forgiveness of your PPP loan by submitting an SBA “Loan Forgiveness Application” to the lender servicing your PPP loan, as the loan is not automatically forgiven. As a result, it is imperative that you plan now to maximize the forgiveness of your loan.
The SBA has continued to provide additional guidance throughout the PPP in response to ongoing requests for assistance and clarity. Also, on June 5, 2020, the Paycheck Protection Program Flexibility Act (PPPFA) was enacted, which provides PPP loan recipients with increased flexibility in utilizing PPP loan proceeds. Most significantly, The PPPFA has extended the period to use funds from eight weeks after the date of receipt of loan proceeds to twenty-four weeks. Borrowers receiving PPP loan proceeds prior to June 5, 2020, retain the option to use an eight-week covered period if desired. Please note that all of the following information includes the changes resulting from the PPPFA.
The original intention of the PPP was to keep employees paid for the eight-week period beginning with the date loan proceeds are received. As mentioned above, recent legislation has extended this to a twenty-four-week period. Expenses to be paid with loan proceeds include payroll costs and specific non-payroll costs.
Payroll costs include the following:
Salary, wages, commissions, or tips (limited to $15,384.62 per employee for the covered period)
Employee benefits (including payments for vacation, parental, family, medical, or sick leave; allowance for dismissal or severance pay; group health care benefits; payment of retirement benefits; and state and local taxes assessed on compensation)
Non-payroll costs include the following:
Interest on mortgage incurred before February 15, 2020
Rent on lease agreement in force before February 15, 2020
Utilities (including electricity, gas, water, transportation, telephone or internet) for which service began before February 15, 2020
To be eligible for full loan forgiveness, at least 60% of the loan must be used for payroll costs and not more than 40% for allowable non-payroll costs. If less than 60% of the loan is used for payroll costs, the borrower is still eligible for partial loan forgiveness. The first iteration of the PPP required 75% of the funds to be used for payroll or only part of the loan would be forgiven, but the PPPFA decreased the required percentage.
What happens if your PPP loan is not forgiven? Any portion of your PPP loan that is not forgiven will be required to be paid back over a 2-year period at 1% interest, with payments deferred for ten months from the date of the PPP loan disbursement. However, for PPP loans approved by the SBA on or after June 5, 2020, the PPP loan maturity is increased to 5-years.
On May 15, the SBA released its long-awaited PPP forgiveness form and instructions for borrowers to apply for forgiveness (please note that a modified forgiveness form is pending as a result of the PPPFA). The form also provides detailed information related to the documentation required to be provided with your loan forgiveness application. It is important to review the documentation requirements; as extensive documentation may be required to be submitted depending upon your eligible expenses submitted for forgiveness. Although the release of the form by the SBA brought with it significant changes to the interpretation of some components of forgiveness that were not previously known, additional guidance and clarity is still needed on some of the components of forgiveness. Changes were made to the following components of the program based on the release of the form:
Covered payroll periods – Under original guidance, the covered payroll period began immediately after loan disbursement and lasted eight weeks. The PPPFA has increased the covered payroll period to twenty-four weeks. For those with payroll schedules that did not align with the disbursement and covered period, this generated many questions and concerns. However, this latest guidance indicates that the eight-week period may begin starting with the borrower’s first payroll following disbursement, not necessarily on the day of disbursement. This alternative period only covers payroll costs, not other allowable expenses, although adjustments do exist for other allowable expenses.
Incurred and/or paid expenses – The CARES Act originally indicated that, for costs to be covered under PPP, they would need to be incurred and paid during the eight-week period (increased to twenty-four weeks by the PPPFA). The latest guidance, however, forgives costs that are incurred, but not paid, as long as they are paid on or before regular billing date. This expansion applies to costs such as mortgage interest, rent, utilities, and payroll incurred during the loan period. Payroll costs incurred during the last payroll period but not paid during the covered or alternative periods (mentioned above) may be forgiven if those payroll costs are paid on or before the next regular payroll date.
Full-time equivalent (FTE) employee counts and wages – The guidance also included several clarifications to the FTE employee count and wage calculations necessary for forgiveness including:
FTE calculation can be rounded to the nearest tenth – The formula to calculate an FTE is average number of hours paid per week per employee/40, rounded to nearest tenth (differs from Affordable Care Act calculation).
Wage reductions must be analyzed on a per employee annualized basis – Salary or hourly calculations should be done on an average annualized basis compared to period of Jan. 1, 2020, to March 31, 2020. If the average for the twenty-four week period is 25% less than first quarter of 2020, loan forgiveness will be reduced, unless the reduction is restored at equal to or greater levels by December 31, 2020, then forgiveness will not be reduced.
Safe harbor exists for borrowers who rehire lost employees by December 31, 2020, at the same level as of Feb. 15, 2020. Forgiveness will not be reduced.
Safe harbor exists for borrowers who made good faith written offer to rehire employees who then refused. Forgiveness will not be reduced.
Safe harbor exists for borrowers who fired employees for cause, voluntarily resigned, or voluntarily requested and received reduction in hours. Forgiveness will not be reduced.
Here is a quick rundown of the changes made by the PPP Flexibility Act.
8 weeks from PPP loan disbursement
The earlier of 24 weeks from date of loan disbursement or Dec. 31, 2020.
Usage of Funds
Minimum of 75% of funds must be used for payroll to with a maximum of 25% for non-payroll costs to achieve forgiveness
Minimum of 60% of funds must be used for payroll with a maximum of 40% used for non-payroll costs to achieve forgiveness. If 60% of loans are not used for payroll, forgiveness is calculated on a sliding scale.
Extension of Safe Harbor for Compensation & FTE Reductions
Salary or hourly wage reductions must be reinstated by June 30, 2020, to avoid reduced forgiveness
Salary or hourly wage reductions have until Dec. 31, 2020, to be restored to avoid reduced forgiveness
Deferral of Loan Payments
6 months from loan origination date
Earlier of 10 months after the last day of Covered Period or when SBA remits the loan forgiveness funds to lender
Loans originated after June 5, 2020 – 5 yearsLoans originated prior to June 5, 2020 – Borrowers and lenders may mutually agree to extend the maturity date of loans to 5 years
Safe Harbors Based on Employee Availability, Rehiring, New Hires
Forgiveness would not be reduced if borrowers can document in good faith:-Inability to rehire individuals employed on Feb. 15, 2020-Inability to hire similarly qualified employees by Dec. 31, 2020
Safe Harbors Based on Employee Availability in Compliance with HHS, CDC, or OSHA guidelines
Forgiveness would not be reduced if borrowers can document in good faith the inability to return to same level of business activity as before Feb. 15, 2020, due to compliance with requirements issued by HHS, CDC, OSHA from the period of March 1, 2020, to Dec. 31, 2020
Also of note:
*Borrowers may elect to stick with the 8-week covered period for loans originating prior to June 5, 2020. However, it is not clear if the June 30, 2020, safe harbor deadline still applies.
The amount of any Economic Injury Disaster Loan (EIDL) refinanced will be factored in when determining the percentage of proceeds for payroll costs.
It is unclear whether compensation limits formerly prorated based on 8 weeks now prorated based on 24 weeks.
It is unclear if the covered period may end prior to 24 weeks if funds have been used.
Further rules and guidance are expected to be issued from the SBA, including a modified borrower application form, and a modified loan forgiveness application that will included the changes resulting from the recently enacted PPPFA; however, please do not hesitate to contact us for further assistance with your PPP loan questions and help maximizing your loan forgiveness.
Dedekian, George, Small & Markarian Accountancy Corporation 8080 North Palm Avenue, Suite 201 Fresno, California 93711-5797 P: 559.431.5500 Cpaplus.com
The COVID-19 virus is forcing businesses in critical industries, like food processing and manufacturing, to make many changes very quickly. Closures and new operating procedures are popping up throughout all of commerce, and new information is constantly emerging. Updated versions of this article will be available through our website. This article contains current COVID-19 information that will help you and your company adapt to this shifting business landscape. To help you adapt to the temporary, new normal created by the COVID-19 outbreak, this article contains the following:
The Families First Coronavirus Response Act (FFCRA)
Assistance for Small Businesses During the Outbreak
The Coronavirus disease 2019 (COVID-19) is a respiratory illness that spreads from person to person through close contact (within 6 feet) and respiratory droplets from an infected person through coughing or sneezing. The first US case was reported on January 21, 2020.
It is essential to understand that the COVID-19 virus affects different people in different ways. It is a respiratory disease and most infected people will develop mild to moderate symptoms and recover without requiring special treatment. However, people who have underlying medical conditions and those over 60 years old have a higher risk of developing severe disease and death. The WHO has outlined what the typical symptoms are, along with additional, less common symptoms.
Common Symptoms Include:
Other Symptoms Include:
shortness of breath
aches and pains
and very few people will report diarrhoea, nausea or a runny nose.
Lowering your chances of contracting Covid-19 is simple: avoiding contact with persons who are sick; avoiding touching your face (eyes, nose, mouth); washing your hands frequently with soap and water for at least 20 seconds. However, the CDC has outlined steps to take if you do contract COVID-19 despite taking precautions.
If you contract COVID-19:
People with mild symptoms who are otherwise healthy should self-isolate and contact their medical provider or a COVID-19 information line for advice on testing and referral.
People with fever, cough or difficulty breathing should call their doctor and seek medical attention.
Call ahead before visiting your doctor.
Separate yourself from other people and animals in your home.
Avoid sharing personal household items.
Wear a face mask.
Cover your coughs and sneezes with your elbow.
Wash your hands often, for at least 20 seconds.
Clean all “high-touch” surfaces (phones, doorknobs, steering wheels, etc.) daily.
Monitor your symptoms.
With these precautions if you contract COVID-19, it is also important to recognize misinformation taking footholds during the uncertainty of this crisis. Both the CDC and FEMA have responded to some of the most common misconceptions that have been circulating.
Facts About COVID-19 that the CDC is Emphasizing:
Diseases can make anyone sick, regardless of their race or ethnicity.
Some people are at increased risk of getting COVID-19. (Above 60 years of age and those with pre-existing conditions.)
Someone who has completed quarantine or who has been released from isolation does not pose a risk of infection to other people.
You can help stop COVID-19 by knowing the signs and symptoms.
Using protective precautions to keep yourself and others safe is simple.
Where the CDC is emphasizing information directly related to the disease outbreak, FEMA has had to rebut disease tangential misinformation. It is important to check your primary information sources credibility and to not assume secondary information sources are factual. During times of uncertainty, it’s more important than ever to verify the source of the information.
Hantavirus is not a new disease. Transmission from one human to another may occur, but is extremely rare. It is primarily contracted through touching waste products of infected rodents. Visit https://www.cdc.gov/hantavirus for more information.
There is no national lockdown. It is being determined at the state and local levels. The fifteen day shelter in place suggestion is to minimize exposure and prevent the continued spread of the disease. The latest information and resources are available at www.coronavirus.gov
FEMA does not have military assets. Like all emergencies, response is most successful when it is locally executed, state managed and federally supported. Each state’s governor is responsible for response activities in their state, to include establishing curfews, deploying the National Guard if needed and any other restrictions or safety measures they deem necessary for the health and welfare of their citizens.
Stockpiling groceries and supplies is not suggested. Food supplies are likely to spoil and you want to minimize chances of contact. Demand is high for grocery, household cleaning, and some healthcare products–stores need time to restock.
The U.S. Government is not mailing checks in response to COVID-19 at this time. If you’re contacted about such a check, at the moment, it’s a scam. Keep an eye on the FTC website for more information about this and other common COVID-19 related scams.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act has passed both the house and Senate and been signed by President Trump on March 27th. Both CNN and Fortune Magazine report that it could take five to six weeks for the federal government to cut checks and send them out. The $2 trillion package includes a provision to send checks directly to many Americans. The amount is based on annual income: individuals earning up to $75,000 and heads of household up to $112,500 will receive a $1,200 rebate from the federal government. Whereas, couples who earn up to $150,000 will receive $2,400. Above those income levels, the benefits are gradually reduced by $5 for every additional $100 income. This will be capped at $99,000 for individuals, $146,500 for heads of household, and $198,000 for couples. Parents are eligible for a $500 rebate per child.
With these foundational facts on the disease and clearing up tangential misinformation, it is also imperative to take precautions in the workplace to prevent spreading the virus. OSHA has issued guidelines on how to prepare workplaces for COVID-19. It focuses on the need for employers to implement engineering, administrative, and work practice controls and personal protective equipment (PPE), as well as considerations for doing so. Aside from safety compliance, the outbreak has affected which industries are still running and can affect the operations of those that are.
How COVID-19 Could Affect Workplaces
Absenteeism. Workers could be absent for many reasons: they are sick; they are caregivers for sick family members; they are caregivers for children if schools or daycare centers are closed; they have family members to at-risk people at home, such as immunocompromised; they are afraid to come to work because of fear of possible exposure.
Change in patterns of commerce. Consumer demand for items related to infection prevention (e.g., respirators) is likely to increase significantly, while consumer interest in other goods may decline. Consumers may also change shopping patterns because of a COVID-19 outbreak. Consumers may try to shop at off-peak hours to reduce contact with other people, show increased interest in home delivery services, or prefer other options, such as drive-through service, to reduce person-to-person contact.
Interrupted supply/delivery. Shipments of items from geographic areas severely affected by COVID-19 may be delayed or cancelled with or without notification.
The OSHA COVID-19 webpage offers information specifically for workers and employers: www.osha.gov/covid-19.
Jobs and Exposure Risk
OSHA outlines the different job industries and their risk of exposure to the virus by very high, high, medium, and low exposure levels.
Very high exposure risk jobs are those with high potential for exposure to known or suspected sources of COVID-19 during specific medical, postmortem, or laboratory procedures.
High exposure risk jobs are often peripherally related to very high risk exposure jobs.
Workers in the medium exposure risk category may be in contact with the general public (e.g., in schools, high-population-density work environments, and some high-volume retail settings).
Low exposure risk groups do not require contact with people or are infrequently exposed to the general public.
OSHA also outlines five steps employers can take to responsibly prevent their workers from being exposed to COVID-19.
Develop an Infectious Disease Preparedness and Response Plan
Prepare to Implement Basic Infection Prevention Measures
Develop Policies and Procedures for Prompt Identification and Isolation of Sick People, if Appropriate.
Develop, Implement, and Communicate about Workplace Flexibilities and Protections
Implement Workplace Controls
Safe Work Practices
Personal Protective Equipment (PPE)
Despite the pandemic, many industries are considered too critical to close, and must remain in operation during closures with limitations.
Federal Critical Infrastructure Sectors
The Cybersecurity and Infrastructure Security Agency has comprehensively outlined the specific sectors that the Federal Government has deemed critical. Two such sectors are manufacturing, along with food and agriculture.
Critical Manufacturing Sectors
Critical Manufacturing Industries with Sub Industries
Primary Metals Manufacturing
Iron/Steel Mills and FerroAlloy
Alumina and Aluminum Production and Processing
Nonferrous Metal Production and Processing
Engine and Turbine
Power Transmission Equipment
Earth Moving, Mining, Agricultural, and Construction Equipment
Electrical Equipment, Appliance, and Component Manufacturing
Transportation Equipment Manufacturing
Vehicles and Commercial Ships
Aerospace Products and Parts
Locomotives, Railroad and Transit Cars, and Rail Track Equipment
Products made by these industries are essential to many other critical infrastructure sectors. The Critical Manufacturing Sector focuses on the identification, assessment, prioritization, and protection of nationally significant manufacturing industries that may be susceptible to manmade and natural disasters. CISA has an existing plan from 2015. For more information, please contact the Sector-Specific Agency at email@example.com
Critical Food and Agriculture Sectors
Homeland Security has recognized Agriculture as a critical industry. As such, these closures do not apply to this sector. The Food and Agriculture Sector is almost entirely under private ownership and is composed of an estimated 2.1 million farms, 935,000 restaurants, and more than 200,000 registered food manufacturing, processing, and storage facilities. This sector accounts for roughly one-fifth of the nation’s economic activity.
The Food and Agriculture Sector is critically dependent on many sectors, but particularly with the following:
Water and Wastewater Systems
Clean Irrigation and Processed Water
Movement of Products and Livestock
Power the Equipment Needed for: Agriculture Production and Food Processing
Fertilizers and Pesticides Used in the Production of Crops
The Department of Labor is administering new paid leave requirements effective through December 31, 2020. Each covered employer must post in a conspicuous place on its premises a notice of FFCRA requirements. Employers may not discharge, discipline, or otherwise discriminate against any employee who takes paid sick leave under the FFCRA and files a complaint or institutes a proceeding under or related to the FFCRA. Employers in violation of the first two weeks’ paid sick time or unlawful termination provisions of the FFCRA will be subject to the penalties and enforcement (Sections 16 and 17 of the Fair Labor Standards Act. 29 U.S.C. 216; 217.)
FCRA Coverage and Qualifying for Leave
Certain public employers, and private employers with fewer than 500 employees.
Most Federal employees are not covered by these expanded provisions for family and medical leave, but are covered by paid sick leave. Small businesses with fewer than 50 employees may qualify for exemption.
Qualifying for Leave
Up to 80 hours paid sick leave.
Paid sick leave equal to hours worked on average over a 2-week period.
If Workers are Unable to Work or Telework Due to:
1) Being subject to a Federal, State, or local quarantine or isolation order related to COVID-19; 2) Being advised by a health care provider to self-quarantine related to COVID-19; 3) Experiencing COVID-19 symptoms and is seeking a medical diagnosis;
Employees taking leave shall be paid at either their regular rate or the applicable minimum wage, whichever is higher, up to $511 per day and $5,110 in the aggregate (over a 2-week period).
4) Caring for an individual subject to an order described in (1) or self-quarantine as described in (2); 5) Experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury; or.
Employees taking leave shall be paid at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2,000 in the aggregate (over a 2-week period).
6) Caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19.,
Full-time employees are eligible for up to 12 weeks of leave at 40 hours a week
Part-time employees are eligible for leave for the number of hours that the employee is normally scheduled to work over that period.
Employees taking leave shall be paid at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $12,000 in the aggregate (over a 12-week period—two weeks of paid sick leave followed by up to 10 weeks of paid expanded family and medical leave).
Assistance for Small Businesses During the Outbreak
Covered employers qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA. Qualifying wages are those paid to an employee who takes leave under the Act for a qualifying reason, up to the appropriate per diem and aggregate payment caps. Applicable tax credits also extend to amounts paid or incurred to maintain health insurance coverage. For more information, please see the Department of the Treasury’s website.
Opportunities and resources for emergency funding outside of these tax credits are available through the CalAsian Chamber of Commerce (CACC). Their Business Triage Center has a dedicated team to help small businesses get access to capital by packaging their loans and providing credit enhancement services, supporting applications to Small Business Administration’s (SBA’s) Disaster Loans and the IBank’s Small Business Disaster Relief Loan Guarantee Program. They can also help direct applicants to one of their various lending institution partners. Additionally, the CACC created a survey to determine how to best assist small businesses statewide. Your input will better enable them to prioritize your business needs during these uncertain times.
The U.S. SBA is offering low-interest federal disaster loans for working capital to small businesses in designated states or territories suffering substantial economic injury as a result of the Coronavirus (COVID-19). SBA Disaster Loans are limited to federally declared disaster states or territories. Therefore, your State or Territory may not yet be eligible for assistance. However as of March 17, 2020 they have issued revised criteria that makes more businesses eligible for the loans.
Under newly revised criteria
States or territories are only required to certify that at least five small businesses within the state/territory have suffered substantial economic injury, regardless of where those businesses are located.
Disaster assistance loans will be available statewide following an economic injury declaration. This will apply to current and future disaster assistance declarations related to Coronavirus.
The USDA extended the application deadline for the Rural Business Development Grant (RBDG) program and the Rural Energy for America Program (REAP) to no later than April 15, 2020. Contact the Rural Development office for the RBDG deadline in your state. For additional information on the REAP deadline, see page 16925 of the March 25, 2020, Federal Register.
Knowing the symptoms and preventative measures is only the start. Businesses must take responsibility for their employees’ health by adapting their daily operations, and are required to provide sick leave when prevention is not enough. In light of these responsibilities, business owners are not without help: the Federal government will be providing tax breaks to employers for those companies impacted by the outbreak and Chambers of Commerce, like CalAsian Chamber of Commerce, are providing assistance in acquiring additional funding. Be sure to visit our website wcismag.com and social media to read real-time updates to this article, curated content from other industry information leaders, and share how COVID-19 is affecting your business.
Be sure to contact CACC or your local SBA office to see what assistance your company may qualify for. Email CACC with “COVID-19 IMPACT – Technical Assistance Needed” in the subject line. Cha Xiong: 916-389-7489, firstname.lastname@example.org; Linda Thor: 916-389-7478, email@example.com
Legalising cannabis can have major benefits for all citizens. If carried out correctly, everyone will benefit from less crime and stronger rule of law. Legalising the drug will especially help protect young people and may even lower their consumption of the drug. It is also a way of raising taxes for the state, instead of fuelling criminal organisations, which currently control the illegal market.
These benefits are increasingly recognised by the public. Crucial to seeing these benefits come about, is the way legalising cannabis is done and how the drug is priced once it is made legal. These are the findings from research I’ve carried out with colleagues in France. There must be a combination of getting the price level right and cracking down on illegal activities to reach the right balance between reducing criminality and avoiding increases in cannabis consumption following legalisation.
To fight the black market, the price of legal cannabis has to be relatively low. For example, it could be set around or slightly below the current illegal price. This will attract current users of the drug away from their existing dealers.
But if nothing else is done, this will not be enough to eradicate the black market. Dealers will simply lower their prices to attract customers back. They are able to do this because there is currently a high markup in the illegal market.
There is a large range of prices and cannabis products sold illegally but the average price of high-quality cannabis is roughly US$300 per ounce in London, according to the crowd-sourced website priceofweed.com. This is up to three times as high as production costs based on evidence from the US market.
The increased competition that the legal market would bring would likely substantially increase consumption – not something most policy makers want. So as well as implementing a legal market, there needs to be a mix of policies to control consumption, including sanctions that are enforced against illegal activities. This would allow a government to price out dealers, while keeping the price of legal cannabis relatively high.
The reasoning is simple: if production or distribution costs of illegal cannabis increase, it is easier to drive criminals out of business by selling legal cannabis. My research shows that the harsher the punishments you put in place against people selling cannabis illegally, the higher you can set the price of legal cannabis to price out dealers. We call this the “eviction price”.
Other instruments governments can use to increase the eviction price are to deter consumers from buying illegal cannabis through enforced sanctions or warning them against the dangers of using illegal cannabis compared to high-quality, safe products supplied on the legal market.
It’s also important to introduce incentives for illegal cannabis producers and sellers to turn their activity toward the legal sector. So as well as investment in law enforcement to crack down on criminal activity, it’s important that former cannabis dealers are given viable job alternatives. Otherwise they may just switch to selling alternative illegal drugs or close substitutes.
Dealers often live in deprived neighbourhoods and are trapped in vicious cycles of crime where low aspirations and job prospects push them into illegal businesses. Investment in these communities is therefore needed to support and train those that make a living from drug dealing.
The money that will be generated by selling and taxing legal cannabis should be largely redistributed towards these kinds of initiatives. Plus, legalising cannabis may enable the police to reallocate their efforts towards other crimes, improving police effectiveness against class-A drugs and non-drug crimes. This was found in the London borough of Lambeth after penalties were reduced in 2001 for those holding small amounts of cannabis.
History also shows that prohibition increases violent crimes. Famous gangsters such as Al Capone in Chicago in the 1920s profited from the imbalance between demand and supply of alcohol by establishing organised crime to supply and serve alcohol illegally in speakeasies. In illegal markets, violence is often seen as the only way to resolve conflicts and secure market power.
Our research was inspired by recent examples of cannabis legalisation in Canada and Uruguay. The stated objectives in both countries was to combat drug-related crime. It is too early to evaluate the overall effects of these policies but evidence from Canada suggests that illegal transactions linked to the black market shrunk as a result of legalisation. And we also learnt from what did not work so well there: a shortage of legal supply helped the illegal market persist. So it’s important to avoid making the same mistakes and propose more effective policies to control the overall consumption of cannabis.
What if someone told you that a new technology would significantly impact every law firm within the next 10 years—and would influence how your firm gets paid, the types of services it offers, and everything in between?
Consider this a wake-up call for a future that looks very different than today, thanks to the technology called blockchain. While still a nascent trend, blockchain is already proving to be a transformational force, changing how people and businesses around the world transact with each other by enhancing the trust, accountability, efficiency, and effectiveness of those transactions.
Don’t assume that blockchain is only for cryptocurrency enthusiasts and specialists. It’s poised to make rapid inroads into all types of industries across many different use cases beyond cryptocurrency. As such, clients will need expertise and guidance for the proper legal frameworks for using blockchain. Law firms that don’t want to get left behind need to pay attention, and start gaining experience and planning their blockchain strategies now.
Defining blockchain simply
Let’s start with what blockchain is not. It is not software that you can buy from a vendor nor is it “owned” by any one company. No one group or country controls it, and anyone, anywhere in the world can use it. While these characteristics can make blockchain seem complex and nebulous, when you think about it, the Internet has the very same characteristics. We don’t have to understand the technical details of the Internet to know it has tremendous impact on our lives and livelihoods.
So, what is blockchain? It’s open source technology that enables the creation and management of a global, autonomous network where information is secured in an immutable and transparent ledger. There are already thousands of networks in use, both publicly and privately. What’s special about a blockchain network is that it gives everyone who uses it access to the same information in a way that ensures the information can be trusted.
Changing the legal industry
Because it’s somewhat early days in the blockchain evolution, innovators are still identifying all the ways it can be used. Perhaps the most common application right now is for peer-to-peer transactions that transfer digital value between two parties in a trusted way without a third party involved.
However, blockchain is also being envisioned and tested to make supply chains more efficient, give artists greater control over digital ownership rights, streamline real estate transactions, manage Internet of Things networks and much more.
Because it changes the way people and businesses transact and communicate with each other, blockchain will begin to impact and evolve the way legal services such as contracts, escrow account management, transactions and much more are handled. Here are some ways blockchain is already poised to reshape how law firms work:
Smart contracts: Instead of being traditional, static documents (whether digital or paper-based), contracts will evolve to be programmatic components of a blockchain network, where the terms and conditions of the contract are automatically applied.
Automated securities settlement: Many of the routine change of ownership transactions handled today by law firms will be automated within blockchain networks in the future, such as transferring real estate or ownership shares in a business. Compliance and restrictions all happen automatically, as they are built into the blockchain protocol code.
Payments via digital assets: As clients adapt digital assets such as cryptocurrency, it will be increasingly important to be able to accept these types of payments.
Escrow accounts: Smart contracts can automatically release funds into a digital wallet at the completion of some pre-determined criteria, eliminating the need for escrow accounts in many transactions.
Establishing an essential role in the blockchain evolution
For forward-thinking law firms that have embraced the changes on the horizon with blockchain, it’s already opening up new practice areas and service opportunities, which can eventually replace those that will shrink and go away. Sharp legal minds are required right now to help organizations understand the appropriate legal framework for using various blockchain networks for different use cases. There is much to do to move from physical assets to digital ones, and the legal industry must be a vital part of the effort.
Lawyers who understand the concept of smart contracts will be in high demand as more businesses begin moving to blockchain. By combining understanding of how blockchain networks function with deep legal knowledge, firms can create blockchain practices that provide legal guidance to organizations of all kinds as they both create and participate in blockchain networks.
Taking the first step
As the world evolves towards transferring assets and information digitally using blockchain, your firm must be ready to both adopt blockchain and provide legal counsel on how your clients can adopt it as well. One way to ease into the world of blockchain is to begin accepting digital assets as payment for legal services rendered. Unless you already have blockchain expertise on staff, turning to a trusted service provider can expedite your implementation while helping your firm avoid missteps.
In any case, you need to begin understanding blockchain now. If clients aren’t already asking about it, they will be soon, which means you need to start establishing blockchain expertise before your competitors beat you to it.