March Advocacy Update

Over the past two weeks, there have been a myriad of announcements from the federal, state, and even local governments on efforts to prevent the spread of COVID-19 and to assist businesses and citizens during these difficult times.  Below are key highlights, to assist in keeping track of these efforts.

State of Michigan Efforts and Communications

Governor Gretchen Whitmer has issued a series of Executive Orders aimed at “flattening the curve” – containing and reducing risk of large scale exposure to the virus, to reduce sudden and immediate pressure on our health care systems that could not be handled all at once. The Governor has also issued orders lifting regulatory restrictions on transit and hospitals to assist the flow of commerce, aid emergency medical response, expand Telemedicine, police price gouging, and restrict entry into care and juvenile justice facilities. As these announcements have layered on, the primary current measures include:

• Statewide closure of K-12 Schools and Attached Childcare Facilities until April 5 at 5:00pm. Unaffiliated child care facilities have not been closed by state mandate yet.
• Statewide closure of restaurants, cafes, coffee houses, bars, taverns, brewpubs, distilleries, clubs, movie theaters, indoor and outdoor performance venues, gymnasiums, fitness centers, recreation centers, indoor sports facilities, indoor exercise facilities, exercise studios, spas, and casinos, through March 30 at 11:59pm. This does not apply to office buildings, grocery stores, markets, food pantries, pharmacies, drug stores, and providers of medical equipment and supplies, health care facilities, residential care facilities, congregate care facilities, and juvenile justice facilities, warehouse and distribution centers, and industrial and manufacturing facilities. Restaurants may continue to offer delivery service, window service, walk-up service, drive-through service, or drive-up service.
• Statewide prohibition on gatherings of more than 50 people or assemblages in shared indoor spaces of more than 50 people, through April 5 at 5:00pm. This does not apply to assemblages for health care facilities, workplaces not open to the public, the state legislature, mass transit, the purchase of groceries or consumer goods, and the performance of agricultural or construction work. The federal government has recommended prohibitions on 10 or more people, and such is under consideration.
• Expanding access to unemployment insurance for qualified workers or first responders, and expanding the state’s Work Share program, until April 14 at 11:59pm. Under the order, an employer or employing unit must not be charged for unemployment benefits if their employees become unemployed because of an executive order requiring them to close or limit operations. See https://www.michigan.gov/whitmer/0,9309,7-387-90499_90640-521770--,00.html.
• For small businesses that paid less than $720,000 in sales and use tax in 2019, monthly sales, use and withholding tax payments that would be due Friday have been postponed until April 20. MI Treasury also said it would waive all penalties and interest for 30 days. The waiver is not available for accelerated sales, use or withholding tax filers.
• Moving the tax foreclosure deadline from March 31, 2020 to May 29, 2020, or 30 days after the state of emergency declared in prior orders is terminated, whichever comes first.

Also, the U.S. Small Business Administration (SBA) has approved the Governor’s request for a statewide Economic Injury Disaster Loan (EIDL) declaration, opening the opportunity to small businesses to access low-interest loans from the SBA. The EIDL designation means that Michigan small businesses, small agricultural cooperatives, and nonprofits that have suffered substantial economic losses as a result of the outbreak will now have the ability to apply for low-interest loans from funding made available by Congress earlier this month. The application for disaster loan assistance is available at https://disasterloan.sba.gov/ela/.

The MCUL continues to monitor these developments and will communicate with our member credit unions on those that will affect their business operations and member services. We expect to see additional Executive Orders issued to place a moratorium on commercial and residential evictions for a likely period of 30-60 days. As of yet, we have not seen or heard of any restrictions proposed on foreclosure by financial institutions, but the Governor’s office now has a designated contact for ourselves and the MBA on “repossession issues.”

Last week, the state legislature appropriated $25 million for COVID-19 state and local preparedness and response purposes, including $15 million in set-aside funds and $10 million in readily available funding for determined needs. On Tuesday, in a marathon session, the legislature approved an additional $125 million – allocating $50 million for hospital services, $40 million for “general efforts,” and $35 million in additional set-aside funds to be deployed as necessary. The state legislature is coordinating with the Whitmer administration and business interest groups, including the MCUL, on needs and ideas for the legislature to consider for further response and mitigation.

We continue to work with DIFS on additional communication and clarification to Michigan’s state chartered credit unions. DIFS recently issued a letter to credit unions 20-CU-04 Disaster Recovery and Continuity of Operations Preparedness as well as an email communication to all state chartered CEOs and Chairpersons on March 13, addressing the rescheduling of annual meetings as well as branch closures and notifications to DIFS. DIFS OCU Director Denice Schultheiss also sent a communication to all state-chartered credit unions on March 19, thanking credit unions for their efforts and leadership, clarifying some information requests, and confirming that DIFS is not conducting onsite examinations at this time. We are in close contact with Director Fox and her senior team, and will continue to provide information to credit unions as it becomes available, and pass on concerns and needs as well.

Federal Efforts and Communications

On March 6th the President signed into law the Coronavirus Preparedness and Response Supplemental Appropriations Act, H.R. 6074. This bill provides $8.3 billion in emergency funding primarily for developing, manufacturing and procuring vaccines and medical equipment. The bill also provides grants to state, local and tribal governments to prevent, prepare for, and respond to the virus. On March 14th, the US House passed the Families First Coronavirus Response Act, H.R. 6201, with wide bi-partisan support. Yesterday, the US Senate passed the measure and the President signed it shortly thereafter. The bill will take effect 15 days after being signed into law, and specifically addresses the following:

Emergency Family and Medical Leave. The bill would require all public employers and private employers with fewer than 500 workers to provide employees with paid sick leave. To be eligible employees must have been on the employer’s payroll for at least 30 days and employees can use the emergency FMLA for the following reasons:

• To comply with a quarantine recommendation or requirement.

• To care for an at-risk family member who is following a recommendation or requirement to self-isolate.

• To care for a child if the child’s school or place of care has been closed, or the care is unavailable because of the coronavirus.

The initial two weeks of leave may be unpaid (the employee may choose to use accrued vacation days, personal leave or other medical/sick leave during this period, but an employer may not require an employee to do so). Following the two weeks of unpaid leave, employers must provide their employees with paid FMLA leave at a rate of no less than two-thirds of the employee’s usual rate. The Secretary of Labor will have the authority to issue regulations to exclude health care providers and emergency responders from the list of employees eligible for leave, and exempt small businesses with fewer than 50 employees when the requirement would put jeopardize the viability of the business. Similar to traditional FMLA, leave covered by emergency FMLA is job-protected and employers must return the employee to the same or equivalent position upon their return to work.

Emergency Paid Sick Leave. The bill provides that private employers with fewer than 500 employees must provide full time employees with 80 hours (two weeks) of paid sick leave and offer part-time employees paid sick leave equal to the hours worked in the average two-week period. Sick leave must be paid at the employee’s regular rate when the employee is self-isolating as a result of a coronavirus diagnosis, seeking a diagnosis or for preventative care for coronavirus. When an employee seeks to take emergency paid sick leave to care for a family member or to care for a child whose school is closed, or childcare provider is unavailable due to the virus, the employer shall pay the employee at two-thirds the employee’s regular rate. Paid sick time requirements do not carry over from year to year and the requirements under the bill expire on December 31, 2020.

The Families First Coronavirus Response Act could place a significant burden on small businesses, including credit unions. To alleviate concerns, the bill provides a quarterly tax credit to employers against the 6.2% Social Security payroll tax to offset the cost of 100% of the paid sick and FMLA leave. Additional concerns have been raised that many small businesses may not have the necessary cash on hand or liquidity to pay required sick and FMLA wages and then wait for the tax credit. Congress and the President continue to discuss ways to ensure the impact on small business is minimized, and this issue is still developing. Finally, in addition to the two aforementioned bills, Congress and the White House are negotiating and drafting an economic stimulus bill, totaling potentially over $1 trillion, to support struggling industries. In addition, the bill will likely provide each American with a check (amount is unknown) in hopes of keeping money circulating in the economy.

Also on Wednesday, US Treasury Secretary Steven Mnuchin released guidance for individuals and corporations wishing to defer tax payments (not filings) owed for the 2019 taxable year, from April 15 to July 15.

In light of immediate regulatory concerns the NCUA has issued its Letter to Credit Unions 20-CU-02 NCUA Action Related to Covid-19. In this letter the NCUA encourages credit unions to work with members impacted by increasing limits for ATM withdrawals, waiving ATM and overdraft fees as well as waiving late fees and offering or expanding payday alternative loan programs to name a few. Also included in the letter is an FAQ for credit unions discussing annual meetings, examinations and moving to offsite-only during the crisis, and other points of concern.

Finally, we are working with League InfoSight and other Leagues to prepare a recorded webinar of resources, best practices etc. We are also working with League InfoSight on a variety of resources and information for credit unions that are posted on the MCUL site as well as League InfoSight including sample policies (see https://www.mcul.org/education-and-networking-resources/covid-19 and https://mi.leagueinfosight.com).

Other Advocacy News

As we are sending this in lieu of the normal monthly advocacy update, two quick notes. The state legislature will now depart Lansing for a few weeks, with one day a week tentatively scheduled for session if needed for further response. Prior to this break, we are pleased to report that SB 125 by Sen. Tom Barrett, to harmonize escheating periods for dormant accounts for deployed military members was passed by the House and concurred by the Senate. It should be presented to the Governor for her signature soon. Also, in the first FY20 supplemental mentioned above the legislature restored funding for small grants to counties to purchase or upgrade software and hardware for electronic recording of real property documents. MCUL has been pushing this effort since last year, and we are pleased that funding for three years of programming was included with protective language to extend the project over the current and next two fiscal years.

Thank you, and If you have any questions, please do not hesitate to contact any member of our team and we will do our best to get you the information you need.