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“Will I be liable for that?” is a common question we hear in the legal world. COVID-19 has made that question even more commonplace, especially as more businesses reopen or expand services and more people reengage in public activities. About a dozen states have acted on the liability concern and passed COVID-19 liability protections, and Congress is also deliberating whether federal legislation is necessary. Here in Ohio, the House and the Senate have been reviewing separate immunity proposals. Yesterday, Ohio’s House passed its bill, which aims to limit liability in certain situations where a person claims harm from the transmission of COVID-19.
The language of House Bill 606 effectively explains the House’s intent in putting forth its proposal, stating that:
- The Ohio General Assembly is aware that lawsuits related to the COVID-19 health emergency numbering in the thousands are being filed across the country.
- Ohio business owners, small and large, as they begin to re-open their businesses are unsure about what tort liability they may face, and recommendations regarding how best to avoid infection with COVID-19 change frequently.
- Businesses and premises owners have not historically been required to keep members of the public from being exposed to airborne viruses, bacteria, and germs.
- Those individuals who decide to go out into public places are responsible to take those steps they feel are necessary to avoid exposure to COVID-19, such as social distancing and wearing masks.
The House bill declares that for the above reasons, any COVID-19 “orders and recommendations from the Executive Branch, from counties and local municipalities, from boards of health and other agencies, and from any federal government agency, do not create any new legal duties for purposes of tort liability.”
The bill’s reference to not establishing a legal duty in regards to COVID-19 is important, as it forms the basis of immunity from liability for COVID-19 infections. Under Ohio law, a person who can prove that harm resulted because another failed to meet a required duty of care can make a successful claim of negligence and receive damages for harm caused. Negating a legal duty of care for handling of COVID-19 removes the possibility of civil liability.
The House bill clearly lays out its general liability protection in Section 4 and extends the immunity from March 9 to December 31, 2020 to “any person,” which includes an individual, corporation, business trust, estate, trust, partnership, association, school, for-profit, nonprofit, governmental, or religious entity, and state institution of higher education. But it also makes an exception from immunity where a person has acted recklessly, intentionally, or with wanton misconduct:
- No civil action for damages for injury, death, or loss to person or property shall be brought against any person if the cause of action on which the civil action is based, in whole or in part, is that the injury, death, or loss to person or property is caused by the exposure to, or the transmission or contraction of [COVID-19] or any mutation thereof, unless it is established that the exposure to, or the transmission or contraction of, any of those viruses or mutations was by reckless or intentional conduct or with willful or wanton misconduct on the part of the person against whom the action is brought.
Opponents to the bill claim that it would encourage persons not to take any COVID-19 precautions, but proponents argue that the bill does so by discouraging reckless behavior. Under the legislation, to behave recklessly means that “with heedless indifference to the consequences, the person disregards a substantial and unjustifiable risk that the person's conduct is likely to cause an exposure to, or a transmission or contraction of [COVID-19] or any mutation thereof, or is likely to be of a nature that results in an exposure to, or a transmission or contraction of, any of those viruses or mutations.”
In addition to the general immunity protection explained above, the House bill also provides temporary civil immunity for health care providers, grants immunity to the State for care of persons in its custody or if an officer or employee becomes infected with COVID-19 in the performance or nonperformance of governmental functions and public duties, and expands the definition of “governmental functions” for purposes of political subdivision immunity to include actions taken during the COVID-19 pandemic.
The Ohio Senate is working on its own version of a COVID-19 immunity bill. A fourth hearing on Senate Bill 308 took place on May 27 before the Senate Judiciary Committee. Several substitute bills have replaced the original bill, and it's yet uncertain what the final version will contain.
Meat sales have been subject to serious supply chain issues wrought by COVID-19, raising many questions here in Ohio about who can process meat and where meat can be sold. In my opinion, explaining meat processing laws is nearly as difficult as summarizing the Internal Revenue Code. But one easy answer to the meat processing questions we've been receiving relates to Ohio's participation in the Cooperative Interstate Shipment (CIS) Program established by the 2008 Farm Bill. Ohio was the first state to participate in CIS and is the largest of the seven approved state CIS programs. CIS participation means that a small Ohio processor can apply to operate as a "federally inspected" plant and sell meat across state lines, including through online sales.
To become a "CIS establishment," the processor must have fewer than 25 full-time employees and meet specific food safety and sanitation standards that are verified through an inspection and assessment process. Because Ohio's "state inspected program" already includes many components of the "federally inspected" standards, it's not a difficult leap for Ohio processors to get into the CIS program and expand their sales opportunities. Small processors interested in CIS start the process by talking with their designated meat inspector from the Ohio Department of Agriculture. For a list of Ohio's 26 CIS establishments, visit the USDA/FSIS CIS Establishments page here.
Want to know more about meat processing laws? Our partner, the National Agricultural Law Center, will host a webinar on June 3, 2020 to address the topic. Join us at Noon EST for Slaughtering and Processing in the United States: Oversight and Requirements with Senior Staff Attorneys Rusty Rumley and Elizabeth Rumley. The two will outline the balance and differences between federal and state authority over slaughter and processing of meat and poultry, along with proposed federal legislation that might change processing requirements and additional challenges facing small meat processors. Information about the webinar and a link to the registration are on the National Agricultural Law Center's website, here. And don't worry, it will make more sense than the Internal Revenue Code.
There’s much disagreement over what we know about COVID-19, but one thing we can agree upon is that it has left an impact on the food supply chain. For some food producers, that impact is creating opportunity. Many growers see the potential of filling the gaps created by closed processing facilities, thin grocery shelves, and unwillingness to shop inside stores. If you’re one of those growers who sees an opportunity to sell food, we have a few thoughts on legal issues to consider before moving into the direct food sales arena. Doing so will reduce your risks and the potential of legal liability.
1. Follow COVID-19-related guidelines
Perhaps this goes without saying, but businesses should take COVID-19 guidelines seriously. Doing so will hopefully reduce the potential of a COVID-19 transmission in the operation while also minimizing the risk of an enforcement action and potential legal liability for failing to protect employees and customers. Follow the Ohio Department of Health Responsible RestartOhio Guidelines that are now in effect. Engaging directly with customers places a grower in the “Consumer, Retail and Services” sector guidelines, which are here. Mandatory requirements include protecting the health and safety of employees, customers and guests by establishing six-foot distances or barriers, wearing face masks, handwashing and sanitizing, checking for symptoms daily, posting signs, deep cleaning, and dealing with suspected and confirmed cases of COVID-19. The FDA has also issued “Best Practices for Retail Food Stores, Restaurants and Food Pick-Up and Delivery Services” here, and OSU’s direct marketing team has many helpful resources for implementing the practices here. Develop protocols based upon the guidelines, carefully train employees on protocols, and document your compliance.
2. Determine what food safety regulations apply to you
For food safety purposes, the Ohio Department of Agriculture and local county health department require licensing or inspection of certain types of food sale activities. The regulations are a bit messy, and it’s challenging to know when an operator is affected by these regulatory requirements. We’ve explained licensing laws pertaining to sales directly at the farm in this law bulletin, “Selling Foods at the Farm: When Do You Need a License?” There are more stringent requirements for those who sell meat, process food, or sell higher risk foods or several different types of foods. We’ve provided a few simple guidelines in the chart at the end of this post, but please refer to the above law bulletin for further details. Additionally, produce growers need to comply with Good Agricultural Practice (GAPs) and Food Safety Modernization Act (FSMA) rules. Learn more about those on our Fruit and Vegetable Safety Program website here.
3. Check your zoning
If you’re within a municipality, you may have zoning regulations that apply to your production and sales activities. Check your local zoning regulation to ensure that those activities are “permitted uses” within your designated zoning district. If not, you may need to seek a “conditional use” permit. Also be aware that some municipal zoning regulations regulate “home businesses,” and a home bakery or cottage food operation that has customers coming to the home to purchase the goods might fall into that category.
If you’re outside a municipality, Ohio’s agricultural exemption from county and township zoning applies to your production and sales activities. Local zoning can’t prohibit your activities regardless of your zoning district, with limited exceptions if you’re in a “platted subdivision” situation (on a lot under 5 acres in a platted area of at least 15 other contiguous lots). Note, however, that county and township zoning can regulate a “farm market” that receives more than 50% of its gross income from goods that weren’t raised on the owner’s farm. You might need to comply with a few zoning regulations that pertain to the size and setback lines for your structure, the parking area, and ingress and egress points for customers.
4. You may have to collect sales taxes on some items
Most takeaway food items to be consumed off-site, such as meat and produce, aren’t subject to Ohio’s sales tax. But if you sell items that are not exempt from sales tax, you’ll need to collect sales taxes on the items. If you’re planning to sell ready-to-eat items on site, beverages, flowers, or container plants, you must charge and collect sales taxes and obtain a vendor’s license in order to submit the taxes to the state. Find more details in our law bulletin on vendor’s licenses and sales taxes here.
5. Review contracting situations
You’ll likely be presented with a contract or agreement in many situations, such as a farmers’ market contract or an agreement for selling on an online sales platform. Or you may need to generate your own contract for selling whole animals or establishing a “community supported agriculture” operation. In either instance, read your contracts carefully. Be sure to include and review important terms such as price, quality delivery dates, payment processes, late fees, data use, and other provisions related to your type of sale. Don’t hesitate to involve an agricultural attorney to be sure that you’ve minimized your legal risk.
6. Talk to your insurance provider
Direct food sales might not be adequately covered by your insurance policy. You’ll need to know whether you have sufficient premises liability coverage if a customer is harmed on your farm, coverage for transporting foods or for selling at a farmers’ market (typically required by the market) and product liability coverage in case someone claims illness or other injury from consuming your food. You may need to increase coverage or purchase additional riders to the policy, depending on your risk level. Reviewing your policy with your provider and aligning coverage with your food sales activities is imperative to reducing your liability risk.
7. Do you need a separate business entity?
Consider whether your food sales activities put other assets at risk, and whether your insurance is sufficient to address that risk. If not, you should consider forming a separate business entity for your direct marketing business. Forming a Limited Liability Company for your direct food sales activities can help shield your other assets from the liability of the food sales. Talk with an agricultural attorney to assess your needs and determine what type of entity is best for your situation.
8. Keep great records
This one applies to everything above. Maintain records of what you do in regards to COVID-19 precautions, employee training, food safety compliance, and financial records of your expenditures and sales. If a liability incident arises, document it carefully. Keep the records for the required amount of time, which is typically three years for receipts for purchases and sales, ten years for insurance and employee records, and permanently for other records.
9. Don’t stop here
This list is a starting point for legal considerations for direct food sales, but it shouldn’t be the end. There may be other legal issues that affect your particularly situation. To learn more and fully consider all risks of direct marketing, talk with others who’ve directly sold food, visit with your accountant, lawyer and insurance provider, and learn the best practices for growing and marketing your food products.
Do you need a license for your direct-to-customer food sales?
Peggy Kirk Hall, OSU Agricultural & Resource Law Program
Emily Marrison, OSU Extension Coshocton County
We offer this chart as guidance and not as legal advice. Please confirm your specific situation and needs with the Ohio Department of Agriculture and your local county health department.
Selling meat for custom operator processing. You don’t need a license to sell an animal to a customer who will have it processed by a custom operator. But you can’t bring custom operator processed meat back to the farm and sell it to customers in individual portions; that type of sale requires processing by a federally approved processor.
Selling meat in individual portions. You may sell cuts of beef, pork and other livestock if the meat is processed and labeled by a processor that meets federal regulations and is deemed “fully inspected” by ODA (see a list of such facilities here).
Selling chickens processed at the farm. Growers may be surprised to learn that no license is required to process and sell up to 1,000 birds per year at the farm where the birds are raised. But if a grower sells the birds along with other food items such as produce, then the grower must register as a Farm Market and be inspected by ODA. The Farm Market registration form is here.
Selling eggs. A grower does not need a license to sell eggs produced at the farm where sold, as long as the grower has 500 or fewer birds. But if a grower wants to sell eggs through a farmer’s market or sells other low risk foods along with eggs, either a Farm Market registration and inspection from ODA (here) or a Retail Food Establishment license from the county health department is necessary.
Selling produce. Selling only fresh, unprocessed produce does not require any licensing. However, if selling other low risk foods along with produce, a grower must either register as a farm market through ODA or obtain a Retail Food Establishment license from the county health department.
Selling multiple food items. Regulation increases when a grower offers multiple types of food items for sale. If those items are “low risk,” the grower must register as a Farm Market with ODA, which involves a site inspection. If higher risk foods are involved, such as meat, eggs from offsite or from more than 500 birds, dressed poultry from offsite or from more than 1,000 birds, the grower must obtain a Retail Food Establishment license from the county health department.
Selling cottage foods and home bakery goods. Many home-prepared foods such as cookies, breads, jams, granola, snack mixes and more fall under Ohio’s cottage food law and require no licensing, but there are labeling requirements. See our law bulletin on Ohio’s Cottage Food Law here.
We've been anxiously waiting for details on additional financial support to farmers through the Coronavirus Food Assistance Program (CFAP). Those details finally arrived yesterday, when the USDA announced its Final Rule for CFAP's Direct Support to Farmers and Ranchers Program, which will allocate $16 billion in funding from the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Commodity Credit Corporation.
The Farm Office team has digested the Final Rule and written an explanation in our latest news bulletin here: Sign up for USDA-CFAP Direct Support to Begin May 26, 2020. The news bulletin provides details on:
- Eligibility requirements for producers
- Eligible commodities
- Payment limitations
- Application and timeline
- Payment calculations, including examples of how to calculate payments
The Farm Office team will also host a webinar about Ohio's CFAP sign up process soon. Be sure to check back with this blog and our Farm Office Live page for further information about the webinar.
The Final Rule and additional information on CFAP are available on USDA's CFAP website.
Written by Ellen Essman and Peggy Kirk Hall
Many people are still working from home, but that hasn’t stopped legal activity in Washington, D.C. Bills have been proposed, federal rules are being finalized, and new lawsuits are in process. Here’s our gathering of the latest ag law news.
SBA posts Paycheck Protection Program (PPP) loan forgiveness application. We’ve been waiting to hear more about how and to what extent the SBA will forgive loans made under the CARES Act’s PPP that many farm businesses have utilized. The SBA recently posted the forgiveness application and instructions for applicants here. But there are still unanswered questions for agricultural applicants as well as talk in Congress about changing some of the forgiveness provisions, suggesting that loan recipients should sit tight rather than apply now. Watch for our future blog post and a discussion on the forgiveness provisions in our next Farm Office Live webinar.
House passes another COVID-19 relief bill. All predictions are that the bill will go nowhere in the Senate, but that didn’t stop the House from passing a $3 trillion COVID-19 relief package on May 15. The “HEROES Act” includes a number of provisions for agriculture, including an additional $16.5 billion in direct payments to producers of commodities, specialty crops and livestock, as well as funds for local agriculture markets, livestock depopulation losses, meat processing plants, expanded CRP, dairy production, other supply chain disruptions, and biofuel producers (discussed below). Read the bill here.
Proposed bipartisan bill designed to open cash market for cattle. Last week, Republican Senator Chuck Grassley and Democratic Senator Jon Tester introduced a bill that “would require large-scale meatpackers to increase the proportion of negotiable transactions that are cash, or ‘spot,’ to 50 percent of their total cattle purchases.” The senators hope this change would bring up formula prices and allow livestock producers to better negotiate prices and increase their profits. In addition, the sponsors claim ithe bill would provide more certainty to a sector hard hit by coronavirus. Livestock groups aren’t all in agreement about the proposal. You can read the bill here, Senator Grassley’s press release here and Senator Tester’s news release here.
New Senate and House bills want to reform the U.S. food system. Representative Ro Khanna from California has introduced the House companion bill to the Senate's Farm System Reform Act first introduced by Senator Cory Booker in January. The proposal intends to address underlying problems in the food system. The bill places an immediate moratorium on the creation or expansion of large concentrated animal feeding operations and requires such operations to cease by January 1, 2040. The proposal also claims to strengthen the Packers and Stockyards Act and requires country of origin labeling on beef, pork, and dairy products. The bill would also create new protections for livestock growers contracted by large meat companies, provide money for farmers to transition away from operating animal feeding facilities, strengthen the term “Product of the United States” to mean “derived from 1 or more animals exclusively born, raised, and slaughtered” in the U.S., and, similar to the Grassley/Tester bill above, require an increased percentage of meatpacker purchases to be “spot” transactions.
Lawmakers ask Trump to reimburse livestock producers through FEMA. In another move that seeks to help livestock producers affected by the pandemic, a bipartisan group of U.S. Representatives sent a letter to Donald Trump imploring him to issue national guidance to allow expenses of livestock depopulation and disposal to be reimbursed under FEMA's Public Assistance Program Category B. The lawmakers reason that FEMA has "been a valued Federal partner in responding to animal losses due to natural disasters," and that the COVID-19 epidemic should be treated "no differently." You can read the letter here.
More battling over biofuels. Attorneys General from Wyoming, Utah, Louisiana, Oklahoma, Texas, Arkansas and West Virginia have sent a request to EPA Administrator Andrew Wheeler to waive the Renewable Fuel Standard (RFS) because of COVID-19 impacts on the fuel economy. The letter states that reducing the national quantity of renewable fuel required would alleviate the regulatory cost of purchasing tradable credits for refiners, who use the credits to comply with biofuel-blending targets. Meanwhile, 70 mayors from across the U.S. wrote a letter urging the opposite, and criticizing any decisions not to uphold the RFS due to the impact that decision would have on local economies, farmers, workers, and families who depend on the biofuels industry. The House is also weighing in on the issue. In its recently passed HEROES Act, the House proposes a 45 cents per gallon direct payment to biofuel producers for fuels produced between Jan 1 and May 1, 2020 and a similar payment for those forced out of production during that time.
New USDA rule for genetically engineered crops. A final rule concerning genetically engineered organisms is set to be published this week. In the rule, USDA amends biotechnology regulations under the Plant Protection Act. Importantly, the new rule would exempt plants from regulation by the Animal and Plant Health Inspection Service (APHIS) if the plants are genetically engineered but the same outcome could have occurred using conventional breeding. For instance, gene deletions and simple genetic transfers from one compatible plant relative to another would be exempted. If new varieties of plants use a plant-trait mechanism of action combination that has been analyzed by APHIS, such plants would be exempt. You can read a draft of the final rule here.
Trump’s new WOTUS rule attacked from both sides of the spectrum. A few weeks ago, we wrote about the Trump Administration’s new “waters of the United States” or WOTUS rule. Well, it didn’t take too long for those who oppose the rule to make their voices heard. The New Mexico Cattle Growers Association (NMCGA) sued the administration, claiming that the new rule is still too strict and leaves cattle ranchers questioning whether waters on their land will be regulated. In their complaint, NMCGA argues that the new definition violates the Constitution, the Clean Water Act, and Supreme Court precedent. On the other side, the Natural Resources Defense Council (NRDC), along with other conservation groups, sued the administration, but argued that the new rule does not do enough to protect water and defines “WOTUS” too narrowly. Here we go again—will WOTUS ever truly be settled?
The Farm Office is Open! Join us for analysis of these and other legal and economic issues facing farmers in the Farm Office Team’s next session of “Farm Office Live” on Thursday, May 28 at 9:00 a.m. Go to this link to register in advance or to watch past recordings.
Written by Barry Ward, Leader, Production Business Management*
COVID-19 has created an unusual situation that has negatively affected crop prices and lowered certain crop input costs. Many inputs for the 2020 production year were purchased or the prices or costs were locked in prior to the spread of this novel coronavirus. Some costs have been recently affected or may yet be affected. Lower fuel costs may allow for lower costs for some compared to what current budgets indicate.
Production costs for Ohio field crops are forecast to be largely unchanged from last year with lower fertilizer expenses offset by slight increases in some other costs. Variable costs for corn in Ohio for 2020 are projected to range from $359 to $452 per acre depending on land productivity. Variable costs for 2020 Ohio soybeans are projected to range from $201 to $223 per acre. Wheat variable expenses for 2020 are projected to range from $162 to $198 per acre.
Returns will likely be low to negative for many producers depending on price movement throughout the rest of the year. Grain prices used as assumptions in the 2020 crop enterprise budgets are $3.20/bushel for corn, $8.30/bushel for soybeans and $5.10/bushel for wheat. Projected returns above variable costs (contribution margin) range from $109 to $240 per acre for corn and $179 to $337 per acre for soybeans. Projected returns above variable costs for wheat range from $152 to $262 per acre.
"Return to land" is a measure calculated to assist in land rental and purchase decision making. The measure is calculated by starting with total receipts or revenue from the crop and subtracting all expenses except the land expense. Returns to land for Ohio corn (total receipts minus total costs except land cost) are projected to range from -$48 to $72 per acre in 2020 depending on land production capabilities. Returns to land for Ohio soybeans are expected to range from $65 to $214 per acre depending on land production capabilities. Returns to land for wheat (not including straw or double-crop returns) are projected to range from $70 per acre to $173 per acre.
Total costs projected for trend line corn production in Ohio are estimated to be $759 per acre. This includes all variable costs as well as fixed costs (or overhead if you prefer) including machinery, labor, management and land costs. Fixed machinery costs of $75 per acre include depreciation, interest, insurance and housing. A land charge of $187 per acre is based on data from the Western Ohio Cropland Values and Cash Rents Survey Summary. Labor and management costs combined are calculated at $67 per acre. Details of budget assumptions and numbers can be found in footnotes included in each budget.
Total costs projected for trend line soybean production in Ohio are estimated to be $517 per acre. (Fixed machinery costs: $59 per acre, land charge: $187 per acre, labor and management costs combined: $46 per acre.)
Total costs projected for trend line wheat production in Ohio are estimated to be $452 per acre. (Fixed machinery costs: $34 per acre, land charge: $187 per acre, labor and management costs combined: $41 per acre.)
Current budget analysis shows favorable returns for soybeans compared to corn but crop price change and harvest yields may change this outcome.
These projections are based on OSU Extension Ohio Crop Enterprise Budgets. Newly updated Enterprise Budgets for 2020 have been completed and posted to the Farm Office website here: https://farmoffice.osu.edu/farm-mgt-tools/farm-budgets.
*Readers may have noticed a few blog posts by Barry Ward recently. Barry directs OSU Extension's Production Business Management research and our Income Tax Schools, and is a key member of the Farm Office team. We've asked Barry to join the blog in an effort to expand its breadth and cover all of our Farm Office website topics. In addition to agricultural law coverage, we'll also update readers with our latest information on farm management, tax, marketing and ag policy. Watch for our other new authors, and we hope you enjoy the Farm Office Blog!
Agritourism has experienced significant growth in recent years, offering farm operators new revenue streams. Hopefully, the recent pandemic won't hinder the growth of agritourism entrepreneurship. Beyond COVID-19, however, there are other legal issues agritourism operators often face, and those issues can result in litigation. We sought to identify how frequently agritourism litigation is occurring across the U.S., and what types of legal issues end up in litigation. Our newest report for the National Agricultural Law Center, Recent Agritourism Litigation in the United States, shares the results of our research.
We categorized the agritourism lawsuits into two major categories: land use and personal injury. To our surprise, we identified more land use cases than personal injury cases. Two potential explanations for this outcome are that many states across the country now have agritourism immunity laws that limit legal liability for personal injuries on agritourism operations and that personal injury cases are likely to involve insurance policies and settlements rather than litigation. Land use cases, on the other hand, are more prevalent and center on regulatory issues such as zoning compliance and nuisance laws.
Most clear from our research is the need for state and local governments to carefully understand and define the meaning of “agritourism,” for both personal injury and land use reasons. The definition becomes quite important when determining whether immunity provisions protect an activity from liability for personal injuries. The definition is also integral to assessing whether or how an agritourism activity is subject to land use laws. Perhaps the most important result of our research is the confirmed realization that before proceeding with any “agritourism” activity, a farmer or rancher should take care to assess how state and local laws define that activity so as to reduce the risk of ending up in litigation.
The USDA’s National Agriculture Library funded our research, which we conducted in partnership with the National Agricultural Law Center. Readers may access the report here.
Tags: agritourism liability; agritourism; agritourism zoning; agritourism nuisance; agritourism immunity
Farmers aren’t traditionally eligible for unemployment benefits, but that won’t be the case when Ohio’s newest unemployment program opens. We've been keeping an eye out for the opening of the Pandemic Unemployment Assistance (PUA) program, which will provide unemployment benefits to persons affected by COVID-19. The program is targeted to persons who are not eligible for regular unemployment benefits, such as self-employed and 1099 filers. PUA is yet another economic assistance program generated by the Coronavirus Aid, Relief and Economic Security (CARES) Act recently passed by Congress.
PUA will provide regular unemployment benefit amounts to qualifying individuals, plus an additional $600 per week for the period of March 29 to July 25, 2020. Qualification doesn’t include a minimum income requirement, but a person must not be eligible for Ohio’s regular unemployment benefits and must not be currently receiving vacation, sick or other paid leave. The applicant must also be unable to work due to one of the following situations:
- The applicant has been diagnosed with COVID-19 or has symptoms and is seeking medical diagnosis;
- A member of the applicant’s household has been diagnosed with COVID-19;
- The applicant is providing care for a family or household member who has been diagnosed with COVID-19;
- The applicant cannot work due to caring for a child whose school or other facility has closed due to COVID-19;
- The applicant has become the primary support for a household because the head of the household has died due to COVID-19;
- The applicant has quit his or her job, was laid off, or could not begin a new job as a direct result of COVID-19;
- The applicant’s place of employment is closed because of COVID-19.
Applications should open by mid-May on the Ohio Department of Job and Family Services website. Self-employed individuals will have to submit proof of employment, such as earnings statements that reflect profit and loss, payroll deposits, or a 2019 tax return. The unemployment benefits will be retroactive to the date of eligibility and will last for no more than 39 weeks, up to December 26, 2020. PUA may also provide an additional 13 weeks of benefits for those who’ve exhausted regular unemployment benefits. To learn more or apply for PUA, visit https://unemploymenthelp.ohio.gov/expandedeligibility/.
Written by Barry Ward, Leader, Production Business Management and Director, OSU Income Tax Schools
In our recent Farm Office Live webinars, we’ve discussed the paid sick leave provisions in the Families First Coronavirus Response Act. The new law recognizes that many employees have been forced by COVID-19 to stay home rather than report to work. In such cases, the law obligates employers to provide paid sick leave but also gives federal tax credits to employers for doing so. Here’s a summary of how the law works.
Emergency paid sick leave provision
Employers with less than 500 employees are required to provide paid sick leave to employees who are unable to work (or telework) if they have become ill with COVID-19, have similar symptoms, or must provide care to someone with COVID-19 issues. Employees who have to care for children due to school or day care closure are also eligible for partial paid sick leave. Employers are required to provide 100 percent of the usual pay rate to an employee if they have COVID-19 or the related symptoms, up to $511 per day. If they’re unable to work due to the need to care for an affected individual or to care for children due to school or daycare closure, the employee must be paid 2/3rds of their usual pay rate up, up to $200 per day.
The following chart summarizes the requirements.
Employee has COVID-19 related illness
Must provide two weeks (80 hours) of 100% sick-pay, capped at $511/day
Employee is caring for individual with COVID-19 related illness
Must provide two weeks (80 hours) of 2/3rds of sick-pay, capped at $200/day
Employee is caring for children because school or childcare is closed due to COVID-19
Must provide two weeks (80 hours) of 2/3rds of sick-pay, capped at $200/day
Expanded family leave provision
A second provision, the expanded family leave provision, requires employers to provide employees with up to 12 weeks of leave for COVID-19-related needs. This leave requirement applies to employees who are unable to work due to having to care for children whose school or daycare is closed or unavailable because of COVID-19. The first ten days of the expanded family leave are unpaid (a deductible of sorts), although the employee can use the “emergency paid sick leave provision” or accrued sick leave to cover these days if necessary. After the first ten days, the employee is eligible to receive 2/3rd of regular pay for the remaining ten weeks, capped at $200 per day.
Note that employers with fewer than 50 employees are eligible for an exemption where the viability of the business would be threatened. The exemption applies to the requirements to provide leave to care for a child whose school is closed or if child care is unavailable.
Employer tax credits to fully compensate for required leave
This new law provides corresponding refundable tax credits to equal all required leave provided by an employer whether the leave was required and provided under the emergency paid sick provision or the expanded family leave provision. The credits are refundable payroll tax credits, designed to immediately and fully reimburse employers, dollar-for-dollar, for the cost of providing the required leave to their employees.
To receive the credit, employers hold on to payroll withholding as offset. Payroll withholding that can be held as this tax credit includes withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees. If this amount isn’t enough to provide the full tax credit due the employer, the employer will have to file a return with the IRS. More information on how to claim these credits is available at: https://www.irs.gov/newsroom/covid-19-related-tax-credits-how-to-claim-the-credits-faqs
Additional details are available on the U.S. Department of Labor’s “Families First Coronavirus Response Act: Employer Paid Leave Requirements” page, here: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave