Update on Kentucky Reopening: Phase III Reopenings Begin – “Healthy at School” Reopening Plan Announced

(Updated with information available from the Governor’s Office as of June 26, 2020 at Noon)

by Kathie McDonald-McClure, Partner

On Monday, June 22, 2020, during his coronavirus update, Governor Andy Beshear announced that Kentucky will begin Phase III of the White House reopening plan during the novel coronavirus 2019 (COVID-19) public health emergency (PHE).  (See below “New! Phase III Reopening”.) The Governor said, “Next Monday, just about everything in the Commonwealth will be open, from bars, wedding venues, public pools and even Kentucky Kingdom.” He continued, “It has been a long road dealing with this virus. But by following medical guidelines we have gone from a time when our cases were doubling every week, to a point where we are safely beginning to reopen businesses and our economy.”

It has been a long road indeed.  Kentucky was one of the first states to declare a state of emergency on March 6, 2020.  Then, on March 26, 2020, the Governor launched Healthy at Home, with information, advice and restrictions aimed at ensuring social distancing and protecting the state’s health care operations.  Governor Beshear reported that studies by the CDC, the University of Louisville and the University of Kentucky all show that these early actions saved thousands of Kentuckians’ lives.

On April 27, 2020, the Governor began reopening parts of the healthcare sector with Healthy at Work for Healthcare Facilities, a four-phase, gradual reopening of healthcare services (not applicable to long-term care settings).  Phases I, II, III and IV are all now underway, with Phase IV having begun on May 27, 2020.  Under Phase IV, non-urgent/non-emergent inpatient procedures can proceed at volumes determined by each healthcare facility.  Visitation restrictions, however, remain in force: a single (one) visitor/support person per patient based on the best judgment and discretion of the facility. For additional information, see the Governor’s Healthy at Work for Healthcare Facilities website and Order.

Then, on May 11, 2020, Governor Beshear began reopening the non-healthcare sectors of Kentucky’s economy that had been closed due to the COVID-19.  Kentucky has been nationally recognized as among few states that are meeting the White House and CDC guidance for reopening the economy.  The reopening, called Healthy at Work, has been a phased approach that is intended to guide businesses and healthcare providers through a “smart, safe and gradual” reopening during the continuing COVID-19 PHE.  It is based on criteria set by public health experts and advice from industry experts. Each phase of Healthy at Work will be rolled out in steps to ensure the Commonwealth’s citizens can safely return to work while still protecting the most vulnerable Kentuckians.

New! Phase III Reopening.  On Monday, June 29, 2020, people can begin gathering in groups of 50 or fewer people. Adherence to rules on social distancing, mask use and sanitation remains critically important, and people in more vulnerable categories should continue to avoid such gatherings.  Updated guidance has been posted on the Healthy at Work website for many venues, including restaurants and bars. There also is new guidance covering wedding venues and event spaces and gatherings of 50 or fewer people. Finally, specific requirements were updated to allow for up to 50% capacity effective June 25, 2020, for barbers/cosmetologists/hair salons, massage therapy, nail salons, tanning salons and tattoo parlors.  Links to the updated requirements are in the timeline below.

Minimum Requirements Applicable to All Reopenings. Healthy at Work has continued with a phased reopening of specific business and organizational sectors. However, pursuant to the Governor’s Executive Order of May 11, 2020, all entities in the Commonwealth shall comply with certain “Minimum Requirements” attached to that Executive Order, in addition to business or activity-specific requirements.

On June 22, 2020, Dr. Steven Stack, Kentucky’s Commissioner of Public Health, continued to emphasize the importance of following the Minimum Requirements during Kentucky’s Phase III reopening. “Despite reopening, there are small things we have to do until we get a vaccine or treatment,” Dr. Stack said. “Continue to socially distance, wear face masks, wash hands frequently and do temperature screenings at work and places of business.” Dr. Stack said using face masks and getting tests are crucial in keeping the virus under wraps.

Dr. Stack continues to stress the importance that Kentuckians follow the Minimum Requirements. During the Governor’s June 22nd update, he stated, “This is a dangerous disease. We are seeing in other states dramatic surges in virus cases”  He said, “The increase is not just about testing more, it’s about hospitals needing to admit more people, and having to treat more people.”

While all entities and activity organizations should carefully review the Minimum Requirements (EnglishEspañola), the Healthy at Work webpage summarizes them as follows:

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As emphasized by the Governor, compliance with the above Minimum Requirements is essential to protect employees in all businesses, organizations and activities – both healthcare and non-healthcare – as well as to protect the individuals with whom employees may come into contact both at work and at other activities.  Dr. Stack has previously asked employers to make accommodations for those who fall into high risk categories for whom COVID-19 can be deadly.

As set forth in the Minimum Requirements, if any entity fails to comply with the Minimum Requirements, they can be reported to KYSAFER at 833-KYSAFER or kysafer.ky.gov.

Industry Specific Guidance and Timeline for Reopening. Industry specific guidance is in place for each business or activity on the Governor’s Healthy at Work webpage.  The timeline for reopening each business sector and the industry-specific requirements for each business sector or activity, even if operations did not cease during the state of emergency, is as follows (specific requirements that are new with this update are flagged below as “New!” or “Updated!”):

May 9, 2020:

May 11, 2020:

  • Construction – Specific requirements
  • Horse racingnot including the rescheduled Kentucky Derby (no fans) (only authorized employees, Kentucky Horse Racing Commission license holders who have a horse stabled at a racetrack, and those providing support for a horse stabled at a racetrack at the racetrack, e.g., racetrack employees, trainers, assistant trainers, exercise riders, grooms, hot walkers, jockeys, veterinarians, farriers, and feed vendors) – Specific requirements
  • Manufacturing, distribution and supply chain businesses – Specific requirements
  • Office-based businesses (at 50% capacity)(includes finance and accounting, legal, insurance, engineering, architecture, real estate, scientific/technical, property management, non-profit organizations performing administrative services, and other corporate offices and private office-based firms) – Specific requirements
  • Pet grooming and boarding – Specific requirements
  • Photography (limited to family units and groups no larger than 10 provided that individuals who are not living in the same household pose at least 6 feet apart) – Specific requirements
  • Vehicle or vessel dealerships Revised Specific Requirements for 50% capacity as of June 11

May 18, 2020 – Order

May 20, 2020 – Order

May 22, 2020 – Order

  • New! Restaurants Only (up to 50% capacity + Outdoor Seating effective June 22, 2020) – Specific Requirements 2.0
  • Group of 10 people or fewer – Specific Requirements effective through June 28, 2020 New! Groups of up to 50 can gather beginning on June 29, 2020 (see below)
  • Travel Ban Lifted Order

May 25, 2020 – Order

New! Revised Specific Requirements 2.0 were issued to allow for up to 50% capacity effective June 25, 2020 for all of the following businesses.  See the “June 25, 2020” heading below for revised requirements.

  • Barbershops/Cosmetology/Hair Salons
  • Massage Therapy
  • Nail Salons
  • Tanning Salons
  • Tattoo Parlors

June 1, 2020 – Order

June 8, 2020 – Order

  • Educational and Cultural Activities – Specific Requirements
    • Includes aquariums, distilleries, libraries, limited outdoor attractions, museums
    • Does NOT include amusement parks, theme parks, music venues, waterparks, fairs, festivals, sports complex and other convention or entertainment venues that attract large crowds.
  • Horse Shows – Specific Requirements
  • Some Childcare (in-home programs) – Specific Requirements

June 10, 2020  

June 11, 2020

  • Kentucky Horse Park
  • Kentucky State Park Campgrounds
  • Vehicle or Vessel Dealerships 2.0 – Up to 50% capacitySpecific Requirements

June 15, 2020

June 18, 2020 – New!

June 20, 2020 – New!

June 22, 2020 – New!

June 25, 2020 – New!

June 29, 2020

The Specific Requirements are also available in Spanish on the Healthy at Work webpage.

Healthy at Work Signage & Other Resources. Kentucky’s Healthy at Work webpage contains links to several resources businesses can use to help implement the Minimum Requirements. These include signage for employees and customers in English, Spanish and French, including signs for Healthy at Work compliance, Do Not Enter if Sick signs and Grocery Store Signage.  There is also a link to the Kentucky Chamber of Commerce webpage for businesses who need Personal Protective Equipment (PPE) such as hand sanitizer and masks.  The Governor’s Office has developed a Frequently Asked Questions (FAQs) webpage to answer questions on how the Commonwealth is reopening the state’s economy under the Healthy at Work plan.

New! Healthy at School Reopening Plan.  On June 23, 2020, the Governor, Lt. Governor Jacqueline Coleman and Kevin Brown, the Interim Commissioner of the Kentucky Department of Education (KDE), announced the Healthy at School reopening plans. KDE’s “flagship” document for the reopening of schools is titled Guidance on Safety Expectations and Best Practices for Kentucky Schools (K-12).  Commissioner Brown said that the Guidance is designed to vest decision-making in each of the Commonwealth’s 172 local school districts.  He said this recognizes the state’s long tradition in trusting school districts to make decisions that are best for the students in their individual communities.

The Healthy at School Guidance focuses on the following five areas of safety and best practices:

  • Social Distancing
  • Cloth Face Coverings, School Health Policies and PPE
  • Screening and School Exclusion
  • Sanitation and Environmental Factors
  • Contact Tracking

In regard to the key safety requirements involving social distancing and wearing masks, Commissioner Brown stated that so long as students are positioned six feet from others when sitting in class, the mask can come down. However, when students are seated less than six feet from other students or are in motion, the mask must be on. The motto used by the Commissioner to highlight when students should wear a mask was “When you move, you mask”.

Commissioner Brown highlighted the collaborative process by which the Guidance was developed, with input from the Education Continuation Task Force as well as the Governor’s Office, Department for Public Health, KDE, the Cabinet of Education and Workforce Development and the Cabinet for Health and Family Services.  He said that KDE will continue to seek collaborative input, including from student representatives, as school districts work towards implementing the recommendations and provide feedback.  He stated that additional guidance on pupil transportation, workplace health and safety, facilities and logistics, Career and Tech, Exceptional Learners and Performance-Based Instruction will be released over the coming month.

To review and stay abreast of all Healthy at School guidance documents and announcements, go to KDE COVID-19 Reopening Resources.

New! Traveling to “hot spots” in other states results in positive COVID-19 cases.  During the Governor’s June 24, 2020 update, Dr. Stack said that the Public Health Department had identified two clusters of positive COVID-19 cases among Kentuckians who had traveled to Myrtle Beach, South Carolina in recent weeks.  In one cluster, 9 of 12 travelers to Myrtle Beach tested positive for COVID-19 after developing symptoms within four days of their return to Kentucky.  Dr. Stack said that individuals in a second cluster of Kentuckians who traveled to Myrtle Beach also are testing positive for COVID-19.  He said that another individual who was not part of these two clusters but who also recently traveled to Myrtle Beach had tested positive for COVID-19 as well.

The Governor frequently reminds the public during his updates that any of the planned reopenings could be paused as needed to protect public health, especially if the Commonwealth’s progress in the fight against COVID-19 is threatened by Kentuckians who let their guard down as a result of the reopenings whether in the Commonwealth or when traveling to other states.

For the latest information on Healthy at Work, click here.  For the latest information on Healthy at School, click here. For the latest information on COVID-19 in Kentucky, go to kycovid19.ky.gov.

Rise in COVID-19 Cases Causes Hospitals to Reassess Bed Capacity

As state reopening practices deliver spikes in COVID-19 cases, hospitals are again facing increasing hospitalizations  that could stretch or exceed their capacities. While many hospitals have now instituted plans and preparations meant to handle surges, the accelerated pace of COVID-19 cases, particularly in Arizona, California, and Texas with aggressive reopenings, has some hospitals concerned that their ICUs won’t be able to handle anticipated hospitalization surges. More information is available here.

Insurers Not Required to Cover Employer-Mandated COVID-19 Tests

On June 23, 2020, the Departments of Health and Human Services, Treasury, and Labor jointly issued guidance clarifying insurer obligations under the Families First Coronavirus Response Act (FFCRA) enacted on March 18, 2020 and the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020.

Read moreInsurers Not Required to Cover Employer-Mandated COVID-19 Tests

CMS Waives Hospital Submission Deadlines for New and Amended Medicare GME Affiliation Agreements

On June 25, 2020, CMS updated COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers to add a waiver of the July 1 submission deadline for new Medicare Graduate Medical Education (GME) affiliation agreements and of the June 30 deadline for amendments of existing Medicare GME affiliation agreements. That is, during the COVID-19 PHE, instead of requiring that new Medicare GME affiliation

Read moreCMS Waives Hospital Submission Deadlines for New and Amended Medicare GME Affiliation Agreements

CMS Ends Emergency Blanket Waiver for Nursing Home Staffing Data Submission

Under the COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers, the Centers for Medicare and Medicaid Services (CMS) had waived the requirements at 42 CFR 483.70(q), which require nursing home providers to submit staffing data through the Payroll-Based Journal (PBJ) system.

Read moreCMS Ends Emergency Blanket Waiver for Nursing Home Staffing Data Submission

Updating the Updates: More Paycheck Protection Program Guidance

by Christopher Hanewald

The roll-out of guidance related to the Paycheck Protection Program (PPP) continues to trickle out as business owners and their advisors desperately work to understand the ever-evolving landscape. Late on June 22, the Small Business Administration (SBA), in consultation with the Treasury, released a 34-page interim final rule (IFR) which seeks to clarify elements of the PPP in light of the Paycheck Protection Program Flexibility Act of 2020 (PPPFA) which was enacted on June 5.

Notable changes stemming from the PPPFA’s passage included:

  • An expansion of the “Covered Period”—the time in which PPP loan amounts must be spent in order to be eligible for forgiveness—from the original 8 weeks to 24 weeks. The 24-week period automatically applies to all loans originated before June 5th unless a borrower affirmatively elects for the shorter 8-week period.
  • A decrease in the percentage of loan proceeds required to be utilized in order to receive full forgiveness. Originally, the PPP required that 75% of funds be expended on payroll costs; however, the PPPFA reduced that threshold to 60%.
  • Extension of the term of loans issued after June 5 from 2 years to 5 years. For borrowers who received PPP loans prior to June 5, they may negotiate with their lender to see if the initial term can be expanded.

Generally, the PPPFA was very favorable for PPP recipients; however, like much of the legislation and guidance issued relating to this program, inconsistencies and uncertainty remained. In the wake of the PPPFA, perhaps the greatest source of uncertainty—given the expanded 24-week Covered Period—was whether recipients could apply for forgiveness prior to the conclusion of the Covered Period.

Due to the expansion of the Covered Period, a loan recipient who calculated their initial PPP loan application based off of 2.5x monthly payroll would now be able to expend the entirety of the loan on payroll costs by week 10 of the Covered Period. Accordingly, business owners were left wondering whether at the time their PPP funds are depleted, but prior to the conclusion of the 24-week Covered Period, could they submit their application for forgiveness? This most recent IFR states unequivocally that:

“A borrower may submit a loan forgiveness application any time on or before the maturity date of the loan – including before the end of the covered period – if the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness.” (emphasis added)

Thus, this IFR allows for a borrower to apply for forgiveness as soon as funds are depleted. While this provision is useful, it is not without its own separate caveat as it relates to reductions in employees’ salaries or wages—an exception from the original PPP. This IFR clarifies that if a borrower applies for loan forgiveness prior to the end of the Covered Period and has reduced any employees’ salaries or wages by more than the 25%, the borrower must account for the excess salary reduction for the full 8-week or 24-week covered period, whichever one applies to its loan. Relatedly, a borrower that applies early for forgiveness necessarily must forfeit a safe-harbor provision allowing them to restore salaries or wages by December 31 and avoid reductions in the loan forgiveness. For example, if a borrower has a 24-week period that ends in October but wants to apply in September, any wage reduction in excess of 25% as of September would be calculated for the entire 24-week period even if the borrower restores salaries by December 31.

Finally, what still remains unclear for business owners and their advisers is whether there are any further strings attached upon the determination of forgiveness by the bank that originated the PPP loan. Specifically, if a borrower applies for forgiveness in week 13 of the Covered Period and receives the determination of full forgiveness in week 15 from the bank—an ambitious hypothetical timeline given the bank has up to 60 days to make such determination—could  the business owner thereafter layoff their entire workforce in week 16 with impunity? While the IFR does not directly address this issue, the implication appears to be that upon a determination of forgiveness, all PPP related restrictions cease.

Business owners who may have already received PPP loans should review documentation and consult with their lenders to determine whether loans issued prior to the PPPFA may be negotiated to incorporate the more favorable terms that became standard with the passage of the PPPFA.

Like the pages of guidance that preceded this most recent IFR, while some pressing questions have been answered, new issues have been uncovered and the wait for the next round of guidance begins.

DOL Releases New Online Tool for Employees to Determine Paid Sick Leave Eligibility

by Courtney R. Samford

On June 23, 2020, the Department of Labor (“DOL”) released an interactive online tool that guides employees through a series of questions to determine their eligibility for paid sick leave or expanded family and medical leave under the Families First Coronavirus Response Act (“FFCRA”).  The online tool is available here.  According to the DOL website, a similar tool for employers will be available soon.