As the COVID-19 global pandemic has disrupted life, the business world faces a stark new reality. Executives have been forced to make difficult decisions about layoffs and furloughs, investor disclosures, and cybersecurity threats as employees work from home. At the same time, these executives must understand new government programs in the United States and abroad that have been enacted to support businesses, but that raise a host of questions. And many must assess how they will deal with future M&A activity, including unsolicited offers and activist investors drawn to depressed stock prices.

To help our clients better understand this new business and legal landscape, our lawyers have prepared an ongoing series of S&C Memos, Podcasts and Webinars that outline and explain important issues in the fields of Corporate, M&A, Financial Services and Labor and Employment. While the law and regulations continue to evolve, we will keep you updated on the latest developments.

RECENT CLIENT GUIDANCE

Partner Contacts: Nicolas BourtinCatherine M. ClarkinJared M. FishmanJulia M. JordanMarc Treviño and Benjamin H. Weiner


 

COVID-19 “Phase IV” Stimulus

January 5, 2021 – On December 27, 2020, President Trump signed into law the 2021 Consolidated Appropriations Act (the “Act”), which provides approximately $900 billion in coronavirus relief. This memorandum summarizes key financial services-related provisions of the Act, including (1) the extensive revisions made to the Small Business Administration’s Paycheck Protection Program (the “PPP”), (2) the authorization of emergency community development programs, (3) the extension of certain temporary suspensions and modifications of regulatory provisions applicable to banking institutions, and (4) the termination of certain lending facilities and lending authority created by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The Act represents the first comprehensive legislative response to the pandemic since the CARES Act in the spring, and the first major legislative update to the PPP since the Paycheck Protection Program Flexibility Act signed into law on June 5, 2020.

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COVID-19 Phase IV Stimulus Package—Key Employer Takeaways

December 31, 2020 – The Consolidated Appropriations Act, 2021 (“CAA”), signed into law on December 27, 2020, contains several provisions that may be of interest to employers. Among other things, the CAA extends and modifies the following employment-related provisions of the Coronavirus Aid, Relief, and Economic Security Act: (a) several key unemployment compensation programs; (b) the refundable Employee Retention Tax Credit; and (c) the period for repayment of deferred payroll taxes through December 31, 2021. 

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COVID-19 Vaccine Policies—What Employers Should Know

December 18, 2020 – On December 16, 2020, the Equal Employment Opportunity Commission updated its guidance, What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and other EEO Laws, to include answers to questions that specifically address COVID-19 employee vaccine policies.  In short, the guidance states that employers may implement mandatory COVID-19 vaccine policies for employees as a condition to returning to, or remaining in, the workplace subject to certain exceptions.  In this memorandum, we discuss the EEOC’s new COVID-19 vaccination guidance as well as certain other legal considerations for employers as they develop their workplace policies in anticipation of widespread distributions of COVID-19 vaccines in 2021. 

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California’s OSHA Adopts Temporary, Emergency COVID-19 Regulations

Updated December 17, 2020 – On December 14, 2020, Governor Newsom issued an executive order that suspends the employee exclusion period under the Cal/OSHA emergency COVID-19 regulations if they exceed guidelines from the California Department of Public Health or local health officers. The updated memorandum summarizes the important aspects of the executive order. 

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S&C Critical Insights – Annual Overview of Activism Trends

December 8, 2020 – In this episode of S&C’s Critical Insights podcast series, Melissa Sawyer, co-head of S&C’s Corporate Governance & Activism Practice, and associate Lauren Boehmke provide an overview of U.S. activism trends they expect to persist into 2021. They cover the impact of the COVID-19 pandemic on activism campaigns in the spring of 2020 and look forward to how companies might get back to “business as usual” in the new year. They also discuss the convergence of strategy between activist investors and private equity funds, who are increasingly willing to borrow from each other’s playbooks. Finally, they explore how activists might look to capitalize on the ESP trend that has dominated corporate governance discourse among institutional investors. 

Listen to Our Podcast

Delaware Court Issues Important COVID-Related M&A Opinion

December 4, 2020 – In its first decision dealing substantively with the impact of COVID-19 on busted deal litigation, the Delaware Court of Chancery held that a buyer was within its rights to terminate an agreement to purchase a business owning 15 luxury hotels for $5.8 billion. In the 242 page Opinion in AB Stable VIII LLC v. Maps Hotels and Resorts One LLC et al., Vice Chancellor J. Travis Laster held that although the effects of COVID-19 did not qualify as a Material Adverse Effect (“MAE”), the buyer was nonetheless entitled to cancel the transaction because the seller breached its interim operating obligations. 

Being the first word from the Court of Chancery on these M&A COVID-related issues, this decision provides some useful guidance on the interpretation of MAE and ordinary course covenants that are ubiquitous in transaction agreements.

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Frank Aquila Talks to Reuters About Dealmaking in the Pandemic

November 24, 2020 – Frank Aquila, global head of Sullivan & Cromwell's M&A practice, spoke to Reuters for a Q&A about the effects of the COVID-19 pandemic on M&A, how it's different from the global financial crisis, and whether virtual dealmaking is here to stay.


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 California Takes Action to Curb COVID-19 Transmission 

November 19, 2020 – On On November 16, 2020, amidst an increase in COVID-19 cases in California and nationwide, California Governor Gavin Newsom announced new immediate actions to curb COVID-19 transmission, including pulling an “emergency brake” in California’s Blueprint for a Safer Economy Framework (the “Blueprint Framework”) and strengthening the state’s face covering guidance. These actions will remain in effect “until the State Public Health Officer determines it is appropriate to make modifications based on public health conditions and data.”

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ISS Releases FAQ on U.S. Compensation Policies and the COVID-19 Pandemic

October 21, 2020 – On October 15, 2020, Institutional Shareholder Services (ISS) released general, preliminary guidance as to how ISS U.S. Benchmark Research may approach pay decisions related to the COVID-19 pandemic in the context of ISS’ pay-for-performance qualitative evaluation. Consistent with existing ISS policy, an elevated concern in ISS’ quantitative screen will result in this more in-depth qualitative review. The guidance was shaped by feedback from discussions with investors at roundtables and ISS’ annual policy survey. ISS indicated that this FAQ provides preliminary guidance ahead of ISS’ regular annual FAQ update in December.


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M&A: Dealing with Uncertainty

October 19, 2020 – M&A partner Melissa Sawyer, co-head of the Firm’s Corporate Governance & Activism practice, participated in a discussion at the Milken Institute Global Conference on “M&A: Dealing with Uncertainty.” The panel examined whether M&A activity will remain subdued through the rest of the COVID-19 pandemic; whether previously prohibitive deals may become viable as industries and business models adapt to the new climate; and what factors might incite dealmakers to seize opportunities in a disrupted economy.

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Lessons From the 2020 Proxy Season: Human Capital Proposals

October 13, 2020 – Marc Treviño, co-head of the Firm’s corporate governance practice and managing partner of its executive compensation group, discusses how the COVID-19 pandemic and other recent events may increase the prevalence of human capital proposals submitted by shareholders following the 2020 proxy season. Marc explores why more companies are likely to adopt or expand public disclosure on human capital management next year in response to growing pressure from investors and regulators. He also outlines changes to expect for specific categories of human capital proposals, including those related to diversity, arbitration and social capital.

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Lessons From the 2020 Proxy Season: Virtual Shareholder Meetings

October 5, 2020 – Melissa Sawyer, M&A partner and co-head of the Firm’s Corporate Governance & Activism Practice, discusses the impact of the COVID-19 pandemic on shareholder meetings for U.S. issuers during the 2020 proxy season, when meetings were largely virtual for the first time. Melissa provides an overview of how companies and stakeholders have reacted to the shift. She also looks ahead to how the evolving expectations of investors might affect the format of meetings in 2021.

Watch Our Webinar

Updated: OSHA Issues Revised Enforcement Guidance on Reporting COVID-19 Cases

October 2, 2020 Update. On September 30, 2020, the Department of Labor’s Occupational Safety and Health Administration (“OSHA”) updated its COVID-19 Frequently Asked Questions webpage to provide additional guidance on when employers should report work-related COVID-19 fatalities or in-patient hospitalizations to OSHA. This additional guidance has been incorporated into this updated post.

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September 23, 2020 Update: California Mandates COVID-19 Supplemental Paid Sick Leave Through the End of 2020 For Employers with 500 or More Employees In the United States

September 23, 2020 Update. The California Labor Commissioner’s Office published responses to frequently asked questions regarding the COVID-19 supplemental paid sick leave available to California workers at companies with 500 or more employees nationwide. The below post has been updated to reflect this guidance.
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California Expands COVID-19 Worker Protections

September 23, 2020 – On September 17, 2020, California Governor Gavin Newsom signed two new bills as part of his worker protection package. The first, SB 1159, expands the presumption of workers’ compensation liability for COVID-19 claims. The second, AB 685, ensures timely notification to employees and local and state public health officials of COVID-19 cases at workplaces. These bills are covered in more detail below.

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Marc Treviño, Melissa Sawyer and June Hu Present Webinar on Lessons From the 2020 Proxy Season

September 23, 2020 – S&C Corporate Governance co-heads Marc Treviño and Melissa Sawyer and associate June Hu hosted a webinar to further explain the lessons from the 2020 proxy season and what to expect going forward. They examined topics including Rule 14a-8 shareholder proposals, say-on-pay votes and equity compensation, and what to expect in 2021. 

Watch Our Webinar

 

Another Court Dismisses PPP Agent Fee Action

September 21, 2020 – In the second decision on a motion to dismiss in cases brought by “agents” seeking fees from lenders for allegedly helping small business borrowers obtain loans under the Paycheck Protection Program, Judge Rakoff in the Southern District of New York granted defendants’ motions to dismiss in six consolidated actions brought by putative agents against JPMorgan Chase Bank, N.A., Citibank, N.A., Signature Bank, and MUFG Union Bank, N.A. 

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Update: U.S. Department of Labor Issues New COVID-19 Guidance on FLSA, FMLA, and FFCRA Leave

Updated September 17, 2020 – On September 16, 2020, the U.S. Department of Labor (“DOL”) published revisions and clarifications to its Temporary Rule (“Rule”) implementing the provisions of the Families First Coronavirus Response Act (“FFCRA”). Additionally, on September 11, 2020, the DOL updated its FFCRA Questions and Answers document to reflect these changes. These revisions are in response to the United States District Court for the Southern District of New York’s August ruling which vacated certain provisions of the DOL’s initial temporary rule. 

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Update: U.S. Department of Labor’s Wage and Hour Division Guidance on Leave Provisions of the Families First Coronavirus Response Act

Updated September 17, 2020 – On September 16, 2020, the U.S. Department of Labor (“DOL”) published revisions and clarifications to its Temporary Rule (“Rule”) implementing the provisions of the Families First Coronavirus Response Act (“FFCRA”). Additionally, on September 11, 2020, the DOL updated its FFCRA Questions and Answers document to reflect these changes. These revisions are in response to the United States District Court for the Southern District of New York’s August ruling which vacated certain provisions of the DOL’s initial temporary rule. 

Read Our Updates:  Part 1Part 2Part 3 and Part 4


U.S. Department of Labor Issues Regulations Implementing the Families First Coronavirus Response Act’s Leave Provisions

Updated September 17, 2020 – On September 16, 2020, the U.S. Department of Labor (“DOL”) published revisions and clarifications to its Temporary Rule (“Rule”) implementing the provisions of the Families First Coronavirus Response Act (“FFCRA”). Additionally, on September 11, 2020, the DOL updated its FFCRA Questions and Answers document to reflect these changes. These revisions are in response to the United States District Court for the Southern District of New York’s August ruling which vacated certain provisions of the DOL’s initial temporary rule. 


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Frank Aquila, Melissa Sawyer and June Hu Author Bloomberg Law Article on ESG Issues in Post-Pandemic M&A

September 16, 2020
 – S&C partners Frank Aquila and Melissa Sawyer and associate June Hu discuss how businesses should weigh environmental, social and governance (“ESG”) factors when considering acquisitions in the post-pandemic world in an article published in Bloomberg Law.  




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San Francisco Enacts Ordinance Protecting Workers and Applicants from COVID-19-Related Adverse Actions and Discrimination.

September 16, 2020 – On September 11, 2020, San Francisco enacted the COVID-Related Employment Protections Ordinance (the “Ordinance”) to temporarily protect workers from adverse action and applicants from discrimination if they test positive for COVID-19, are isolating or quarantining, or have previously isolated or quarantined, due to COVID-19 symptoms or exposure. The Ordinance will remain in effect for 60 days, until November 10, 2020, unless it is reenacted by the San Francisco Board of Supervisors.


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California Mandates COVID-19 Supplemental Paid Sick Leave Through the End of 2020 For Employers with 500 or More Employees In the United States 

September 15, 2020 – On September 9, 2020, Governor Newsom signed into law Assembly Bill No. 1867, which, among other things, provides COVID-19 supplemental paid sick leave to certain employees that are not covered by the Families First Coronavirus Response Act (the “FFCRA”). The law goes into effect immediately and requires covered employers to provide COVID-19 supplemental paid sick leave no later than September 19, 2020. The requirement will remain in effect until the latter of December 31, 2020, or the expiration of any federal extension of the Emergency Paid Sick Leave Act