Presenters: Diane Surette, CEO, Burke; Anne Beall, CEO, Beall Research; Russ Anderson & Jon Orleans, attorneys at Pullman & Comley.
Moderated by Melanie Courtright, CEO of the Insights Association
Transcript Courtesy of Focus Forward & FF Transcription
Melanie: Hello everyone. I'm Melanie Courtright and I'll be your moderator today. If you don't know me I'm the CEO of the Insights Association. I'm really grateful for the time that you are spending with us today and for the opportunity to host this session for you today. Before I introduce the speakers a couple of housekeeping items about the presentation. First off, a quick disclaimer. The information we share today is not intended to substitute for legal or financial advice. Always seek financial or legal counsel relating to your specific circumstances if you need to. And if you need to be connected with an attorney, account consultant, or advisor please let us know. We have resources that we can connect you with. Next, today's webinar will be recorded and it will be available on the coronavirus resource page at the Insights Association. It will be available on Engage. And we will send out an email about it. So we will definitely record and get this out to you so that you share with others who might have not been able to attend. We'd love to hear from you during today's presentation. You may ask questions or share comments at any time by using the Q&A pod on your screen for private messages. There is also a chat pod if you haven't pulled that up yet for asking questions for the public group. And we'll leave plenty of time at the end for open discussion, answering questions that have already been submitted as well as any that come up during the webinar. A really quick thank you first things first to everyone who's been able to join us, to everyone who supported the Insights Association in doing these town halls. We've recently executed a survey on impacts of the Coronavirus and we've had a lot of support from Quester and Harmony. We've just had a ton of support. As we've been giving back to the industry people have been giving back to the association. I want to thank everyone. Also, a reminder of the Coronavirus resource web page. We're getting a lot of questions about small businesses and small business resources how they might be able to find out how to get financial assistance. There are a lot of links of the page. There are also the recordings and there is events information. So if you haven't been there I encourage you to go. And so next I'd like to introduce our first two speakers. Diane Surette and Anne Beall. Diane is a CEO of Burke. Previously she served as the company's executive vice president and managed client services, sales, marketing, research innovation, and account management. Anne Beall is the founder and CEO Beall Research. Previously worked at the Boston Consulting Group conducting large scale complex strategic studies for Fortune 500 companies. And here is Anne's beautiful picture. So Diane let's start with you. What are you seeing around you? What's going on around you in the world? What is Burke seeing? What are your employees seeing? And what are seeing personally?
Diane: Well, first let me say that our employees are working from home at this point. I'm sure that's probably true for most of us. It's not all of our employees but the lion's share of our employees. We are leaving our offices for those people who feel the need to work there. And there are a variety of reasons that people might feel the need to work there. But our building is quite large and people are definitely social distancing or that kind of thing. So I feel like they are OK at this point to be able to do that. As far as clients what we are seeing is that some clients are thinking about pausing. Some have paused. Some have not. Certainly things like in store tests or anything that's face to face we have clients who have paused or cancelled those things and moved them over to online vehicles. And we've talked about that before. We also have some clients we do a lot of work in the healthcare sector. And we have some clients, obviously, if the respondents are people who are trying to help in this emergency like physicians and other practitioners, we've halted all surveys going to those people. So those are some of the things that we've seen. We have some clients who have said while we want to pause at this point, we want you to do everything that you need to do to be ready so that when we are ready to restart we can hit go. So hitting the go button right then. We also have other clients who have said I want to make sure that I'm using my research dollars in the best way that I can use my research dollars today. Help me to understand what that is. So we are providing a lot of one on one counsel with our clients to help them to understand if they should be adding additional questions in their trackers. For example what those questions might be. Also seeing if they should pivot and use their research dollars for a different type of survey instrument. But by and large most of our clients are saying that they do want to stay in touch with their respondents, with their consumers. And we think that's important to do because we don't know how long this virus and this pandemic is going to go on. There are some people who speculate that it will be 18 months before we get back to any sort of real level of new normal. And you don't want to go that long, obviously, without communicating with your clients. And some of the trends that our clients are seeing now in terms of the behaviors of their constituents will not necessarily change after this is all over. And so they definitely want to keep their finger on the pulse of that. So the other thing that we are seeing is we are getting response rates that are up from where it was before. People are captive audiences if you will and they seem to want to talk. And so we are getting good response rates. However, we are not seeing yet any real change in what we are getting from those responses. I will also add and hopefully then I'll stop and give Anne some room to chat here too. But I will also say we at Burke have a phone center. And that's been particularly challenging for us to make sure that we can keep our people safe at the same time as continuing our business. And so we've instituted some measures to ensure their safety. So we went from one location to three locations. And then in the main location that we have, we have people separated into five different rooms. And they are at least six to eight feet apart. In the other locations, they are even further apart. And we've also provided everybody with their own personal headsets that they take home with them and bring back with them to make sure that they stay clean and sanitized. And a whole host of other measures as you might imagine to ensure that people are safe. In addition, we've changed the scripting as for when they are calling, when they are dialing to let people know that we have put these measures in place so that the respondents aren't concerned for the safety of our employees. And we have had a few comments like that. Not many but some, which I think is sweet and thoughtful and kind. And we want them to know that our people are safe. So those are some of the things. And I'll stop now and give Anne an opportunity to chat.
Anne: Well, I think we are seeing some of the same things. We are obviously a smaller firm than Burke. But everybody is working from home at this point. That's giving us some IT headaches as you can imagine but it's nothing that we haven't been able to surmount. What we are seeing from clients is we are seeing a combination of things. What we see is not so much a pausing as much as a let's take our time and do this right. What I'm hearing is that people are saying I'm not ready to go into field just yet for this study. For some of the studies that we are in early stages so let's take our time. Let's really get the survey right. Let's think about what it is we really want to talk about now. So there is a little bit more of a longer time frame on some things. And then we are also seeing in a couple of situations a let's just delay to the second quarter. So that's largely what we are seeing. We are not seeing wholesale cancellations which is good. The other thing that we are seeing is that clients are coming to us and they are saying how is this going to affect my business? Maybe we should be doing research on that. So that's a new request that's coming in for us. It's a very thoughtful client who is coming to us and saying I really want to get ahead of this. I think I need my – I'm going to need information sooner rather than later. I don't want to basically let this go for three or four months or two months or whatever it is - however long this goes on. I need to be prepared. So there is some very proactive behavior on some clients. Not a ton just yet, but we are getting some of that type of activity. So that's another thing that's happening. In terms of the response rates we are very much seeing what Diane has been seeing, what I think everyone else has been seeing is response rates are actually great. People are certainly answering surveys at a slightly higher percentage. So we are probably actually surveying people that maybe would have never been surveyed before. And so we are getting those people into our surveys. Good response rates. We are not seeing actually any differential data in terms of response rates. So for example one of the things that we did was we actually went into China at the height of their pandemic and we did a survey with folks. And that was something there was a lot of debate between the client and between my team. And we finally just decided to go ahead and do it. We found that the data was exactly the same in China as it was in the US with just one slight cultural difference. So basically what we saw was that you can do research during this time period. So that's something that we are telling our clients. Now obviously maybe some things are - recent spending behavior might not be something that is going to be right now exactly representative of what it's like when we go back to the new normal. But you know as Diane said, what will the new normal be? We don't know.
Melanie: That's great. A question for both of you. Are you hearing anything - response rates are great and participation rates are great. How are consumers from your perspective feeling about participating in research right now?
Anne: I actually think they are feeling good about participating in research because they want to share their voice. They want to do something. And I think a lot of people are looking for a diversion. And frankly, some surveys will give you a diversion and sometimes allow you to really speak about the things that are important to you. And I think right now people want to have a voice.
Diane: I would echo that. That's what we've seen so far is that people really do want to have a voice. And with a couple of people indicating they are concerned about the people who are actually dialing. But online people also are participating at record levels.
Melanie: So one of the questions we've gotten is from the brand perspective are brands cutting way back on research. What are you both seeing? You know I'll share some data here in a second that would seem to suggest that brands are not cutting way back. Is that what you are seeing as well?
Diane: I will say that's what we are seeing gratefully so. We are seeing, again they might shift what they are spending on. So they might put a pause on something and then start a whole new piece of research to dig at the dig sites that they are interested in learning about. But we are not seeing any type of major reduction in research at this time.
Anne: Same. That's what I'm seeing as well.
Melanie: I'll show you this slide. We shared it a little bit. And many of you on the call know that we at the Insights Association are running an impact on the COVID virus data. And while we are still running that, this is a preview of the data. It represents 250 people, 50 of which are corporate buyer side. Client side. And what we are seeing there is that 4% are expecting a large decline. Some decline 28%. 61% you know more than two thirds are expecting no decline or some growth. Data collection companies are feeling different and there is a big impact to qual there. And that might also be fear based and just trying to predict and predicting based on potentially what could be the worst outcome. But there is good news for now as we continue to collect the data that there doesn't appear to be a large decline coming. Again, it sounds like this is right in line with what you guys on the agency side are saying you're experiencing?
Diane: Yes. We are still doing qual. It's just that it's online digital.
Melanie: Well, look at this slide then. This is a quick preview into the question we asked about in-person being moved and redesigned for online. 44% say 80 to 100% of their in-person work is moving online. There is a group of people that are doing their in-person work that say zero to 28% are not moving or zero to 20% is being moved online. There is a 38% of people saying that. And so that's work that if there is no in-person going on and it's not moving online, it means it's going away for now. So a little bit concerning to the market sizing of the industry. And so do you guys have any advice on moving online qual work for the listeners?
Diane: I'm not sure. You know I'm not sure. It's largely what we are finding it's very client dependent. They have a lot of reasons for wanting to or not wanting to. And we try to provide individual counsel on whether we can get the same type of information that they need using an online format. And typically we have been able to do that but it's not 100%. There are some clients who are saying I really don't want to impose on people at this time. And again, it's because of the populations that they are seeking to get input from.
Anne: I think that the only issue that I have with moving online and we do a lot of online qualitative. I think at this point the issue is really getting that feel for how that person is responding when we do a ton of video uploads so that we can really see them. And read their body language and get a sense for what they are doing. And have them give us tours of whatever the category is that we are researching. The issue really becomes one of how close can you get to the consumer in this type of situation. I think fairly close. So I think the qualitative should not be adversely affected. Unfortunately the in-person at this point will be until we emerge from this.
Melanie: Great. Thank you. So one more slide and then I'll move on to the second part of our town hall before we move into Q&A. This is the actions taken with staff employees. It sounds very similar to what Diane and Anne you were both talking about. New or increased work from home 83% saying that they are doing that. Unlimited time off policies is still a low number. And then deep cleaning of offices similar to some of the things that Diane talked about on the call center. Banned travel 60%. And that is really different on the corporate buyer side. And banning meetings over a certain size. I was a little surprised to see that that number was low on the agency data collection and other front. Lower than I thought it would be but 43% overall. And so we’ll, as in Insights Association, we’ll continue to work on the data to continue collect completes. And over time run some comparisons as we move through this. But I know that we've got a question from several people about are we seeing cutbacks, layoffs, site closures. That's not in the current version of the survey. We are going to add that. What I will say is I've heard a couple of people mention that they've had to close some facilities both for government reasons. They've been asked to close them. And for financial reasons. And I've heard of a few layouts already. Diane and Anne, this is a bit of a curveball question to you. But anything you would add there? Go ahead.
Diane: I can say that we are trying. We would rather not ever have to lay anybody off as a result of this. People are already struggling. And so we are doing our very best to make sure that - when you work from home, work is different. And people don't necessarily feel that they can add the same value as they could when we were face to face because we were holding face to face meetings or we were doing and they were supporting that maybe from an administrative standpoint and that kind of thing. So what we are trying to do is to make sure that we are using those talents in other places to make sure that people know they are adding value and they can continue to work. So we will do that as long as we possibly can. I will say from a field perspective where we have people who are ad-hoc employees. So they’re ebb and flow with the size of our business in the phone center. We are trying to do everything we can to keep those people engaged as well. Those are the people who will be harmed the most as a result of the situation that we are in. So when we had to reduce capacity in one phone center because we were splitting people up and having them work further apart from one another. That's why we opened another couple of areas to allow people to continue to work. Now those aren't in the same location which means they need to travel a bit to do so. And so some people may opt out of that. But for right now we are not and for the foreseeable future. How far that is I don't know because things change on an hourly basis. We are not seeing that for ourselves.
Anne: For our business we are trying to stand by our employees. We know there may be some times ahead where we are going to be a little bit lighter on work. So we are thinking about ways to do internal projects that had been on the backburner and ways to kind of keep people busy. Also to continue to try and add value to the industry by doing our own research on how this is impacting consumers and things like that is what we are planning on doing over the foreseeable future.
Diane: I would echo that, Anne. We are doing the same types of things. Right now we are still very, very busy. And I think some of it is just learning how to accommodate with everybody working from home too and having children at home. And all of that has certainly made it an extra challenge.
Anne: I think we are working a lot of hours actually more than we were before.
Melanie: Great, thank you. I'm going to move on. And then I'll just remind everyone there are some questions in here already that we'll get to at the end. And if you have any questions for Diane or Anne please feel free to put them in the Q&A box. Next I would like to introduce Russ Anderson and John Orleans from Pullman and Comley. Russ Anderson is an attorney. He is a corporate and business attorney and regularly advises clients with respect to commercial contracts, transactions, and intellectual property. He is going to be talking to us today about the contract issues relating to COVID. Jon Orleans is also an attorney and has 35 years of experience representing businesses of all sizes, nonprofits, and disputes arising out of employment contracts. So he is going to be talking to us about the effects of employer issues through this epidemic and pandemic. So I will had it off to Russ.
Russ: Thank you, Melanie. So I think the first issue right now in terms of, certainly I've gotten a lot of these questions, is essentially what am I supposed to do with all my contracts? And also customers are cancelling or not cancelling now. Thankfully it sounds like from Diane and from Anne, customers may not be cancelling en mass. And that's a great result. But I think there is just a lot of uncertainty now. I mean certainly from a lot of my clients. I've gotten the question about what do I do now with X or with Y or my customers are cancelling projects. And so I think the first thing is whenever a customer actually seeks to either suspend work or terminate the work altogether to know what's in your contract and to review the contract sort of the first place to start. Unfortunately, you know each contract is different much like out COVID laced fingerprint here. And needs to be reviewed on its own merits to see what's sort of in there. Some of the places to look and I'm sure many of you are familiar with sort of where these things live in the contract. But the first thing to look at is obviously the termination for convenience provision. See what the rights are to just simply just say you know what? We are done. We don't want to continue with this project. We want to stop. Is there any kind of a notice period? Does it affect just one SOW. Does it affect necessarily all the different projects that someone might have? You know that's really the first place to turn. The next kind of provision is just termination for cause. And generally at this point it sounds like unless you are doing in-person qual research you may be okay. Call centers are open and people are working from home and being able to perform. And so there may not really be a default. And so as a result this may not be a problem for most of the industry right now except for maybe in-person qual. But if there is, very typically there is some type of care provision. And so if you are looking at say 30 days out that might be enough time maybe if we are lucky to be able to start re-engaging performance and sort of getting back out there. And if not then potentially you could be in default unless you have excuse non-performance. And we'll get into what that is on the next slide. But the other thing to look at is just effect of termination. what is the right in the agreement in terms of if there is going to be a termination for convenience for example, do you have to provide a refund? if you are only receiving money after the fact and everything is in arrears do you get paid pro rata? How do you account for your work done today? And then if the client wants to put off the project and suspend it instead of just terminating what are the things to think about is just when is this going to get restarted? Can you bill for your work today as opposed to having to wait for potentially two, three months before everyone starts back up again. And so I think those are sort of the main sort of contract points to sort of thing about. I mean I know I have one customer who does not necessarily permit termination for convenience readily. And still doesn't want to anger customers to say you know what? We are not going to let you have any rights to suspend or to terminate. And it's one of those sort of the golden rules. The person with the gold makes the rules. So if you don't want to terminate, if you don't want to anger your customer and you don't want to necessarily let them off the hook, one option is to sort of do what for example the airlines have done and said what? You can suspend your project for now and sort of institute your own sort of cancellation policy where you can say for example what? We are going to let you suspend the work but you have to pick it back up by say September 30th or something like that. So there is different strategies that you can take in terms of moving projects forward or sticking with your rights or whatnot. So then excused non-performance for disaster is a pretty common construct in agreements. And it's called a force majeure clause which as I understand it in French means literally superior force. And so it comes in different shapes and sizes. So we have the short form version here and the long form version here. And the short form version is the one that I think is a little bit more typical in most agreements which basically just says one party or neither party will be liable to the other for events beyond its reasonable control. And then it lists a short list of things. And just for fun I made sure the one on the left did not include epidemic and the one on the right did include epidemic. And the question becomes if your agreement doesn't say epidemic, does it matter? And the answer is well, maybe it does. Maybe it doesn't. I mean I think most courts looking at the total doing of the totality of what's going on would say certainly it's an act of god. A lot of times now it's an act of government. I mean I know New York for example just shut down all non-essential businesses. And I think, alas, I think market research probably counts as a non-essential business for most intents and purposes, although we'd like to think the otherwise. I think lawyers feel the same way that we'd like to think ourselves as essential. But alas, I don't know that the government agree with us. So I think that's when you look at your force majeure provision more likely than not I think you are going to be sort of falling into that. And if you are looking for excuse non-performance and the first thing to look at is look for that force majeure clause. What does it say? Does it include language that would encompass what's going on here. And not only that but it's one thing to say that hey, I have this great force majeure provision which means I get to not perform well. But is COVID-19 the real reason you are not performing? You can't just invoke it because you can't get enough completes or whatnot. There needs to be more there. I think one of the things when you do actually try to invoke a force majeure provision is you do actually have to think about what it means for your client relationship. If you delay performance, you are delaying performance. So as a result your customer may not be happy. And a lot of force majeure provisions for example the long form version that I had up on the prior slide says for example that you have to mitigate the impact of the force majeure event. And you have to provide timely notice of the force majeure events. So are there any limitations that are in that provision that might prevent you from really utilizing it? And I think one of the points I want to make particularly with respect to force majeure provisions is yes, it may be in your agreement. And it's great that it's in your agreement especially if you need to not be the one performing. But it's not an automatic sort of get out of jail free card. What it does is it helps you to delay performance in general. So if you need to not perform for say 30 days because everyone has to work from home and you are not able to accomplish what you need to accomplish. that helps you to not default under your agreement. It helps you not have to pay contract damages for breach. But none of this helps you if it's - at least in general again contracts each one is special flower and each one has its own unique language that you have to pay attention to. And maybe your force majeure provision will have some kind of broader if you are not able to perform within X number of days, then there is a termination right and then this is what happens on termination. But if it's like the short form force majeure clause then that doesn't really help you very much. And so if you don't want to delay performance you are for example the customer in the agreement and the vendor really gets the benefit of the force majeure provision. You might not. And so that's a real problem because you may not be able to just cancel your agreement. So can we go to the next slide? So if you can't really use force majeure because for example let's say there is no force majeure provision in your contract or you are the customer and all you really have to do is pay money. And that's not going to help you very much to say well, I'm just not going to – I need to not pay the money. So there is three common law that are force majeure like defenses. And they are all roughly similar. There is impossibility, impracticability, and the doctrine of frustration of purpose. And they all pretty much as what they sound like. So impossibility means that your performance has been made impossible. So for example you are a qualitative mall intercept provider and the malls are closed. Well, your performance is now made impossible because you literally can't get into the mall to perform your mall intercept research. Impracticability is very similar to that where essentially your performance because of facts beyond your control has become so obscenely difficult that you are not able to necessarily perform. And I think frustration of purpose is really kind of an easy one to understand. So let's say for example that you have a client who had a project that was specifically related to the South by Southwest conference. Well that got cancelled. And so if the research and you knew that this was very specifically tied to South by Southwest and they've now cancelled it. Well, the client's purpose has now been frustrated. And so even if you don't have a force majeure provision in your contract or if it wouldn't necessarily help the customer, they could try to invoke that. And say look, my purpose for this has been frustrated and you knew that. And so therefore I should be allowed to get out of this agreement. One thing to note with all of these common law defenses is they are really a last resort. Courts are historically maybe with COVID and the special circumstances that are really easy to understand here, courts might be a little bit more willing to forgive non-performance or an attempt to cancel because of the circumstances here. But in general courts, have been very reluctant to just sort of let people out. And frankly, the existence of a force majeure provision sometimes makes courts even less willing to say you have a force majeure therefore you dealt with this issues contractually. We are not going to let you out based off of these common law issues. So in new agreements, we know about COVID now. So anything that we are doing from this point forward you can't say it's a force majeure or you didn't have notice. And so everything changes from this point forward. I think you really have to think contractually about what you want your agreements to say starting now about how you are going to deal with the quarantines and all the challenges that come with where we are now. And so first of all, if you don't have a force majeure clause in your agreement, this might be the time to start thinking about adding it. Specifically adding references to epidemic in there least for the future. But I think even a force majeure clause in your agreement again doesn't really help because we know about this now. And so I think instead you have to say specifically what happens to performance. And so one construct that some people have thought about is well, I don't care about the fact that there is this epidemic going on. I want you to perform no matter what. And so that's called a hell or high water clause. And so that provision is going to say something like the doctrines, notwithstanding the COVID pandemic, you represent that you are able to perform under any circumstances and that we are not going to the doctrine of frustration of purpose, and impossibility, and impracticability don't apply. You can say that very specifically and the court should let that happen. I think again suspension and cancellation rights. What are you going to allow customers or vendors do with respect to these issues? And I think again, for example the airlines are a great example because they are so public. The airlines have said essentially book now and you can cancel risk free for 90 days or something like that or we'll let you cancel and rebook for trips anytime in the next year. So there is all these different kinds of constructs that you can construct for yourself to allow for how you deal with these issues going forward. And again you are kind of at the point where you have to do something. You have to build into your agreement some type of structure for how you account for performance going forward. And so I think with that, that's my side of things. And we will go over to Jon who needs to unmute his microphone as I can see.
Jon: Hi everybody. I'm Jon Orleans. Let me start just by thanking Melanie for the opportunity to speak to you. I want to talk about the kinds of issues that the COVID-19 pandemic raises for us as employers. I'm going to talk first about some sort of general considerations and then I'm going to talk specifically about the legislation that passed the congress and was signed by the president on Wednesdays. Pardon, on Wednesday. So I'm getting a lot of questions from my clients about alternatives to layoffs. What can we do to avoid having to lay people off? Of course everyone is thinking about remote work. People are thinking about unpaid leave. People are thinking about adjustments to their paid leave policies. And in general, the advice on these subjects is that you have a wide, wide discretion in implementing these kinds of policies or in changing the policies that you have. Certainly we are all encouraged at this point, and in some states commanded to send our workforce home and have them work remotely. That works for some jobs and not for others. I know that some employers have gone to great lengths to equip their staff with necessary computers, printers, and so forth to be able to work at home and to be able to move people out of the workplace to the extent possible. In general it's not something you are obligated to do but it's something that you certainly may do. Many employers are adjusting their paid leave policies. They are allowing employees to use whatever paid leave they have for any purpose rather than limiting paid time off to specific purposes that might be stated in the policies as they exist. Some employers are permitting employees to borrow against paid time off that has not yet been accrued. So that for example if you have employees who are accumulating paid time off at a day per month for example. As of the end of March they might have only accumulated three days. But you might let them borrow against the time that they'll accumulate for the rest of the year as a way to tide themselves over if you have no work for them to do in an alternative to laying them off. In general, our advice with respect to that kind of adjustment would be to put something in writing so that you can protect your rights to recover the advanced time if the employee were to leave your employ before earning it back. And that is something as many of these issues are that may be regulated by your state law. So you shouldn't implement any of these kinds of things without checking with counsel who knows the state law where you operate. So our general advice regarding leave policies and adjustments to leave policies is shown here in italics. Follow your policies. If you are going to change your policies let people know that you are changing them. Be careful to be consistent. Treat people the same. Check your state and local requirements. Next slide please. Thank you. So I'm getting sadly, lots and lots of questions from clients about layoffs and furloughs. To begin with at least in the state where I mostly practice with is Connecticut, the law, and typically we are talking about the law of unemployment compensation benefits, does not draw a legal distinction between a layoff and a furlough. In the general understanding of people I think and of employers particularly, the distinction is probably that a layoff may be permanent. A furlough is by definition temporary. A second distinction in many cases is that when employees are furloughed they often continue to be entitled to benefits, whereas typically when people are laid off, their benefits end. But again you need to look at your state law to determine whether there are particular requirements or distinctions, legal distinctions that are made between layoffs and furloughs that you need to be away of. If you are going to lay people off or furlough them because you need to save the money, you might consider a couple of alternatives. One is the idea I just mentioned. If you are reasonably confident that the layoff or furlough is going to be temporary, you could continue people's benefits for a period of time. You may want to check with your insurance broker or agent to make sure that you can do that under your particular insurance policies or benefits plans. But obviously the prospect of losing health insurance at a time like this is something that is of enormous concern to employees. So if you are in a position to be able to say to people you may not be getting paid for a couple of weeks or a month but your benefits will continue, that is something that is very valuable to your employees and good for morale if and when you are able to bring people back. There is also an option that is available in some places. I know it's available in my state, which is to reduce hours across the board rather than laying some people off and keeping other people on. In Connecticut it's called a shared work program. So the idea being that if you have 100 employees who work full time and you only have work for half of them, rather than laying half of them off and keeping the other half on full time you reduce hours by 50% across the board. And people are able to collect unemployment benefits to make up for at least part of the lost income resulting from the reduction in hours. In my state, in order to do that and to be sure that your employees are going to be able to collect, you need to get a plan approved in advance by the state department of labor. I can't tell you whether that's true in the state where you operate. But if you are looking down the road at implementing something like this you may want to consider investigating the possibility of a plan similar to this. Also, I know that in my state the governor has just announced that unemployment will be paid for reductions in hours or for or for part time workers who lose work. So there may be ways that your employees can make up for lost income through unemployment benefits. One client of mine came up with a really creative approach which was to divide the workforce into two teams and rotate them in two week shifts. So for two weeks somebody is working their regular hours. They are getting paid their regular pay. For the next two weeks they are on lay off and presumably collecting unemployment. Of course they have to be available for work during that time. But it's a creative approach that may work. So now let me talk about the Families First Coronavirus Response Act that was passed by the congress on Wednesday. To begin with it applies to employers with fewer than 500 employees. So if you were a very large employer, it doesn't apply to you. And there are provisions in the statute that may allow employers with fewer than 50 employees to be exempted. It's not entirely clear I have to say. The Department of labor is authorized to issue regulations about that topic. And there is a provision that says if you are an employer of fewer than 50 you won't be subjected to penalties or to certain penalties if you violate the new statutes. So there is clearly some concern there for protecting small businesses but exactly how that will play out we don't know quite yet. The act has two principle parts. The first is this emergency paid sick leave act which obligates you as an employer to provide two weeks of paid sick leave for employees who need time off for reasons relating to the COVID-19 pandemic. And this includes, because they have been or may have been or may have been exposed to the virus, because they have to obtain care or treatment, so they’ve become symptomatic, because they have to care for a family member who either has been diagnosed or may have been exposed and is in quarantine, or because they have to care for a minor child whose school or daycare has closed because of the Coronavirus. The paid leave is paid at the employee's normal pay rate. It's ten days but there is a cap on the pay rate of $511 a day. Unless the employee is getting the time off in order to be a caregiver for a family member or a child. And in that case it's two thirds of the employees normal pay rate capped at $200 per day. This paid leave is in addition to any other paid leave offered by the employer, as I mentioned, and everybody is entitled to it regardless of how long they've been with the employer. It is supposed to be paid for ultimately by the federal government through a tax credit which I'll get to in a second. Next slide please. The second major part of the Families First Coronavirus Response act is an expansion of FMLA. And so this is a provision that says employers - and again first the law says it's all employers from one to 499, but then later it says that employers of under 50 may be exempt - must provide 12 weeks of job protected leave to employees who can't work or can't work from home, telework, because they have to provide care for a child under 18 whose school or daycare has closed because of the Coronavirus. And this is interesting. When the law initially passed the house, this provision was much broader. It applied to employees who had to take time off because they were sick or they had been exposed or they had to care for a family member who had been exposed. Wasn't limited to this childcare related purpose. That got changed in what we'll refer to as [INAUDIBLE] revisions in the house of representatives before it was passed along to the senate. So for the specific group of employees who are providing care for a child, the first ten days can be unpaid. Of course the employees generally will get that first ten days through the emergency paid leave provision that we talked about a moment ago. After the first ten days, the employees are entitled to at least two thirds of their normal pay for the remaining ten weeks subject to a cap of $200 per day. So for those of you who are already subject to the family and medical leave act you can see that this is an expansion of the purposes for which family and medical leave may be taken. And also a paid leave requirement which hadn't previously existed in the statue. Keep in mind that an employee who is infected with the virus and becomes sick while not entitled to this leave, this paid leave will be entitled if you are subject to FMLA to the usual unpaid FMLA leave for his own or her own serious health condition. And just to make things a little more confusing, the employees who are entitled to this are only employees who have worked for the employer for at least 30 days. Remember that the previous provision I discussed applied to all employees no matter how long they've worked for the employer. So let's talk about how this is – I'm sorry. I didn't include in the slides how this is all supposed to be paid for. So let me just say that the statute provides that employers will receive a refundable tax credit against the employer’s share of social security tax to pay for any leave that they grant to their employees under the two provisions of this statute. So for the emergency paid sick leave or for the family and medical leave expansion. You're supposed to be able to recover what you paid out by taking a credit against what you would otherwise pay in employer share of social security tax. There will be regulations coming out implementing this. It's possible that there will be some changes or clarifications made in the next round of federal legislation addressing the Coronavirus. But that's where we are right now. And if I can be forgiven just a moment of shameless law firm promotion, if the folks here will go to the Pullman & Comley website which is www. pullcom.com we have a page on our website which is devoted to legal alerts related to the Coronavirus crisis. And you may find useful information there. That's it, Melanie. Thank you very much.
Melanie: You're welcome. Two quick questions for you, Jon. A little bit of an echo. Hope that goes away. One is, does the expansion act apply to 1099 contractors or W-2 employees?
Jon: It applies only to W-2 employees. It doesn't apply to independent contractors.
Melanie: And then the second one was for the offering of leave for people with children at home. If they are offering remote do they still need to offer that? If they are offering for the employee to work remote even with their children at home do they still need to offer that?
Jon: No, you don't. If the employee can work from home, then you don't need to give the paid leave. Of course you'll be paying them their normal pay for the time that they work.
Melanie: Great. And then a question for the broader group. What do we think is the likeliest path for relief for those in our industry? Do we think it's payroll tax lifting, quarterly tax filing relief, direct cash infusion via stimulation package? I know they are talking about that at the consumer level but what about at the business level? What do we think are some likely outcomes for relief for people in the insights industry?
Russ: I think for sure SBA loans. That seems to be a pretty popular answer right now. I did see - I haven't been able to really review sort of exactly what was said, but I did see for example that Treasury secretary Mnuchin today said that essentially the April 15th tax deadline has been moved essentially to July 15th. So that seems pretty likely to push I would guess both corporate and individual taxes out towards July 15th. And so potentially that could mean no quarterly tax for Q2 effectively or at least for Q1, I would suppose. And I think also one thing to look for are state small business loans or state business loans. so for example again in Connecticut our department of economic community development has indicated that they are going to be issuing or putting together a loan program to help people get through. In terms of direct cash payments, I think the payroll tax proposals. Sorry. I think the payroll tax proposals on the federal side have run into a little bit more headwinds in terms of getting those past. I don't know that that's necessarily going to happen. And so again, I think the most likely result will be going to be loans.
Melanie: Thank you. So I've muted a few of you just to sort of help with the background noise. So don't forget to unmute yourself. I have one comment from Robert Sailor here saying that they've started the SBA loan process. And it takes about three to four weeks to process. So I guess the advice there is to make sure that if you are going to need that resource that you plan and start that process soon. There is some great information that links from the Insights Association home page on to the SBA that talks about how long and what you need to start process. We're thinking about a couple of years of tax filings and that sort of thing. So if you think you are going to need that, you should start learning and figuring out what that process is going to be like for you now. Howard has also dropped in a couple of links for you into the chat box. Really I'm going to offer one really quick piece of advice and then I'm going to give them speakers each a chance to say ten to 15 seconds of anything they might want to add. My biggest advice as we go through this is that the Insights Association is going to continue to support you and provide information as we have it. I know there is a lot of comments here about trackers and how to move online. We have some free webinars coming up. And we're specifically talking about methodology. But don't suffer alone. If you've got anything going on that you need support with, please reach out to anyone on this call. Anyone on any of the calls that we've done. Anyone at the association and we are here to help you. Any last comments from anyone of the speakers before I move into final slides?
Jon: Yeah. Just two real quick. First in response to the question about things that we might see as relief for employers. I am hopeful that state departments of labor will look for ways to expand the availability of unemployment compensation, which will indirectly provide some relief to employers by protecting your employees against some of the worst consequences. And then the only other point that I wanted to make that I hadn't made earlier is that you need to keep in mind as you are considering what to do the distinctions between your FLSA exempt employees and your non-exempt employees. For your exempts if they do any work during the work week, they are entitled to salary for the entire work week. So you have to plan carefully about how you are going to do hours reductions or layoffs when you are dealing with exempts versus non-exempts.
Melanie: Thank you. Anne, I think you were going to say something?
Anne: That's exactly what I was just going to say. Just kidding. So I guess I just want to say that I know that we are all probably very stressed about the situation. I think that as an industry I think we actually have a lot that we can offer right now. And I think that there is no lack of need for both help and for information among many of the client companies that we work with. And I think that this is also an opportunity to create strong relationships with clients who really need us. So I am anxious but hopeful about our industry right now and feel that we have a lot to offer.
Melanie: Thank you. Diane, Russ, anything else from you guys?
Diane: I guess I would say that we are all in this together. And I know that I've started to talk to some of my colleagues, including Anne, and some others to just talk even between these great town hall meetings. I appreciate Insights Association for putting them on. But it's always nice to reach out to others who are in the same shoes that you are in and just brainstorm. There is enough business out there for all of us. And I think that we can help each other out. And I know that everybody has been really open to doing that. So I look forward to us getting even closer as a research community through all of this. I guess is one good thing that comes out of it.
Melanie: Thank you. And Russ.
Russ: I don't have much to add but I will say I will say it's not just market research firms. I mean law firms, accounting firms. I think really all professional services firms, I think are going through a lot of the same things. And we are all trying to figure out a way to through what the future holds and seeing what we can do.
Melanie: Thank you. So just so you guys know what's coming up next. There is a free webinar next week that is starting around the migration of offline to online. I said it backwards. We have the next generation of data capture and analysis coming up. This is the migrating qualitative projects online panel which I hope you'll sign up for. If you are struggling with that process, these guys can give you some great advice. We'll continue these town halls. Our next one is planned to be with a great economist to talk about the economic impact and what we should expect to see. I know there are some questions about what might be the recovery signs that we'll look for. I'll ask him to specifically speak to that. And it will also include a couple of other people. Again, making sure we bring it back to our industry. Your ideas and requests are welcome. Remember to use the Engage platform. There are some great conversations going on in the Engage platform. CEO forums, corporate forums, peer forums. You can ask anything you want there and you'll get a group of people trying to help you. And if your business has been impacted and you need help I really hope that you'll reach out to us because that's what we are here for. And so with that I thank each of you. If we didn't get to your question we'll reach out separately. And if you need anything please let us know. Thank you and see you next week.