Tribal Governments and Responding to COVID-19: Financial, HR and Investment Considerations
REDW LLC | March 19, 2020
As federal, state and CDC guidance and directives continue to limit people’s activities and operations, Tribes are deciding how best to handle workforce needs, while still meeting their members’ public health and safety demands. And those Tribes with enterprises must also find ways to manage their workforce and customer interactions.
REDW remains committed to supporting our clients and business associates in these challenging times, and we want to assure you that you can count on our continued partnership as we navigate our way through this uncharted landscape, together. As expected during a crisis, there is an overwhelming amount of information available on the Internet, some of it more reliable than others. To help guide your decision making, we are providing our own insights and helpful tips, below.
Many Tribes have established disaster plans and set up unified or incident teams. Be sure to visit the FEMA website to see their Tribe Mitigation Plan Review Guide.
In addition, we recommend forming a core management committee, or “Incident Team” that includes key management, public safety, health, human resources, finance and procurement, and risk managers. These managers should work hand-in-hand as events occur, understand the CDC requirements, and implement action and communication plans.
Further, we understand that FEMA funding is being put in place to assist with your disaster plan implementation, including a provision allowing Tribes to request a waiver of the 25% cost share requirement. FEMA is setting up regional calls with Tribes and will release an FAQ document soon.
The Native American Finance Officers Association (NAFOA) is also regularly posting COVID-19 Legislative Efforts and Updates impacting Indian Country on its website.
Business Interruption Insurance and Federal Assistance
It is vital that you plan to compile and track the financial and supporting documentation for claims or federal assistance for your Business Interruption Insurance, Cash Flow Planning, Projections, and related matters. This plan should include:
- Maintaining financial data to file claims for business interruption, whether using private insurance or federal assistance.
- Cash flow planning and projections.
- Consideration of refinancing that will take advantage of historically low interest rates as well as evaluating possible modifications to debt repayment terms.
- Evaluating working capital and overall capital (equity) sufficiency for Tribal enterprises.
- Budgetary projections that affect enterprise operations, lending requirements and tribal distributions.
During the COVID-19 health crisis, there are several alternatives available to Tribal employers to address social distancing mandates, mandatory closures of certain types of enterprises, and the need to keep sick employees out of the workplace.
Many employers have already elected to take their workforce remote (when possible), place employees on administrative leave (paid or unpaid) during closures, or initiate layoffs. The following are some important considerations for Tribes during this critical time:
- You should require that all employees who have symptoms and/or test positive for COVID-19 stay home and utilize their PTO/sick leave to avoid further spread of the virus.
- If you elect to offer remote work, be sure to communicate clearly that this accommodation is only allowed for a limited time. You do not want to create a precedent for remote work that will carry over after the COVID-19 crisis has passed.
- If your employees are placed on unpaid administrative leave, plan to exhaust and pay out all PTO benefits at the outset of the leave, just as you would for other types of leave. This will not only help support the employees, but will also streamline HR processes should the leave have to be converted to layoffs in the future.
- If you elect to place employees on paid administrative leave, ensure compliance with 2 CFR 200.431 for grant-funded positions. This regulation requires that paid administrative leave for these positions meet certain requirements, including that the Tribe must already have an administrative leave policy in place. If you have an administrative leave policy that does not directly address a public health emergency, we recommend building upon the existing policy with a Tribal Council Resolution (or other legal authority specific to the Tribe) or by adding a “public health emergency” as a specific reason for paid administrative leave. The resolution should also provide a definite time frame for the administrative leave (such as “10 weeks”) or a clear range (“4-6 weeks”). Finally, the resolution should directly reference how the Tribe will follow the CDC (Center for Disease Control) and/or other federal guidelines/guidance in determining whether to conclude the period of leave early or to extend it.
- If you do not have an administrative leave policy or prefer not to place employees on administrative leave, consider the implications of the Family and Medical Leave Act (FMLA) on employees who are either experiencing a serious medical condition themselves or need to take care of a sick family member. The FMLA provides certain employees with up to 12 weeks of unpaid, job-protected leave per year. Group health benefits are also maintained during the leave.
- We understand some Tribes are electing to pass emergency policies to ensure sick leave is available to use for this purpose for its workforce for this specified time, for the employee, or for someone in their household they need to care for. This will likely be consistent with the federal stimulus bill that is expected to be signed by President Trump this week and includes a requirement for paid sick leave for certain employees, (see below). We also recommend it as a best practice to help slow the spread of the virus while supporting your workforce.
- Additionally, the legislature passed a stimulus package that is also expected to be signed by the President this week that will likely include employer mandates for two types of leave:
- The first mandate pertains to a mandatory paid two-week sick leave provision for employees who are being tested for, have been diagnosed with, or are receiving treatment for COVID-19. This will also apply to individuals whose doctor issues a recommendation that they stay home due to exposure or symptoms. Pay for this leave will be capped at $511/day. Plan to add time to eligible employees’ PTO or sick leave banks, ensuring that they have at least this much time available.
- The second is a paid 10 week childcare leave provision allowing a parent to stay home with a child who is out of school due to closures. Pay for this leave will be capped at the lesser of 2/3rds of the individual’s gross income, or $200/day.
- No matter which of the above options you select, we recommend that you immediately create a protocol for HR to carefully track the different types of absences (paid or unpaid administrative, FMLA, sick, PTO, child care leave). This will help to ensure they are correctly allocated and your payroll is accurate during this challenging time. Payroll software solutions may also require updating to distinguish between the different types of leave, and interrelationship with other required leave (FMLA).
- Many Tribal Governments, as sovereign nations, choose to apply federal and state leave requirements, such as the FMLA. Additionally, Tribes receiving federal or state grants, or assistance, may be required to apply these mandates as a provision of the funding they receive. As a result, in general, REDW recommends compliance with the current (and soon to be adopted) federal and state leave requirements.
The REDW HR Consulting team is here to assist with your approach to addressing personnel issues relating to COVID-19. Please contact us for assistance in drafting resolutions to amend administrative leave policies, assisting your internal HR with processing leave requests and tracking, or simply answering your questions and providing guidance as you navigate this challenging time.
Alicia Finley, Tribal Compensation Practice Leader, 505-998-3432
Cristin Heyns-Bousliman, Esq., Human Resources Consulting Practice Leader, 505-998-3452
Carol Mayo Cochran, CPA/PFS, CEBS, CCP, CMA, CMS, SHRM-SCP, THRP, CFC, Principal, Human Resources Consulting, 505-998-3208
Procurement – Federal award and other procurement purchases made during this time that are sole-sourced should be adequately documented and approved, even if done soon after the purchase, to ensure federal compliance. Also, it’s a good idea to track and accumulate any purchases made to deal with this crisis for possible future federal assistance reimbursement. In addition, overtime and other labor costs for public safety and healthcare workers should be tracked for the same purposes.
Audit Deadlines – As we understand it, there are no provisions by OMB or the federal agencies to extend required audit deadlines at this time. However, we noted the following, which was posted by the AICPA’s Government Audit Quality Center. You should review and discuss it with your auditors to see if you need to seek audit extensions:
According to the GAQC Website, it appears individual requests for auditee extensions can be made:
“We know that March 31, 2020, is the final deadline for June 30, 2019, single audit submissions to the Federal Audit Clearinghouse. We have also heard from members in certain parts of the country whose clients have closed offices or where staff are being encouraged to work from home. This has caused practice challenges that may result in late filings. Until such time as OMB issues formal guidance that would apply to the broader population of recipients, our advice is for entities and auditors that are concerned about meeting the upcoming deadline to contact the National Single Audit Coordinator at the cognizant or oversight agency for audit (see contact listing in Appendix III of the 2019 OMB Compliance Supplement). The OMB memo does remind agencies that they can issue exemptions on a case-by-case basis under section 200.102 of the Uniform Guidance.”
We are well versed in working remotely, and can still assist you very effectively. Please contact us for help with reviewing emergency policies, or if you have questions on federal expenditures:
Corrine Wilson, CPA – Principal and National Tribal Practice Leader, 602-730-3609
With the Coronavirus impacting our lives, our health, and the global economy, the financial markets are experiencing extreme volatility. To address your concerns regarding the recent market volatility, we presented a webcast titled “Navigating Market Declines and Volatility” on Thursday, March 19 at 3pm MT, which also included a Q&A component.
Click here to register and view a recording of the webcast on demand.
REDW is committed to keeping you informed at all times, but especially during a crisis of the magnitude of the COVID-19 pandemic. Stay connected with us on LinkedIn and @REDWLLC. Or check out some of our other updates here.