The August issue of CBIZ's Banking & Financial Services Newsletter includes a conversation with Lori Bettinger, Co-president of Alliance Partners and President of BancAlliance, on the banking sector and opportunity to make loans across other industry sectors. Also covered are underwriter questions to expect with your insurance renewal in this hard market and 8 potential COVID-19 employment liability claims. As always, links to several additional resources and webinars included.

1. IN THIS ISSUE:
Banking &
Financial Services
AUGUST 2020 | ISSUE NO. 17
1-800-ASK-CBIZ • cbiz.com/banking PAGE 1@CBZCBIZ BizTipsVideos
©Copyright2020.CBIZ,Inc.NYSEListed:CBZ.Allrightsreserved.
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QUARTERLYHOT TOPICS
CBIZ Banking & Financial Services
Industry Expertise. Broad Perspective. Client-Focused Approach.
A Conversation with
Lori Bettinger on Loan Risk
in a COVID-19 World
PAGE 1
Underwriter Questions
to Expect Post-COVID-19
PAGE 3
Executive Order for Payroll Tax
Holiday Puts Employers in
No-Win Scenario
PAGE 5
8 Potential Employment
Liability Claims from
COVID-19
PAGE 7
AConversationwithLoriBettinger
onLoanRiskinaCOVID-19World
Kris St. Martin, Director of
the CBIZ Insurance Bank
Program and a bank CEO/
Chairman prior to joining
CBIZ, recently posed a
series of questions to Lori
Bettinger, Co-president
of Alliance Partners and
President of BancAlliance.
Prior to joining Alliance
Partners, Lori served as
the Director of the TARP
Capital Purchase Program
at the Department of the
Treasury, focusing on the
implementation, investing
and restructuring cycles of
the $205 billion portfolio.
From 2004 to 2008, she was a financial economist with the U.S. Securities and Exchange
Commission’s Division of Trading and Markets. Lori received her M.A. from the Johns Hopkins
School of Advanced International Studies and her B.A. from Yale University.
KRIS
Lori, your involvement with Alliance Partners and BancAlliance puts you in a unique position to
comment on loan risk in a COVID-19 world. Would you give us an overview of Alliance Partners
and BancAlliance and how you serve the banking industry?
LORI
Alliance Partners is an asset management firm that works with BancAlliance, a network of
over 250 community banks located across the country. We offer a full-service lending platform
with a credit-centric approach to originating, screening, underwriting, managing and servicing
loans. We offer a wide range of loans and programs based on the intersection of our clients’
objectives and our view of the market opportunities and challenges.
CBIZ professionals assist banks,
credit unions and other financial
institutions with a unique range
of consulting, advisory and
business services.
FINANCIAL SERVICES
INSURANCE SERVICES
EMPLOYEE SERVICES
Visit us online for a full view
of our service to the financial
sector, prior issues of Hot Topics
and insights and resources, and
local office contacts.

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BancAlliance is a member-driven network designed to
provide community banks with access to lending services
available only through membership. In particular, through
its flagship commercial loan program, BancAlliance offers
its members access to an efficient way to diversify their
loan portfolios.
KRIS
We’ve heard a lot about the devastating impact the
shutdown has had on certain industries, including
hospitality, travel, retail and office rentals. What are some
lesser talked about sectors or sub-sectors that your
underwriting team is closely monitoring?
LORI
We’ve been keeping an eye on companies that serve
the education market – whether contractors to
public school districts or retail companies active on
college campuses. It’s fair to say that of all the risks
contemplated during the underwriting process, a
wholesale closure of public school districts across the
county was not contemplated! In addition, we’re keeping
an eye on certain retail sectors that are impacted
by various factors aside from just general consumer
demand, such as companies that target the professional
apparel market. We’re also very focused on the fitness
industry, as clearly many gyms have been greatly
affected by the shutdown. Also, who would have thought
that during a pandemic so many healthcare companies
would be at least temporarily adversely affected due to
the cessation of many medical procedures?
KRIS
Do you see any similarities or differences between the
real estate crash of 2010 and the current COVID-19
shutdown?
LORI
Thankfully, not yet. Financial institutions appear to be in
a stronger capital position going into this downturn and
currently seem well-positioned to weather this extremely
challenging environment. In addition, today we have a
financial crisis that is clearly precipitated by a health
crisis, which is quite different from the earlier crash. I
do worry that if the recession persists, we will certainly
see ripple effects in the commercial real estate market,
which could cause challenges for the banks most active
in that sector, but still believe that the banking industry
will prove resilient.
KRIS
Many banks are reporting that loan demand is
significantly down today. Where do you see opportunities
for making loans?
LORI
There are clearly some companies that are in businesses
that have done well through the crisis – grocery stores,
food suppliers, and certain service companies that
facilitate remote working and virtual events. While
I mentioned that some healthcare companies have
suffered temporary disruptions to their businesses,
others have clearly flourished during this time. The
challenge with any borrower is feeling confident in the
ability to underwrite cash flows during a time of such
volatility, when the market seems to change by the week
(if not by the day).
KRIS
There were many non-bank companies that were selling
loan participations in the early 2000s, with many of the
loans being real estate development in nature. What went
wrong with that model?
LORI
With real estate, it is so important to understand
a particular market in detail; it can be a challenge
to underwrite real estate loans without a deep
understanding of the dynamics of a particular market.
In the past, some of the participation loans that caused
serious issues for community banks were focused on real
estate, and it may have been difficult for all participants
in a loan to fully underwrite the risks if they were not
present in that specific market.
With cash flow lending, financing is typically provided
to fund middle-market businesses with approximately
$10 to 75 million in EBITDA. To underwrite these types
of loans, you must understand their business model and
how the company generates the cash flow necessary
to service the proposed debt. The physical location of a
company is less important during underwriting than a
thorough understanding of its business, which makes
the underwriting easier to do from a remote location
(so to speak).
KRIS
Thanks for your time, Lori. I know our readers are
appreciative of your insightful commentary.
If you are interested in more information about Alliance
Partners, don’t hesitate to reach out to Lori at lbettinger@
alliancepartners.com or 301-232-5444.
Do you have thoughts on this topic?
If you are interested in engaging in a thoughtful
conversation or providing a guest article for our quarterly
newsletter on issues impacting the banking and
financial sectors, please connect with Kris St. Martin at
kstmartin@cbiz.com or 763.549.2267.

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@CBZCBIZ BizTipsVideos
operations? Work from home, COVID cases in
market, reopening, furloughs and layoffs, etc.
4. Have you strengthened cybersecurity measures
to secure remote operations?
5. Industry sector exposure? Energy/oil/gas/
energy, transportation, retail trade, hospitality,
recreation, etc.
6. What percentage of total loans was deferred or
restructured?
7. Bank stress testing – Have there been any recent
updates and what are the primary assumptions?
8. How many PPP loans did the bank originate?
What was the dollar amount?
9. Regarding COVID-19 specifically, what is your
communication plan with your shareholders?
10. Most recent and next regulatory exam dates –
any criticisms?
As business advisors and lenders, we suspect you will
also appreciate the following preview of the detailed
questions underwriters will be asking your customers.
PROVIDED BY CBIZ INSURANCE SERVICES, INC.
R
enewing insurance in today’s market is more
difficult and time-consuming than ever before. The
hard market has developed after several years of
significant catastrophic losses. That situation has now
been exacerbated by the impact of COVID-19, leading
insurers to impose even more coverage restrictions.
In general, stricter policy provisions include adding
sublimits, changing deductibles, enacting policy
safeguard limitations and more.
Following are the top ten questions underwriters are
asking financial institutions in this mid- and post-COVID
environment. Preparing responses in advance will help
put your financial institution in the best position to
successfully negotiate your insurance renewal.
Key Financial Institution Underwriter Questions
1. What is your 2020 financial performance to
plan – YTD and projected year-end?
2. Capital plans – Is there a capital raise in
your future?
3. What has been COVID-19’s impact on your
UnderwriterQuestionsto
ExpectPost-COVID-19

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Additional Online Resources
COVID-19ResourceCenter
Impacts to Expect How Business
Can Respond
Articles by Business Need
Tax, legislative, employees, HR, financial
management, risk, operations
Executive Insights On-Demand Webinars
Featured Webinar: The Silver Lining during the
Economic Downturn: Optimize Your Wealth
Preservation Plan
Quick-ClickContent
CBIZ Employee Benefits On-Demand Webinars,
available 24/7, can be found here.
On the Margin: Market Recaps - CBIZ
Investment Advisory Services present Second
Quarter and July investment highlights and
look ahead.
Biz Tips: Protecting Your Commercial Real
Estate Investment Biz Tip Video - insight into
the top exposures for commercial real estate
and how to manage or transfer risk through
insurance and loss control.
Engaging Remote Employees During COVID-19
– this featured download offers five tips to
effectively engage your remote workforce.
(Continued from page 3)
@CBZCBIZ BizTipsVideos
General Business Customers
Underwriter Questions
Financial Activity Operations
■ What is your 2020 financial performance to plan –
YTD and projected year-end?
■ How has COVID-19 affected your operations?
■ Have you experienced or do you expect to
experience disruptions to your supply chain?
■ What changes have you made to your onsite
processes?
■ Have you strengthened cybersecurity measures to
secure remote operations?
■ How do you expect COVID-19 to affect your balance
sheet and your ability to timely account for and
manage your assets?
■ How much cash do you currently have on hand and
how long is it expected to last at the current burn
rate? Do you have access to additional liquidity
through credit facilities or other sources? Please
provide details.
■ Did your landlord provide rent relief? Was it full or
partial? When does it end?
■ What are you currently doing to preserve capital
while still meeting short-term obligations? Did
you have money earmarked for long-term capital
investment that you are able to use to help weather
the crisis?
Human Resources Legal
■ Have you experienced a reduction in force? Were
employees terminated or furloughed?
■ What criteria was used to determine which
employees were impacted?
■ Did you consult outside counsel? Were consent
forms required?
■ Do you have a formal safety plan?
■ Do you require employees to be periodically tested
for COVID-19? If so, what frequency?
Business Continuity / Disaster Plan
■ Have you experienced challenges in implementing
your business continuity plan?
■ Were there material expenses when executing your
business continuity plan?
■ Do you have business interruption insurance?
General Insured Profile
■ Have you made a property damage claim that was
honored and paid in the last five years?
■ Have you had a successful business interruption
insurance claim in the last five years?
■ Is your business situated in a high-risk location
(e.g., FEMA-rated flood zone)?
■ Do you have a detailed property valuation and
loss control plan for all of the assets (buildings,
contents, machinery, equipment, etc.)?
Additional Resources
■ 5 Tips to Navigate Your Insurance Renewal in Light
of COVID-19
■ What to Expect from a Comprehensive Insurance
Audit (info sheet)
■ CBIZ Disaster Preparedness Guide
Your Team
Answering these questions may prove challenging, but
doing so now will ensure you are prepared when asked
by the underwriter. Your insurance broker should be
reaching out to you at least 60 to 120 days in advance
of your policy renewal date to discuss creative solutions
to ensure your organization is adequately protected at the
most affordable cost. Please reach out to your local risk
and insurance professional or a member of the CBIZ
Insurance Services team for assistance.

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O
n August 8, President Donald Trump signed four
Executive Orders, one of which addresses a
federal payroll tax holiday that he has sought to
have included in any new coronavirus pandemic relief
legislation. The President’s order is in response to the
absence of movement by Congress on an additional
stimulus package. The new order defers the withholding,
deposit and payment of the employee’s share of federal
OASDI (Social Security) payroll taxes (6.2%) from Sept.
1, 2020 through Dec. 31, 2020, on wages of employees
whose annualized income is “generally” less than
$100,000. While some have questioned President
Trump’s legal authority to take this action, employers are
placed in a precarious and potentially costly situation
regardless of the legal outcome.
The Executive Order
The executive order accomplishes the payroll tax
holiday through the exercise of the President’s disaster
declaration authority under Internal Revenue Code
Section 7508A. This law allows the Secretary of the
Treasury to defer tax filing and payment due dates for up
to one year. Importantly, this law does not authorize the
outright waiver of tax filing or payment obligations. As
the withholding obligations of employers will eventually
come due, the impending burden of such obligations may
compel Congress to forgive the deferred payroll taxes. The
order specifically directs the “Secretary of the Treasury
[to] explore avenues, including legislation, to eliminate
the obligation to pay the taxes deferred pursuant to the
implementation of this memorandum.” To date, neither
Democratic nor Republican members of Congress have
embraced President Trump’s desire for a payroll tax
holiday, which leaves the prospects uncertain for the
eventual forgiveness of these payroll taxes.
Potential Legal Hurdles for the Executive Order
There also is some uncertainty about the legal basis to
order a payroll tax holiday in this manner. Section 7508A
grants the Treasury Secretary the authority to, among
other things, defer “payment of any income, estate,
gift, employment, or excise tax or any installment thereof
or of any other liability to the United States in respect
thereof” (emphasis added). This provision has rarely
been interpreted as broadly as it would need to be in
order to invoke a payroll tax holiday. Section 7508A has
been invoked nationwide only once, to delay the tax filing
and payment deadline this year to July 15, 2020. The
Treasury Secretary did not institute the payroll tax holiday
using Code Section 7508A on that occasion, but instead
delayed income, estate, trust, and gift tax filing and
payment obligations.
The potential legal challenge with the type of payroll tax
holiday in the executive order is that it pertains to the
withholding obligation of an employer, and therefore does
not directly apply to the amounts remitted to employees.
If an employer passes the “savings” from not withholding
ExecutiveOrderforPayrollTaxHoliday
PutsEmployersinNo-WinScenario
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the employee’s share of payroll taxes to its employees, it
will not be possible to subsequently withhold the tax on
those wages. As a result, this could be seen as rendering
the putative deferral as effectively being a waiver —
something that is not authorized under Section 7508A.
And of course, with the election right around the corner,
the legality of the executive order is becoming a political
hot topic.
Employer Options in Response to the
Executive Order
The Coronavirus Aid, Relief, and Economic Security
(CARES) Act previously established a payroll tax holiday
for the employer’s share of Social Security taxes through
Dec. 31, 2020. It is the deferral of employee’s share of
Social Security payroll taxes under the executive order
that places employers in a precarious situation. If we
assume that the intent of the executive order is to put
more money into the hands of employees immediately,
then employers have to make difficult choices with little
certainty as to the outcome. In order for employers to
implement the intent of the payroll tax deferral and still
ultimately be free of adverse consequences, employers
must gamble that Congress will eventually act to forgive
the deferred payroll taxes. Trying to divine the future in
this manner is a no-win situation. Consider an employer’s
choices in these circumstances:
1. The employer assumes that Congress will
eventually act by waiving the deferred payroll
taxes, and implements the payroll tax holiday
by passing the benefits on to employees. If
Congress later fails to act, then the employer
would either have to claw back money from
employees or use its own money to pay the
employee’s share of payroll taxes (on top of the
gross pay already remitted). And because this
would be compensation, as well, the employer
would have to gross-up the amount and withhold
more payroll taxes on that payment.
2. The employer could withhold the tax but not
pay it to the government, instead using it as an
interest-free loan. This would defeat the purpose
of the executive order as it would deny any
benefit to employees, and could have potential
negative public relations consequences because
the employer effectively retains its “employee’s
money.”
3. The employer could withhold the tax and remit
it to the government, effectively ignoring the
executive order altogether. Not only would this
deny any benefit to employees, it would position
the employer itself in potential noncompliance
with a presidential executive order.
Furthermore, in the event the potential executive order
is found to lack legal authority, the IRS could assess
a Trust Fund Recovery Penalty (TFRP) for a failure to
withhold. The TFRP imposes a 100% penalty on persons
responsible for withholding certain taxes, including
employment taxes. This could be particularly harsh on
businesses that are forced to shut down between the
time the executive order is in effect and the time it is
determined to be illegal. “Responsible persons” who
tried to comply with the executive order could then find
themselves subject to the TFRP, even though they tried to
comply with the law while their now-defunct business was
operating. The executive order directs that the deferred
amounts shall be “deferred without any penalties,
interest, additional amount, or addition to the tax,” which
could diffuse the penalty concern if this part of the
executive order is found to be legal.
Final Thoughts
Employers must proceed with caution and carefully
evaluate options concerning any payroll tax holiday
implemented via executive order. Each of the various
options comes with its own risk and potential
consequences. The only option that comes with no
potential adverse consequences requires an employer to
assume that Congress will enact future legislation. For
more information concerning the potential executive order
and its impact on your business, please contact us.

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C
OVID-19 has created a massive upheaval in
the workplace. Employers have found themselves
drafting and implementing policies and procedures
addressing a wide array of issues, including remote
work, layoffs, furloughs, pay cuts, workplace conditions
and many more. The uncertainty wrought by COVID-19
has left employers at an increased risk of exposure to
employment-related claims, alleging wrongful termination,
discrimination and retaliation to name just a few.
The following are the most common potential causes of
action related to COVID-19 that may lead to employment-
related litigation. As is the case with all inherently legal
issues, employers are strongly recommended to seek
the guidance of legal counsel when faced with any of the
claims discussed herein.
1. Workplace Health Safety
There have already been a multitude of safety
violation claims filed under the Occupational Safety and
Health Act (OSHA) and state equivalents. These safety
violations typically allege that an unsafe workplace
has caused sickness and/or death due to COVID-19 or
that an employer failed to take appropriate measures
to reduce COVID-19 exposure and spread within the
workplace. (Appropriate measures” might include
providing hand-washing stations, sanitizers, masks or
adequate protective gear on location.) Other claims have
alleged that employees have been unable to practice
social distancing due to the nature of their jobs.
2. Leave (FMLA, FFCRA FMLA)
In addition to traditional paid and sick leave, COVID-19
spurred the passing of the Families First Coronavirus
Response Act (FFCRA), which includes the Emergency
Family and Medical Leave Expansion Act and the
Emergency Paid Sick Leave Act. Individual states may
have their own Family and Medical Leave Act (FMLA). The
FFCRA requires employers with 500 or fewer employees
to give employees expanded paid family and medical
leave and emergency paid sick leave.
Without analyzing the unique provisions of the FFCRA, it
must be noted that the Act expressly incorporates existing
Family and Medical Leave Act (FMLA) and Fair Labor
Standards Act (FLSA) remedies provisions. This means
that an employee who is wrongfully denied expanded
leave or not paid during the leave will have a cause of
action to recover damages (lost wages, salary, benefits
8PotentialEmployment
LiabilityClaimsfromCOVID-19
and other compensation) or actual monetary losses
resulting from the denial of leave (e.g., the costs of child
care) with interest. Likewise, employers that fail to comply
with the Expanded Paid Sick Leave Act will be made liable
to remedy provisions under the FLSA.
Given the extensive exposure, employers should consider
speaking with legal counsel in order to update and
implement leave-related policies. Employers should also
consider training their managers and supervisors on
updates to the policies and laws, as they will be on the
front lines when dealing with leave-related issues.
3. Wage Hour
With employees being asked to work from home and
employers restructuring their workforce, including salaries
and compensation, to fit their current needs, it’s vital to
remember that this reshuffling can give rise to claims
under FLSA and applicable state laws related to salary
and hours reductions. Altering work arrangements and
compensation structure may be necessary to keep some
organizations afloat, but such changes may inadvertently
alter the classification status of their workers. Such
classification issues may lead directly to an FLSA claim.
Even when hourly employees are working from home,
strict adherence to policies and procedures around break,
mealtime and use of personal equipment is still required.
Hourly workers should not answer emails and texts
outside their defined workday, otherwise the organization
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could be the subject of an hour and wage claim. Reiterate
your policies and procedures on a regular basis to avoid
confusion or an incorrect assumption of expectations.
4. Discrimination
Numerous federal and state laws protect employees
from discrimination based on protected class
characteristics. Laid-off or furloughed employees may
bring claims under federal and state anti-discrimination
laws, challenging the purported reason they were
selected for an adverse employment action. Employers
should be careful to use objective means when deciding
which employees to lay off or furlough. They will also
want to retain records of the criteria used and, in certain
instances, evaluate whether any disparate impact may
result from the decision.
Employees might also bring a claim based on an
employer’s failure to reasonably accommodate employees
with a bona fide disability related to COVID-19. Such
claims might even be based on a denial of a request to
allow an employee to work from home.
5. Retaliation
Most state and federal laws contain provisions that
make it unlawful for employers to retaliate against
employees who exercise their protected legal rights
or oppose unlawful employer actions. For instance,
there have already been numerous claims that allege
retaliation for objecting to unsafe working conditions
and exposure to individuals with COVID-19 symptoms
in the workplace. Other retaliation claims may arise out
of an employee complaint that the employer wrongfully
denied a request for leave.
The most important practice in insulating your business
from a retaliation claim is documentation. Extensively
documenting the employer’s reasoning behind their
employment decisions can be the difference between a
successful retaliation defense and a costly judgment.
6. Wrongful Termination
With the major increase in employee furloughs and
layoffs, it is no surprise that there has been an increase
in wrongful termination claims. Wrongful termination
claims can arise out of a multitude of COVID-19-related
issues. One example is a claim that the employee was
terminated for complaining about a lack of personal
protective equipment. Another example is a claim that the
employee was terminated for lodging a complaint about
coworkers with COVID-19 symptoms reporting to work.
To mitigate the potential for a wrongful termination
claim, employers should proceed carefully upon
receiving employee complaints. Employers should
also maintain meticulous records of complaints, the
investigation process and the ultimate reasoning behind
the termination.
7. Disclosure of Confidential Information
Because the Centers for Disease Control and Prevention
(CDC) and state/local health authorities have
acknowledged community spreading of COVID-19 and
issued precautions, employers have been allowed to
measure employee body temperature. However, this newly
expanded testing capability exposes the employer to an
array of privacy-related issues.
In order to maintain the privacy of COVID-19-related
medical documents, the ADA requires that all medical
information about a particular employee be stored
separately from the employee’s personnel file. An employer
may store all medical information related to COVID-19
in existing medical files. This includes an employee’s
statement that they have the disease or suspect they
have the disease or the employer’s notes or other
documentation from questioning an employee about
symptoms. Additionally, how you handle sensitive personal
health information (PHI) can also become a cyber exposure
depending on how the information is protected.
8. WARN Act Compliance
The federal Worker Adjustment and Retraining Notification
(WARN) Act requires companies with over 100 employees
to provide at least 60 calendar days’ notice of worksite
closing or layoffs. While there are some exceptions, such
as layoffs due to unforeseen business circumstances and
natural disasters, employers are still required to provide as
much notice as possible and include the reason the notice
was not 60 days. Regardless of whether or not COVID-19
qualifies as an exception to the WARN Act, claims are
expected to be filed.
In addition to consulting with your legal counsel, you
should contact your insurance and risk management
professional to review your employment practices liability
insurance policy. If you have any questions, please
contact a member of our team.
DISCLAIMER: This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional
advice. This information is general in nature and may be affected by changes in law or in the interpretation of such laws. The reader
is advised to contact a professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in
connection with the use of this information and assumes no obligation to inform the reader of any changes in laws or other factors that
could affect the information contained herein.