The SVB Payroll Predicament

Employers with SVB accounts face a serious predicament with an imminent and urgent need to make payroll. Given the potential liabilities that result from missed wage payments, there are some steps employers can take now to better navigate this crisis.

First, and most obviously, employers locked out of SVB accounts should try to access cash for payroll elsewhere. Investors and others who offer to finance their organizations to bridge the crisis should first consult counsel to document repayment. If cash cannot be secured, employers should communicate this fact to employees right away. Payroll cannot be met through promises (or promissory notes) but open communication about what the employer is doing or will do is key. If cash cannot be raised, a temporary furlough of employees might be best. But furloughs could trigger other legal consequences (such as WARN and termination payments). Employers should not, however, permit an employee to work "for free" or ask