Fashion & Retail Industry Pandemic Relief

The New York City Bar Association has written to the New York State Congressional Delegation, outlining the difficulties faced by the fashion and retail industries due to the COVID-19 pandemic, and suggesting measures to provide relief in the next stimulus bill.

“The COVID-19 pandemic has severely impacted the fashion and retail industries,” the letter from the City Bar’s Fashion Law Committee states. “Non-essential retail has been shuttered by mandatory stay-at-home orders and unprecedented levels of unemployment have resulted in drastic cuts in consumer spending.”

Noting that “the retail and fashion industries are uniquely important to New York – economically and culturally” and to protect this sector that “quite literally, touches us all,” the City Bar proposes the following federal assistance:

• A Modification to the Paycheck Protection Program (PPP): Because it has become evident that the crisis will extend past the eight-week period of the PPP program, consider extending the time limitations for the use of PPP funds to six months.

• The Net Operating Loss (NOL) Carryback: Accelerate the cash benefits the CARES Act provides under NOL by allowing companies to estimate their 2020 net operating loss and immediately offset these losses against prior taxable income on an expedited refund basis, as well as expanding the carryback provision for 10 years.

• Stability Fund: The creation of a federal direct assistance program would provide much needed liquidity to the industry, allowing for flexibility to pay rent, taxes and vendors, as well as current and new staff.

As the fashion and retail industries re-open their physical retail locations and transition to a new normal in the coming months, the City Bar proposes the following additional federal assistance:

• Business Interruption Insurance: The creation of a federally-backed business interruption insurance program, similar to the Terrorism Risk Insurance Act or the Flood Insurance program, would provide much needed protection for the fashion and retail industries should a second wave of the coronavirus result in mandated store closings.

• Occupational Safety and Health Administration (OSHA) Issues: OSHA recently reclassified retail from a low to a moderate risk industry. The fashion and retail industry needs to train their staff on these new requirements, engage more aggressive sanitation efforts and likely provide personal protective equipment (PPE) for their employees and customers, as well as retrofit their establishments and educate their customers to comply with any new required social distancing rules.

As of February 2019, in New York City alone, the fashion industry employed 4.6% of the total private-sector workforce, including designers, seamstresses, salespeople and office personnel, and generated more than $11.3 billion in wages and $3.2 billion in tax revenue. Retail is a major economic generator in New York State, employing nearly 1 million people in approximately 77,000 establishments and generating upwards of $251 billion in sales annually. Further, a wide range of creative industries, laborers, vendors and professionals are supported by the fashion and retail industries throughout New York State and beyond. 

“Despite this devastating economic situation, many in the fashion community have risen to the challenge and pivoted production from mini-skirts to masks and from evening gowns to hospital gowns,” the letter adds.

The letter can be read here: https://bit.ly/2WhlKvH