02 Jun Covid-19 Business Halacha: Q&A With Rabbi Chaim Weg
PROPER PRECEDENCE IN PAYMENTS
What are the general parameters for a business, regarding paying employees vs. paying the company’s bills? Does COVID-19 affect the halacha in any way?
The general halacha is that one must pay his workers first. There are quite a number pesukim in the Torah related to this. There is a mitzvas “lo saseh” of “Lo salin pe’ulas sachir itcha ad boker” and there is a mitzvas aseh of “byomo titein sechoro”. The Chafetz Chaim in sefer ahavas chesed expounds on a business owner’s responsibility to pay his workers with the following. If he has accounts receivable, he has to collect them to pay his workers. If someone is holding money for him, he must make sure to collect it so that he can pay his employees. If one has unsold merchandise and can sell it, he should do so in order to pay his employees in a timely manner. The Chafetz Chaim continues, quoting the “Chinuch” which says that the exception to the aforementioned rules would be if one is going to have a hefsed merubah (great loss), by not paying certain debts. In this situation, he may pay off the debts before paying his employees.. So if one has payments that he must make to keep his business afloat, such as rent, vendors, and other bills that may carry significant interest and penalties, he may do so even before he pays his employees. Although COVID-19 makes these shailos more prevalent due to the financial constraints of many businesses, the halacha may change regarding what constitutes a hefsed merubah. As many states and municipalities have passed laws which prevent landlords from evicting their tenants, and bill collectors from charging interest during these times, it could be that the worker would come first regarding payment in these circumstances, even if he normally would not. The best thing for an owner to do is to discuss this with his employees before hiring them. If the worker is hired with the understanding that the payments will not be on time, the owner will not be ovair (transgress) on bal talin if he finds it difficult to pay them when their wages are due.
LANDLORD AND TENANTS RIGHTS AMID COVID-19
What is the halacha if a landlord rents out his basement to another family or a playgroup, and a member of that family or playgroup contracts the coronavirus? Does the landlord have any right to regulate what the tenants are permitted or forbidden to do? May he force them to move out so his own family does not catch the illness?
The Rema was actually asked a very similar question about five hundred years ago, when it was common to rent out rooms in one’s house. The Rema was asked about a tenant of such a room whose wife contracted an infectious disease, and the landlord demanded that the tenant move out. The Rema paskensthat the landlord may not force the tenant to leave due to the halachic principle of sechirus l’yoma memkar hu, one who rents something is considered to be the owner of that object or space during that time. Therefore, the same way that the halacha dictates that a person is permitted to use his house or apartment in an ordinary manner despite the objections of his neighbors (adam oseh l’toch shelo), the tenant who is sick with the virus has the right to use the basement normally by remaining there. If the landlord is so uncomfortable with the situation that he cannot live there, then he would be the one that has to move out. The Rema cites a fascinating case in the Gemara as proof to his ruling. The Gemara states that if a person rents out an apartment for a year from a landlord and the landlord’s house collapses, the landlord is not permitted to eject the tenant even if the landlord is living on the street, since it halachically belongs to the tenant. Using the same logic, the landlord would not be allowed to compel the tenant to wear a mask or gloves in the apartment, since common practice in current times is not to wear a mask or gloves in one’s own home. One important caveat to this issue is that if it is discovered that the tenant was sick before the kinyan (acquisition) of the property was effected, then the landlord can indeed cancel the agreement. The reason is that he can argue that it was a mekach ta’us (transaction in error), since he never would have rented the premises to someone who tested positive for Covid-19.
GIVING MA’ASER KESAFIM DURING TIMES OF FINANCIAL DIFFICULTY
As a result of the coronavirus, many people have unfortunately been struggling financially to make ends meet. Is the widespread practice of giving ma’aser kesafim, one-tenth of one’s earnings to tzedaka, applicable during this time?
Must one give ma’aser from his income during a period that he is not earning enough to support his own household? The general rule concerning issues of tzedaka and ma’aser kesafim is chayecha kodmin, your needs precede those of other needy individuals. As a result, many people may technically be patur from giving ma’aser even in ordinary times. This complex determination is subject to the amount of a person’s monthly expenses and evaluating what percentage of those expenses are in fact necessary and what percentage is spent on “extravagances” that are not truly necessary. In fact, the Chazon Ish suggested that in addition to the tremendous beracha that results from it, one of the common reasons for giving ma’aser is so people do not waste money on unnecessary expenses (though he stresses that one must not judge others, since what is “extra” for one person may be “needed” for another). Thus, in order not to do be bothered with calculating what is in fact needed and what is not, some people simply push themselves to give ma’aser regardless of their expenses. But those are struggling significantly financially and cannot support their family are certainly patur from giving ma’aser during this period of time.
A follow up question that often arises is whether one who was patur from ma’aser for a certain period of time should try to separate ma’aser retroactively from his earnings once business improves for the previous months. For example, in the current crisis, should someone who was patur from ma’aser during the months of March, April, and May give ma’aser in June, July, and August retroactively for the previous months when business (hopefully) improves?
According to the strict halacha, he is considered to be an ani (poor) during the months of March, April, and May, thus if he gives ma’aser separately for each month, he would not be chayav in ma’aser regardless of his earnings in later months. However, some people run businesses that have ups and downs and they must look at their net gain every year to assess their earnings. The Chafetz Chaim recommends that such a person make a tenai (stipulation) that at the end of the fiscal year, he will assess his net earnings and then give ma’aser based on that calculation. In our case, too, one who calculates his ma’aser kesafim on a yearly basis in this manner should assess his net earnings at that time, taking into account the losses due to the coronavirus, and give ma’aser accordingly. We daven that we should return to the state where all of us are able to give ma’aser at all times with relative ease and be zocheh to the beracha of financial stability.
SEPARATING MA’ASER KESAFIM ON A PPP LOAN AMID COVID-19
If a business receives a PPP loan in order to help make their payroll, must the business owner separate ma’aser kesafim from that money? Would it matter if the loan is ultimately forgiven?
Answer: The halachah is that one is not obligated to give ma’aser kesafim from loans, since the money was not earned and must be repaid. If the loan eventually turns into a gift, then the question would arise whether ma’aser must be separated at that point. It would seem that the way these loans are currently being issued, there is no chiyuv to separate ma’aser even after the money becomes a gift, since ma’aser need not be separated from business expenses, but only from the net profit. Therefore, since a PPP loan is used to help cover business expenses, such as the payroll, it is not considered part of the profits. If the money given would somehow impact upon the owner’s profits, then he would indeed have to separate ma’aser accordingly. It is important to note that one cannot simply use one’s tax returns to calculate the total profit, as there are some things that the IRS considers to be a deduction that the Halachah does not, while others are considered a deduction according to the Halachah but not according to the IRS. If the same question concerning a loan that is later forgiven arises with regard to an individual as opposed to a business, the Halachah is that one would be obligated to separate ma’aser, since gifts of money are for sure chayavin ma’aser. According to Rav Moshe Feinstein, though, there may be an exception to this rule if the gift was given for a specific purpose by the donor. In such a case, since the donor would not want the recipient to use any of the money for other purposes (including for tzedaka or ma’aser), one would be exempt from separating ma’aser from it.