Services

How to Head Off Legal Risk as the Economy Reopens

By Lorna Garey
Covid Legal Risk

In short:

  • Attorneys expect to see ‘creative’ lawsuits as people go back to work
  • If you’re thinking of seeking an exemption to the FFCRA, be aware that dispensations are likely to be limited and require significant paperwork
  • While rules around taking employees’ temperatures and asking about symptoms have been eased, you still need to treat that data as confidential

Companies continuing or restarting operations are assessing the risk of potential lawsuits stemming from new health and safety policies in response to COVID-19.

The U.S. Chamber of Commerce recently said worries over class-action claims and other suits could stop businesses from reopening and called on Congress to protect companies that follow applicable federal and state guidelines for protecting staff and customers. To find out what particular areas companies should monitor in the coming months, Brainyard reached out to Atlanta-based Glianny Fagundo, a partner with Taylor English Duma LLP. Fagundo specializes in employment law and workplace issues.

Brainyard: Businesses around the country are now contemplating what it means to return operations to as close to normal as possible. From a legal point of view, what should they be thinking about?

Glianny Fagundo: First, personal liability: While a customer would have an extremely hard time demonstrating that he or she contracted COVID-19 at a particular business, since the virus is widespread, that does not mean that they will not try it. I highly recommend businesses talk to their insurance brokers to see the risks for which they are currently insured and review deductibles, liability limits and guidance on how to reduce exposure. We have heard of insurers assisting business clients with liability waiver forms for use with customers, for example.

Notwithstanding, with businesses and insurers expected to struggle over the next few months, perhaps years, businesses and their insurers may be forced to settle even the most absurd lawsuits just to avoid litigation costs.

Second, staffing decisions: Most businesses will not reopen at full capacity, either because of social distancing measures that would limit people per square foot or low volume of business. How you select the employees who will return to work may pose risks. The Department of Labor made it clear that employees who have been furloughed do not get Families First Coronavirus Response Act [FFCRA] paid leave. Will you bring everyone back except those who may qualify for FFCRA? That could be considered retaliation to avoid paying legally mandated leave.

Even basing employee recall decisions on seemingly neutral factors may create risks if certain protected groups are adversely affected more than others. Also, the EEOC continues to change its guidance as to what to do with employees who have been deemed vulnerable to COVID-19 complications. In fact, it just pulled its guidance in that regard and said it will issue a new brief quickly. It is important for employers to have someone designated to stay on top of all of these developments.

Third, OSHA and other health regulations or recommendations. Most, if not all, U.S. jurisdictions have issued guidelines as to PPEs and social distancing. It is important these are followed carefully.

Finally, employee privacy: The EEOC and other agencies have relaxed the standards for workplace medical tests, which were largely prohibited before. These agencies are now permitting employers to take employee temperatures and ask them about symptoms. Notably, the information obtained thusly is still highly confidential and could expose employers to liability under HIPAA, the ADA and other statutes.

BY: What specifically should companies know about the Families First Coronavirus Response Act, or FFCRA?

GF: Assume that it applies to EVERY employer with fewer than 500 employees.

There are a lot of myths out there about exemptions for employers with fewer than 50 or even 25 employees. While the statute authorized the secretary of labor to exempt some employers with fewer than 50 employees from the paid leave requirements, the final ruling from the DOL made the exemption very limited.

First, it exempts only small employers from the paid leave requirements associated with employees staying home to care for a child whose school or place of care is closed, or whose child care provider is unavailable. Small employers are still obligated to provide paid sick leave for all other reasons under the FFCRA.

Second, to qualify for the exemption, an officer of the employer must document that he or she has determined that providing the paid leave would jeopardize the viability of the business because:

  • Such leave would cause the small employer’s expenses and financial obligations to exceed available business revenue and cause the small employer to cease operating at a minimal capacity;
  • The absence of the employee or employees requesting such leave would pose a substantial risk to the financial health or operational capacity of the small employer because of their specialized skills, knowledge of the business or responsibilities; or
  • The small employer cannot find enough other workers who are able, willing and qualified, and who will be available at the time and place needed, to perform the labor or services the employee or employees requesting leave provide, and these labor or services are needed for the small employer to operate at a minimal capacity.

Importantly, as the language suggests, this analysis has to be performed for each employee requesting the paid leave — it is not a blanket exemption to an entire business.

BY: Do you foresee conflicts between local stay-at-home orders and statewide reopening orders?

GF: There were a lot of conflicts in the early days when local jurisdictions issued orders that were conflicting with neighboring local governments. For example, one county would grant an exemption for a certain type of business, but the county where that business’ employees lived was not subject to exemptions. This created a lot of issues.

Fortunately, most states have now issued orders preempting local orders, and we’re not aware of remaining conflicts. If, however, an employer is still in such a situation, they need to be reasonable and upfront about employees facing individual liability. Further, the employer needs to reconcile applicable shelter-in-place orders with employee eligibility for paid leave under the FFCRA.

BY: Is there potential fallout for an employee who may expose a customer to coronavirus?

GF: Unfortunately, yes. As I mentioned earlier, we are expecting a lot of creative lawsuits over the next few months. It would not be outside the realm of possibility that someone tries to sue another individual for COVID-19 contagion. If the individual sued was working on behalf of a business at the time of the alleged contagion, the employer may be held vicariously liable for the acts of its employee under the “respondeat superior” doctrine, which holds an employer legally responsible for wrongful acts done by an employee or agent, if such acts occur within the scope of employment.

As a result, even if the employer is not named in the lawsuit, the employer and its insurer should want to defend the employee to minimize liability as, ultimately, they may be the ones with the deep pockets who will end up having to pay any judgment.

BY: What are some of the possible issues that could arise from asking employees or customers to sign waivers of liability forms?

GF: Employers cannot release their legal duties to protect workers via releases. As a result, such forms are largely invalid, and would likely have the unintended consequence of upsetting the judge and the jury in a lawsuit.

In terms of customers, and if asking for a release is feasible, businesses are free to request them. I highly recommend that businesses seek the guidance of counsel in developing these releases, because to be effective, they need to take into account a variety of factors particular to certain industries and jurisdictions — this is not the time to buy or copy generic forms from the internet.

BY: Are there other federal or widely adopted state-level rules to guide businesses in terms of protecting workers, customers and the business itself?

GF: Employers should look at OSHA, CDC and EEOC guidelines as to employee safety and medical inquiries. These can all be obtained online.

In terms of states, each state has adopted its own guidelines, so employers should review those as well. When it comes to reconciling federal and state laws and regulations, it is important to remember that federal law will always be a base floor. While the states can create worker protections that go above what is federally required, they cannot go below. Therefore, if a state mandate does not go as far as the federal one, the federal one should be observed.

BY: What adjustments would you recommend to sick leave policies, if any?

GF: Relax rigid standards, like demanding the presentation of a doctor’s excuse when an employee is absent for three or more consecutives dates. First, if the employee was not absent due to COVID-19, it makes little sense to make him expose himself to it by going to a doctor’s office. Second, the healthcare system is largely overwhelmed, and the employee may not be able to get an appointment for weeks.

As a result, it may not be practical to demand a doctor’s excuse before approving paid sick leave.

Considering the financial burden that the crisis is imposing on everyone, employers should be generous in terms of granting paid sick and personal leave. In fact, the use of company-provided paid leave may be a way to minimize the need for pay cuts or furloughs and maximize the likelihood that employees will be available to work in the later part of the year, once the economy starts moving again.

BY: Employers may wish to ask workers about infection/antibody status or require them to have their temperatures taken at start of shift. Are we entering HIPAA territory?

GF: Absolutely. This is loaded with HIPAA and ADA issues. The EEOC and other agencies have relaxed the standards for medical testing in the workplace, which were largely prohibited before. These agencies are now permitting employers to take employee temperatures and ask them about symptoms. Notably, the information obtained is still highly confidential and could expose employers to liability under HIPAA, the ADA and other statutes.

As employers develop and implement these protocols, they should review the most recent guidance from the EEOC, HIPAA and the CDC regularly, and train employees on the importance of keeping all medical information confidential.

BY: Do you expect to see companies facing legal action if an employee becomes ill and says he or she was insufficiently protected?

GF: Yes as to actions, but not so much as to liability. This will vary from state-to-state as it will come down to workers’ comp laws and regulations. In states where the workers’ comp exclusive remedies bar is broad, employees will be forced to go through that system, and any actions they file in civil courts will be dismissed.

Interestingly, many states have regulations that deny claims for communicable diseases if such are prevalent in the general population and are not exclusive to the workplace. Hence, employees may end up in a Catch-22: If they say they got it at work, they must go through workers’ comp, but workers’ comp will deny their claim. Having said that, we have already seen some lawsuits trying to get around these bars by claiming that the employee brought the disease home, where he infected family, and they are the ones suing.

Again, we are expecting very creative litigation.

Importantly, employers should research the workers’ comp laws and regulations in the states in which they have employees to see what liability, if any, they could face there. Decisions to open certain facilities or plants should take these risks into account.

BY: Are employers required to notify staff or customers if an employee contracts the virus?

GF: Not under federal law, although federal agencies recommend people who have been exposed be notified of the exposure and told that they should track their symptoms and seek medical care if they develop any. Importantly, the name of the employee can never ever be disclosed. Further, employers should check on state and local laws and regulations in case those do mandate a different course of action.

Glianny Fagundo

Glianny Fagundo is a partner with Taylor English Duma LLP. Ms. Fagundo prides herself in partnering with clients to design and implement workplace policies and practices that are not just compliant with the law, but that further business goals and protect a company’s culture. Her years as a high-stakes employment and business litigator gave her a full appreciation of the value, and cost, of human capital. As a result, her employment law counsel and advice are carefully designed to maximize returns and decrease risks.

Ms. Fagundo routinely counsels national employers on workplace issues, including wage and hour, worker classification, joint employer/single enterprise, religious and disability accommodations, discipline, terminations, RIFs, executive employment agreements, and background checks. She also continues to defend companies in high-stakes cases including claims for restrictive covenants violations, discrimination, collective FLSA/wage, contractual breaches, fraud, consumer disputes, professional liability and products liability.

Industries in which Ms. Fagundo has considerable experience include healthcare, restaurants and hospitality, retail, professional services, transportation and logistics, and media/entertainment.

Mark Bianco

For more helpful information from the Brainyard and our friends at Grow Wire and the NetSuite Blog, visit the Business Now Resource Guide.


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