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Employer Liability Risks Relating to COVID-19

Earlier this year, legal commentators predicted a “huge explosion” in employment-related lawsuits relating to COVID-19. In fact, an article in the Wall Street Journal reported that “Plaintiff lawyers are massing to loot medical providers and employers in response to the coronavirus.”

And now, just a few months later, it has begun. Thousands of lawsuits have been filed relating to employment conditions, civil rights, business interruption insurance, etc. For instance, in a recently filed Nevada complaint, a labor organization alleges that employers did not enforce physical distancing, install plexiglass shields, follow reasonable contact-tracing and quarantine procedures, and otherwise protect their employees. See Local Joint Executive Board of Las Vegas v. Harrah’s Las Vegas LLC, No. 2:20-cv-01221 (D. Nev. June 29, 2020).

If businesses have not already done so, now is the time to examine policies and procedures to better protect employees, customers, and themselves. In doing so, here are some liability risks they should keep in mind:

Exposure Liability

The legal theories underlying exposure-liability claims include simple negligence, strict liability, and wrongful death. In general, a plaintiff asserting a personal injury tort claim will argue that a business breached a duty to owed to the plaintiff by failing to exercise the level of care that would be exercised by a reasonably prudent business under the same or similar circumstances. Thus, an employee or customer who contracts COVID-19 might have an injury claim if a business did not take reasonable steps to protect him or her from contracting the disease by, for example, enforcing social distancing, requiring masks, providing hand sanitizer, etc.

Strict adherence to—and perhaps exceeding, when possible—OSHA, CDC, and state or local guidelines may protect against or discourage these lawsuits. Businesses may also consider using written waivers to protect against exposure liability. However, waivers are dependent upon state law, and whether courts will enforce waivers relating to COVID-19 is unclear. Indeed, liability waivers that violate public policy are unenforceable, likely including any waiver that implicates workers’ compensation laws or OSHA liability.

Many employment-related exposure lawsuits will also be barred by workers’ compensation laws to the extent COVID-19 is considered an occupational injury. However, some creative plaintiffs may try to circumvent these laws by asserting other claims, including claims for public nuisance. See, e.g., Smithfield Meat Plant Conditions Assailed as Public Nuisance,  N.Y. Times, Apr. 24, 2020 (“A lawsuit filed against a Smithfield Foods plant claims it has created a public nuisance by failing to protect workers from coronavirus infection.”). A public nuisance claim usually requires proof that the defendant unreasonably interfered with the use or enjoyment of a public right and thereby caused the substantial and widespread harm. Native Vill. of Kivalina v. ExxonMobil Corp., 696 F.3d 849, 855 (9th Cir. 2012). “The general rule is that public nuisance actions must be brought by government officials. … However, a private party may bring a public nuisance action where the nuisance is ‘specially injurious’ to the private party, beyond the harm caused by the nuisance to the general public.” Trujillo v. Ametek, Inc., No. 3:15-CV-1394-GPC-BGS, 2015 WL 7313408, at *7 (S.D. Cal. Nov. 18, 2015).

Privacy Violations

The Americans with Disabilities Act generally prohibits an employer from making disability-related inquiries and requiring medical examinations. However, when there is a significant risk of substantial harm to the health of others that cannot be reduced by an accommodation, such as during a pandemic, the ADA’s protections may not apply. Thus, during a pandemic, employers should rely on the latest CDC and state or local public health assessments to determine if the situation poses such a direct threat.

Here, the CDC and public health authorities have determined that the COVID-19 pandemic meets this direct-threat standard, which means that employers now have greater leeway to inquire about employees’ health and to require testing. For instance, the EEOC has issued guidance that permits employers to take employees’ temperatures, require testing, and ask about certain health-related information.

Yet, even during a pandemic, employers do not have free rein to obtain and use information about employee health. Employers should implement policies or practices with an eye to privacy, balancing the need to collect information against privacy obligations, including protecting against data breaches. For example, while current CDC guidance allows employers to notify other employees and visitors of a COVID-19 diagnosis, including information about the relevant work area and dates worked, employers should not disclose the identity of the employee with COVID-19 to anyone except as may be required to a health agency.

Discrimination and Retaliation

Employers are already facing employment-practices litigation related to the pandemic. This includes claims relating to (1) discrimination (including disparate treatment or discriminatory impact), wrongful termination, and retaliation due to layoffs and reductions in wages or hours; (2) discrimination and retaliation based on which employees are brought back to work; (3) discrimination and retaliation following adverse actions against employees who refuse to return to work, whether due to fear, needing to take care of a child, or simply because they make more money from unemployment insurance; and (4) the failure to accommodate high-risk employees.

To help defend against such claims, employers should document all actions and preserve all records, including communications, that support employment actions. This especially includes preserving all information relating to the selection criteria used to identify impacted employees. Additionally, employers should review their policies in light of EEOC guidance, and employers should implement even-handed practices to mitigate COVID-19 exposure based on guidance provided by health authorities, including the CDC.

Employers fortunate enough to have employment practices liability insurance should also review their policies carefully. These policies often contain significant exclusions but typically cover discrimination, retaliation, and whistleblower claims. Employers should promptly notify their insurers of claims, even if the employer suspects that a claim is excluded or will be denied.

Wage and Hour Claims

Pay changes, reassigning employees to perform different jobs, requiring COVID-19 testing, and the transition to remote work are fraught with wage and hour litigation risks. For example, employers may face lawsuits for unpaid overtime by employees claiming that while working at home they worked more than the weekly or hourly thresholds. If an employer fails to keep adequate records of time worked, the courts will likely accept the employee’s testimony about how much they worked. Thus, employers that have not adopted means to accurately track applicable breaks and hours worked (including remote work) by non-exempt employees should do so immediately. Employers should also ensure that written policies regarding timekeeping, overtime, meal periods, and breaks provide clear instructions for remote employees. Guidance from the Department of Labor can be found here

Employers should also ensure that exempt employees remain primarily engaged in exempt work. Under the Fair Labor Standards Act, the more non-exempt work that an exempt employee performs, the less primary the exempt work becomes, which increases the risk of a misclassification claim and the obligation to pay overtime.

Violations of New Laws

New laws intended to combat the effects of COVID-19, such as the Families First Coronavirus Relief Act (“FFCRA”), create significant compliance challenges for employers. For example, employers with 500 or fewer employees now must provide:

  • Twelve weeks of family and medical leave (ten of which must be paid at two-thirds of their regular rate of pay, with a daily cap of $200 per day, or $10,000 total) if the employee needs to provide care for a child under 18 due to school closures or the unavailability of childcare.
  • Two weeks of paid sick leave to employees at either $511 per day for up to ten days if they need leave for their own care, or two-thirds of their regular rate up to $200 per day for up to ten days if they need leave to care for someone else.

Small businesses may be exempt from providing this paid leave due to school or childcare closures if it would jeopardize the viability of the business. However, claiming this exemption may invite litigation.

Keeping up with these news laws can be difficult. To limit or avoid liability, employers should ensure that their policies and practices are flexible and consistent with Department of Labor guidance. The Paycheck Protection Program and tax benefits under the FFCRA and Coronavirus Aid, Relief and Economic Security Act (“CARES”) were also designed in part to help with the costs of providing this emergency leave. More information about the new laws can be found here and here.