How to mitigate legal liability while reopening your business

As states begin to relax restrictions on social gatherings, businesses are trying to reopen in a manner that is safe for their employees, vendors, customers and clients. They’re also trying insulate themselves from the legal exposures they face as they work out a plan to get their business up and running.

“I’m getting a lot of questions from employers who want to do right on all of those fronts,” says Molly Meacham, a shareholder at Babst Calland. “They are really working hard, thinking through the issues, listening to state, local and federal government advice, all while trying to keep their businesses running.”

Smart Business spoke with Meacham about addressing the legal risks that come with operating during the pandemic.

What legal concerns do companies have as they reopen?

The most significant concern is that a company will have an outbreak at their workplace. If that happens, it means considering the company benefits employees should be entitled to, such as sick leave or short-term disability, if they are eligible for leave under the Family and Medical Leave Act (FMLA), if they are covered by Families First Coronavirus Response Act (FFCRA) and eligible for those leaves, or if they’re entitled to any accommodation under the Americans with Disabilities Act.

Another risk is that contracting the illness could lead to a lawsuit or workers’ compensation claim. In a classic workers’ compensation scenario, the employee would need to prove they contracted the virus at the workplace. Some states are reducing employees’ burden of proof, or covering COVID-19 illness for certain groups of employees. For those states that are not making changes, whether or not COVID-19 is covered by workers’ compensation is likely to be a hotly litigated issue.

The regulatory and legal burden on employers has increased dramatically with this pandemic. For example, the Department of Labor has hired a number of new Wage and Hour Division investigators to enforce wage and hour laws, including the new FFCRA. The increased regulatory burden and increased enforcement could lead to administrative action or civil liability for companies found to be in violation.

How can companies reduce their litigation exposure?

Some companies are looking at COVID-19 exposure liability waivers to provide some legal insulation. Those waivers are of limited utility against employee claims, as an employer typically cannot compel employees to waive future rights, their rights under workers’ compensation, or their right to make an OSHA complaint for an unsafe workplace. Therefore, employee waivers are likely to generate bad will and skepticism without much return.

The effectiveness and enforceability of waivers for customers, clients and third parties who are accessing a company’s premises depends on state law and the specifics of the waiver. Although those waivers may ultimately be enforceable in certain states, for some businesses the limited potential legal protection may be outweighed by the negative impact on the company’s business relationships. In addition, in some states those waivers may ultimately be unnecessary, as some states are passing legislation granting businesses immunity from liability for harm caused by COVID-19.

How can companies keep people safe and insulate themselves from legal repercussions?

It’s important to have a response plan in place. If there’s an incident or exposure in the workplace, the company should first care for the impacted employee, then ensure that other potentially impacted employees are promptly notified and removed from the workplace if necessary, and that steps are taken to disinfect the workplace.

For companies that have a plan in place that is compliant with federal, state and local guidelines and regulations, and the company clearly communicated that plan to employees and customers, it will be difficult for a court to second-guess those steps and say that a company should have done more.

These are difficult times. Through preparation, companies can balance safety with continued operations and maintain the safest possible premises for employees and third parties, such as vendors, customers and clients.

Insights Legal Affairs is brought to you by Babst Calland