Amidst COVID-19 Pandemic
With many states either already dropping their stay at home orders or scheduled to loosen restrictions soon, many businesses are eager to welcome customers back to their stores. Small businesses are especially anxious as they may literally be running out of funds soon once their Paycheck Protection Program funds are used. Companies however would be incorrect to believe that everything will return to business as usual. The reasons are twofold for small businesses needing to adapt during this time: first, bringing employees and customers back is a legal minefield that needs to be mitigated; second, customers may be hesitant to shop at businesses that have not adopted safety measures.
Legal Pitfalls for Companies Related to Coronavirus
Unsafe Work Conditions
The family of a deceased JBS SA meatpacking worker recently filed suit that alleged the unsafe conditions at a company plant resulted in him contracting a fatal case of COVID-19. The complaint brings claims of Negligence, Fraudulent Misrepresentation regarding the safety of working conditions at the plant, and Wrongful Death.
Companies should enact safety measure such as: mandating the use of masks; checking employees for a fever; and requiring social distancing of at least six feet when possible to mitigate the chances of being on the wrong side of a crippling Negligence suit. While legal scholars predict that there will a flood of litigation against businesses when reopening, they concede that only complaints alleging the heightened standard of Gross Negligence will have a chance of being successful. It will be difficult for a Plaintiff to show that the company was Grossly Negligent if a robust safety program is written down, made public, and actually followed.
Potential Bias in Rehiring
One strategy the talking heads have been promoting is to let younger individuals back first, as they are less likely to be affected by the virus. It may seem then that an employer would be prudent in first allowing younger workers back in a staged reopening, while allowing older or individuals with preexisting conditions back at a later stage once the COVID-19 spread slows. Not so fast. The employer would be opening itself to an Age Discrimination Claim.
Families First Coronavirus Response Act
The Families First Coronavirus Response Act (“FFCRA”) was passed in March 2020. It requires covered employers (those with fewer than 500 employees) to provide employees up to two weeks of paid sick leave for a number of reasons. Two weeks of paid sick leave at the employee’s regular rate of pay must be provided where the employee is unable to work due to being quarantined or themselves experiencing COVID-19 symptoms. Two weeks of paid sick leave at 2/3 the employee’s regular rate of pay must be provided when the employee is unable to work due to caring for an individual that is quarantined or caring for a child whose school or childcare is closed. If the employee has been employed for at least 30 days, an additional 10 weeks of paid family and medical leave must be provided at 2/3 the employee’s regular rate when caring for a child whose school or childcare provider is closed.
In an ideal world, employers would have plenty of funds to pay these types of benefits to employees. However, many small employers are barely able to keep the lights on may be forced to pay an employee for up to three months of not working. The employer would be eligible for a tax credit for these payments; however, this likely will not give many employers that are on the brink of defaulting on their loans much comfort. Employers must get appropriate need of the need for leave from employees in order to utilize tax credits.
An employer may find itself facing litigation if it chooses to terminate an employee requesting paid leave. A mother recently filed suit against Eastern Airlines LLC alleging that she was fired after making repeated inquiries and requests for paid family leave under the FFCRA.
One possible remedy for small businesses being unable to pay leave benefits is through a Department of Labor exemption. The Department of Labor has the authority to exempt small businesses from providing paid leave benefits under the FFCRA if it “would jeopardize the viability of the businesses as a going concern.” This exemption only applies for businesses with fewer than 50 employees. This exemption seems to apply only for employees seeking leave due to having to stay home to care for a child and not for employees quarantining themselves or experiencing symptoms. One of the following three conditions must then be met to claim the exemption: providing leave would result in the small business’ expenses and financial obligations exceeding available business revenues and cause the employer to cease operating at a minimal capacity; the absence of the employee requesting leave would entail a substantial risk to the financial health or operational capabilities of the employer because of their specialized skills, knowledge of the business or responsibilities; or there are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee requesting leave, and these labor or services are needed for the small business to operate at a minimal capacity.
An authorized officer of the business must document the determination that the criteria for the exemption are satisfied and retain such documentation for four years. The Department of Labor has instructed that no materials should be sent to them when seeking this exemption. Regulations are anticipated to be released in the future providing greater clarity on this exemption.
The Department of Labor has put out a helpful questions and answers document regarding other technical areas of the FFCRA such as calculating pay and number of employees.
Americans with Disabilities Act
The Americans with Disabilities Act (“ADA”) gives workers the right to request a reasonable accommodation which allows them to do their job. The ADA typically prohibits employers from taking employees’ temperatures as an unlawful medical examination. However, the Equal Employment Opportunity Commission has announced that employees can be tested as it is now job related and consistent with business necessity. What is not clear though is the question of what to do with workers with underlying conditions. Do they have to be segregated from the rest of the workforce? Can they demand to work from home while others are required to come into the office? These are the types of questions employers face as they reopen their businesses.
If the employee does not request a “reasonable accommodation,” the ADA does not mandate the employer to take action. If an accommodation is requested, the ADA regulations require an employer to consider whether there are reasonable accommodations which would eliminate or reduce the risk so it would be safe for the employee to return to the workplace. An employer may only bar an employee from the workplace if the facts support the conclusion that the employee poses a significant risk of substantial harm to him or herself that cannot be reduced or eliminated by reasonable accommodation. It may be best for employers to be more flexible during this unprecedented time and think about ways in which to reduce the risk and set up reasonable accommodations for those concerned about contracting the virus.
The ADA also mandates privacy of employee medical information. The CDC advises that if an employee is confirmed to have COVID-19, employers should inform fellow employees of their possible exposure to COVID-19 but maintain confidentiality as required by the ADA.
The previous sections have discussed the legal perils for businesses reopening. This Act focuses on what employers must do in the unfortunate event where they must lay off workers going forward.
The Workers Adjustment and Retraining Notification Act (“WARN Act”) typically applies to workers at companies with at least 100 employees who have worked at least 20 hours a week for more than 6 of the past 12 months. A covered employer must provide at least 60 days written notice prior to a plant closing or a mass layoff.
The 60-day notice is not required when a mass layoff is caused by unforeseeable business circumstances, natural disasters, and because of faltering companies. “As much notice as is practicable” must still be given. Although it is likely the case, it is unclear about whether COVID-19 will qualify as an exception to the 60-day notice. Two former Hooters workers recently filed a class action alleging the company violated the WARN Act. It is anticipated this case will fall within the unforeseen business circumstances exception, but employers should still be cognizant of the WARN Act notice requirements if layoffs are anticipated further down the road due to a slow recovery. Additionally, the WARN Act does not apply to temporary layoffs lasting less than six months. However, it will constitute a layoff where a WARN notice may be required if those furloughed employees are kept out of work for longer than six months.
Guidelines for Businesses Reopening
Most states, as well as the Occupational Health and Safety Administration (“OHSA”), have implemented guidance on reopening. The city of Cedar Rapids, Iowa has also created a business reopening guide. Employers have a general duty under OHSA to maintain safe workplaces. However, this guidance put forth by OHSA is not a standard or a regulation and creates no new legal obligations. It is unclear how state-imposed protocols will be enforced. What is clear is that businesses not following the protocols may face some negative attention. Most recently, there was a report that Mark Cuban hired “secret shoppers” to go to retail stores and restaurants throughout Dallas. It was discovered that 96% of the businesses were non-compliant of Texas’s minimum standard health protocols.
There are discussions that the next stimulus bill will contain some sort of liability shield for businesses reopening. However, businesses should not be waiting for Congress to be their saving grace on this matter. While employers would be wise to review all laws they need to follow and update best practices to mitigate their chances of being sued for Negligence, assuming a broad liability shield is not passed, businesses should not view this period as a time to do the least amount of compliance necessary. There are varying opinions on the severity of this novel virus, but those companies that are being proactive in opening, in a safe and responsible, way have been praised by leaders in the business community and are seeing a correspondingly positive jump in their stock prices. Small businesses should take notice of this reaction and do everything they can to create a safe environment for their employees and customers, as it is becoming evident, especially through this pandemic, that those companies which are willing to adapt to the times are those that will be successful in the long-term.
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