Minimize Potential Liability During The COVID-19 Pandemic

Pete is a restaurant owner whose business has been sidelined by the COVID-19 pandemic. Now, because the infection rate in his state has gone down significantly, Pete’s business is being allowed to reopen to a certain extent. This is great news for Pete and his fellow restaurateurs, and he is excited to re-hire his employees and get moving again. But Pete is concerned about his exposure to litigation risks associated with the pandemic: Could he and his business become vulnerable to lawsuits from customers or employees if they happen to get sick or, God forbid, die. How can he make sure that when he starts operations again he is not going to end up being more aggravated than if he just kept his business closed.

For sure, Pete has a lot to think about, and things probably will not get back to normal for a while, but, in the meantime, there are a few things he and other small business owners can do to ensure that their litigation risks are held to a minimum:

1.  Find your state’s reopening guidelines and abide by them.

Although the Center for Disease Control (“CDC”) and the Occupational Health and Safety Administration  (OSHA)—two federal agencies–have prescribed social distancing and related employment guidelines, these guidelines are strong recommendations only and do not rise to the level of being enforceable federal law. As such, the principal authorities to look to are the state and local governments managing the regions in which the business is located. Each state is reopening at a different rate and this means that rules can vary from state to state, so the first thing to do is for Pete to consult his State Government’s website. In New York state, for example, specific guidelines, containing mandatory rules and recommended best practices have been prescribed for Food Services and can be found online.

Moreover, some states also give local communities authority to fashion their own reopening guidelines to meet specific local conditions. Businesses in New York City, for example, need to understand New York City’s own reopening rules in addition to New York State’s own guidelines.

Because conditions are fluid, every business should appoint someone in their organization to be responsible for reviewing guidelines on a regular basis to ensure that management knows about changes to them that may affect how business can be conducted.

Another recommendation is for a business to be in contact with their local state representatives (i.e., assemblyperson or senator) and make sure that the business is on those representatives’ respective listservs so that it can receive regular updates about government actions regarding the economic reopening.

Finally, businesses should contact their insurance carriers to find out about the extent to which their policies will cover COVID-19-related liability claims and to purchase additional insurance, if necessary.

2.  Failing to meet minimum social distancing guidelines can expose an employer to claims of willfulness and gross negligence.

While there is a legislative effort under way on the Federal level to reduce the risk posed to business owners by COVID-19-related claims, the prevailing wisdom is that actual liability risks are reduced when businesses are complying with reopening guidelines. According to certain commentators, businesses who ignore social distancing and mandatory mask-wearing requirements mandated by state reopening guidelines are most likely to hazard COVID-19 claims on the grounds that those businesses have been willful and grossly negligent in ignoring them.  Of course, under the civil law, a patron would have to show that it is more likely than not that she contracted COVID-19 while eating at Pete’s establishment, a claim possibly very difficult to prove, but lawsuits, even frivolous ones,  can be expensive to defend.

Similarly, businesses, that fail to provide their employees an adequate supply of personal protective equipment, may be vulnerable to lawsuits initiated by employees who claim to have become infected on the job, as well as regulatory claims that can be asserted by state and federal labor agencies. Employers should confer with their State’s Workers Compensation Board to find out about the extent of the employer’s workers compensation coverage should COVID-19-related disability claims arise.

To reduce litigation risks further, many businesses, like Pete’s,  have required their patrons to execute waivers, providing that patrons understand and acknowledge that in patronizing Pete’s business, they assume the risk of infection and so cannot sue Pete for damages that may result. Whether these waivers are enforceable can depend on state law, but, in general, waivers are unlikely to protect businesses from their own gross negligence, i.e., failing to meet reopening guidelines. Commentators have weighed in that there is no downside to requiring patrons to execute such waivers if businesses understand that they may not be enforceable. Finally, liability waivers that an employer may require their employees to sign will likely be found unenforceable under applicable state and Federal labor laws.

3.  Document, document, document…

Reopening the economy is going to be tricky and there is no question that the litigation risk posed to businesses by COVID-19-related claims is palpable, but by complying with reopening guidelines, businesses should be able to keep such risks to a minimum. Critical to being able to do this, however, businesses will need to document, to the extent possible, their compliance. For example, businesses should keep records about how they have fitted out their dining rooms to comply with the 6-feet social distancing and density requirements. Records should also be kept concerning temperature screenings of employees and the issuance to employees of personal protective equipment. It is also recommended by many guidelines that restaurants also keep track of where patrons are sitting and the staff that is assigned to them so that, in the event of infection, there can be contact tracing.

The Takeaway:

Litigation risks should not be ignored but neither should they stop Pete from reopening his business. By making sure, ahead of his restaurant’s reopening, that his business complies with reopening guidelines, is able to obtain updated information on rule changes, has adequate insurance, and has a system in place to keep records showing his business’s good faith efforts to comply with applicable health and safety measures, Pete should be in a good position to relaunch his business while keeping litigation risks in check.

Related content:

Work Made for Hire and Intellectual Property

When a Small Business Becomes a Multi-Owner Enterprise

When Is an Oral Contract a Legally Binding Agreement?