Team Management

COVID-Related Lawsuits Are Spiking. Are You Prepared?

Barbara C. Neff  

The lingering COVID-19 pandemic has created a world of unknowns, but one thing is certain—businesses will face years of employee lawsuits related to the virus. You may have seen headlines about claims already filed against companies like Walmart and Kroger, but it’s not just the behemoths that need to worry about costly litigation.

Employment-related claims against businesses of all sizes tend to spike in economic downturns that cause devastating job losses. Throw in a novel disease that has people scared not just for their livelihoods but also for their lives, and you’ve got an even riper environment for lawsuits by current or former employees. Plaintiffs’ attorneys already are on the hunt for workers with bones to pick.

That’s why you need to know the types of claims you can expect, how you can reduce your risk of such claims, and where you might find cover if you need it. Here we’ll focus on potential claims that may be made by employees and how you can reduce your risk

Potential claims—and how you can preempt them

Unfortunately, litigious employees have a variety of claims to choose from when it comes to COVID-19. Here are some of the most likely, along with some steps you can take to help avoid them.

1. Discrimination, retaliation, and harassment

The harsh economic impact of the pandemic may have forced you to cut staff and/or compensation. Affected employees might argue that these actions were discriminatory, based on a protected characteristic (like: age, disability, race, religion, sexual orientations, and more).

They also could contend you were retaliating against them for:

  • Taking or requesting leave
  • Requesting an accommodation
  • Complaining about COVID-19-related safety issues

You’re at risk of similar discrimination claims when you reopen if you don’t bring back your entire workforce at once. If, for example, you start by returning younger, ostensibly healthier employees to work—even with the best of intentions—it could lead to claims of disability, pregnancy, or age discrimination. 

Offering flexible work arrangements to help employees? If you treat women more favorably than men, you could be accused of making unlawful sex-based assumptions about childcare responsibilities.

Beware of the possibility of harassment, too, whether of employees who have COVID-19 or Asian employees harassed because of the geographic origins of the virus. Don’t assume that you’re in the clear just because everyone is working remotely. Your employees can harass each other electronically.

What you can do to reduce your risks:

  • Document the legitimate, nondiscriminatory business reasons for your employment actions (for example, your criteria for terminations, pay cuts, and returning employees to work, such employee profitability, productivity, or expertise).
  • Base your employment actions on criteria such as job function, skills, and past performance.
  • If you decide to screen your employees for COVID-19, we recommend you test all your employees rather than a subset.
  • If an employee refuses COVID-19 testing due to a sincerely held religious belief, seek advice from an employment law attorney on how to proceed. 
  • Do not ask your employees if they have underlying medical conditions that make them particularly vulnerable to COVID-19 (the only exception to this is if an employee requests a reasonable accommodation; in that case you may inquire about the nature of the medical condition in order to supply the proper accommodation)
  • Do not ask about the medical status of an employee’s family members.Train your managers on the relevant federal and state laws regarding discrimination, harassment, and retaliation.
  • Communicate  your anti-discrimination and -harassment policies clearly to your employees, including the reporting mechanisms, and update your employee handbook, if need be.
  • Investigate complaints promptly, thoroughly, and according to established and consistently applied protocol, and take appropriate action only after consulting an attorney.

Read our guide on avoiding COVID-related workplace discrimination here

2. Leave-related claims

The federal Family and Medical Leave Act (FMLA) and many of its state counterparts apply only to employers with at least 50 employees, so plenty of small businesses have had no leave policies. But COVID-19 prompted the passage of another leave law that could ensnare many smaller businesses. 

The Families First Coronavirus Response Act (FFCRA) applies to employers with fewer than 500 employees. It generally requires covered employers to provide paid sick leave and expanded family and medical leave for certain reasons related to COVID-19—including when employees can’t work because 1) they’re ill with the virus, or 2) they have to care for their children whose school or child care provider is closed due to COVID-19.

The FFCRA does include a “small business exemption” for employers with fewer than 50 employees, but you need to understand its limits. The exemption applies only to paid leave due to school or child care closures and only when the leave would jeopardize the survival of your business.

The sudden introduction of these new obligations left some small employers, particularly those with no existing leave policies or procedures, scrambling to get up to speed. The US Department of Labor (DOL) has since offered guidance, but your innocent missteps could open the door to leave-related claims.

What you can do to reduce your risks:

  • Stay current on federal, state, and local laws regarding leave and regularly review your policies for compliance.
  • If relying on the small business exception in the FFCRA, document how your business meets the DOL’s criteria (as explained in Question 58 of the DOL’s FFCRA guidance).
  • Don’t rush to discipline employees for absences.
  • While the EEOC states that an employer may request medical documentation certifying fitness for duty when employees return to work, they also caution this may not be practical during the pandemic.
  • Properly compensate employees on paid leave.

3. Wage-and-hour claims

Businesses of all kinds made an unprecedented shift to remote work in the spring of 2020. Were you among the employers who dipped their toes in the remote work pool for the first time?

You may have been pleasantly surprised at the results, but you also could have put yourself at risk of wage-and-hour claims, especially if nonexempt employees were working at home. After all, it’s harder to track time when employees are off-site.

You also could run into wage-and-hour problems if you trimmed salaries or wages as part of budget cuts. Previously exempt employees may now be nonexempt and overtime-eligible (for example, if their salary dips below the applicable threshold), and you might have inadvertently dropped wages below minimum wage requirements. If you cut staff, did you properly compensation those employees for past work?

Plus, when you reopen, you could need to pay employees for the time they now spend “donning and doffing” personal protective equipment (PPE) or cleaning before and after their shifts.

What you can do to reduce your risks:

  • Pay laid-off employees for all hours worked before they were let go.
  • Draft and distribute written policies on overtime, meal times, break periods, and time spent donning and doffing PPE and cleaning; update your employee handbook with this information, if need be.
  • Develop policies and procedures to ensure the accurate logging of time (for example, you could introduce electronic time sheets or online timekeeping systems); update your employee handbook with this information, if need be.
  • Review compensation for overtime and minimum wage compliance.

4. Safety-related claims

With COVID-19 so easily spread, employers can expect a surge in claims related to inadequate safety precautions, including that you failed to:

  • Properly screen employees, customers, and others visiting the workplace
  • Properly clean and sanitize
  • Provide PPE
  • Enforce social distancing and mask policies
  • Provide reasonable accommodations for employees who request them

Remember, too, that the federal Occupational Safety and Health Administration (OSHA) and state occupational health authorities prohibit retaliation against employees who refuse to work out of health and safety concerns. Employees can’t bring lawsuits for such retaliation on their own, but the agency can pursue an enforcement action if an employee files a complaint with it.

OSHA also could take enforcement action against you for violations of the general duty clause, which requires employers to provide a workplace free of “recognized hazards” that are causing, or likely to cause, death or serious physical harm. At this point, it’s safe to say COVID-19 is such a hazard.

The bloodborne pathogens, PPE, and other standards might be triggered by COVID-19, as well.

What you can do to reduce your risks:

  • Develop and enforce clear policies and practices to mitigate the risks of COVID-19 exposure in your workplace.
  • Incorporate the most up-to-date regulations, protocols, and guidance from the Centers for Disease Control and Prevention, OSHA, and state and local authorities for employers in general and, if available, your industry. Reliance on these sources, even if not mandatory, will go a long way toward establishing that you acted in good faith and exercised reasonable care.
  • Provide training to managers and employees on all new policies and practices.

5. Privacy violations 

The good news is that the US Equal Employment Opportunity Commission (EEOC) has given employers temporary permission to screen employees for symptoms, or administer a COVID-19 test, before allowing them in the workplace. These actions would normally violate the Americans with Disabilities Act. 

The bad news is that this makes you vulnerable to claims related to the confidentiality of employees’ medical information. According to the EEOC, that information includes an employee’s statement that they have the disease or suspects they have the disease, and your notes or other documentation from questioning an employee about symptoms.

What you can do to reduce your risks:

  • Conduct screenings and tests in private.
  • Keep COVID-19-related medical information separate from personnel files. 
  • Limit disclosure of the information to those who need to know (for example, coworkers who have been exposed) and without disclosing identifying information where possible.
  • Check your state law for any notification requirements (in California, for example, you must notify employees that you’re collecting their private data and explain why).

What about insurance coverage?

Despite your best efforts, you could find yourself handling employee claims around COVID-19. It’s possible, though, that you may be able to shift the financial responsibility to an insurer, especially for illness claims stemming from exposure on the job.

How workers compensation can potentially protect your business 

As you probably know, workers’ compensation generally is the exclusive remedy for work-related injury and illness. It’s too early to say whether all states will treat COVID-19 as an occupational injury or illness (or under which circumstances they might) but that generally would help employers—although it also might boost your workers’ comp insurance premiums.

Some states already have moved in that direction by creating presumptions that workers who contract the virus have a workplace injury under the state workers’ comp law. The application of the presumption—like workers’ comp in general—varies by state, though. Some states apply the presumption to all workers, for example, while others restrict it to certain categories, like health care or other essential workers.

It’s possible, too, that COVID-19 wouldn’t be covered by workers’ comp due to an exclusion for “ordinary diseases of life,” meaning those illnesses the general public is equally exposed to. States also may have exceptions for contagious diseases resulting from exposure to coworkers, intentional injuries, fraudulent concealment, or other circumstances. Crafty plaintiffs’ attorneys are no doubt searching for other ways to circumvent the exclusive remedy defense as you read this.

How workers compensation can potentially protect your business 

Don’t forget: you have more types of claims to worry about than those for on-the-job illness or injury. For other claims, you might have coverage under an employment practices liability insurance (EPLI) policy

Where triggered, EPLI covers both damages and defense costs. It may, however, include exclusions for wage-and-hour, OSHA, and leave claims, as well as bodily injury and disease. EPLI coverage can vary greatly, so you’ll need to check your specific policy language. 

If you are considering purchasing an EPLI policy, consult with an attorney first. It is very possible that a policy purchased now will not cover claims that arose before it was in effect. 

Legislators to the rescue

As of this writing, Congress is at work on another federal relief package to mitigate the effects of COVID-19. One provision under debate would provide a liability shield from claims by employees (and customers) in certain circumstances. 

Several states have enacted their own shields, and others may join their ranks. So far, the laws vary significantly in terms of the scope of protections. Broadly speaking, they provide immunity from liability for claims related to exposure to, or infection with, the virus—as long as the employer has acted in good faith and not with intentional or gross negligence.

Bear in mind, though, that a liability shield will likely come with significant limitations—it will only apply only to claims based on exposure to COVID-19. A federal or state liability shield won’t protect you from other types of claims, such as those over discrimination, leave, wage-and-hour violations, or privacy.

Proceed with caution

Even frivolous lawsuits drain time and money you don’t have to spare. Take the steps spelled out above to reduce your odds of ending up on the hook for a costly judgment. 

And, when in doubt, consult an attorney. The upfront expense usually is much cheaper than defending a lawsuit.

Barbara C. Neff Barb Neff has been writing about a variety of legal and other topics since 2001. She has a law degree and a master's degree in journalism.
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