Managing the Prospect (or Reality!) of Increased Litigation During and After COVID-19

By Kristen M. Smith

Historically, economic downturns have resulted in increased litigation. The full impact of COVID-19 and the ensuing recession are yet to be seen, but we are starting to see trends in the types of litigation being initiated against businesses in the wake of COVID-19.

COVID-19 has spurred the creation of numerous changes to laws and regulations as the pandemic evolves. While businesses, particularly employers, try to navigate this ever-changing legal landscape, they are becoming a target for litigation initiated by employees, many of who are suffering the negative impact of the depressed economy and looking to recoup financial losses.

Below are a few examples of emerging trends in potential litigation risks for businesses, especially employers, and ways to mitigate those risks:

1. Potential Risk: Liability for non-compliance with local or state rules related to COVID-19.

Localities and states are frequently issuing and modifying orders that impose rules on businesses to reduce the spread of COVID-19. With rules changing on a nearly daily basis in some instances, compliance is challenging, and failure to comply could expose a business to liability.

In addition to complying, businesses should create clear, written policies that address the rule requirements. These policies should state that they are subject to change based on local and state orders as they develop. Having a written policy and a record evidencing enforcement of the same will help insulate businesses from allegations that they did not comply with local or state rules.

2. Potential Risk: Liability under the Americans with Disabilities Act (“ADA”) for enforcing safety protocols without making accommodations for employees with disabilities.

When implementing and enforcing safety protocols in response to COVID-19, businesses should be mindful of their obligations to employees under the ADA. If an employee refuses to comply with a policy due to a medical reason, the employer may have an obligation to provide an accommodation. Failure to do so could expose the employer to liability under the ADA.

To mitigate this risk, employers should maintain an open dialogue with employees to determine necessary accommodations. When in doubt, employers should seek the help of legal counsel to analyze the facts of a specific scenario to determine whether an accommodation is required, and what accommodation may be appropriate.

3. Potential Risk: Liability for failure to comply with the Families First Coronavirus Response Act (“FFCRA”), which requires certain employers to provide employees with paid sick leave for reasons related to COVID-19.

While the FFCRA only applies to employers with fewer than 500 employees, the aggregation rules, which take into account related entities in some instances, are complicated. Some employers have misapplied the rules and incorrectly determined that FFCRA does not apply to them, thereby exposing themselves to liability under the statute.

Employers should educate themselves on the intricacies of FFCRA when determining whether or not it applies to them and when determining what, if any, leave pay is owed to employees. An employment lawyer can help to analyze these issues and determine a course of action.

The foregoing list of risks and recommendations is not comprehensive. These issues are often fact specific and require thoughtful discussion to determine all potential risks and strategies to mitigate them. If you’d like to hear more about the ways in which litigation is impacting employers in the wake of COVID-19, please tune in to our webinar, Managing Risk in the Wake of COVID, which features input from franchisors who are navigating these issues first-hand.