The coronavirus is the biggest topic on most everyone’s minds right now. We have been asked some questions by our clients and seen some recurring issues raised by this situation. We have provided answers to some frequently asked questions below and also included practical tips for managing a few of the legal issues raised during this difficult and uncertain time.
FAQ 1: Will I be required to fulfill contractual obligations if doing so has been rendered impossible because of the effects of the coronavirus?
Answer: If your contract has a “force majeure” clause in it then you probably do not have to perform under the contract. “Force majeure” is an event outside of the control of a party to a contract that prevents the party’s performance. In order for an event, like the current pandemic, to be a force majeure 1) the event must be beyond the control of the affected party; 2) the affected party’s ability to perform must have been prevented, impeded or hindered by the event; and 3) the party must have taken reasonable steps to mitigate the event or consequences. The COVID-19 pandemic is certainly capable of being a force majeure event, but your specific situation will also depend on the contractually required activities, how those activities have been affected and also what actions you took to mitigate the effects.
FAQ 2: How will the coronavirus affect pending or anticipated litigation?
Answer: All federal and state courts in Texas are handling the coronavirus differently. Some courts have closed entirely, while others are hearing essential matters only. What is clear is that this event is going to create significant delays for civil dockets. Before the pandemic, district and county courts in Harris County still had not returned to full operating capacity since Hurricane Harvey because of the damage to the criminal courthouse and the fact that the civil courthouse was sharing courtroom space with the criminal courts. Even before COVID-19, some estimates were a minimum of two years to get a trial date in a Harris County civil court. That time estimate is sure to be stretched out even further now. Motions and routine matters are not being heard at all right now, but the courts will catch up on those fairly quickly once they reopen.
FAQ 3: For employers and employees, are businesses required to continue to pay people who are not working because of COVID-19?
Answer: This depends on whether employees are classified as “exempt” or “non-exempt” employees under federal law. The Fair Labor Standards Act defines non-exempt employees as those who are not exempt from the FLSA’s minimum wage and overtime requirements. Non-exempt employees are typically those who are paid hourly. Employers are only required to pay non-exempt employees for hours actually worked. The FLSA defines exempt employees as those performing executive, professional or administrative duties and are typically paid a salary. Generally, employers must continue to pay exempt employees. However, employers do not have to pay exempt employees for weeks in which they perform no work. They must pay exempt employees for weeks in which the employee performs any work at all, even if the amount of work done in a given week is significantly reduced. There are additional specific rules regarding the use of vacation and paid time off (“PTO”) time as part of the compensation structure.
FAQ 4: What obligations does an employer have to its employees if it shuts down during the quarantine?
Answer: It depends on the size of the business, but larger employers are usually required to at least provide notice to employees of a shutdown. There are exceptions to the notice requirement, however, and the COVID-19 pandemic likely falls within one of those exceptions.
FAQ 5: Can I be liable for someone contracting COVID-19 if, for example, I require employees to come to work and an employee contracts the disease potentially at the workplace?
Answer: There are myriad situations that could occur in a business where someone could contract the coronavirus, or any infections disease for that matter, at the place of business or because of certain types of business activity. These types of cases would be heavily fact-dependent. Most likely, this type of personal injury claim would be brought as an action for negligence. Negligence has four components – duty, breach, causation and harm. Did the business have a duty to the person affected? Did the business breach that duty? Did the business’ breach of the duty cause the issue facing the claimant? Did the business’ breach result in harm or some type of damages to the claimant? Businesses certainly have duties to their employees and customers to provide facilities and engage in business practices that are not unreasonably dangerous or harmful. In assessing breach, the standard of care has to be defined. The standard of care is what a reasonable and prudent business would have done in the same or similar circumstances. The answer is going to be dependent on the specific circumstances of the case. If a business knowingly exposed employees or customers to someone who was infected with the virus then there is more likely to be a finding that the business breached its duty of care. On the other end, if a business remained in operation, but the business is not one where there is a lot of interpersonal contact and the degree of risk of contraction of an infectious disease is objectively very low, then the business would most likely not be found to have breached the standard of care. The next element of causation would probably be the stickiest to prove in this type of case. In cases of community spread of the virus the source of the virus present in the infected person is unknown. Proving the timing and source of exposure and contraction of the coronavirus would probably very difficult, if not impossible. Finally, a claimant would have to prove that they suffered some damages as a result. Damages can be in the form of lost pay for time lost at work, compensation for medical expenses, pain and suffering, mental anguish and potentially punitive damages.
Practical Tips for Dealing with Some Legal Ramifications of COVID-19:
- If you are concerned that the pandemic will cause you to breach existing contracts, review the contract to determine if it contains a force majeure provision. It might be specific enough to actually include pandemics within the definition.
- Regardless whether you think a force majeure clause will absolve you from a breach of contract claim, it is best to provide as much advance notice to the other party as possible. Then, do what you can on your end to mitigate as much of the damages as possible. We have found that being proactive, communicating effectively and making an attempt to work with the other party in good faith will go a long way to preventing legal claims in the first place.
- If you are currently involved in a civil lawsuit, or you anticipate that you will be soon, look at ADR alternatives. ADR is “Alternative Dispute Resolution” and includes things like arbitration and mediation. Mediation is the simplest, cheapest and most readily available type of ADR and it can be very effective. However, you need to understand, as a litigant, that you are going to have to be flexible and willing to compromise (i.e., not get everything you want) if you elect to go to mediation. Otherwise, you will probably be waiting years for a final resolution of your case, not to mention bearing the uncertain costs and time commitments of litigation in the meantime.
- When dealing with employer/employee issues, there are often more than just legal issues to consider. Based strictly on the law, businesses are not required to pay non-exempt, hourly wage employees for time they do not work. Businesses are required to continue to pay exempt, salaried employees their full salary for any work week where they do any work at all. We are seeing a lot of businesses committing to continuing to pay even non-exempt employees as a business decision for purposes of employee retention, morale, public relations or simply because they feel it is the right thing to do under the circumstances.
- If you are considering shutting down your business entirely during the quarantine, provide as much advance notice as possible to your employees. The more notice you give, the lower the potential amount of damages, if any, in the event you were found to violate any shutdown notice requirements.
- Finally, businesses should not be overly concerned about liability related to contraction of the coronavirus. In litigation, as in other aspects of life, an ounce of prevention is worth a pound of cure. Maintain good business practices in compliance with the recommendations of the federal, state and local authorities for dealing with the coronavirus outbreak and you will have met your duty to your employees and the public. In any event, even if someone tried to bring a claim against your business for exposing them to the coronavirus it would be exceedingly difficult to prove that something you did or did not do caused them to contract the disease.
As of now, our office is open during normal business hours, though with reduced staffing. We are here and available to serve our clients. If you have any questions about coronavirus-related legal issues or any other legal matter, please do not hesitate to call us. We do not charge for initial consultations.
Take care, be smart and stay healthy!