As companies continue to suffer in light of the spread of COVID-19 and drastically disrupted operations on the front and back ends, which have taken a significant toll on their bottom lines, many have been awaiting the lifting of states’ stay-at-home orders and/or shelter in place mandates. In light of the gradual phasing out of such orders across the country, most of which began on May 25 and which vary from state to state, businesses across the board are faced with a common question: what are the legal risks and responsibilities that come with reopening?
A key element in this consideration – and one that non-essential retailers in New York City, which are permitted to open their doors in some capacity beginning on Monday are certainly asking themselves – is whether and to what extent companies will be deemed responsible if an employee or a customer contracts COVID-19 while at work or while shopping in a retail establishment. Beyond that, questions abound as to what exactly companies need to be prepared to do if an employee does, in fact, test positive for the still-spreading virus, and what legal complications can come if a customer contracts it while on their premises.
Recording and Reporting
In terms of companies’ responsibilities when it comes to reporting employee cases of COVID-19, the Occupational Safety and Health Administration (“OSHA”) mandated that beginning on May 26, 2020, if an employee has been diagnosed with the coronavirus, an employer with more than 10 employees must undertake a “reasonable investigation” to determine if an employee’s diagnosis is: (1) confirmed; (2) “work-related,” meaning that “an event or exposure in the work environment either caused or contributed to” the illness; and (3) the case involves one or more of the general recording criteria specified by OSHA, such as if it involves the employee getting medical treatment (beyond mere first aid attention) or spending days away from work.
If these three elements are met, the COVID case must be recorded by the employer in its OSHA 300 log, and ultimately, submitted to the government agency in accordance with its reporting guidelines, which is typically on an annual basis. (In regards to serious cases, the reporting standard is heightened. For example, employers must report any work-related COVID-19 fatality within 8 hours and any hospitalization of a worker as within 24 hours). In order to avoid penalties, including potential fines, an employer must properly record and report COVID-19 cases.
“At a minimum,” employment attorneys Morgan Tanafon and David Barmak, state that “OSHA recommends that all employers develop an infectious disease preparedness and response plan, and stay informed of the latest guidance to keep the plan up to date.” OSHA asserts that such a plan “should consider and address the level(s) of risk associated with various worksites and job tasks workers perform at those sites; where, how, and to what sources of COVID-19 might workers be exposed; non-occupational risk factors at home and in community settings; workers’ individual risk factors (e.g., older age; presence of chronic medical conditions, including immunocompromising conditions; pregnancy); and controls necessary to address those risks.”
The Legal Risks
As for legal risks, employers face a number of sources and forms of potential liability. However, one, in particular, stands out: exposure liability. What the U.S. Chamber of Commerce considers to be “perhaps the largest area of concern for the overall business community,” and what is among the most concerning for companies on the verge of reopening, exposure liability is likely to lead to a flood of employee class action lawsuits. Legal experts predict that employees and customers, alike, will make claims that unsafe workplaces – or retail establishments, for instance – caused them to contract COVID-19 or subjected them to a heightened risk of exposure.
The core assertion in such a claim would be that an employee or customer was exposed to COVID-19 while on the job, present within a retail establishment (as a customer) or as the result of a business’ particular action, or failure to act, and became ill as a result. As the Chamber of Commerce notes, “Depending on the legal theory underlying the claim, proving causation may be a challenge” for those that opt to initiate such legal action down the road, “the threat of exposure-related lawsuits will inevitably deter some businesses from reopening even after it is determined that they could safely operate by following the guidance of appropriate health authorities.”
In terms of employees, alone, (as opposed to employees and customers), companies are already are facing pandemic-related litigation. Amazon, for instance, was named in a lawsuit in New York federal court this week for allegedly failing to provide adequate protections for employees at its Staten Island facility, thereby, putting them – and their families – at risk.
Such fear of potential litigation is likely weighing on retailers. As Bloomberg’s Kim Bhasin reported this week, while non-essential New York City establishments are legally permitted to resume business in a limited capacity on June 8, at least “some of the city’s biggest stores will not be participating.” Coach, Kate Spade and Stuart Weitzman will not be opening any of their New York outposts, Bhasin revealed, nor will beauty giants Sephora and Ulta, among others.
Meanwhile, not all are being quite as hesitant. Tiffany & Co., which is reportedly in the midst of potential deal renegotiations with luxury goods conglomerate LVMH Moët Hennessy Louis Vuitton in connection with their pending $16.2 billion merger, has set a tentative reopening date for June 11, likely hoping to get a jump on its post-lockdown revenue rebound.