Last Updated: May 26, 2020
As businesses prepare to re-open during the Coronavirus pandemic, it’s important that they understand potential liability implications.
Unfortunately, the answer to a question that begins with “can I be sued for…” is always “yes”. While you can be sued, it does not mean that you will or will not be found to be liable. At this stage, following best practice guidelines as well as maintaining thorough documentation every step of the way are both critical.
Following is a brief overview of the top 5 areas of concern for employers.
If you have specific questions related to your business, please contact your GKG team.
Workers’ Compensation (WC)
Employees who have been working at home, idle, and/or furloughed will be returning to work after an unusually long absence. The potential for injury will be heightened because employees may have lost fitness and/or familiarity with proper procedures. While a workplace injury will be covered under the WC policy, the claim cost will directly impact the employer’s experience modifier and in turn future premiums for a 3-year window. Employers should Identify and address potential risk areas.
There are many questions around WC and an employee contracting COVID-19. Historically, diseases like the flu are not covered under WC and where they are the “burden of proof” is on the employee to show that they contracted it at work. Some states (i.e. Illinois) have recently amended the law and now the burden of proof is on the employer/carrier to show that the disease was not contracted at work. We see this as a fluid issue and are watching both the courts and legislatures/governing bodies.
Employment Related Actions
Returning employees to the workplace, potentially a workplace that they do not want to re-enter based on fears of exposure, personal health, or other self-interest can create issues. We encourage employers to consult with us and qualified labor counsel on specific questions. And, again, be sure to maintain thorough documentation every step of the way.
Employers are encouraged to carry Employment Practices Liability Coverage—prior year legislative changes in NYS have made it much easier to bring a successful action against an employer and the cost of defense alone can be significant.
Third Party Actions
Parties who might bring an action include any visitor to your site and anyone in contact with an employee or the visitor. If someone contracts the virus and can trace it back to your business, they still need to show “negligence” on your part in order for you to be held liable. How the courts will view such cases—and they are already being filed—remains to be seen. The employer’s best defense is to follow best practices and have them carefully documented.
Most General Liability policies could provide defense for the employer; however, some policy language could provide exclusions, including exclusions for “communicable disease”. Various publications have addressed the CGL’s response to the coronavirus with varying degrees of accuracy. Employers should review coverage.
With the spread of the virus, there has been a rise in cybercrimes and criminal activity. Ironically, small and medium sized business are targeted frequently now that larger businesses have upped their prevention skills & techniques.
Employers have two important lines of defense: (1) purchasing insurance coverage, which remains relatively inexpensive when compares to the significant claims we are seeing and (2) regularly updating your cyber security defense and policies.
Directors & Officers Exposure (D&O)
D&O coverage is designed to protect Directors and Officers from claims arising from intentional acts. Reopening provides the potential for more lawsuits in general and specifically from accusations of corporate governance not being properly prepared for COVID-19 and allowing the business to suffer and for not effectively safeguarding employees and the public.
D&O policy language varies dramatically and should be reviewed for applicability. Following best practices in corporate governance and documenting it thoroughly is highly encouraged.