What Is COVID-19 Liability Protection, and How Can You Protect Your Business?

By Andrew Martins,
business.com writer
|
Aug 26, 2020
Image Credit: Chainarong Prasertthai / Getty Images

As businesses reopen across America, how can your company avoid COVID-19 lawsuits?

As businesses across the United States reopen, business owners are trying to figure out how to keep their employees and customers safe from the potential spread of COVID-19. As such, experts are gearing up for a possible wave of COVID-related liability suits in the coming months. To stem the possible tide of litigation, some states have passed protection laws, and Congress is considering a federal mandate. In the meantime, here are some tips to help you shore up your own defenses.

What is COVID-19 business liability protection?

As many businesses continue to experience the negative economic effects of the pandemic and the virus continues to spread across the country, business owners are weighing how to reopen safely. Some business owners are concerned that they will be sued, as has happened to some major retail chains.

Liability protections would shield businesses, schools and other institutions from such lawsuits as long as the businesses were operating in good faith and were following approved safety guidelines. Such protections would require the complainant to prove, without a shadow of a doubt, that the business in question was negligible in its efforts to reduce potential exposure to COVID-19.

What steps can you take now to protect your business against COVID-19 lawsuits?

As lawmakers consider their next move, legal experts are providing outside advice to small business owners who are looking to avoid COVID-related lawsuits. Andrea Sager, a small business attorney and entrepreneur, even created a free, downloadable liability waiver for consumers to sign before they enter a business. Though she believes a judge could choose to not enforce the document, she said it was important that reopening businesses cover their bases.

"I'm trying to ensure that my clients and all the small businesses are protected to reduce their liability," Sager said. Businesses that have a brick-and-mortar presence should have customers sign a waiver, because "these lawsuits are going to take off," she said.

In addition, Sager noted the following suggestions for businesses that are trying to prevent costly COVID-related claims:

Get familiar with your insurance policy.

Though not every business insurance policy is the same, there may be language in your agreement that helps with litigation costs. Even if your policy has general liability insurance, Sager said it might not be enough.

"We know that not all insurance companies act the same way, and there will be some small businesses that say, 'I can just call my insurance company,'" she said. "But that company will come up with some loophole to leave the business owner high and dry. Without the federal law, I think that even if a small business owner has insurance, not all of them will be covered."

Implement CDC guidelines.

Some states don't have mask mandates or social distancing policies in place, but businesses can establish their own policies. By enforcing guidelines set by the Centers for Disease Control and Prevention, you can establish a standard that could hold up in court.

By enforcing stricter rules, "if somebody wants to sue you, you can say, 'Look, this will go a lot further to protect people coming to my place of business,'" Sager said. "By following the law and taking it a step further, you can ensure that you won't be held responsible."

Reopen only if you can do so legally.

Governors have set the rules for which types of businesses can reopen. If your business is not allowed to reopen and you do so anyway, you could be hit with fees or arrested by local police. If your business is hit with a COVID-related lawsuit, a judge can note that you willfully ignored state rules and thus cast an unfavorable judgment against your interests. Before reopening, be sure to check local and state guidelines to make sure your business is cleared to reopen.

Communicate with your customers and employees.

When dealing with any kind of safety precaution, it's imperative to share your efforts with your employees and the general public. For example, if people coming to your business know you require a mask, they should have no excuse for showing up without one. If they do, you can point to your rules and deny them entry without fear of any credible backlash in court.

Your employees should be among the first to know about your safety precautions. However, make sure to consider the stipulations of the Americans with Disabilities Act (ADA), Sager said.

"Do not ask your employees to sign a waiver, because there are completely different considerations there with workers' compensation and possibly even ADA measures to consider," Sager said. Measures vary by state and by employee, "because if you can allow your employees to work remotely, you should do that for as long as possible," she said.

What liability protections have some states already established?  

In the absence of a federal mandate for COVID-related business liability protection, some states have taken it upon themselves to create their own policies. As of August 2020, measures have already been taken in Wyoming, Utah, Oklahoma, Arkansas, Alabama, Georgia and North Carolina, while lawmakers in Minnesota, Iowa, Illinois, Ohio, Pennsylvania, New York, New Jersey, South Carolina, Mississippi, Tennessee, Louisiana, New Mexico and Arizona have legislation in the works. Though provisions vary by state, here are some overarching themes that lawmakers have implemented:

  • Retroactive protections. The first case of COVID-19 in the U.S. was diagnosed in Washington state on January 20. Due to a lack of testing at that time, it's impossible to know when the virus spread to different parts of the country. As such, states that have put their protections in place have backdated their rules. For example, Iowa's law covers any liability dating back to Jan. 1, while states such as Louisiana, Kansas and Alabama have opted to cover only as far back as mid-March, when widespread shutdown orders were put in place.

  • Doesn't protect willful negligence. As more states begin to establish mandatory mask policies, or even reverse some shutdown measures, state governments are stipulating that COVID liability protection rules will not protect businesses that fail to comply with public safety measures. If it can be proven that a business failed to meet guidelines at the federal, state or local levels, they can be found guilty of gross negligence and left vulnerable to a liability lawsuit.

  • Protections for health care providers. In addition to protections for retail and other brick-and-mortar establishments, some states have baked amendments into their provisions that protect health care providers from liability. Because these businesses are often visited by sick individuals, this kind of measure actively protects against the potential for a person to file claim that their COVID-19 diagnosis was directly linked to the business. Yet like other small business owners, medical practitioners can be shielded from potential litigation as long as they properly follow guidelines.

Some major retail and fast-food chains have already been hit with COVID-related lawsuits. Last month, CNBC reported that Walmart, Safeway, McDonald's and Amazon have faced such litigation. Once open, a business runs the risk of becoming a transmission site for the virus, regardless of how it operates. That's why any discussion about business liability protection at the state and federal levels have been an all-encompassing topic.

Each state's anti-liability measure is different. What may have passed in Wyoming is likely to differ in many ways from the bill passed in Ohio, for example. If your small business is in any of the states listed above, or if your state legislature is currently examining a similar measure, you should pay close attention to the guidelines laid out by your elected officials. Failing to meet the state's guidelines could leave you wide open for crippling legal fees, exhaustive court expenses and a costly settlement.

What the federal government is considering

Senate Republicans recently unveiled their stimulus plan to the country. GOP members stressed the importance of the bill's litigation protections. In fact, so important was the measure that Senate Majority Leader Mitch McConnell called it a "red line" issue, stressing that the bill would not pass without the provision.

"We need to provide protection, litigation protection, for those who have been on the front lines," he said on Fox News back in April. "We can't pass another bill unless we have liability protection." He echoed that sentiment while speaking with reporters after the bill's introduction, even though top Democrats have balked at the bill in its entirety for various reasons.

If passed, the proposed bill would standardize business liability protection during the pandemic. Like the provisions already passed at the state level, the federal liability protections would shield health care providers and employers, as well as school districts, from any lawsuits levied against them for exposure to the novel coronavirus. If a business were to be found guilty of gross negligence that led to the COVID-19 exposure, that business could still be targeted for a small business lawsuit.

While it's still unclear what, if any, measures Congress will pass, Sager said she hopes the litigation protections make the final cut. Without them, she said, scores of businesses in states that don't have any provisions in place could be forced to shut down because of deep legal fees.

"Unfortunately, there are some governors that want to leave it up to the local governments to make a response," she said. "The mandate should come from the federal government because we need something that will be enforceable throughout the whole country."

I am a former newspaper editor who has transitioned to strictly cover the business world for business.com and Business News Daily. I am a four-time New Jersey Press Award winner and prior to joining my current team, I was the editor of six weekly newspapers that covered multiple counties in the state.
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