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What Are Liability Waivers, and How Do They Work?

Skye Schooley
Skye Schooley
Staff writer

Liability waivers can protect your business when used properly. Learn about general and COVID-19 liability waivers to see if your business needs one.

Running a business is risky, especially during the coronavirus pandemic. Some companies choose to protect themselves against potential lawsuits by having customers, vendors and/or employees sign liability waivers. However, while liability waivers may serve as protection for some, they may be legally unenforceable for others. Before moving forward with a liability waiver, you should know what they protect and the legal guidelines that govern them.

What is a liability waiver?

A liability waiver is a legal agreement between two parties in which one party (the recipient) acknowledges the risk of interacting with the other and claims legal responsibility if they are injured. For example, in business, a liability waiver may involve a customer giving up the right to potential legal injury claims in exchange for permission to partake in the company's products or services.

"There are a number of types of liability waivers depending on the risk," Chas Rampenthal, segment leader of LegalZoom's attorney-assisted services, told business.com. "The enforceability of these types of agreements are generally subject to state laws, so there is not one single unified or generally acceptable waiver that works for all situations."

How do liability waivers work?

Liability waivers can take many forms and vary by situation. For example, a liability waiver can be written out and signed (like in a business), agreed to in a "terms and conditions" statement (like when you access a website or app), or accepted when you buy a ticket (like when you go to a sporting event).

When a business chooses to use liability waivers, it's often to protect itself from a lawsuit brought on by a customer or employee who was injured due to ordinary negligence.

"The intent of the waiver is to reduce your business's risk of negligence lawsuits by asking an individual to assume some of the responsibility for possible injury," said Andrew Adams, an associate at Skoler, Abbott & Presser P.C. "The idea is that, if that individual brings a lawsuit against your business at a later time, you can provide the waiver as a defense to their claims."

Employers should note that liability waivers aren't always recognized as legally binding. For example, some states may limit liability waiver enforceability, and other states (Louisiana, Montana, Virginia) don't allow liability waivers at all. As an employer, you need to understand the legal guidelines, know your rights and limits, and take special care in your wording when drafting waivers.

Rampenthal listed the following liability waiver guidelines:

  • Liability waivers must align with state laws and public policy.
  • Liability waivers must be properly worded – especially in states that have specific laws regarding waivers.
  • Liability waivers can't release a company from what is known as "gross negligence" (where the company disregards safety and does not take reasonable actions to limit risks) or intentional conduct.

COVID-19 liability waivers

As health guidelines loosen and people assimilate to a world with coronavirus, more businesses are reopening their doors to customers and having employees return to offices. Companies now face the responsibility of ensuring their employees and customers don't catch or spread the virus on their watch.

While there are several health measures you can (and should) take to minimize risk, you may also be considering a COVID-19 liability waiver to reduce the risk of lawsuits.

COVID-19 liability waivers are similar to standard liability waivers; however, they are often unenforceable. There is a lot of ambiguity regarding liability protection against the coronavirus, and although the federal courts are considering it, no official laws have been passed. It is currently up to the states to decide what is allowed, and even that is limited.   

"Businesses should not assume that COVID-19 liability waivers will be enforceable, even in states where such waivers are generally allowed, as courts may deem them entirely unenforceable as a matter of public policy, arising from a once-in-a-generation pandemic event," Adams said.  

Because of the nature of the pandemic, some states are making employee COVID-19 liability waivers very difficult to enforce. For example, Rampenthal said that California's governor signed an executive order presuming that employees who contract the virus within 14 days from working at a business (not from home) may be eligible for workers' compensation.

As for your customers signing COVID-19 liability waivers, there is no guarantee that those would be enforceable either. It is always best practice to follow federal, state and local health guidelines to keep your business safe. If you choose to implement a COVID-19 liability waiver, it should only be a supplement for these best health and safety practices, never a replacement.

Although there is currently ambiguity regarding COVID-19 waivers, businesses may feel a growing need for them as the pandemic continues.

"If the status of federal or state laws limiting liability continues in limbo, and if that is combined with a sharp increase in COVID-related lawsuits, we may see waivers start to become more prevalent," Rampenthal said.  

Who should require signed liability waivers?

Since Louisiana, Montana and Virginia don't enforce liability waivers, businesses operating in those states are automatically eliminated from the equation. Similarly, a liability waiver that is enforceable in one state may not be enforceable in another, which is something to consider if you have employees or customers who cross state lines. Otherwise, whether you should require signed liability waivers completely depends on your business's unique situation.

Requiring standard liability waivers

If you do operate in a state that allows liability waivers and meet the state criteria to effectively draft and enforce a waiver, it's worth considering. A few types of businesses may find them especially useful, such as those that operate in a risky industry (e.g., recreation sports or construction) or offer potentially hazardous products or services.

Liability waivers may also be a good idea if there is still a possibility of someone getting injured even once you take all the appropriate precautions. Rampenthal said if you are concerned about the activities that your customers engage in at your business or using your equipment – known as product liability – then you should know your options to limit liability, and also your obligations for reasonable precautions to make the activity safe, to help ensure the long-term viability of your business.

It is important to note that liability waivers are primarily used to protect against claims made by customers or vendors, not employees. Adams said that waivers are sometimes not enforceable against employees or other individuals subject to legal protections.

Requiring COVID-19 liability waivers

Adams said businesses operating in areas of commerce without COVID-19 protections from state law may want to consider liability waivers for their customers and other guests, if waivers are enforceable in their state.

However, also take into account the possible public perception of your company asking a customer to sign a liability waiver. If you've taken all the proper precautions to maintain a safe and healthy place of business, and you still think a COVID-19 liability waiver is necessary, base your approach on how you think your customers will react.  

"Be prepared to explain to them that this is necessary to allow you to offer the service, and be sure to spell out all the precautions to help put the customer at ease," Rampenthal said. "On the legal side, this is a time when you want to spend the time to get it right, and that means talking to a lawyer that can help you get through this and draft a waiver that has the best chance of enforceability." 

How to write a liability waiver

Liability waivers are only enforceable if they are written in accordance with the specific guidelines set by your state. It is highly advisable to work with an attorney when drafting one. Although there is no single approach that works for every situation, Rampenthal listed the eight basic steps to writing a liability waiver:

  1. Write a subject line that stands out and clearly announces what the waiver is for.

  2. Warn the recipient to read the waiver before signing. This warning is generally in bold or caps (or both).

  3. Detail the activities and the risks. Let the recipient know they are assuming the risks, and that they will hold the business harmless from any lawsuit or action for damages.

  4. Be clear about what the waiver is effective for (types of injuries or harm, etc.).

  5. Include a choice of law that makes sense – for in-person services, that is the state or jurisdiction where the customer is.

  6. Verify again that the recipient knows and understands the details of the waiver.

  7. Have the recipient sign and date the agreement (including their printed name).

  8. In some cases, you can have a witness sign to verify that the agreement was entered into voluntarily.

Sample liability waiver templates

You may be able to tailor an online liability waiver template to your situation. However, again, there is no one-size-fits-all template for liability waivers, and you should always speak with an attorney to help you draft a legally compliant waiver.

  • LawDepot lets users create free release/waiver agreements based on type of release, such as general release, motor vehicle accident, activity waiver and release, damage to personal property, debt settlement, mutual release, or personal injury.
  • LegalTemplates offers six free liability waiver forms that you can create and download as PDFs or Word documents: general release, car accident, activity waiver, personal injury, property damage and mutual release.
  • JotForm has several different business templates, including a COVID-19 liability waiver You can use the form builder to edit the document to fit your needs.
  • DocPro lets users view a sample COVID-19 liability waiver template that they can use to create their own agreement. To build your waiver, you will first need to make a free account with DocPro.
Image Credit: AndreyPopov / Getty Images
Skye Schooley
Skye Schooley
business.com Staff
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Skye Schooley is an Arizona native, based in New York City. She received a business communication degree from Arizona State University and spent a few years traveling internationally, before finally settling down in the greater New York City area. She currently writes for business.com and Business News Daily, primarily contributing articles about business technology and the workplace, and reviewing categories such as remote PC access software, collection agencies, background check services, web hosting, reputation management services, cloud storage, and website design software and services.