The impact of COVID-19 and the business disruption has extended to the supply chain, service industry, production, and manufacturing plants and impacted large and small businesses, in addition to the financial institutions. As customer concerns heighten, management and even the board of directors are being required to implement emergency guidelines and provide notices to customers and employees.
In recent days, we have received many client requests for legal advice, policy guidance and assistance in drafting emergency action plans and carefully crafted notices to business partners and employees, as the novel coronavirus requires immediate leadership responses. Here is a sampling of some issues that should be given consideration:
1. Business Interruption Insurance:
Whether or not an employer has a specific insurance policy designed to address losses caused by the impact of a public health crisis, a further review of the business commercial all-risk property insurance program may be required in the alternative. As there are several different types of business interruption coverages, it must be determined whether the general purpose of such coverage is to reimburse the policyholders for lost profits and fixed costs that are directly attributed to operating the business during the period of restoration from such an interruption. General property insurance policies commonly provide coverage for business interruption losses solely to the extent that the interruption results from covered property damage (i.e. fire or insurances recovery for business interruption losses flowing from the property damage).
The coronavirus has spread not only through person-to-person contact but also by a person touching a surface or object where the virus exists and then touching their nose, mouth or eyes according to the Centers for Disease Control. Transmission can also occur by shaking hands or touching a doorknob, tabletop or other surfaces that have been touched by an infectious person. Current scientific theories may support the conclusion that the presence of the coronavirus on desks and office equipment and in such commercial settings can constitute direct physical loss or damage. As we continue to monitor the evolving pandemic crisis there could be the possibility that a commercial property insurance policy may trigger coverage for “civil or military authority,” which may restrict or prohibit partial or total access to an insured location. Even if the insured can demonstrate that product or property was damaged by the coronavirus, an insured policy may contain exclusions that preclude coverage for contamination and pollution.
It would be prudent in today’s world to consider crisis management coverage, coverage for interruption by communicable disease, or cancellation of booking coverage.
The specific policy language at issue is paramount and should be thoroughly analyzed in the event an insured intends to submit a claim under their property insurance policy arising out of any coronavirus event. The essential factual issue is whether the insured property was physically altered and/ or affected by the virus.
2. Unemployment Insurance Benefits:
The Labor Department oversees unemployment insurance benefits symptoms, but states administer applications and payments and generally determine eligibility requirements. It is proposed that states pay unemployment insurance benefits to workers who miss time on the job due to the spread of the coronavirus. Workers impacted by COVID-19, could likely see an extension of benefits to Employers who miss work because of quarantine, to those who choose not to work to avoid exposure or to care for a family member, as well as those whose Employers cease or limit operations in response to the pandemic. PA has recently waived the one week waiting period for all employee claims that may be stem from the coronavirus. More information can be found at the PA Department of Unemployment Compensation.
3. Health Insurances Portability and Accountability Act’s Privacy Rule:
HIPAA prohibits the use and disclosure of an employee’s “protected health information.” An Employer cannot request that its group health plan provide information regarding an employee’s illness or potential positive COVD-19 status. There are exceptions to the privacy rule as to the disclosure of PHI to a public health authority.
4. Measuring the Temperature of Employees:
The Equal Employment Opportunity Commission (EEOC) defines “a medical examination” as a “procedure or test that seeks information about an individual’s physical or mental impairments or health: the Center for Disease Control and Prevention defines a fever as 100.4 degrees F/38 degrees C or higher. In prior guidance, the EEOC has taken the position that a temperature test is likely a medical examination under the ADA, however, in the event of a pandemic, such medical evaluation may be justified by business necessity. It is recommended that an Employer use a non-invasive means to measure their employees’ temperatures.
- Union Considerations: The collective bargaining agreement’s management rights clause grants an Employer the right to invoke reasonable work rules with its employees. The National Labor Relations Board and Arbitration cases have ruled that safety rules are not necessarily the same as work rules. It is highly recommended that an Employer consults with the Union first (without conceding a duty to bargain). Temperature testing benefits the majority of union workers, which should persuade a union to agree to this testing during a pandemic. Unilateral implementation of temperature testing to union employees could result in a claim under the National Labor Relations Act and/ or collective bargaining agreement (Union Contract.)
- Privacy Considerations: It would be advisable for the Employer to obtain written permission from each employee to engage in temperature testing during the pandemic to have the employee waive his/her right to privacy claims, including any federal or state claims. Furthermore, an Employer cannot discipline or discharge an employee for refusing to have their temperature tested.
- Wage and Hour Considerations: If an employee is required to wait a considerable amount of time to have their temperature tested, prior to entering the workplace, such time is considered compensable under the FLSA and/or state laws. The Employer should request the employee sign a check-in sheet when they arrive at the workplace, prior to being tested and permitted to enter the workplace, or request that the employee keep track of their waiting time and have them add it to their working time.
- Vendors, Independent Contractors and Visitors: Employers that test the temperature of employees prior to entering the workplace should also give great consideration to extending this practice to all vendors, independent contractors and visitors to assure a safe and virus-free environment.
- OSHA Requirements: The General Duty Clause, 29 U.S. C Section 654 (a) (1) of the Federal International Safety Act of 1970 requires all Employers to furnish each worker with “a place of employment, which is free from recognized hazards that are likely to cause death or serious physical harm.” The coronavirus certainly qualifies as a “recognized hazard.”
Given these unusual circumstances, Employers must do more than simply monitor the Centers for Disease Control and Prevention’s website, limit overseas travel, cancel unnecessary employee meetings, and hand out bottles of hand sanitizer. Companies must be proactive and develop new health and safety plans to get beyond this pandemic while monitoring business continuity, workplace management, and litigation avoidance. Clear and sensitive human resources policies will need to be developed to achieve this balance.
Visit our COVID-19 Hub for additional information from our team to assist your business in responding to the COVID-19 crisis:
- Read Todd Pappasergi’s post about the impact of COVID-19 on governmental agencies.
- Read Frank Botta’s post providing clarity on Governor Wolf’s recommendations for essential and non-essential business operations.
- Read David Weber’s post: Contractors and Coronavirus: Refunds of Down Payments