Possible employer liability stemming from the pandemic

By Phillip A. Kilgore, W. Kyle Dillard and S. Michael Nail

Like many Americans, employers (and their lawyers) have had to become true experts on the coronavirus over the past several months. Employers have had to learn the science behind COVID-19, how to prevent its spread, how to maintain or resume safe work environments, and how to navigate a complex web of new and existing laws and regulations created or implicated by the pandemic.

Employers also have had to anticipate and contend with a growing wave of employment litigation related to COVID-19. Data suggest the potential for a tsunami of litigation springing from the pandemic. Employers thus face the difficult choice of re-opening in order to survive or avoiding uncertainty and potential liability by keeping operations on hold.

At this stage, it is difficult to fully anticipate all the types of claims that may be brought by employees and how those claims will be handled by courts or administrative agencies. This article will survey the types of claims employees have filed around the country as of the date of publication, and specifically hone in on current South Carolina claims. Our conclusion will recommend steps for employers to consider to mitigate liability exposure.

This article does not address claims that may arise outside of the employment context. Claims based on products liability, insurance coverage, injunctive relief, or general tort principles brought against businesses by customers or other third parties are beyond the scope of this article.

Survey of national COVID-19 employment claims:

A review of court filings in the United States reveals numerous employment lawsuits based on COVID-19–related claims that fall into the broad categories set forth in the first chart.

Thus far, the most common claims relate to workplace safety and retaliation. Many of the related claims overlap and allege complaints about reports of unsafe workplaces and adverse action resulting therefrom.

The foregoing summary derives from filings during a timeframe in which most states had “shelter-in-place” or “stay-at-home orders,” and many employers were either not operating or only partially operating. Thus, it seems likely that these types of lawsuits will increase dramatically in the coming months. Not only is actual COVID-19 court litigation on the rise, but agency complaints with OSHA are increasing. Between Feb. 1 and July 28, federal OSHA received 8,363 COVID-19–related complaints and referrals and State OSHA Plans received 20,589, for a total of 28,952. Of these complaints and referrals, 18,418 have been closed; 10,534 remain open. Employers should expect an uptick in agency inspections as well.

While workplace safety claims will dominate in the near term, disability, leave, and wage and hour claims are likely to rise in popularity as more employees return to work and employers continue to adjust operations around COVID-19 challenges.

Are there any protections for employers?

A top legislative priority for the U.S. Chamber of Commerce has been a broad “safe harbor” shield for businesses from COVID-19 related lawsuits, tied to guidelines established by the CDC and state health authorities. Opponents claim that such safe harbors are unnecessary and would be overly broad.

On July 27, Sen. John Cornyn, R-Texas, joined by Senate Majority Leader Mitch McConnell, R-Ky., introduced the Safe To Work Act, which would provide substantial and comprehensive liability protection from coronavirus-related claims for businesses, educational institutions, nonprofit organizations, health care providers and employers. The bill proposes to create an exclusive federal claim for plaintiffs alleging they contracted COVID-19 from an exposure to the virus caused by a defendant. This federal claim would limit liability to certain narrow circumstances and preempt all state laws that would otherwise apply to such lawsuits. While a federal adoption of a liability shield is debated in Washington, states have begun to take similar action to help businesses mitigate the risks of such potential litigation.

The S.C. General Assembly has not passed such legislation, but a bill has been proposed. On June 24, the “South Carolina COVID-19 Liability Safe Harbor Act,” also called the Safe Harbor Act, was introduced in the House of Representatives (H. 5527).

The Safe Harbor Act would provide liability protections for a broad class of businesses and government entities, acting in their capacities as employers and otherwise (“covered entity”), that reasonably adhere to “Public Health Guidance” as defined in the Safe Harbor Act and in effect at the time of the alleged conduct giving rise to a “coronavirus claim.” The Safe Harbor Act defines “coronavirus claim” as any cause of action that is related to any actual, alleged, or feared exposure to or contraction of coronavirus from:

• the premises of a covered entity;
• the operations, products, or services provided on or off premises of a covered entity;
• the acts or omissions of a covered individual or covered entity, to include the delay or withholding of medical care; and
• efforts to prevent or delay the spread of the coronavirus, to include making precautionary equipment or supplies such as personal protective equipment.

The safe harbor provisions would not apply if a claimant were to prove by “clear and convincing evidence” that the covered entity or covered individual caused the injury or damage (1) through knowingly reckless, willful, or intentional misconduct; or (2) by failing to make any attempt to adhere to public health guidance. Observers expect the General Assembly to revisit the proposed law in mid-September.

Some states already have implemented temporary COVID-19 related liability protections for employers and legislation is pending in others. While these laws vary from state to state, the common theme is to protect employers from tort liability if they comply with applicable safety guidance.

By way of example, North Carolina Senate Bill 704, signed into law on May 4, provides that “essential businesses” (defined in Executive Orders 121 and 141 — and further including “any business that the Department of Revenue determines is essential”) and “emergency response entities” (which includes manufacturers of PPE and ventilators, for example) are temporarily immune from civil liability. This immunity shields against claims by customers, employees or PPE users for COVID-19 illness claims unless the business was grossly negligent, reckless or intentionally caused the harm. North Carolina’s immunity law applies only to claims filed on or after March 27, and covers acts or omissions on or after March 27 until North Carolina’s governor rescinds the emergency declaration or it expires.

Also, in North Carolina, House Bill 118, signed into law on July 2, covers businesses, government agencies and other groups sued by someone who contracts COVID-19. This law shields companies and other entities from lawsuits as long as they do not act with gross negligence or intentional wrongdoing. The protections do not apply to workers’ compensation claims. Businesses are required to provide “reasonable” notice of actions they have taken to reduce the risk of transmitting the virus on their premises, but they wouldn’t be held accountable if workers or customers fail to comply.

In anticipation of possible passage of South Carolina’s Safe Harbor Act, employers will want to stay current on and follow CDC, OSHA and state specific guidelines for safe operation. An employer that can demonstrate a track record of following official recommended practices will have a greater chance of successfully defending against allegations of heightened negligence. This points out the need to plan, train, and practice thorough sanitation procedures, and keep good records of such efforts.

Does the workers’ compensation bar apply?

South Carolina law already provides a structure for dealing with employment-related COVID-19 claims. For example, if an employee were to contract COVID-19 out of and in the course of employment, the employee’s exclusive remedy may lie in the workers’ compensation system. South Carolina’s workers’ compensation law, like those of some other states, excludes “ordinary diseases of life,” such as the flu, from being considered an “occupational disease.”

Such a claim (or the employer’s “workers’ compensation bar” defense to a civil claim) may be stronger if the employee is employed in the health-care setting where the alleged “occupational disease” is an attendant hazard of the job, not unlike hepatitis, which has been held compensable in many jurisdictions, including South Carolina. Under the more demanding general framework of South Carolina’s workers’ compensation law, however, it may be difficult for employees to prove a compensable, occupational injury associated with COVID-19.

Some states have enacted special COVID-19 workers’ compensation legislation or are considering COVID-19 amendments to their workers’ compensation laws. The new laws in many states would create a presumption that employees with COVID-19 contracted the disease at work. These changes would shift the burden of liability from businesses to the state or create a hybrid solution.

Similar legislation pending South Carolina’s House of Representatives (House Bill 5482) would create a workers’ compensation presumption in response to the pandemic. Specifically, this bill would create an easier path for first responders, health care providers and correctional officers who contract COVID-19 to obtain workers’ compensation benefits. These essential workers would be entitled to the presumption that a diagnosis of COVID-19 arose from and in the course and scope of such employment. They would be entitled to immediate receipt of temporary total disability benefits under certain circumstances, specifically if they:

• received a COVID-19 diagnosis from a physician;
• received a presumptive positive COVID-19 test;
• received a laboratory-confirmed COVID-19 test; or
• were directed to isolate by an employer due to confirmed or suspected COVID-19 exposure.

Should this bill become enacted in its current form, it would almost certainly ensure that a tort claim asserted by a covered employee for exposure to COVID-19 at work would be barred by the workers’ compensation exclusivity doctrine, absent an exception to the bar, such as a deliberate intent to harm.

Survey of South Carolina COVID-19 employment claims

A review of court filings in South Carolina from late March 2020 through late June 2020 reveals a variety of employment lawsuits based on COVID-19-related claims that fall into the broad categories set forth below:

Tips for employers to mitigate exposure to COVID-19 claims

• Follow all applicable safety guidelines of state and local health departments (i.e. South Carolina DHEC), OSHA and the CDC. This includes requiring the use of and supplying appropriate personal protective equipment, regular cleaning and disinfecting of workplaces, and appropriately distancing employees to limit exposure.
• Properly train employees to following safety protocols and train management-level employees to implement the protocols and how to respond to employee safety concerns.
• Investigate and address any reported concerns about compliance with the employer’s COVID-19 workplace safety plan and document investigation processes and outcomes.
• Ensure that relevant policies are up to date. These policies include but certainly are not limited to, those related to non-harassment, anti-discrimination, anti-retaliation, FMLA, the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act under the FFCRA (if fewer than 500 employees), ADA interactive process/reasonable accommodation, and remote work.
• Educate managers, supervisors, and human resources professionals on the relevant policies and steps to take if an employee invokes such policies and/or claims noncompliance.
• Encourage employees to report health and safety concerns, ensuring multiple reporting avenues.
• If conducting health screenings, temperature checks, or other testing such as viral or oxygen testing, ensure compliance with social distancing and PPE requirements, confidentiality regarding any records, and the observance of applicable privacy laws (note that restrictions on permissible testing exist in some jurisdictions).
• Document steps taken after an employee reports a positive and/or presumptive COVID-19 diagnosis and comply with all state guidelines and CDC recommendations on quarantine timeframes and return-to-work parameters.
• If surviving during the pandemic requires adjustments to employee compensation, provide notice of changes as required by applicable state wage payment laws.
• If reducing the workforce, provide appropriate notices and use nondiscriminatory selection criteria.
• Stay abreast of new legislation, emergency orders and agency guidance.

Conclusion

The unprecedented nature of the COVID-19 pandemic is certain to change the legal landscape, particularly with respect to labor and employment litigation. This pandemic is likely to spawn a number of as yet unimagined issues for employers to manage in order to succeed in the “new normal.” As employers continue to operate during the pandemic or begin to re-open, they should consider all of the implications, have a plan in place, and regularly consult with employment counsel along the way.

Sources for this article include ongoing reviews of courthouse news reports nationwide, the Occupational Safety and Health Administration’s COVID-19 Response Summary, various bills before the S.C. Legislature and court rulings in Muir vs. CR Bard Inc. and Edens vs. Bellini.

Phillip Kilgore is the managing shareholder of the Greenville office of Ogletree Deakins and practices employment law and litigation. Kyle Dillard is a shareholder of the Greenville office of Ogletree Deakins, and is a member of Ogletree’s Steering Committee for COVID-19 Litigation Practice Group. Michael Nail is an associate in the Greenville office of Ogletree Deakins and practices employment litigation, construction litigation and workers’ compensation.