CORONAVIRUS AND ITS IMPACT ON YOUR BUSINESS

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Whether its COVID-19, H1N1 or the latest “pandemic” taking over the news and/or the water cooler, keep this in mind, if it bleeds it leads.  A pandemic is defined as, “an outbreak of a disease that occurs over a wide geographic area and affects an exceptionally high proportion of the population.” 

You may be asking yourself, how will this impact my business?  What will my insurance cover?  What do I need to do to prepare my business for a complete or partial closure due to illness?  What questions can I ask my employees while still complying with ADA guidelines? What can I do to minimize the impact on my business?

First and foremost, update your disaster/contingency plan!  If you don’t have one, its time to create one.  Disasters, whether natural or otherwise can hit any time and without notice.  The best line of defense is offense – prepare your employees, physical office, data, systems, and clients with procedures to implement when disaster strikes.  Be prepared to serve without power, phone, internet and even without a physical office location, if possible.

A good disaster plan allows you to focus on recovery and service, not searching for critical data or piecing together tools to work.  Make sure the final document is easy to find by everyone on staff, from any location.

BUSINESS INCOME

If I shut down my business, will I have insurance to cover my loss?  Or one or more of my key suppliers operations are disrupted and I’m unable to get parts and or supplies to continue my operations?  Many businesses have insurance policies that are meant to kick in when disaster strikes.  At first glance, those might seem perfect scenarios for my Business Interruption and/or Contingent Business Income to be triggered.  Those policies almost always cite “direct physical loss or damage” and have an “exclusion of loss due to virus or bacteria” which excludes coverage for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.

GENERAL LIABILITY

In the coming weeks and months, business owners may face liability claims brought by individuals who assert they were infected with the coronavirus while on the business’s property or because of some alleged action or inaction by the business. 

Commercial general liability insurance policies are intended to protect the insured in the event of claims for bodily injury (or property damage) brought by third parties.  CGL policies often include coverage not only for any settlement or judgement amount resulting from a third party’s liability claim but also for mounting a defense claim.  Thus, you should look to see if your policy excludes claims resulting from infectious disease. Example: You are hosting a networking event at your office, unbeknownst to you, an attendee tests positive for the Coronavirus the next day and several attendees contract the virus from your event.  Are you covered?

DIRECTORS & OFFICERS LIABILITY

Depending upon the nature of any COVID-19 related claim being asserted, companies should consider the possibility that their Directors and Officers policies may respond to an alleged liability, including defending such claims.  Example:  may provide coverage for the costs and liabilities arising from shareholder lawsuits alleging that the company acted unreasonably in response to the coronavirus, e.g., allegedly failing to develop supply chain alternatives or allegedly failing to properly disclose financial risk resulting in economic loss to the company.

WORKERS’ COMPENSATION

Workers’ Comp – What makes an illness an occupational illness and thus compensable under workers’ compensation?   Two tests must be satisfied before any illness or disease, including COVID-19, qualifies as occupational and thus compensable under workers’ compensation:

  1. The illness or disease must be occupational, “meaning it arose out of and was in the course and scope of the employment; and
  2. The illness or disease must arise out of or be caused by conditions peculiar” to the work.

Whether an illness arises out of and in the course of and scope of employment is a function of the employee’s activities.  The simplest test toward determining whether an injury arises out of and in the course and scope of employment is to ask:  Was the employee benefiting the employer when exposed to the illness or disease?  Be warned, this test is subject to the interpretations and intricacies of various state laws.   For further information, contact MIOSHA at 800-866-4674 or www.michigan.gov/miosha.

The Centers for Disease Control and Prevention (CDC) expects flu activity to be at high levels through March and are now saying that businesses, schools, and households should begin preparations for the coronavirus. Among the CDC’s recommendations to help minimize the spread of these serious illnesses is for people to stay home when they are sick.

There are several factors to consider when dealing with employees who are sick in quarantine or have family members who are sick. In addition to any paid time-off you may offer, there are several regulatory requirements to consider. You may often have to manage multiple laws at the same time. Here are a few resources to look into:

  • Family and Medical Leave Act (FMLA)
  • State family and medical leave laws
  • Americans with Disabilities Act (ADA) and the Americans with Disabilities Act Amendments Act (ADAAA)
  • State and local sick leave laws
  • State paid disability leave 

EMPLOYERS RIGHTS AND RESPONSIBILITIES FAQ

1. Can an employer question employees about recent travel and potential exposure to those who might have the virus and can an employer require employees who have traveled to a heavily impacted area or have family members who may have traveled to a heavily impacted area to stay home during the recommended quarantine period?

Asking employees about or taking action with regard to possible health conditions raises issues under the Americans with Disabilities Act (ADA). The ADA prohibits employers from asking employees about their health and medical conditions. However, the Pandemic Preparedness in the Workplace and the Americans with Disabilities Act guidance issued by the U.S. Equal Employment Opportunity Commission (EEOC) provides that during a pandemic, exceptions to the ADA’s restrictions on employer health inquiries allow employers to inquire about an employee’s potential infection with the disease and related travel. Pursuant to the EEOC, if the individual does not have the disease, the employer will not be asking about a current medical condition and the ADA will not be implicated. Moreover, if the individual is infected, the ADA’s direct threat rule allows inquiries because an employee will pose a direct threat to co-workers and others in the workplace. The EEOC’s pandemic guidance also provides that asking employees to work from home as an infection control strategy will not run afoul of the ADA. Moreover, asking employees about the illness or potential infection of a family member will not implicate the ADA, but could be an issue under the Genetic Information Nondiscrimination Act (GINA). Employers should limit questions about family members to recent travel and ask employees about potential exposure to the virus and not specifically about the condition of family members.

The Occupational Safety and Health Act (OSHA Act), which requires employees to protect the safety of employees, is also implicated by coronavirus infections. The coronavirus pages of the Occupational Safety and Health Administration’s (OSHA) website state that to protect the safety of employees, employers should implement policies that will result in the “prompt identification and isolation of potentially infectious individuals.” OSHA has also indicated that employers may take action with regard to high-risk individuals, which includes those who have traveled to impacted areas or those who have been exposed to the illness.

Employers may implement policies asking employees to report whether they or a family member have traveled to impacted regions (i.e., areas with extensive person-to-person transmission of the illness). For those employees identified as having potential exposure, an employer can, and

in certain cases must, direct those employees to work from home or not work during the incubation period. Employees who do not want to provide information about travel or potential exposure could also be asked to work from home or not work until it is determined safe for the them to return to work.

2. If an employee will not be able to perform his or her job from home, will the employer be required to continue paying the employee or can the employee be required to take sick leave or be put on disability?

Subject to limited state law exceptions, employers generally are not required to pay nonexempt employees for hours not worked. Thus, nonexempt employees directed by their employer not to report to work and not to work from home generally need not be paid. Those employees may be permitted or entitled to use accrued paid time off, including paid sick leave in jurisdictions with paid sick leave requirements.

Exempt employees are subject to the salary basis requirements of the Fair Labor Standards Act (FLSA) and analogous state laws. An exempt employee instructed to work from home should be paid in the same manner as if the employee reported to work.

The issue becomes more complicated when an exempt employee is instructed to stay home and is not able to work because of the nature of the job. If the employee stays home for the entire workweek, and performs no work during that workweek, the employee need not be paid but may be permitted or entitled to use accrued paid time off, including paid sick leave in jurisdictions with paid sick leave requirements. But if an exempt employee has performed any work during the workweek, the employee will be entitled to be paid for the entire workweek unless the employee is, in fact, infected with the coronavirus. If an employee is infected with the coronavirus, the employee need not be paid and must be permitted to use accrued paid time off including paid sick days.

3. Should employers stop sending employees to the impacted regions?

The Centers for Disease Control and Prevention (CDC) has issued the following travel advisories related to the coronavirus as of February 28, 2020 this alert was published:

  • Warning Level 3 – avoid nonessential travel; China, South Korea, Iran, Italy
  • Alert Level 2 – practice enhanced precautions; Japan
  • Watch Level 1 – practice usual precautions; Hong Kong

According to this guidance travel to China, South Korea, Iran and Italy should be limited. The CDC encourages employers to comply with these travel restrictions, but the federal government has not required employers to do so. The general duty clause of OSHA Act, however, requires employers to provide a safe work environment. Employers whose business involves travel to China, South Korea, Italy or Iran (or other areas that become subject to travel advisory issued by the CDC) should consider other available options for employees, such as videoconferencing or delaying travel. Further, employers should exercise appropriate steps to protect the workplace from exposure from employees who have traveled to these areas or who have been in recent contact with individuals who have traveled to these areas.

4. Are employers required to notify OSHA of any suspected cases of coronavirus?

OSHA has deemed the 2019 novel coronavirus a recordable illness when a worker is infected on the job. If an employee becomes infected while traveling for work or at work, the employer would be required to prepare and file appropriate reports with OSHA. State laws also have applicable reporting requirements, however, in many states the reporting of disease is again the responsibility of healthcare providers.

5. Should an employer notify other employees of suspected cases of coronavirus?

An employer may provide general information to employees to let them know that someone in the company is infected with the virus to allow employees to monitor themselves for signs or symptoms and quarantine themselves, if appropriate. To comply with the ADA and other privacy laws, employers may not, however, specifically disclose the identity of the infected employee or provide information that will allow other employees to identify the infected individual.