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Waving Goodbye to Waivers?

Why pre-COVID-19 release rules may no longer apply

January 02, 2021 Photo

The COVID-19 pandemic has created challenges for people in all walks of life and has had global implications on the way we all conduct our business and our lives. Policymakers have made efforts to respond to these challenges, which has directly impacted the working ways of businesses across all types of organizations. Many jurisdictions have banned large gatherings or closed non-essential businesses; some countries have suspended international travel; and many localities have asked that public transportation be used only for essential purposes. This has created a lot of questions regarding best practices around individual businesses and waivers, which we will try to answer here.

COVID-19 in the Workplace

One issue we are seeing in legal and risk management circles is whether employees can be required to sign a COVID-19 waiver at businesses they interface with as part of their jobs, and whether vendors or visitors should sign similar acknowledgements or waivers. At first blush, many people’s first inclination might be to answer in the affirmative. Unfortunately, a closer examination of this question reveals that there may not be a clear answer.

Before going too deep into the woods on COVID-19 and the workplace, it is important to know whether such claims are covered in the employment context. While most health insurance coverage would respond to COVID-19-related claims, such coverage is typically subject to limitations, co-insurance, deductibles, and the like. Whether workers’ compensation applies is a much more complicated answer.

First, it should be noted that each state has its own unique workers’ compensation landscape, but workers’ compensation is compulsory in all states at some level (depending on the size and structure of a business). Workers’ compensation provides medical treatment; wage replacement; and even death benefits for a qualifying condition. With few exceptions, workers’ compensation is the exclusive remedy for employees, such that workers cannot sue employers for a work-related injury as long as they are receiving workers’ compensation.

As a general rule, workers’ compensation does not cover routine, community-spread illnesses like a cold or the flu because they usually cannot be directly tied to the workplace. Of course, COVID-19 has presented a unique circumstance in which many jobs that are not historically considered hazardous have suddenly become very dangerous. Essential employees are at a high risk of exposure to the virus while at work. But even then, such working conditions do not guarantee that a COVID-19 infection would be covered under workers’ compensation in most states.

In response, more than a dozen states have taken action to extend workers’ compensation coverage to include COVID-19 as a work-related illness. A handful of states have enacted legislation creating a rebuttable presumption of coverage for various types of workers. Some limit the coverage to first responders and health care workers. A couple of states apply coverage to only essential workers, and other states have used executive-branch authority to implement presumption policies for first responders and health care workers in response to COVID-19. Another handful of states, including California, has taken executive action to provide coverage to other essential workers, like grocery store employees. Compensability and whether the workers’ compensation bar is applicable really depend on which state you are in and whether the exposure involves a front-line employee, a health care worker, or an essential worker.

Putting aside the workers’ compensation issue, there are other questions that employers will want to consider before requiring an employee to sign another company’s waiver. For example, consider a delivery driver for Company A, who is asked to sign a waiver by Company B before being allowed on site. there are definite concerns about the employee’s free choice in the matter. While the enforceability of a third party’s waiver does not directly impact or benefit Company A, it is almost certain that Company A would be dragged into any claims or issues stemming from an employee being compelled to sign such a waiver or experiencing any injury ostensibly covered by the waiver.

Further, if the employee is only interacting with Company B and its premises as part of the employee’s job duties at Company A, then we get into tricky territory when penalizing employees for not putting themselves in harm’s way. To the extent that employee refuses to sign the waiver, taking any employment action may be problematic. Even more, there might be questions about the enforceability of any waiver based on unequal bargaining power. Under the circumstances, a court might look into the importance of the service at issue for the physical or economic well-being of the party signing the agreement, and the amount of free choice the signing party has in seeking alternatives.

But what about businesses that expect all invitees to sign a waiver, such as ski resorts, sporting arenas, and even dot.com businesses? It’s routine for these businesses to require this as a condition of entry, and this often includes a standard non-disclosure agreement and waiver. The court may deem the waiver a contract of adhesion or otherwise void as against public policy.

Additionally, COVID-19 is OSHA-reportable. OSHA has published revised enforcement guidance detailing how it will enforce the recordkeeping requirements of 29 CFR 1904 for employee coronavirus illnesses for all employers. Also, some states have updated their requirements, such as California, which approved new emergency temporary Cal/OSHA standards on COVID-19 infection prevention on Nov. 30, 2020. As part of the new requirements for investigating and responding to COVID-19, employers must offer COVID-19 testing at no cost to employees who might have been exposed in the workplace, and they must provide them with the information on benefits. These new temporary standards apply to most workers in California not covered by Cal/OSHA’s Aerosol Transmissible Diseases standard.

Third-Party Issues

In light of the forgoing concerns raised relative to COVID-19, it may be difficult to require third-party vendors to sign waivers. There are a number of other options to consider when safeguarding your interests, including posting signage to inform about COVID-19 risks, requiring masks, avoiding touching, requiring proper distancing, and possibly taking temperatures of third parties prior to entry on the premises.

Additionally, consider arranging spacing within the premises to encourage physical-distancing plans; minimize enclosed areas; and have managers, security, health safety teams, and staff enforce physical-distancing guidelines. Another issue is the extent a company can or must exercise control over independent contractors. In the context of rideshare services, food delivery, and other contracted services operating under a collective brand, there may be an expectation by the customer that appropriate precautions are being taken. Enforcement and implementation may present both practical and legal hurdles, however.

There is also the potential for negotiating or allocating responsibility for COVID-19-related issues between your company and its business partners, rather than with their employees directly in the form of an indemnification agreement—although many of the same issues related to public-policy concerns and unconscionability may arise if a business tries to transfer its own negligence or willful misconduct relative to COVID-19 practices onto a third party.

A New Age for Waivers

Waivers are common and have long been utilized for activities ranging from extreme sports to the old-fashioned roller-skating rink, but in many jurisdictions, a trip to the hair salon, movie theater, high school sporting event, or the gym now involves a waiver.

The question becomes, however, whether a waiver required by a business owner is enforceable against a patron when both are occupied in an endeavor contrary to a state’s then-current regulations. For example, a COVID-19 waiver signed by a patron of a salon or a client of a gym during a time when the establishment was ordered to be closed but decided to remain open anyways—a situation demonstrated in the case Atilis Gym Bellmawr, LLC v. Murphy, U.S.D. N.J. 1:20-CV-06347—is likely a contract void against public policy. There may be other defenses, too, such as an assumption of the risk, if a state recognizes same or comparative negligence. However, if a lawfully open gym includes straightforward COVID-19 waiver language in its required release, then this may be viewed as no different than longstanding established case law and enforceable to the same extent that it would bar an injury for a sprained ankle.

There are gray areas, however. What if a gym refuses to allow patrons to wear masks in direct violation of a state’s law? What if a business owner violates occupancy limits, which might not be immediately apparent to patrons? Or fails to provide for adequate social distancing? Or does not implement appropriate protocols for their employees, thereby not only increasing the potential for employee spread, but also enabling it to spread to customers? These questions will likely be viewed under the lens of whether the conduct was mere negligence, criminal or quasi-criminal, or rises to the level of gross negligence. In the case of ordinary negligence, the waiver may stand, but there are simply not enough cases to know how courts will view this issue. A look at a state’s handling of prior waiver cases, together with the state’s action in responding to the current health crisis, may also provide insight.

There is certainly the possibility in situations where no waiver is practical, such as a retail shopping scenario or restaurant, and cases will arise in an ordinary negligence context. However, these issues can and do arise outside of the context of a communicable disease in scenarios such as a slip and fall, trip and fall, or food-borne illness. Most states have taken swift and comprehensive regulatory steps and, as such, a court may find that compliance with those steps, which in some cases is fairly onerous, is sufficient to preclude liability. That is, compliance with state regulations may lead to presumption of non-negligence.

Other Considerations

Travel is another industry that has been decimated by the current health crisis. While the travel industry has an interest in waivers and limiting its own exposure to claims, it has also undertaken some additional burdens in the interest of boosting consumer confidence. In addition to heightened cleaning standards and social-distancing protocols, some vendors have offered insurance or assurance programs designed to allow consumers to cancel or defer participation based upon certain health factors and travel restrictions.

Lastly, force majeure contract clauses rarely come into play, but 2020 saw its share of “act of God” and “governmental regulation” disruptions. Despite the best intentions of the parties, force majeure issues may continue to pop up in just about any sector. We have all learned this year that that events once unthinkable unfortunately do occur. When reviewing and preparing contracts, take a moment to make sure that the force majeure clause reflects the parties’ intentions and is sufficient to encompass a broad array of eventualities

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About The Authors
Multiple Contributors
Jeanine D. Clark

Jeanine D. Clark, Esq., is a partner with CLM Member Firm Margolis Edelstein. She can be reached at jclark@margolisedelstein.com

Simon Keshishian

Simon Keshishian is senior director of risk management and senior risk counsel for Red Bull North America Inc.  simon.keshishian@redbull.com

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