Erick PoorbaughBy Erick Poorbaugh

Poorbaugh is an associate at Dunlap Bennett & Ludwig’s Richmond, VA office

[03.23.2020 Richmond]   As the coronavirus continues to spread, businesses and individuals throughout the world are taking precautions.  However, as a business owner, you need to consider not only how to protect your employees and customers from the virus, but also how to prepare your company itself from the litigation that invariably follows such disruptions to business as usual.  Here are several issues that you should watch out for as you plan your response to this growing epidemic:

Delays & Deadlines: What Happens if Your Supply Chain Gets “Quarantined”?

As more and more businesses shut down or scale back operations in response to the pandemic, it becomes increasingly more difficult for businesses to meet their contractual deadlines.  Worse, even if your business is able to continue its own operations normally, your business may well suffer delays due to your business partners’ delays.  For example, if a manufacturer is late in shipping a part to a supplier, this could delay the supplier in providing the part to a subcontractor, which could delay the subcontractor’s work for a general contractor, which could delay the general contractor’s work for a client.

With these delays will come an increased risk of litigation.  While businesses would do well to try to find workarounds or come to agreements with their contract partners, it is inevitable that many of these situations will result in breach of contract lawsuits.  These lawsuits will likely involve questions of consequential damages (e.g., “the other company’s breach caused me to breach my contract with a third party”), mitigation of damages, the impossibility of performance, and wether delays due to the coronavirus are an “act of God” (a legal term referring to problems that are beyond human control, such as natural disasters), which would relieve a party from liability.  Making matters worse, many of these lawsuits will involve counter-claims, third-party claims, and cross-claims with additional parties up and down the supply chain.  Business owners would do well to consult with counsel regarding their contracts and try to anticipate and head off potential problems before they arise.

Staying Safe: What Happens If Someone Catches the Coronavirus?

Another potential source of liability comes from the disease itself.  While it may be financially tempting to ignore calls for social distancing and attempt to proceed with business as usual, what happens if someone contracts the coronavirus and is able to trace it to one of your employees who was performing duties in the course of and scope of his or her employment with your business?  While such cases are far from the typical personal injury case, they might arise in the not-so-distant future.

Additionally, there may be statutes that your business must comply with, especially in certain industries that have increased customer health concerns, such as restaurants or daycare centers.  Violating these statutes could not only subject your business to penalties from the government but will also likely make it easier to be sued by someone claiming to have contracted the coronavirus from your business.  You would do well to review the standards for your industry with an attorney to confirm that you are in compliance with any applicable laws and not engaged in any practices that could be considered negligent.  Finally, it is important to bear in mind that even if an action is safe from a legal perspective, it may still be inadvisable from an ethical or public relations perspective.

Calling in Sick: What Rights Do Your Employees Have When They Are Unable to Work?

These are not all the legal hurdles that a business will need to contend within this environment.  A business also needs to consider the rights its workers have during this crisis, not just from a moral perspective, but from a legal perspective as well.

On the one hand, if you continue your operations and one of your employees contracts the coronavirus on the job, your concerns will not just be humanitarian, as there will likely be workers’ compensation issues that will arise.  You may want to review these statutes with counsel to ensure that you are not denying any of your employees their required compensation, lest you wind up in an expensive public relations nightmare.

On the other hand, if you advise your workers to stay home for safety’s sake, this still does not end the need for caution.  Even if your employees are unable to work, they may still be entitled to pay or other rights.  You should review your employment documents and any relevant worker protection statutes with counsel to ensure that you are providing your employees with any notice, pay, or other consideration that might be required during the shutdown.

Don’t Panic, But Plan

In this time of crisis, it can be easy to be frightened by these and other situations that threaten litigation.  But as with the virus itself, the best response is to remain calm and take proper precautions to protect yourself as effectively as possible.  Our attorneys at Dunlap Bennett & Ludwig PLLC would be happy to consult with you and advise you on how to best safeguard your business from these and other dangers.  And while, as with the virus itself, nothing can provide a 100% guarantee of protection, together we can optimize your chances of weathering the coming epidemic of litigation.

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Posted in: Litigation & Disputes

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