A Guide to Corporate Liability in the Covid-19 Era.
By Attorney Nouvelle L. Gonzalo and Ms. Macarena Bazan
Can you edit your contracts in light of covid-19?
Yes! We strongly suggest you do. As you are likely well aware, COVID-19 (coronavirus) is an illness caused by a virus that can spread from person to person. The virus that causes COVID–19 is a new coronavirus that has spread throughout the world. COVID-19 symptoms can range from mild (or no symptoms) to severe.
The virus has changed how business owners and service providers operate. As such, your company needs to update its contracts to address how your business operates with your employees, vendors, and customers. These contracts create legal binding obligations for each party. Because Covid-19 spreads easily, employers often wonder what is the best way to update their existing contracts. We’re glad you asked!
In light of COVID-19, your contracts should be reviewed and amended. This includes your employment, product, and service agreements.
A. Employment Agreements
As an employer, you will want to review and perhaps amend your performance requirements, termination clauses, and sick leave clauses. You can update to include procedural guidelines to follow if the business is interrupted by either party due to the virus. This provides you, as the employer and your employee protection and guidance for events due to the pandemic. Some employment contracts contain a force majeure provision that employers or employees might utilize to justify termination or changes. It is important to note that COVID-19 as a reason for not performing will be upheld in court “only if it is included in the force majeure clause. This is because force majeure clauses must specifically include the event that actually prevents a party’s performance.” Your company may amend your employment agreements to include language such as “unforeseen condition, circumstance, war, epidemic, governmental restriction, administrative decision, [or] Act of God” to the termination clause. Additionally, employers may want to amend their performance requirements to include procedural guidelines to follow if a COVID-related disruption of performance by either party occurs.
B. Customer Agreements (Services and Products)
Your customer agreements, whether for the sale of products or services, should be reviewed and amended as well. Like employment agreements, customer agreements set the terms of work, the expectations, and compensation for services that you provide to your customers or suppliers. Service providers and contractors can draft new clauses determining COVID protocols and procedures the parties are expected to carry out. For example, disclaimers can be included to protect parties in the agreement. These disclaimers can bring awareness to risks that may come with performing the service. For example, a disclaimer included within a contract with a performing artist will warn them of the risk of performing for large gatherings or large events. While this does not rid either party of full liability, it will ensure that the members who sign the contract are aware of the work and risks they are agreeing to from the start. It also helps as a defense later.
C. Employer Liability for Virus Exposure.
Multiple employees have tried suing through worker’s compensation due to exposure to the virus. While “mere exposure” to the COVID-19 virus without infection may not result in a compensable worker’s compensation claim, it is important for employers to be aware of these types of cases. You, as an employer, can include clauses in an employment agreement that exempts you from liability if your employees are exposed to the virus. It is beneficial to many businesses to avoid these legal battles where possible. It is important to note, however, that without any language to protect you as an employer, your business could potentially be held liable if an employee contracts the virus. This is because the courts have yet to decide whether COVID-19 is covered by applicable workers’ compensation statutes. While no bar has been set as to how liable employers could be regarding COVID-19, it is important to remain informed about future developments of this issue and to amend contracts properly.
It is highly recommended to start reviewing all of your contracts whether you owner your company or you work for it. COVID-19 has greatly changed legal regulations. Use your contracts and stay current. This will decrease your legal liability in the workplace. Talk with your legal counsel about your situation. If you would like a complimentary consult, contact us today at firstname.lastname@example.org.
Nouvelle Gonzalo is a U.S. and international corporate lawyer who works with companies across the globe. She is the managing attorney of Gonzalo Law LLC, a U.S. and international corporate law firm with offices in Florida and Ohio. In addition to the active practice of law, she has served as adjunct faculty at the University of Florida Levin College of Law where she has taught international corporate law for several years. She was recognized as a rising star by the national organization, Super Lawyers, in 2019 and 2020. Her practice areas include: international corporate law, intellectual property law, and nonprofit law.
Macarena Bazan is a current sophomore at the University of Florida majoring in Political Science and Business Administration with a specialization in Pre-Law. Macarena is a Legal Intern for Gonzalo Law a U.S. and International Corporate Law Firm, the Vice President of the University of Florida chapter of Phi Alpha Delta, and a member of the Honors College. She placed 3rd in the National Phi Alpha Delta Mock Trial competition and has received the President’s Honor Roll and Dean’s List throughout her college career. Macarena has been with Gonzalo Law since January 2020. She focuses on case research, drafting and editing contracts, and additional research.