Employment Claims – Preparing for the Next COVID-19 Wave

May 29, 2020

Due to the COVID-19 pandemic, many Americans are following “stay at home” guidelines, and both businesses and individuals are confronting the related financial and economic impact. According to the U.S. Bureau of Labor Statistics news release on 5/22/2020, unemployment rates were higher in April in all fifty states and Washington D.C., and the unemployment rates in forty-three states set new series highs. This “new normal” has resulted in an environment ripe for potential COVID-19 employment-related claims, as employment claims tend to increase during an economic downturn. The first of these lawsuits are already being filed with Courts around the country.

There are a number of employment claims that businesses could face due to the COVID-19 pandemic. We will explore key points on the following potential issues:

  1. Retaliation concerns due to Families First Coronavirus Response Act
  2. Discrimination issues with furloughed employees
  3. Breach of contract claims
  4. Whistleblower claims

Families First Coronavirus Response Act (FFCRA)

The FFCRA requires employers with fewer than 500 employees to provide employees with protected paid leave for specified reasons, including child-care, related to COVID-19. Covered employers that deny properly requested leave, ask employees for unnecessary documentation, or retaliate against employees who request paid leave subject themselves to exposure to employment claims alleging a violation of FMLA or FFCRA. Employers are not permitted to terminate, discipline or discriminate against employees who request paid leave under the FFCRA. Employers must be scrupulous when calculating the number of employees, and designation of employees, when determining eligibility under the FFCRA to avoid potential exposure.

Discrimination

Businesses confront potential employment claims when they are forced to furlough employees. Employees who have requested paid leave for COVID-19 related reasons may claim that a subsequent furlough is retaliatory. Similarly, claims could arise due to a failure to rehire employees due to requesting paid leave, or a COVID-19 diagnosis. Employers that do not rehire employees over a certain age due to the perceived higher risk of COVID-19, face potential claims under the Age Discrimination in Employment Act. Discrimination towards Asian Americans, specifically disparate treatment and harassment claims based on national origin, expose employers to COVID-19 related employment claims. Employers must prevent discrimination or retaliation based on any protected class of employees.

Breach of Contract

As businesses struggle financially due to the COVID-19 pandemic, they may be unable to perform their obligations under employment contracts such as offers of employment, salary and compensation agreements, or failure to pay under a severance plan. Employers facing these claims may have a “force majeure” defense available to them, if such a provision is in the employment contract. This doctrine excuses the parties of a contract from liability when circumstances that are beyond the control of the parties prevents them from fulfilling the contractual obligations.

Whistleblower Claims

Employee complaints about workplace safety due to potential COVID-19 exposure are increasing in frequency. With the ever changing Executive Orders, CDC, Federal, State and local guidelines, employers must ensure that they do not make hurried decisions regarding the safety of their workforce. However, there have been cases filed where employees claim that they were retaliated against for complaining about an employer’s failure to keep the workplace safe. Employees who engage in “whistleblowing” are protected by law from retaliation. Employers should encourage employees to report concerns regarding safety and reassure employees that they will not be disciplined for voicing concerns about the business’ COVID-19 response. COVID-19 related health and safety complaints should all be thoroughly documented and investigated.

Employment Practices Liability Insurance

Most employers now maintain Employment Practices Liability Insurance (EPLI). Such insurance policies would provide coverage for many of the claims identified above. In the event you become aware of an employment-related practice claim, please ensure that you place your EPLI insurer on notice of the claim at the earliest possible time. A failure to do so may permit the insurer to deny coverage for your claim.

Additionally, your EPLI coverage may include an Employment Practices Liability Hotline through the insurance carrier. These hotlines often provide access to top employment law firms to assist your organization in knowing how to respond to these COVID related situations. For more information on EPLI Hotlines available to you through your carrier, please contact your Graham Claims Consultant.

Risk Management Resources

Now more than ever, our clients can benefit from additional support for their Human Resource teams. Therefore, Graham Company has partnered with Guardian HR, a leading HR consulting firm, to provide a free, one-year subscription to their Hotline Services. With Guardian HR, our clients will have unlimited access to an HR Hotline staffed with experts to answer questions, including questions about potential COVID-19 related employment claims. To access Guardian HR, please contact your Graham Claims Consultant, or email Fran Stevenson at fstevenson@grahamco.com.

For additional COVID-19 resources and risk management recommendations, please visit our COVID-19 Risk Management Center.

A PDF of the above information can be found here.

Shamrock Kennedy
Esquire, Claims Consultant
The Graham Building
Philadelphia, PA, 19102
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