The Post-Pandemic Paradox: Small Businesses Face Increased Liability Exposure As Risk Of The Coronavirus Decreases

Business owners are eager to resume normal operations but many are weary of looming legal woes.

Small businesses that were forced to shut down are now facing a new wave of threat as they begin to reopen: lawsuits. The expected cases about workplace injuries and illness are already starting to appear. These complaints allege that employers failed to meet certain CDC or OSHA guidelines designed to protect employees and prevent the spread of COVID-19 in the workplace. Thus, resulting in the contraction of the virus. Actions of this nature are expected to be common, and Congress is working to establish certain protections that will shield employers from frivolous and unfound claims.

There are, however, more serious and difficult to defend claims on the horizon that pose a significant threat to small businesses with furloughed, laid off, or terminated employees in response to the Coronavirus and ensuing economic shutdown.

WARN Act Violation Claims

The Worker Adjustment and Retraining Notification Act (WARN Act) requires employers with 100 or more employees to provide at least 60 days notice before mass layoffs or plant closures. Less notice before a dismissal could spark claims seeking back-pay and the extension of employee health benefits. Frighteningly, WARN claims are likely to result in class action suits that are costly to fight.

Wrongful Termination

When faced with economic uncertainty in the first wave of pandemic-induced panic, many employers layed off or furloughed large swaths of their workforce. Now that things are cooling down, operations are beginning to resume and some employees are being asked to return to work. The employees that are not called to return may file wrongful termination suits, sighting the pandemic as an excuse for unwarranted and baseless termination. Frequently, employees are contending that their positions could be performed remotely under the stay-at-home order and the dismissal is actually based on other reasons. 

Discrimination Claims

Following a similar theme as the wrongful termination claims, descrimination claims are beginning to pop up. Laid off and furloughed employees are challenging their dismissal and alleging that they were let go for reasons other than the Coronavirus. Plaintiffs contend that the employer was simply using the pandemic as an excuse for termination. These claims allege that the employer violated a protected status outlined by the Equal Employment Opportunity Act or Americans with Disabilities Act. Expect these cases to appear when businesses reopen with reduced operations and smaller staff sizes. Some employees will be invited to return to work, while others will not, sparking claims of discrimination.

The Employers Takeaway 

It is crucial for small businesses to stay abreast of federal, state and local guidelines for reopening, including guidelines established by the CDC and OSHA. This can be a difficult task for smaller operations, but it is an imperative. Savy employers will establish and enforce policies that are consistent with these guidelines and train employees to follow new protocols until restrictions are lifted and normal operations can resume. 

Now is also an excellent time to consider small business insurance that can protect you from litigious claims. A general liability, employment practices liability, or workers comp policy will provide crucial support and protection that can keep your business afloat when faced with employment disputes that are related to the Coronavirus. CyberPolicy offers a number of resources for small businesses to plan for, prevent, and insure against costly litigation. Visit www.cyberpolicy.com or speak with a licensed insurance advisor by calling (800) 590-7292 for more details.

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