Employers Beware: Preparing for the Inevitable Flood of COVID-Related Lawsuits

As states lift their “stay-at-home” orders, employers who have struggled to survive the economic toll of the COVID-19 crisis now face a new threat: uncertain legal liability in a post-COVID market. As we transition away from the stay-at-home orders, employers should be on alert for the near-certain flood of new litigation.

Potential Claims Arising From Reaction to the COVID-19 Pandemic

Employers should not expect a drop in the usual suspects: discrimination, retaliation, and wage-and-hour claims. These types of claims always increase during economic downturns, and with the unemployment rate skyrocketing across the country, employers should brace themselves for an uptick in such claims.

Discrimination and Retaliation Claims Arising From Reductions in Force – Widespread layoffs and reductions in wages or work hours caused by the pandemic are expected to bring an increase in discrimination and retaliation claims. These claims may allege that employers terminated employees (or selected employees for furloughs or reductions in hours or wages) based on immutable characteristics, for complaining about COVID-19 safety issues, or for taking protected leave under the federal Families First Coronavirus Response Act (“FFCRA”) rather than as a result of the economic impact caused by COVID-19. To help defend against such claims, employers should take care to preserve all financial records supporting the need for the employment actions taken and document any data constituting selection criteria used to identify impacted employees.

Violation of New and Changing Leave Laws – The pandemic brought a barrage of new or modified leave laws, including the FFCRA and other state and local leave laws, making this area fertile ground for lawsuits. As Congress, states, counties, and even some municipalities sought to enhance the rights of employees within their jurisdictions to take leaves of absence during the pandemic, employers were often left with little time to understand and implement each new leave protection, thus opening the door to potential leave violations for unsuspecting employers. To help protect against such lawsuits, employers should continue to stay current on federal, state, or local leave laws and consistently check their policies and procedures to make sure they have complied with all new/modified laws. This can be done by regularly checking websites for the Department of Labor and applicable state and local governments. Similarly, employers should also ensure they are appropriately compensating employees on leave, whether it is under the federal Family and Medical Leave Act (“FMLA”), California Family Rights Act (“CFRA”), the FFCRA, or some other act, law, or ordinance that provides paid leave. Additionally, due to the speed with which these laws are changing, employers should be slow to take disciplinary action based on attendance or absences to allow themselves time to fully understand the ever-changing patchwork of leave laws that now make taking such action fraught with peril.

Wage-and-Hour Violations While Working Remotely – Pay reductions and the transition to remote work will also create additional opportunities for litigation, especially for non-exempt employees. Working from home inevitably complicates an employer’s ability to track work hours, which increases the risk of claims for “off-the-clock” work and noncompliant meal periods and rest breaks. To avoid such claims, it is important to adopt mechanisms to ensure employees are accurately logging hours and meal/rest breaks. This may include use of phone-, web-, or cloud-based timekeeping systems, electronic timesheets, or some other manner of logging time.  Employers should also ensure that they develop and distribute written policies regarding overtime, meal periods, and rest breaks for remote employees. This is especially important for employers that plan to allow workers to continue working remotely.

Failure to Reimburse Business Expenses to Employees Working Remotely – As state and local governments began issuing stay-at-home orders, many employers increased their reliance on telecommuting and having employees work remotely. As a result, employers are also likely to see an increase in reimbursement claims arising from employees’ use of personal resources for work-related purposes. For example, utility bills for electricity, internet, and phone were likely impacted by increased time and activity at home. Although the general rule is that an employer does not have to reimburse work-from-home business expenses where the employee had the option to work remotely (see Novak v. Boeing Co., 2011 WL 9160940, at *3 (C.D. Cal. July 20, 2011)), that rule does not apply when the employee does not have the option of going to the office and is required to work from home because those expenses are a foreseeable and clearly anticipated cost of doing business (see Aguilar v. Zep Inc., 2014 WL 4245988, at *17 (N.D. Cal. Aug. 27, 2014)). Employers may need to reimburse their employees a reasonable amount for their reasonable and necessary home office expenses including, but not limited to, cell phone or landline use, home internet, printing costs, and personal computer usage, upgrades, or software. This is also an important consideration as employers decide whether to maintain a remote workforce after the stay-at-home orders are lifted.

Potential Claims Arising Out of the Transition Back to Work

The re-opening of businesses will bring with it new ways of doing business and performing job duties, which inevitably will bring new challenges as employers welcome back their workers. Below are a few areas to which employers should pay special attention.

Discrimination and Retaliation Claims Based on Who Is Rehired – Much like the potential for discrimination or retaliation claims based on who was selected for layoffs, employers should be cognizant of the potential for similar claims based on who they choose to bring back to work if it is less than their entire former workforce. The federal Americans with Disabilities Act (“ADA”), Title VII of the Civil Rights Act of 1964, and the California Fair Employment and Housing Act (“FEHA”) all protect prospective employees from discriminatory hiring practices. Employers that intend to bring their workforces back in stages or only in part should document any data constituting criteria used to select which employees they are bringing back.

Claims By Employees Refusing to Come Back – Employers are likely to face circumstances where an employee refuses to return to work. An employee may do so for any number of legitimate reasons, including fear of infection, or needing to care for a child out of school. However, these circumstances can be traps for unsuspecting employers. For example, disciplining an employee who refuses to return to work because they (or a household member) are considered “high risk” due to an underlying health condition could give rise to claims of disability discrimination, failure to accommodate, or associational discrimination. Disciplining employees who are unable to return to work because schools are still closed could still give rise to certain forms of sex discrimination claims, marital status discrimination claims, or wrongful termination claims based on public policy, even if their FFCRA or other protected leave has been exhausted. Disciplining employees who refuse to return to work due to fear of infection may give rise to claims of retaliation for complaining about unsafe working conditions.

There are steps employers can take to reduce the number of employees who refuse to return to work. For example, employers may encourage “high-risk” employees, employees with “high- risk” household members, or fearful employees to return to work by adopting clear policies and practices to mitigate infection in the workplace. For those employees needing to care for children while schools and daycares are closed, employers can direct them to resources providing childcare or connecting them to childcare providers. For example, California has recently established an online childcare locator that provides childcare options within the employee’s geographic region. But what if these employees still refuse to come back to work? It may be advisable for employers to offer these employees the ability to work remotely (if feasible), offer accommodations at the workplace, or place these employees on personal leave until they are ready to return to work.

In contrast to these employees, employers may also encounter laid off employees who decline to return to work solely because they are receiving more money from unemployment insurance (“UI”). Specifically, under the recently enacted federal Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), some employees may receive an additional $600 weekly UI benefits, and may, therefore, refuse to return to work if the job pays less than their current UI benefits. These employees should be careful as the growing trend among state unemployment officials has been to disqualify such employees from UI benefits if they refuse to return to work when offered to do so by their former employers. Indeed, officials in Iowa, Oklahoma, Tennessee, and other states have already announced such policies. Moreover, employees receiving UI benefits who fail to disclose a job offer in their periodic certifications of eligibility may be liable for UI fraud.

Notably, an employer’s knowledge of these circumstances and failure to take required action can also give rise to liability. For example, employers in California have 10 days to notify the Employment Development Department (“EDD”) in writing when an employee receiving UI benefits refuses suitable work. Additionally, employers must always promptly comply with all inquiries or information requests from the EDD.

Claims Based on Workplace Safety – As more and more governments issue physical and social distancing guidelines and expectations for businesses, employers can expect an increase in claims based on inadequate safety precautions. The question is, what can employers legally do to protect against workplace infections, and what are they legally required to do to protect against workplace infections?

For now, employers may take workers’ temperatures and ask if they are experiencing symptoms of COVID-19 before they enter the workplace.  Although the ADA generally prohibits employers from implementing mandatory medical testing or inquiring about a worker’s medical conditions, these bans have been relaxed by the Equal Employment Opportunity Commission (“EEOC”) during the COVID-19 pandemic. Additionally, employers should adopt clear policies and practices to mitigate infection in the workplace based on the most up-to-date guidance and protocols provided by the Centers for Disease Control and Prevention (“CDC”), California’s COVID-19 website, the California’s Division of Occupational Safety and Health (“Cal/OSHA”), and other federal, state, and local authorities as such protocols for social distancing, sanitization, and personal protective equipment may become the expected standard of care and safety that employers will be required to maintain for employees.

Failure to Accommodate Claims by “High-Risk” Employees – In addition to workplace safety concerns, employers may expect accommodation claims from their “high-risk” employees who do want to return to work. Recent EEOC guidance states that employers have a duty under the ADA to find ways to curb risks for “high-risk” employees with underlying conditions. Such employees may only be sent out of the workplace if their conditions pose a “direct threat” to themselves because of the pandemic and no reasonable steps can be taken to allow them to work safely.

In addition to adopting policies and practices to mitigate infection in the workplace, employers can reduce such claims by engaging with their high-risk employees early and often and documenting their efforts to engage with these employees to determine what reasonable steps could be taken to further curb the risk of infection. Examples of reasonable steps include providing masks, gowns, and other protective gear, installing barriers between employees with medical conditions and their coworkers, or allowing employees to work on a modified schedule. Those employers that relied on telecommuting and having employees work remotely may want to continue such practices where feasible.

Privacy Claims Relating to an Employee’s Health – Now that employers are temporarily permitted to take employee temperatures and ask certain questions about an employee’s health, employers need to be aware of the delicate balance between the employer’s responsibility to ensure safety in the workplace and the right of employees to keep their health information private.

Employers who choose to “pre-screen” their workforce before returning to work must take steps to protect the employee’s privacy during this process. For example, what happens if an employee registers a high temperature in front of a line of employees waiting to have their temperatures taken? Or how do you handle an employee that self-reports COVID-like symptoms? Employers should adopt clear policies and procedures to ensure that an employee’s health-related information is kept private. This includes maintaining separate medical files, limiting disclosure of a possible exposure to infection to only those who need to know while omitting identities of employees to the extent possible, and conducting screenings and related conversations in private, when possible. Additionally, employers must be sure to provide their employees with a compliant notice under California Consumer Privacy Act (“CCPA”) notifying them that the employer will be collecting their private data and explaining the purposes for doing so.

Takeaway

The above is not an exhaustive list of the types of claims employers may face, as the full breadth of our new reality will not be clear until we begin the transition away from the stay-at-home orders. Employers should carefully review their policies and procedures and check federal, state, and local agencies for guidance in re-opening their places of business. Employers should also take care to document their efforts to comply with such guidance and to protect and accommodate their workforce. Finally, employers should always consult an experienced employment attorney if they have any specific situations or have questions.

Disclaimer: Laws, regulations, and guidance on matters related to COVID-19 change rapidly. Please contact your Payne & Fears attorney for current guidance.