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COVID-19 has had significant economic and legal impacts in the areas of California commercial and residential real estate, rental property, employment relations, employment compensation, workers’ compensation, premises liability, unemployment insurance, sales contracts and, not surprisingly, family law. The pandemic has also affected the operation of the Courts which has resulted in new rules and delays applicable to virtually every Court case – especially tenant evictions. In order to meet the challenges of the pandemic, government, through executive orders, public health orders and legislation, has endeavored to ameliorate the virus's effects. Here are just a few of the changes that may affect you and/or your business:

Rental Properties and Evictions

Colliers International Executive Vice President Jeffrey Weil, a noted authority on commercial rental real estate, recently posted the following sobering facts:

Real Capital Analytics, which tracks national commercial real estate sales, reported on June 25, 2020 that May sales volume was down 79% year over year. Industrial was the best performer category (only down 70%), office volumes were down 82% and apartments were down 81%. Retail dropped 83%, and all of the above looked comparatively strong as compared to hotels, which were down 95%.” Expect June figures to be even worse.” There are major investment groups putting together scavenger funds to go after distressed properties, but many believe that the window of opportunity is still a long way out in the future, which means we are nowhere near the bottom . . .

On May 29, California Governor Gavin Newsom issued an executive order extending the State’s eviction moratorium through July 28, 2020 (we expect it to be further extended). The eviction moratorium prohibits a landlord from initiating proceedings or otherwise taking steps to evict a tenant for nonpayment of rent from any residential dwelling (including single family and multi-family homes, mobile homes or other structures lawfully used as a residential dwelling) if the tenant demonstrates that the inability to pay rent is due to COVID-19. The moratorium also applies to commercial tenants, such as a business or commercial enterprise renting or leasing a structure used for business purposes. 

There are a few procedural rules for tenants to claim this relief. The unpaid rents are not voided or forgiven – they are deferred. At present, repayment terms have not been legislated. Thus, those landlords whose tenants take advantage of the moratorium will not see rental income during the moratorium period (which is likely to be extended until the date the Governor’s Emergency Executive Order is lifted). However, there is no mortgage payment moratorium. Thus, property owners must continue to pay the mortgages on their properties even though they are not receiving rental income. Rental property owners are advised to contact their mortgage holders to try to negotiate their own payment deferrals.

The Federal Government has enacted some limited relief for businesses in the form of loans – some of which will be forgiven if certain requirements are met. If you are a commercial landlord who has lost rental income due to deferral of rents by your tenants and you are having difficulty paying the mortgage on the property, these programs may provide you with the life line you need to prevent foreclosure and to continue to own and operate the property.

Deferral of rents for those affected by COVID-19 is not the only impediment to evictions. Even if your tenants have not been affected by COVID-19, California Courts have instituted a moratorium on the issuance of Summons on Complaints in Unlawful Detainer actions unless the eviction is based on public health or safety concrns.  Thus, tenants that do not qualify for rent deferral or who have breached the lease by having unauthorized persons (other than extended family members) living on the premises, or otherwise, nevertheless, may stay in possession at least until the California Supreme Court and California Judicial Council lift the ban on the issuance of Summons. 

There are some strategies that can be employed to attempt to have tenants vacate the premises during the eviction moratorium. With regard to residential rental properties, the State’s Just Cause and No Cause Eviction laws make things slightly more complicated and, depending upon the location of the property, local ordinances may add further legal complexity. If you are in this or a similar situation, please do not hesitate to contact us so we can discuss these strategies.

Employment Matters

With a large shift to virtual workplaces, due in large part to the State’s “Shelter At Home” Order, significant issues have arisen with regard to employee workplace protections. If an employee is affected by COVID-19 the Governor has issued an Executive Order that creates a rebuttable presumption that the infection occurred in the course and scope of employment and, is therefore, compensable under worker’s compensation insurance.  Please note that it is a rebuttable presumption. Therefore, an affirmative showing by the employer that the employee contracted COVID-19 other than in the course and scope of employment may be made to overcome the presumption and defeat the worker’s compensation claim. We suggest that you leave the investigation and handling of these claims to your worker’s compensation insurer so that, as an employer, you do not run afoul of employee privacy and healthcare information privacy laws.

Many employees now work remotely. However, as the Occupational Safety and Health Administration (OSHA) has made clear in its regulatory releases, employers remain responsible for protecting the health and safety of workers at these remote workplaces, including their employee’s homes if that is their workplace. The employer’s responsibilities include ensuring that the workplace is physically safe for the performance of the work. Employers remain responsible for ensuring remote workers record their time and take their required breaks. While OSHA has said it will not enter the employee’s home to audit compliance, it still will accept employee claims against employers for noncompliance. Employers must provide employees with the tools they need to successfully perform their work for their employer. In the context of remote workers this may require employers to pay for the employees' ergonomically sufficient desks and chairs, computer, headphones and internet service. 

If you have remote workers we suggest you work with us to revise your required OSHA Illness and Injury Prevention Plan to address these risks. OSHA has issued Guidance on Preparing Workplaces for COVID-19 that you can access here.

Many employers are now considering cuts in wages for remote employees since the corporate world views working from home as less expensive for employees. Another issue that has arisen for many employers is difficulty in getting employees to return to work. This is acute among minimum and low income wage employees. The Federal Government has provided an additional $600/week in unemployment benefits on top of those benefits to which an unemployed worker is already entitled. This has resulted in some cases of workers making more money on unemployment per week than they could make per week if they went back to work. This has put upward pressure on wages for low income wage earners. 

If you are considering a change in your wage structure please contact us as the legal ramifications of errors and mistakes in hiring, firing and compensation are considerable.

Business Transactions

The global pandemic has delayed many business transactions as shipping and production have fallen off around the world putting increasing strain on supply chains. In many cases consumption has evaporated and buyers no longer wish to be straddled with unsaleable inventory that was purchased before the pandemic but set to be delivered now. There are a number of potential ways to attempt to cancel or avoid these contracts. If you are in this situation, contact us. We may be able to help.

Premises Liability and Insurance

A growing concern for property owners, retail businesses. landlords and tenants is liability to those who contract the virus on their premises. Most premises liability policies contain exclusions upon which insurers are attempting to rely to deny these claims . . . and you can be assured that future pandemics and viruses will be expressly excluded in many new policies and renewals. There is some industry discussion about creating separate pandemic liability insurance policies for additional premiums. However, until the present pandemic has run its course we doubt such policies will be available. Therefore, it is incumbent upon property owners, retail businesses, landlords and tenants to assure the safety of the premises and provide proper notices of required behavior, such as wearing masks, social distancing, limitations on the number of persons in the building, worker personal protection equipment and training, etc., as well as express disclaimers of liability for those who enter the premises.. We can help you mitigate your pandemic premises liability risks. Therefore, do not hesitate to call us should this be of concern.

If your business had to close its doors or reduce its efforts due to COVID-19, and you have business interruption insurance coverage, you should contact your attorney. Insurers are generally denying these claims on the basis that COVID-19 did not cause property damage that would trigger business interruption coverage. However, there is a good argument that the business interruption was not caused by COVID-19. Rather, the interruption has been caused by governmental “Shelter at Home” orders which generally are a covered cause under these policies. Let us help you with your claim if you are in this situation.

Family Law

As you can imagine “Stay at Home” orders have exacerbated difficult spousal and familial relationships. If Italy is any measure, once COVID-19 wanes and “Stay at Home” orders are lifted, we may see a 40% increase in marital dissolution proceedings.

For those who are already divorced or in the process of dissolution, the pandemic has affected spousal and child support, child visitation and asset appraisal. While we do not practice family law, if you are experiencing any of these issues we can refer you to qualified family law legal counsel who can address these issues.

We are here if you need us to help you navigate through this pandemic. Take precautions, stay safe, and we can all get through this together – living, working and thriving in the Age of COVID-19.

By Randall S. Davis

Mr. Davis is a partner in the Walnut Creek, California law firm of Israel & Samuels, LLP where his emphasis is upon business, employment and real estate transactions and litigation. Mr. Davis can be reached directly at his virtual office at (925) 683-1017.