Some of the Corona Virus Legal Issues
COVID-19 is everywhere. Not the virus itself, but the news coverage of the virus. On Wednesday the World Health Organization declared it a pandemic, the stock market has plummeted over 20%, professional sporting events are being cancelled, and to cap off a crazy day, the President banned all travel between the U.S. and Europe for thirty days. The crescendo is deafening.
Regardless of how one feels about the risks from the virus itself or the scope of the coverage, companies are facing real legal issues with their actions or inactions over the next couple of weeks. This alert identifies some of them in the areas of employment law, contract performance and special issues for Federal Government Contractors.
Employment Law
Under Federal laws and regulations, employers have a responsibility to provide a safe workplace for its employees. During a disease outbreak there are many misconceptions on what constitutes a “safe workplace,” and what steps an employer may take to ensure “safety.”
- Can you force a sick employee to go home? Absolutely.
- Can you force an employee to let you take their temperature? Absolutely not.
- Can you ban an employee’s personal travel to a hot spot such a Westchester County, NY? No.
- But you can deny someone’s leave request based on their travel destination.
There are competing legal interests between the employer’s responsibilities and the employee’s rights and privacy. This is an area fraught with risks and the wrong decision can have significant consequences. You need to tread carefully - or contact your attorney (preferably me!)
Contract Performance
Almost every contract has a force majeure clause – these clauses generally excuse a party’s performance under a contract; however, the devil is in the details. Force majeure clauses tend to be viewed as legal “boiler plate” and are generally not read in detail or negotiated carefully before signing a contract. Therefore, these clauses can range from simple two sentence paragraphs to complicated, detailed paragraphs that cover a laundry list of possible events.
Bottom line – do not assume that your contract is voidable because it has a force majeure clause; we told two clients this week that their contracts could not be cancelled. Everything depends on the factual circumstances (i.e. what actions have the local and State governments taken?) as well as the legal language in the clause – does it have to be impossible, impractical or is it a frustration of purpose?
If you have a contract that is impacted by the COVID-19 outbreak, you are encouraged to consult an attorney to review your options to determine if you can terminate or otherwise alter the terms of the contract.
Federal Government Contractors
There are two general ways the COVID-19 outbreak will impact Federal Contractors: 1) you cannot perform because of issues with supply chain interruptions, closed offices or quarantines; or 2) the Government shuts the office where your employees are working on-site and demands that they work from home or in your offices.
For the first category, while Federal Government contracts do not have force majeure clauses, there are multiple FAR clauses that can excuse non or delayed performance for circumstances outside of the contractor’s control. For instance, clauses such as 52.249-8; 52.249-9 and 52.249-14 all excuse delays for these extenuating circumstances. However, as will force majeure events, these clauses require that a contractor taken certain actions and “reasonable” steps to provide notice and ensure performance as soon as practicable.
A Government decision to close its office and place a burden on the contractor to provide services at different locations may trigger the changes clause and require a modification. A contractor should not agree to take on extra work without a contract modification, and if the Government issues a unilateral no-cost modification, the contractor may be entitled to a request for equitable adjustment or a claim.
If you think your performance will be impacted or if the Government is trying to change the scope of your contract, please consult us to make sure that you are taking all proper steps to protect yourself. Start by contacting your attorney.