For much of Wisconsin, the economic re-opening this month came abruptly.
A 4-3 ruling by the Wisconsin Supreme Court on May 13 placed the decision to issue restrictions meant to prevent the spread of COVID-19 into the hands of local health officials — a step some justices warned would result in chaos. And local officials have been far from uniform in their response.
In Appleton, the owners of the Dairyland Brew Pub decided to open their business shortly after the high court had struck down Gov. Tony Evers stay-at-home order. Dozens of patrons gathered around the bar for a drink — standing in close proximity and without masks.
Hours later, Appleton officials imposed their own ban on such gatherings. But the order remained in place only for about a day and a half. Appleton, like many other local jurisdictions, lifted its local ban on May 15 after concluding it probably couldn’t withstand a legal challenges.
Such bumpy re-openings and the resulting uncertainty are bringing up plenty of legal questions for Wisconsin companies as they start opening their doors. Owners are now forced to weigh the risks of doing business during a pandemic against the economic consequences of remaining shut down.
Erik Eisenmann, a partner and chair of Husch Blackwell’s labor and employment practice group, has been working with businesses on reopening plans since mid-April, when it seemed likely the official statewide reopening date would come sometime after Memorial Day.
“We’ve seen businesses contemplating what it’s going to look like when they’re able to reopen or when they’re able to transition from work-from-home to bringing people back into the office or workplace,” Eisenmann said.
Eisenmann said companies are generally showing concerns about three topics — health and safety, employees and business considerations.
Health and safety in the workplace
Eisenmann said businesses should first make sure they are meeting the obligations set by Occupational Safety and Health Administration rules and Centers for Disease Control guidelines.
Compliance can mean requiring the use of personal protective equipment like masks, screening employees for the virus and changing the arrangement of workplaces to allow for social distancing.
OSHA complaints are already becoming more common, Eisenmann said, and he expects additional questions to come up as employers try to protect workers.
If an employee makes a complaint by citing the National Labor Relations Act, employers that choose to retaliate run the risk of being hit with an Unfair Labor Practice violation. Eisenmann noted that Amazon and other large companies have already found themselves mired in disputes of this sort.
“In addition to some of the legal considerations and risks, there’s big PR considerations,” Eisenmann said. “I’ve been advising clients that you don’t want to be the business that shows up in the newspaper because its employees are complaining about safety.”
The coronavirus outbreak has also changed what sorts of information employers are allowed to collect in the interest of safety. Before the pandemic, for instance, taking employees’ temperatures most likely would have been prohibited both by the Americans with Disabilities Act and Wisconsin state law.
“Given the fact that COVID has been deemed a pandemic, EEOC has issued guidance suggesting employers are allowed to ask questions about exposure and COVID status and are allowed to do that type of testing,” Eisenmann said.
Addressing employee fears
At the same time, employees can invoke the rights provided them by the ADA and continue working remotely after their offices reopen. For that reason, many employers are expecting to see a surge in ADA requests from employees wishing to work from home.
The Disability Management Employer Coalition and MetLife held a webinar on May 7 about provisions of the Families First Coronavirus Response Act and how they mesh with ADA accommodations and Family and Medical Leave Act requests.
Peter Fabiankovic, corporate counsel at MetLife, said people still cannon qualify for ADA accommodations unless they have a condition that meets the legal definition a disability. He didn’t think an ADA request to work remotely would hold up if the person making it had no underlying medical condition. However, if an employer were to require working from home because of the virus, affected employees could qualify because they could be perceived to have an impairment.
Employees who are anxious about returning to work because of the risk of infection could also find relief, in certain circumstances, from the FFCRA, said Dan Iskra, developer and manager of MetLife’s group disability and absence products.
“Fear, in and of itself, does not qualify,” Iskra said. “But that being said, if the individual received advice by a healthcare provider to self-quarantine because of an underlying condition, that would potentially qualify underneath the emergency paid sick leave act component.”
No matter what, employers can help shield themselves from legal liability by taking care to consider every request that comes before them individually and making decisions according to the particulars of each.
“An employer has an obligation to at least consider an accommodation if someone is requesting not to come to work because of an underlying medical condition,” Eisenmann said. “You’re going to need to do an assessment on a case-by-case basis, rather than just drawing a bright line.”
Reducing the workforce
Considering people one by one is also sound advice for employers forced to make layoffs to avoid economic hardships.
“Even the most optimistic employers are realizing that we’re not simply going to snap our fingers and demand is going to be back where it was in February or March,” Eisenmann said.
The pandemic and its resulting shutdowns have devastated the U.S. economy. Nearly 39 million Americans applied for unemployment benefits since March. Experts believe the unemployment rate could eventually rise as high as 25%.
Eisenmann advises companies making a workforce reduction to rely on objective data — like performance, time on the job and other non-discriminatory, business-related reasons — when choosing which employees should be let go.
“If you have a workforce that’s going through a reduction and adversely impacting people in a protected class, that raises the risk of litigation,” Eisenmann said. “Doing that analysis to make sure decisions are being made in a fair, non-discriminatory way is even more important these days.”
Business interruption coverage
As business owners seek ways to keep their companies afloat, many are turning to their insurance providers for financial relief.
Chris Strohbehn, partner at GRGB Law in Milwaukee, said he expects to see more companies, now that they have dealt with the virus’s most immediate effects, begin making pandemic-related business-interruption claims.
He said most business-insurance policies cover business interruption, but some have exclusions for viruses — a result of epidemics like SARS from years past. The question then becomes: How applicable the claims are, according to the language of the policy, to whatever policyholder in question.
“A lot of them have exclusions, but that doesn’t mean that they’re going to necessarily apply,” Strohbehn said. “It could be a very different kind of loss those exclusions intended to cover but not necessarily this pandemic.”
Wisconsin’s partial re-opening of its economy following Evers’ shutdown could affect whether a business can make a claim for business-interruption coverage. Insurance companies may not pay an owner of a business that was legally allowed to continue operating after being deemed “essential” if that person had voluntarily decided to shut the operation down. The same could apply to a restaurant that’s allowed to re-open as long as it adheres to capacity limits.
These are costly questions for insurance providers. Lloyds of London estimated the pandemic will cost the insurance industry more than $200 billion, according to an Associated Press report.
Strohbehn and Russell Karnes, associate at GRGB, believe it’s going to take litigation to make insurance companies pay COVID-19 claims. Karnes said he has yet to see a single insurance companies pay out on claims his clients have submitted. Rather, insurance providers have been asking questions or simply issuing denials. He and Strohbehn believe providers are contending that there is no coverage and denying most claims.
“I’ve seen about zero percent of insurance companies agree to pay so far,” Strohbehn said. “I expect as a business decision the insurance companies aren’t going to pay until they get told to by the Court of Appeals or the Supreme Court of Wisconsin.”
Litigation puts the claims on a two- to three-year track for payment, even for business that receive a favorable decision. Strohbehn and Karnes expect a lot of litigation — and potentially class actions — to result from the pandemic.
“A lot of new areas of law are going to be interpreted,” Strohbehn said. “I think some of these policies were written in a way that insurance holders aren’t going to like down the road or policyholders for that matter.”
Strohbehn and Karnes stressed that businesses should be reviewing their policies.
“Everybody who’s got a business or a client who’s dealing with an issue like this should take some time to look at the policy,” Strohbehn said. “There might be some sort of recovery down the road.”
Strohbehn and Karnes spoke with the Wisconsin Law Journal after a State Bar of Wisconsin PINNACLE® webinar on COVID-19 insurance coverage issues.