Coronavirus Crisis: Unique Times Make for Unique Lawsuits

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

Last month, an article on this blog wrote of a federal lawsuit by two passengers aboard the Grand Princess which was anchored off the coast of California as a result of COVID-19 outbreak. What made the lawsuit unique was that neither of the plaintiffs had actually contracted COVID-19 at the time of its filing. The alleged damages stemmed only from the risk of exposure to the virus.

Since then, other unique lawsuits have been filed in the wake of the COVID-19 crisis.

MISINFORMATION SUITS

Amid the crisis, misinformation has abounded as to (1) the pandemic itself, (2) potential treatments, and (3) the health of American business. Not surprisingly,  allegations of misinformation have found their way into litigation. Although these suits have not yet been directed at employers, they likely will in the future.

WASHLITE v. Fox News

Lawsuits against news outlets generally allege defamation or similar torts, not violations of a state’s consumer protection act. Nevertheless, Washington’s Consumer Protection is the basis for a lawsuit filed on April 2, 2020 by the Washington League for Increased Transparency and Ethics (“WASHLITE”) against Fox News. The lawsuit alleges:

“Fox News … willfully and maliciously engaged in a campaign of deception and omission regarding the danger of the international proliferation of the novel Coronavirus, COVID-19 … While acting in the broad stream of commerce, [Fox News] knowingly disseminated false, erroneous, and incomplete information, which was relied upon by the public and which had the effect of delaying and interfering with the implementation of effective mitigation and countermeasures against the virus.”

Fox News issued a statement calling the lawsuit “Wrong on the facts, frivolous on the law.”

Douglas v. Norwegian Cruise Lines

The cruise industry has been among the industries hit most seriously by the COVID-19 crisis. Shareholders in cruise companies have seen the value of their shares plunge markedly.

On March 21, 2020, a federal class action lawsuit was filed in Florida on behalf of persons “who purchased or otherwise acquired the publicly trade securities of Norwegian [Cruise Lines] from February 20, 2020 through March 12, 2020” and then saw the value of their share plummet. The lawsuit alleges the company filed false and misleading statements with the Securities and Exchange Commission. In this regard, the Complaint specifically avers:

“[Norwegian] made false and/or misleading statements and/or failed to disclose that: (1) the Company was employing sales tactics of providing customers with unproven and/or blatantly false statements about COVID-19 to entice customers to purchase cruises, thus endangering the lives of both their customers and crew members; and (2) as a result, [Norwegian’s] statements regarding the Company’s business and operations were materially false and misleading and/or lacked a reasonable basis at all relevant times.”

At the time of this writing, Norwegian has not yet answered the lawsuit.

WRONGFUL DEATH SUITS

Wrongful death lawsuits against employers generally allege an injury or illness which can be traced to a workplace hazard, not a community hazard. As the Occupational Safety & Health Administration (“OSHA”) has recognized specifically as to COVID-19, it is difficult to make “determinations about whether workers who contracted [the virus] did so due to exposures at work” or elsewhere.

Evans v. Walmart

Nonetheless, on April 6, 2020, a lawsuit was filed in Illinois against Walmart by the estate of Wando Evans, alleging Mr. Evans and other employees had contracted COVID-19 at work. Mr. Evans died from the virus on March 25, 2020; another employee at the same store also died from the virus. As support for allegations of “negligence” and “willful and wanton misconduct”, the lawsuit alleges Walmart failed to follow recommendations outlined by OSHA and the Centers for Disease Control and Prevention (“CDC”):

“[Walmart] [f]ailed to cleanse and sterilize the store in order to prevent infection of COVID-19…[f]ailed to provide [Evans] and other employees with person protective equipment such as masks, latex gloves and other devices designed to prevent the infection of COVID-19; [f]ailed to warn [Evans] and other employees that various individuals were experiencing symptoms at the store and may have been infected by COVID-19 which was present and active within the store; [and] [f]ailed to adequately address and otherwise ignored other employees at the store who communicated to management that they were experiencing signs and symptoms of COVID-19…[f]ailed to provide employees with antibacterial soaps, antibacterial wipes and other cleaning agents…”

Walmart responded in a statement: ““We are heartbroken at the passing of two associates at our Evergreen Park store and we are mourning along with their families … We take this issue seriously and will respond with the court once we have been served with the complaint.”

EMPLOYMENT SUITS

In the wake of the COVID-19 crisis, millions of employees have been furloughed, laid off or terminated. Many of these employees have already sued their former employers.

Olsen v. Ratner Companies

When Ratner Companies abruptly closed all of its hair salons on March 21, 2020, it did so in the middle of a pay cycle. When the company failed to make payroll, a collective action suit was brought on April 7, 2020 in New Jersey federal court alleging violations of the Fair Labor Standards Act (“FLSA”) and the New Jersey Wage Payment Law. The named defendants included the company’s officers.

As of the date of this article, Ratner has not yet answered the lawsuit.

Mazurkiewicz v. Northwestern Memorial Hospital

On March 23, 2020, a whistle-blower lawsuit was filed in Illinois by a nurse who had been fired by Northwestern Memorial Hospital on March 19, 2020. The suit alleges the nurse was fired after raising concerns over the masks being provided to health care workers. The suit names the nurse’s former supervisor and the company president as defendants.

As of the date of this article, the suit had not been answered.

King v. Trader Joe’s

Last week, a former employee of Trader Joe’s Louisville, Kentucky store filed a wrongful discharge lawsuit against the grocer. The lawsuit alleges the former employee was fired on March 28, 2020 for creating a Facebook group for store employees to share concerns as to the grocer’s alleged lack of attention toward employee safety and health procedures during the  COVID-19 pandemic. (King v. Trader Joe’s East Inc., Case No. 20-CI-002406, in the Jefferson Circuit Court, Kentucky)

As of the date of this article, Trader Joe’s has not yet answered the lawsuit.

TAKEAWAYS

To be sure, some of these lawsuits (1) smell of opportunism, (2) may not survive a motion to dismiss or motion for summary judgment, and (3) may ultimately be decided in bankruptcy court.

As emphasized in previous articles on this blog, however, lawsuits costs money to defend. Especially now, such costs can be extinction level events for companies teetering on the edge of insolvency. For such companies, risk management must consider not merely the chances of success in a lawsuit; it must also consider whether a company can survive the filing of a lawsuit.

Robert G. Chadwick, Jr. frequently speaks to non-profit organizations regarding labor & employment issues. To contact him for a speaking engagement please e-mail him at rchadwick@realclearcounsel.com.

Coronavirus Crisis: Navigating The Maze Of The Families First Coronavirus Response Act

By Robin Foret, Of Counsel, Seltzer, Chadwick, Soefje & Ladik, PLLC.

Purpose and Duration

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (“FFCRA” or the “ACT”), an emergency measure in response to the Coronavirus pandemic. The Act became effective on April 1, 2020, and is scheduled to automatically expire on December 31, 2020. The Act is essentially comprised of two separate statutory provisions that are both enforced by the Department of Labor (“DOL”): (1) the Emergency Paid Sick Leave Act (“EPSLA”) that is enforced through the Fair Labor Standards Act (“FLSA”). See 29 C.F.R Part 826.20 et seq.; and (2) the Emergency Family Medical Leave Expansion Act (“EFMLEA”) that is enforced as an extension of the FMLA. See 29 U.S.C. § 2601. et seq.

  • City of Dallas Ordinance – Employers in the City of Dallas should be aware that in light of the COVID-19 crisis and the implementation of the FFCRA, the Dallas Sick Leave Law has at least for now, been suspended so that employers should comply with the Act instead.

Employers

An employer for purposes of this Act is defined as anyone who has at least one employee, but less that 500 employees. All such employers must comply with the Act, subject to some exceptions that may apply to employers with under 50 employees under certain circumstances explained below.

Employees

An eligible employee is any employee (full-time or part-time) who has worked for the employer at least 30 consecutive days in the last 60 days.

Posting Requirements

A Notice of Rights Poster, which can be obtained from the DOL website, must be posted at the employer’s place(s) of business. For employees exclusively working from home or who cannot otherwise be at the office or business location, the Poster should also be sent by e-mail or regular mail.

Work to Perform Requirement

It is important for employers to note that there must in fact be work for the employee claiming leave to perform in order for that employee to be able to obtain leave benefits under either the EPSLA or the EFMLEA. More specifically, if an employee is unable to work at the office or telework from home due to a “lack of work” at the company or the particular business location that they work, no paid sick leave because of a shut down or partial shutdown. In those instances, the employee is eligible for unemployment benefits until his or her work resumes. For example, if an employee worked at Starbucks and the particular location does not have a drive-thru, there may be not work to perform.

Telework

Telework means that a particular employee is able to work from home. Employees who are able to telework are not eligible for sick leave benefits unless another COVID-19 reason prevents them from working (examples: their own illness, a power outage). It is important to note that the FLSA “Continuous Workday Rule”, that requires an employer to count all hours between the first hour worked and the last hour worked during a workday, does not apply.  Instead, employees who telework are asked to keep track of their hours and breaks (for example: when they stop work to care for a child or assist with home schooling). This provides more flexibility during the crisis. See 29 C.F.R. 790.6.

Emergency Paid Sick Leave Act (“EPSLA”)

This statute allows an eligible employee to take up to 2 weeks (80 hours) of paid leave for the following six reasons related to COVID-19: (1) if the individual is subject to a federal, state or local quarantine or stay-at-home order; (2) the individual has been advised by a healthcare provider to self-quarantine; (3) the individual is experiencing COVID-19 symptoms and is currently seeking a diagnosis (including testing); (4) the individual is caring for someone who is subject to an order as stated in number 1 above or who has been advised to self-quarantine as stated in number 2 above; (5) the individual is caring for a son or daughter whose school or day care has closed and has no other caregiver (this includes children under 18 and those over 18 who are unable to care for themselves); or (6) the individual is experiencing a similar condition that has been specified by the Secretary of Health and Human Services, in consultation with the Secretary of the Treasury and the Secretary of Labor (this last reason for leave has not yet been developed and more guidance is expected).

  • How Much Leave is Allowed? – Full time employees (defined as those regularly scheduled to work 40 or more hours per week), are entitled to up to 2 weeks (80 hours) of paid leave at their normal rate of pay. Part time employees are entitled to the average hours that the employee worked during the last 2-week period (or, if their schedule varies, use the last 6 months, or the number of months they are at the job if less than 6 months, to calculate the average). An employer may alternatively use 2 times the number of hours that an employee is scheduled to work per week.
    • The calculation must include all days during the period, and days taken during that period for PTO or vacation may not be deducted.
  • How Much Pay is Allowed? – If the employee is seeking sick leave for one of the first 3 reasons listed above concerning his or her own condition, quarantine or stay-at-home order, the employee is entitled to his or her full daily rate up to a maximum of $511 per day, and $5,110 total. If the employee is seeking leave for any other reason listed above (reasons 4-6), the maximum daily amount is $200, with a total of $2,000 allowed.
  • What is a Self-Quarantine Order? – This requires advice from a healthcare provider that the employee has COVID-19, may have COVID-19, or is vulnerable to getting the disease, and, that because of one of these reasons the employee is precluded from working or teleworking.
  • What is Considered Has Symptoms / Seeking Diagnosis? – Symptoms ordinarily means those pursuant to the Centers for Disease Control (“CDC”), which includes a fever, dry cough, shortness of breath, etc.). This requires that the employee: be unable to work or telework, seek diagnosis and treatment, and must be advised to self-quarantine during that time.  Sick leave is allowed during the time that the employee is waiting for test results, regardless of the severity of the symptoms.  In the event that the healthcare provider states that the individual does not qualify for a test, then use the second reason – 14-day self-quarantine per CDC guidelines.
  • To Care for Someone Else – If the reasons for leave is to care for another (reason number 4 above) who is under an isolation order or under self-quarantine, the individual cared for must be an immediate family member, roommate, or similar person who has a relationship that creates the expectation of being cared for by the employee.
  • The “But For” Test – If the reason for the sick leave is either reasons 4 or 5 listed above (to care for another or because of the lack of child care), then leave requires that “but for” those conditions, the employee would be able to work or telework. Again, if there is no work for the employee to perform due to work stoppage or slow-down, paid leave is not permitted.

Emergency Family Medical Leave Expansion Act (“EFMLEA”)

The EFMLEA is an extension of the FMLA that again, applies to all employers with between 1 and 500 employees. It allows up to 12 weeks of leave (the first two of which are unpaid under this statute, but which may be paid under the EPSLA if those requirements are satisfied – 5th reason for sick leave discussed above). This provision permits partial pay in the event that, due to COVID-19 reasons, an employee must remain home to care for a son or daughter because of a school closure or the lack of daycare when there is no other caregiver available. This applies to children under 18, as well as to those over 18 who are unable to care for themselves.

  • How Much Pay is Allowed? – The employee is entitled to 2/3 of their regular rate of pay for up to 10 weeks at a maximum daily rate of $200, and $10,000 in total leave benefits. The maximum is $12,000 when combined with the 2 weeks of sick leave benefits.
  • Under 50 EmployeesPossible Exemption. Employers who have less than 50 employees may be eligible for exception to the expanded FMLA leave if they can show that providing such benefits will be detrimental to the viability of the business. In such cases, companies should evaluate and document any reasons they identity to not provide such leave, although they need not send documentation to the Department of Labor at this time.
  • Under 25 EmployeesReinstatement Rights. As with the FMLA, employees who take leave under the EFMLEA are entitled to be reinstated to their position or a substantially equivalent position when leave ends. However, if the business has less than 25 employees, it is exempted from providing job restoration following leave if: (1) the employee’s position no longer exists due to economic conditions; (2) the employer has made reasonable efforts to restore the employee to the same or equivalent position; and (3) the employer continues to make reasonable efforts to contact the employee for one-year if an equivalent position becomes available.
  • No Private Right of Action – Under the EFMLEA, an employee has no private right of action to file a complaint or lawsuit against an employer with less than 50 employees, because that employer was not subject to the FMLA before the expansion Act was created. Such employees must seek a remedy through the Department of Labor or other designated agency.

Required Documentation to Request Leave

An employee is required to provide his or her employer with documentation in support of Paid Sick Leave or Expanded Family and Medical Leave. That documentation must include: (1) the employee’s name; (2) the dates for which leave is requested; (3) the COVID-19 qualifying reason for leave, and (4) a statement representing that the employee is unable to work or telework because of the COVID-19 qualifying reason. Additional documentation may be required. For example, the name of the government entity that issued the quarantine or isolation order and/or the name of the healthcare provider who advised the employee to self-quarantine for COVID-19 reasons or to care for another individual under self-quarantine. An employee requesting leave to care for a child must state: (1) the name of the child; (2) the name of the school, daycare or child care provider unavailable due to COVID-19, and (3) a statement that no other suitable person is available to care the for child.

Penalties for Non-Compliance

The Paid Sick Leave statute is enforced under the FLSA. Failure to provide paid leave under this section is considered the same as failing to pay minimum wage benefits in violation of Section 6 of the FLSA, and those penalties apply (See 29 U.S.C. 216 and 217).  An employer may not discharge, discipline, retaliate or discriminate against an employee who takes leave under this section, or who files a complaint, proceeding or testifies in a proceeding. Violation of this section carries penalties that are stated in 29 U.S.C. 215(a)(3), 216 and 217. Moreover, the Secretary of Labor is permitted to verify compliance with this statute through periodic compliance checks. The Expanded Medical Leave Act is enforced in a similar manner as the FMLA.

  • The DOL will observe a temporary period of non-enforcement for the first 30 days after the Act takes effect, so long as the employer has acted “reasonably and in good faith to comply with the Act. Good faith exists when violations are remedied, the employee is made whole as soon as practicable by the employer, the violations are not willful, and, the employer sends a written commitment to the DOL that it will comply with the Act in the future.

The information contained in this article is not designed to address specific situations.  If you have questions concerning this topic, you should consult with legal counsel for advice on fact specific matters. 

Robin

Robin Foret is Of Counsel at Seltzer, Chadwick, Soefje & Ladik, PLLC, and is Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization.  Robin Foret is a frequent speaker and writer on employment law compliance topics.  She also provides training for companies to assist them comply with federal and state employment laws.  She can be reached at rforet@realclearcounsel.com or by telephone at (469) 626-5358.  You may also visit the website for more information about our law firm’s services at www.realclearcounsel.com