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Employment Liability Claims Set to Rise With COVID-19

Employment Practices Liability Coverage Leader at Marsh

As business activity ramps up from COVID-19-related restrictions, companies are determining just how they will create a safe space for their workers, customers and clients. As they do, the potential exists for a variety of lawsuits and claims related to employment practices and wage and hour liability.

Take temperature checks, for example. Before the COVID-19 pandemic, the consensus was that temperature-taking by an employer was considered an impermissible medical exam under the Americans with Disabilities Act, and therefore, employers were cautioned to avoid the practice. That thinking changed quickly and dramatically due to COVID-19. Although it’s helpful that the issue has been clarified — employers now have the blessing of the Equal Employment Opportunity Commission (EEOC) to take temperatures, along with other diagnostic screening measures — the practice still creates the opportunity for risk. 

The challenge for employers is that the EEOC has not provided specific guidance or protocols for companies to follow as to how to take temperatures or conduct other tests. 

Temperature-Taking and Potential Claims

There are many potential claims that can come out of temperature-taking, with privacy issues and maintaining employee confidentiality atop the list. The bottom line is that medical information should be kept confidential, and employers must be mindful of state privacy law requirements, including mandatory notice requirements that might accompany screening measures.

Discrimination is another area of concern with temperature-taking. You need to be consistent with who you’re testing. For example, a potential trouble spot could emerge if you select for testing employees who are a member of a protected class, but not others.

We are also likely to see wage and hour concerns related to the time employees spend waiting to get their temperature taken or awaiting a secondary assessment after an initial exam. There is an analogy here to security screenings that many employees already go through — the U.S. Supreme Court has ruled that such time is not compensable. But, as with all things wage and hour, there could be (and often are) state and local laws that are more favorable to employees.

Employers should also be aware that as the “direct threat” level of COVID-19 decreases, the EEOC could reinstate its prior rules prohibiting employer medical exams. So if your company is employing temperature checks or thinking of doing so, it’s important to keep informed on changes in regulations.

The Future of the Employment Law Landscape

Temperature and other medical diagnostics are just one example of a single return-to-work issue with multiple facets of potential employment practices and wage and hour liability exposure. Claims have started to roll in from a number of underlying issues as well as new regulations and legislation. 

Discrimination claims are a key risk, whether based on disability or underlying health conditions that might make employees more susceptible to COVID-19. It remains an open question as to whether having COVID-19 itself is considered a disability.

Employment law observers have also noted a troubling increase in backlash discrimination and harassment claims against individuals of, or perceived, Asian descent. The EEOC and state employment agencies are closely monitoring these claims.

As companies begin to move past current lockdown measures, it’s a good time to perform a ‘look back’ and reassess decisions that were made.

In addition, workforce reduction measures are likely to bring an onslaught of claims. These may center on who was let go, who was furloughed, who was brought back and the timing around such measures. These claims are likely to be a fixture of the employment law landscape well into the future. 

Employers will have to decide who comes back first or at all. Is it based on skill set? On department or business unit? Will you implement staggered returns? All of these decisions must be made legally, in a nondiscriminatory manner, and in compliance with wage and hour laws. For example, if an employer were to decide to call back younger workers before older ones, there is a clear path for plaintiffs’ counsel to bring an age discrimination claim. 

Workplace Laws and Whistleblowing

Employers are also facing the prospect of class action exposure under the WARN Act, OSHA, COBRA or other workplace laws. Because of the sweeping and, unfortunately, sometimes hasty nature in which some employers had to make decisions with regard to the workforce, these claims are particularly well-suited to class action treatment because they affected so many employees similarly. 

Most troubling are claims of retaliation and whistleblower claims activity. OSHA has recorded hundreds of whistleblower complaints related to COVID-19, mainly claims by employees that they were terminated or disciplined after reporting allegedly unsafe work practices or conditions.

And, as is often the case in employment law, federal law is not the only source of protection for these types of claims. A majority of states recognize a form of wrongful discharge under anti-retaliation statutes or even common law.

We have already seen reported complaints filed across a variety of industries where an employee has alleged that the employer failed to comply with local stay-at-home orders or health and safety regulations, did not implement a safe workplace, failed to provide personal protective equipment or failed to maintain proper social distancing. Where the employee was disciplined, demoted or terminated shortly after raising the concern, employers can anticipate a retaliation claim with the potential for significant damages as a result.

Looking Ahead

On the insurance market front, we are not yet seeing many employment practices and wage and hour liability insurers addressing these exposures through exclusions. Rather, COVID-19 issues are coming up on the underwriting side, with increased scrutiny and questions around a company’s practices. Typical question areas include layoff details and plans, whether the company has conducted a disparate impact study, whether outside legal counsel assisted with the process, whether the employer is conducting temperature tests, and so on.

Among the various steps companies should take to navigate the new liability landscape is to designate an internal leader or create a task force of multiple internal stakeholders to stay abreast of the overwhelming amount of guidance, legislation and new ordinances around employment practices. Before taking any measures — including recalling employees back to the workplace, bringing back furloughed employees and assessing at-risk populations — consult with legal counsel. It’s also important to maintain documentation to be able to answer questions from plaintiffs’ counsel regarding what the guidance was at the time a specific decision was taken.

As companies begin to move past current lockdown measures, it’s a good time to perform a “look back” and reassess decisions that were made. Returning to work also presents an opportunity to review and republish anti-discrimination and anti-harassment policies and remind employees of reporting channels. At the same time, employers should begin planning for a potential second wave.

But while staying aware of the risks, employers are well-served to remember that compassion is legal. While there are numerous legal considerations that provide minimum standards, that doesn’t mean it’s the best you can do. Within the bounds of your business, you might be able to be more generous, permissive or flexible than the law demands if and when your employees need you to be.

Kelly Thoerig

Employment Practices Liability Coverage Leader at Marsh

Kelly Thoerig is the employment practices liability coverage leader in Marsh’s FINPRO Practice. She is primarily responsible for writing employment practices liability policies, spearheading policy and insurer new product reviews and drafting policy endorsements on behalf of her clients.

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