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Addressing Legal Issues for Businesses Around Coronavirus

As the coronavirus continues to bring global health and financial concerns, businesses are preparing for challenges to supply chains, consumer demand, financing, and more.

But what about the legal challenges and questions for businesses? Several law firms are addressing the business legal challenges around coronavirus.

Workplace Law and Coronavirus 

The first issue for businesses surrounds the area of what New York-based law firm Morrison Cohen describes as “avoiding the spread of infectious diseases in the workplace and complying with applicable law.”

As the coronavirus continues to bring global health and financial concerns, law firms are addressing the business legal challenges.

A firm memo notes that: “Under the General Duty clause set forth by the Occupational Safety and Health Administration (OSHA), employers must manage the risk of serious illness spreading in the workplace by developing and implementing a strategy to maintain a healthy workplace, while doing so in a way that complies with federal, state, and local employment laws.”

The memo addresses three key questions (for full responses, see the full memo):

  1. CAN EMPLOYERS ASK EMPLOYEES ILLNESS-RELATED QUESTIONS? “Generally, if an employee is experiencing symptoms that are, or are perceived to be, substantially limiting his or her major life activity, such as, for example, his or her ability to breathe, then such illness may be protected under the ADA.” However, the firm notes: “An employer may ask illness-related questions of an employee who has a short-term commonplace illness, or who has recently traveled to a quarantined area regarding his or her risk of exposure to COVID-19.”
  2. CAN EMPLOYERS SEND HOME EMPLOYEES WHO APPEAR TO HAVE SYMPTOMS OF A RESPIRATORY ILLNESS? “Sending an employee home, even against his or her will, who displays symptoms of a potentially contagious illness would not run afoul of the ADA’s restrictions on disability-related employer actions. This is because: (i) if the illness ultimately turns out to be relatively commonplace and short-term, such as the flu, then it is not a disability under federal law; and (ii) if the illness does turn out to be severe, where it substantially limits an employee’s major life activity and thus may constitute a disability under the ADA (or is at least perceived to be severe), then sending the employee home would be lawful, as the severe illness poses a direct threat to the health or safety of that individual and other employees in the workplace.”
  3. HOW DOES AN EMPLOYER KNOW IF AN EMPLOYEE IS REQUESTING AN ACCOMMODATION? “There are no magic words for an employee to request an accommodation under federal and state laws. Instead, employers must be on the lookout for any verbal or written request by employees to alter the way they currently perform their jobs. Examples of such alterations include requests to wear a protective mask or gloves while working, increasing hand sanitizer and disposable wipes for additional cleaning of shared surfaces and doorknobs, or temporarily working from home.”

Contractual Force Majeure and Coronavirus

Another area for businesses to consider is the “Contractual Force Majeure Provisions” around coronavirus. The New York Law Journal posted an analysis of the challenge by Morrison Cohen’s Hon. David B. Saxe (Ret.), a former New York State Appellate Division Associate Justice, and Michael Mix.

The piece notes that “Parties should scrutinize their existing contracts to see if those contracts include a force majeure clause and to see whether coronavirus is a force majeure event.” That’s because “With the increasing number of coronavirus cases around the world, including the United States, it is only a matter of time before contract counterparties outside of China attempt to argue that their contractual duties should be excused due to coronavirus.”

Indeed, the post notes that “There have already been reports of Chinese companies invoking force majeure clauses in contracts in an attempt to avoid performance of their contracts.”

Reuters highlights an example involving PetroChina: “PetroChina has suspended some natural gas imports, including on liquefied natural gas (LNG) shipments and on gas imported via pipelines, as a seasonal plunge in demand adds to the impact on consumption from the coronavirus outbreak. The company issued the force majeure notice to suppliers of piped gas and also to at least one LNG supplier, though details of the force majeure notice could not immediately be confirmed.”

M&A Transactions and Coronavirus

Sidley Austin addresses the issue of “Diagnosing and Treating Coronavirus Risks in M&A Transactions.” The firm notes that “buyers should ensure their diligence on the target business extends to” various areas, including: “existing insurance policies and their coverage, including business interruption policies and the nature and extent of stopgap health and disability coverage related to the target’s welfare plans for employees;” supply chain risk; “regulatory, licensing and data privacy implications as a result of remote working arrangements, particularly in certain industries (e.g., financial services); and more.

For sellers, the post highlights that “sellers should be prepared for buyer sensitivity to these issues and pre-emptively prepare information on the current and expected future impact of the coronavirus outbreak on the target business and relevant mitigation efforts. Sellers should also be prepared to manage due diligence expectations and be prepared and organized, including making use of third-party advisor resources to help manage the due diligence process.”

Other areas noted include Price and Consideration, Material Adverse Change, Outside Dates, Interim Operating (and Other Operating) Covenants, Representations and Warranties, and Choice of Governing Law.