Contract disputes, cybersecurity, liability and back to work issues are just a few of the many areas in which companies are seeking legal help as the coronavirus continues to create uncertainty about the future and impact organizations’ day-to-day operations.
The COVID-19 pandemic swept through New York and the nation quickly and largely unexpectedly, creating temporary work stoppages for most, ushering in an era of more employees working from home and altering the economic and productivity outlook for many companies. Legal experts have been busy helping businesses work through these issues and navigate the challenges ahead.
“The start of the pandemic, especially in the first couple months there, was certainly a very, very hectic time for our clients with all the new laws and adjusting to stay-at-home orders and remote work,” said Jeff Calabrese, a partner at Harter Secrest Emery and head of labor and employment practice at the firm. “It was really a totally different world for most of our clients.”
Much of the initial chaos has died down, Calabrese said, but companies are still trying to navigate what for many is an altered and continually changing landscape. Clients have increasingly had concerns about returning to the physical office as the pandemic appears to be easing in New York. Companies are seeking to ensure a safe return to the workplace and seeking guidance to limit any potential liabilities.
The reopening of schools is another area employers have sought guidance, Calabrese said, with employers expecting significant increases in time off requests from parents of children who may be learning from home.
Lorisa LaRocca, a partner with Woods Oviatt’s employment and labor department, said employers are seeking legal help to determine their obligations in addressing employee parents of school-aged children. With many schools across the state opting for a hybrid or distancing learning model, parents are in some cases required to be at home for all or portions of the work week.
“So employers have to navigate through what their obligations are to employees,” LaRocca said, noting as school reopen, companies are faced with a number of challenges.
LaRocca said the Families First Coronavirus Response Act, or FFCRA, requires companies to provide paid leave for employers who can’t return to the workplace for various reasons, including caring for a child, for up to 12 weeks. Companies are working to solve a variety of issues related to the childcare issue and the FFCRA.
LaRocca said employers are also working to overcome employee reluctance to return to physical work spaces, and aiming to be accommodating, safe and productive. Frequent questions have arisen surrounding maintaining a safe workplace and ensuring employees who are sick stay home and, if necessary, get tested. LaRocca noted companies have largely been advised to follow state and federal guidelines and testing protocols.
“It’s just easier to have it be a set procedure and a set process that doesn’t have much subjectivity to it,” LaRocca said. “I don’t think there’s a lot of reason for employers to veer from that. If they follow the guidelines they’re going to be in a much better position to be protected from any potential liability.”
Reviewing contracts, ranging from leases to vendor-supplier agreements, has also been a significant need for many companies, according to Christopher Rodi, an attorney with Woods Oviatt’s corporate department. Rodi said due to the pandemic there have been numerous contracts that couldn’t be upheld by companies either struggling to fulfill their obligations or with suppliers or partners unable to hold up their end of a deal.
Commercial contracts, force majeure or material adverse event clauses note that acts of God, war and other events can trigger delays in a party’s obligations, but Rodi noted most of those clauses do not include the word pandemic. Interpreting what those clauses do say and whether or not the pandemic can be included has been heavily negotiated and disputed.
Eric Ferrante, an associate in Nixon Peabody’s complex commercial disputes group, said the landlord-tenant relationship, has been an area of particular concern, as a lot of businesses are struggling to generate revenue and pay rent. Ferrante said there are significant questions from both landlords and tenants.
“Those are interesting questions because this is a pretty unique situation,” Ferrante said. “There hasn’t been a time maybe since World War II — that’s kind of a lot of the cases we’ve looked to in order to advise clients — the government has told large swaths of property owners or business owners ‘you can’t go into work today.’”
A number of local attorneys pointed to the force majeure clauses, which are included in contracts to release a party of its obligations due to unforeseeable circumstances.
“It’s probably not much of a surprise that a lot of those contracts or clauses don’t refer specifically to worldwide pandemics,” Ferrante said, adding companies are exploring what their options are in enforcing or being released from contracts.
Lana Ivy, a partner with Harris Beach’s commercial litigation and appellate practice groups, said in the past parties may not have paid close attention to the force majeure provisions, but right now they’re being examined closely even before there’s a relevant dispute.
Due to the COVID pandemic, Ivy said companies are much more protective of their contractual rights, as organizations are trying to run down every source of revenue available in a time of economic uncertainty.
“You see a lot of disputes, contractual disputes and business disputes come to a head a little sooner,” Ivy said, adding it doesn’t mean the parties are necessarily going to court immediately but looking earlier to lawyers for help.
Companies have also sought legal help in managing and navigating the federal Paycheck Protection Program (PPP) that was implemented to keep businesses afloat during the early months of the pandemic. Rodi noted there have been several rounds of guidance following the rollout of the program, and lawyers have been working with companies to ensure they ultimately qualify to have their loans forgiven.
Rodi said the requirements that must be met for a company to be eligible for PPP forgiveness can vary, but in the simplest terms the funds must be spent on certain expenses, such as wages and rent, and during specific time periods.
Ferrante said the PPP loans have presented a number of issues for companies, noting the rules and guidelines for the program were not written in a way that made it simple for small business owners who handle their own books.
“If you had access to legal counsel and accountants you could muddle your way through it, but without that sort of outside guidance, in some instances, it would have been really hard to figure out what it was that was expected of you,” Ferrante said, adding the rules were changing after the program was rolled out.
Nicole Ozminkowski, an attorney with Harris Beach’s corporate practice group and health care industry team, noted in her work in respect to health care cybersecurity has been a significant issue with many employees moving to remote work. Cybersecurity isn’t an issue limited to health care, but given the sensitive data and privacy laws the questions are of significant importance in the health care space.
Ozminkowski said obligations are different for each organization or entity, but organizations need to ensure they’re doing their best to protect any sensitive information.
Jenny Holmes, an attorney at Nixon Peabody LLP and deputy leader of the firm’s cybersecurity and data privacy team, has spent significant time advising companies about data security and privacy. Holmes said in recent months many companies, who otherwise have never done so, started to consider whether or not to collect health information from employees and/or customers.
“It’s really become sort of this wild wild west of data collection and there are a lot of unknowns,” Holmes said, adding that companies are seeking help to determine if that data can be collected and if that data is collected how it must be protected. “There’s a lot of open ended-ness out there.”
Outside the Health Insurance Portability and Accountability Act (HIPAA) and the Americans with Disabilities Act (ADA), Holmes said there’s not a lot of guidance for how companies should treat that data. Attorneys have been forced to examine other legal framework to develop best practices, and Holmes said basic guidelines, such as collecting the minimum amount of data needed and limiting access to the data, are recommended, as well as data retention limits.
Another area cybersecurity companies are navigating is employees working from home. Holmes said employers should be cognizant any type of security, privacy and confidentiality agreements within the company still apply while working from home, and simple steps such as shutting down computers at night, changing WiFi and other passwords can be helpful.
“It’s really important that employers continue to send out those reminders and best practices to keep it on the forefront of employees’ minds,” Holmes said.
Matthew Reitz is a Rochester, New York-area freelance writer.