Spike In Workplace COVID-19 Suits Only Starting, Report Says

By Vin Gurrieri
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Law360 (September 8, 2020, 8:49 PM EDT) -- The coronavirus pandemic has already spawned nearly 600 lawsuits, with even more litigation on issues like layoffs and sick leave expected once businesses bring back workers and ramp up operations, according to a new report Tuesday from Littler Mendelson PC.

The WPI Labor Day Report 2020, which was produced by the management-side firm's Workplace Policy Institute, analyzed the effect the ongoing pandemic has had on businesses and workers as both try to navigate the health crisis.

One of the report's central findings is that the pandemic has already resulted in a significant amount of litigation against businesses, with many early cases revolving around COVID-19 exposure, workplace health and safety, and terminations. But even though businesses are increasingly reopening their doors after weeks or months of lockdowns, there isn't likely to be a reprieve in virus-related litigation anytime soon, according to the report.

"Where workplace liability is concerned, there is no shortage of laws or regulations under which employers may face claims," Littler attorneys at WPI, the firm's lobbying arm, wrote in Tuesday's report.

"To date, while at least a dozen states have enacted laws to shield employers acting in good faith from liability for COVID-19 claims, they have largely been confined to claims of exposure to the virus — we have not seen significant legislation offering any type of protection for labor and employment claims in particular," the report's authors added. "Nor has the federal government yet acted on proposals to limit COVID-related liability for employers and businesses, although proposals to do so have been introduced."

Virus-Related Litigation Abounds

Although the bulk of virus-related lawsuits have so far been largely aimed at employers in the health care sector, the focus could shift to more industries in the coming months as more businesses reopen under the cloud of COVID-19.

According to Littler, no less than 588 COVID-19 employment suits have been filed in federal and state courts since the start of the pandemic through August, including nearly 70 class actions.

The most common claims have been for retaliation and breach of contract wrongful termination, according to Littler's report. Other common claims include disability bias, workplace safety, and failure by businesses to meet their obligations under various federal leave laws, the report said.

But as the pandemic persists, employers will face more wage-hour claims related to things like compensable time and business expense reimbursement, as well as suits alleging violation of the Worker Adjustment and Retraining Notification Act when workers are laid off, it said.

Under the federal WARN Act and various state-level variations, except under certain circumstances, employers are obligated to give workers a heads-up about mass layoffs well in advance, an obligation that has proven difficult as the pandemic has forced businesses to abruptly lay off or furlough millions of workers.

"While WARN provides certain exceptions to these notice requirements (most notably, when a plant closure or mass layoff is the result of business circumstances that were not reasonably foreseeable at the time notice was required), the applicability of these exemptions with respect to COVID-19 remains unclear," the report said. "Despite the unpredictability and uncertainty of the pandemic and its duration, and of the ever-changing governmental and societal responses to the pandemic ... plaintiffs may challenge businesses for invoking the 'unforeseeable business circumstances' exception to give shortened WARN notice or to extend layoffs beyond six months."

Michael Lotito, co-chair of the WPI and one of the report's authors, told Law360 that the WARN Act will be a source of legal trouble for businesses going forward.

"A major issue is going to be with respect to WARN because it's a foreseeable issue. So, we're expecting a wave of those types of claims for sure," he said, adding that he believes more sick leave claims, whistleblower-related allegations and disability accommodations may also be in the offing as businesses reopen.

Telework Is the 'New Normal'

Besides the legal ramifications of the pandemic, the health crisis has changed the way businesses operate — perhaps permanently.

One of the most glaring examples has been the shift en masse by businesses towards remote work, which many were forced to adopt at the outset of the pandemic for workers whose jobs were conducive to such arrangements even if they had never embraced it before.

The report posited that the pandemic exacerbated "fundamental changes" that were already happening in American workplaces, like increased automation and the replacing of brick-and-mortar operations with virtual offices and online platforms.

Lotito for one said the shift to remote work may not abate once the pandemic subsides since "there are some economics that make it compelling," noting that businesses can take savings from having less physical space to pump more money into things like capital investments or better wages and benefits.

"The other thing that makes it real is people — people themselves have become accustomed to doing telework, they like it," he said. "Maybe they don't like it five days per week, but they like it two days a week [or] three days a week. They want that flexibility, it's appealing."

Moreover, the uncertainty surrounding school safety is another factor that is keeping people tethered to their homes, which will make leaving telework behind difficult for both workers and businesses at least until that issue is resolved, according to Lotito.

But while "pivot to home offices will likely stick around in some sectors," Littler's lawyers in their report cautioned that the shift brings a "host of employment concerns" that some haven't experienced.

That includes varying state laws about employers paying workers back for businesses expenses, which in a home office might include internet use and electronic equipment, and tax and contractual issues that arise when a worker's home bases is in a different state than where the employer is located.

"I think the issues we laid out in the report — some of the technical things about wage and hour issues and those sorts of [things] — they will play out in due time," Lotito told Law360.

More May Flock to Gig Work

The firm's report also took a deep dive into the effects the pandemic has had on the nation's labor market and what it'll mean for unemployed workers suddenly faced with fewer job prospects.

Although the national unemployment rate has rebounded somewhat from the drastic tumble it took in the spring when businesses were placed in lockdown, it is still hovering at 8.4% with nearly 14 million people on the unemployment rolls, according to data issued by the Bureau of Labor and Statistics on Sept. 4.

Littler noted in its report, which was written when the U.S. Department of Labor Labor's latest batch of data was released, that the agency's stats over the past few months haven't included people who remained on payroll but had their wages cut or missed out on tips or commissions during virus-related lockdown, nor has it covered wages that self-employed businesses owners and others who provide "independent services" missed out on. The firm also pointed out in its report that businesses and workers in the hospitality and retail sectors have especially been hit.

As more permanent jobs dwindle, the report's authors said that more workers are expected to turn to gig work as independent contractors to supplement their existing pay, or because they are jobless and have no other source of income for the time being.

And a mass move toward gig work in tough economic times wouldn't be without precedent, according to Lotito, who said the shift could be similar to what happened during the Great Recession a decade ago when economic hardships drove more people to gig work.

"We saw it during the last downturn [in] that '07, '08, '09 time frame, that a lot of individuals went to gig work in order to supplement income or to be their only source of income at least for a period of time and that's very attractive to people," Lotito said.

But any major shift by people towards work in the gig economy would, unlike a decade ago, run headlong into efforts by California and other states to crack down on the alleged misclassification of workers as independent contractors, particularly in the gig economy.

The Golden State recently enacted A.B. 5, a landmark but controversial law that made it harder for businesses to classify workers as independent contractors.

The state of that law, however, is still in flux. Gov. Gavin Newsom on Friday signed a bill modifying A.B. 5 to allow more individuals to continue working as independent contractors, and a ballot measure called Proposition 22 will be before voters in November that would exempt app-based drivers from A.B. 5's legal framework.

And Congressional Democrats have pursued legislation that would enshrine a classification test resembling the one adopted by California in A.B. 5 on a national scale, a policy plank that could gain momentum after the November election.

"There's obviously a real demand for people to try to get some income [from] someplace. Clearly A.B. 5 and its supplement ... makes that extremely difficult," Lotito told Law360. "So, there's an irony at a time at a time when we need maximum flexibility in order for people to earn a living, California is shutting down that potential opportunity."

--Editing by Adam LoBelia.

For a reprint of this article, please contact reprints@law360.com.

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