“Times, They Are A-Changin’,” the timeless Bob Dylan song can apply in any era – now, more so than ever. Because of these rapidly changing times, we have received a significant number of questions from clients that ask us to cut through the “noise” and provide some real answers. Before digging in, we should note that not only are the times changing, but the rules are also constantly evolving, and both of these factors lead to uncertainty. Uncertainty is a driver of anxiety, whether for a family, a business, or the stock market. We are hoping that providing some real answers (even if we’re making assumptions) to real questions alleviates some of your uncertainties.
First question on-deck, “If our employees come back to work, whether we are still sheltering-in-place or not, and they contract coronavirus, would the top executives and our business be covered by insurance if we get sued?”
It’s a great question, and we can say it’s a great question because we didn’t ask it!
Let’s get some assumptions out of the way. These assumptions won’t affect our answers but help us lay the framework for the question and response. Let’s assume a business has a Workers’ Compensation Insurance policy in force along with General Liability, Employment Practices Liability, and Directors & Officers Liability insurance. You can ask your insurance broker about these coverages if you have questions. And we are insurance brokers, so if you have questions about any or all of these coverages, please feel free to ask us!
Now, onto the answers…and some more questions.
We would expect the insurance company to step in and pay for legal defense costs under the Employer’s Liability section of a Workers’ Compensation policy should an employee sue the business for contracting COVID-19 from their basic work operations. As with everything else surrounding the COVID-19 subject, things are changing week by week, so we can’t say anything with 100 percent certainty. Still, we don’t see a basis for an insurer refusing to pay defense costs.
Now, causality will be near impossible for an employee to prove – how can anyone say for certain they contracted COVID-19 due to their basic work operations? This will most likely be an insurance company’s response if the employee asks for a settlement. We don’t see how settlements/judgments can be awarded due to this causality effect. With that being said, there have been some significant rule changes that may affect this notion going forward. The extent of these changes could be the subject of an entirely separate article. But to summarize, the Independent Insurance Agents of Illinois noted that first responders could be “rebuttably presumed” to have contracted COVID-19 from their employment. Meaning if a first responder contracts COVID-19, the assumption will be that the virus was contracted at work. This definition will make a Work Comp filing or petition more likely to be accepted by a Work Comp insurance carrier.
As politicians, courts, commissions and the public weigh in on the changing landscape, we will do our best to stay on top of developments as we recommend others do as well.
As an employer, how do we minimize our liability?
Tell employees to practice social distancing, stay home if sick, wash their hands, and to do all they can to follow the rules to help prevent themselves from contracting COVID-19. As of right now, that is what the employment courts are asking of employers. Some regulatory bodies, such as OSHA, have more stringent requirements. Also, you should be following state-mandated office closures, as you cannot force anyone in non-essential business to come into the office (if you do and they contract COVID-19, they might have more of a case). Stay informed about the evolving rules, and ask your trusted advisors questions!
Our safety consultants at Horton provided the following narrative, and we can certainly provide the checklists described below upon request:
Employers currently in operation, and those planning to resume operations, can take action to prevent the spread of the virus, while also addressing the fears and apprehension of their workforce. The foundation of all workplace-related virus efforts is the creation of an exposure control plan. A customized exposure control plan identifies vectors of disease transmission and the actions necessary to prevent the spread. Such plans address social distancing, equipment and tool disinfection, PPE, respiratory protection, employee density planning, employee and supervisory training, frequent audits, and plan modification-updating. The existence of a comprehensive exposure control plan, and support for concerned employees, will go a long way in managing virus-related issues in essential business operations, as well as those that will soon transition back to work. There are checklists we can provide that will help you evaluate the status of your current COVID-19 safety program or develop a program as you prepare to return to the workplace.
Separately, we have a relationship with an Employment and Workers’ Compensation attorney who can provide legal advice on these topics. We are happy to make introductions and to help facilitate phone calls. This attorney is extremely knowledgeable on these topics, and this is a complimentary service.
What about D&O insurance? How would that protect our executives and board in the event there is a lawsuit alleging a lack of oversight?
Let’s look at a specific example. Recently, Walmart was sued in Cook County by the estate of an employee who died of Coronavirus complications, and the plaintiff alleged that Walmart breached its duty to exercise reasonable care by:
“failing to cleanse and sterilize the store to prevent infection; failing to implement and enforce social distancing guidelines; and failing to warn the defendant and other store employees that various individuals were experiencing symptoms at the store. The complaint also alleges that the store failed to meet or implement various measures recommended by the Center for Disease Control and other governmental authorities, such as failing to implement basic infection prevention measures (by providing hand sanitizer, masks, gloves, etc., to employees); failing to develop procedures to identify and isolate sick people; failing to train personnel on measures to minimize infection risk; and failing to stop employees exhibiting symptoms from working in the store.” From “Thinking About Coronavirus Blame and the Possible Course of D&O Claims,” by Kevin LaCroix.
We agree with the opinion stated in the article that this lawsuit will likely be defended by Walmart’s Work Comp policy, but we bring it up as an example. If a situation arises, we recommend alerting your broker or us, and they/we will help you determine which policies will respond.
If a director or officer of your firm(s) were explicitly named in a lawsuit, many Directors & Officers insurance policies have a “Duty to Defend” the director or officer if there is potential coverage under the policy. We assume the insurance company would site the Bodily Injury Exclusion not to cover this type of claim. But we do feel there would be coverage under the Workers’ Compensation Policy as stated above.
That being said, many D&O policies contain a Shareholder Derivative Defense/Investigation coverage if a shareholder files a lawsuit alleging that the value of the company was decreased because the Board of Directors did not properly oversee its response to the crisis, for example. This type of derivative coverage typically does not contain a bodily injury exclusion.
The important things to think about for Executives, Directors, and Officers is that you are using your best judgment to mitigate coronavirus issues.
- Have processes and procedures to rely upon that prove you are fully engaged in your duty of care and loyalty to the organization
- Document what you have done and take into consideration that you have broad insurance programs in place to protect you in the event you are sued because someone is hurt or becomes ill.
Now that we’ve covered potential insurance responses in the event someone gets sick, what type of insurance comes into play if an employee claims disparate treatment because of a COVID-19 infection?
Employment Practices Liability Insurance (EPLI) defends a company against claims of discrimination or harassment based on protected classes under Title VII of the 1964 Civil Rights Act, the Age Discrimination in Employment Act of 1967, (ADEA), and the Americans with Disabilities Act of 1990, (ADA). These protected classes include Age, Race, Gender (pregnancy), Disability, National Origin, Religion, and Genetic Information.
Additionally, EPLI defends companies against workplace torts, including failure or refusal to hire or promote, bullying, humiliation, adverse change in terms, conditions or status of employment, and infliction of emotional stress, to name some.
We don’t know how each specific carrier will respond, and it’s going to be based on specific policy wording, but we would definitely recommend filing a claim or notice of claim if an employer is aware that an employee has a grievance or certainly files a grievance in writing based on the question above. And avoiding circumstances where allegations of discrimination against certain classes of individuals can be made is important as well. Employers need to protect the health and wellbeing of their workforces while trying to follow all the changing rules.
We understand this crisis has unleashed many challenges and whether you are a Bob Dylan fan or not, it’s tough not to point back to his lyrics from “The Times They are A-Changin’” and make correlations to today. We hope that while answering some people’s questions in this article that we’ve provided some answers to a greater community. If you have additional questions, please let us know, and while we are prioritizing our clients at this time, we will certainly attempt to respond. And feel free to visit our COVID-19 Employer Resource Center for information, including articles, webinars, and additional resources.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.