The COVID-19 (coronavirus) pandemic has caused massive disruptions to businesses of all types, shapes, and sizes. In both Pennsylvania and New Jersey, “non-essential” businesses have been ordered to shut their doors for at least two weeks. Put another way, with a few exceptions, only gas stations, pharmacies, and grocery stores are permitted to continue business as usual. For bars, restaurants, breweries, and other hospitality establishments, take-out is an option, but the revenue from that will not fully make up for the lost revenue from the inability to open their doors to the public. Manufacturers will face disruptions in their supply chain. Construction companies will be unable to deliver projects due to disruptions with their contractors and suppliers. All business sectors will be facing some loss and looking to share the loss with their business partners and insurers. Here are a few legal issues that business owners should keep in mind in the weeks to come:
• Employment – For those businesses that can continue to operate, work from home should be strongly considered. Employers are encouraged to create set guidelines on how their employees should work from home. Employers should also be mindful that any injuries suffered by employees during working hours are subject to the employer’s worker’s compensation policy. Employers should also make it clear to their employees that while work from home during a pandemic is a viable option, employees should not construe this as a blanket “reasonable accommodation” under the Americans with Disabilities Act, and that in the future, all requests for such accommodation will be reviewed on a case-by-case basis.
• Contracts – With so many businesses closing (either permanently or temporarily) or reducing operations, their ability to honor their contracts will be jeopardized. We can review any such contracts and determine if the business can state a valid basis for its inability to perform under the contract during a pandemic.
• Leasing – while most commercial lease agreements permit the tenant to suspend or reduce rent payments in the event that the space becomes unusable, in a situation like this, it is unclear if the tenant could make a valid case for failing to pay rent. Lack of revenue is not a sufficient justification, but this event is unprecedented in modern history. We can review all commercial leases to determine and potentially negotiate payment plans or settlements with landlords so that businesses can stay in operation.
• Insurance – business interruption insurance policies are available to businesses of all shapes and sizes to cover losses stemming from unforeseen events. In addition to traditional business interruption insurance, there is also contingent business interruption insurance which covers financial loss caused by disruption with customers and suppliers. Several lawsuits have already been filed against multiple insurance carriers seeking coverage for losses relating to the coronavirus pandemic and the New Jersey legislature is considering legislation that would require insurance carriers to cover losses incurred by businesses due to the pandemic. We can review your policies to determine if there is coverage for business losses
resulting from the pandemic. We routinely represent policyholders in disputes with their insurers and can take the necessary steps to get the insurer to honor the coverage you purchased.
Feel free to contact any of our attorneys if you have any questions. We are all in this together, and we are willing to do what is necessary to make sure that your business stays afloat.