COVID-19: The Heightened Risk of Litigation for Employers

by Hayes Cronk

In continuation of our recent commentary on the COVID-19 pandemic, we're examining the latest litigation risks for employers in today's blog post. Because of COVID-19, employers of all sizes have been forced to make difficult decisions regarding employment. These decisions have led to furloughs, increased sick leave, productivity concerns, pay cuts, and termination of employees, all of which ultimately raise litigation concerns.

The boundary between termination and retention is more blurred than ever before. And this lack of distinction naturally leads to contract claims. Additionally, termination can raise non-compete issues if an employee is subject to a non-compete covenant, as well as wrongful termination issues.

Due to the sweeping nature of layoffs, employees may feel that they are disparately impacted or disparately treated by the termination. Disparate treatment involves blatant or even inadvertent targeting of a specific employee or group of employees and treating them differently than other groups of employees. This issue can be a major problem for businesses, and employers must be cognizant of how and who they lay off in order to avoid claims from an employee or group of employees alleging that the business laid them off based on discriminatory reasoning.

One common question that we’ve received from our clients is: what if an employee refuses to come to work? Refusal to work by employees is a hotbed of OSHA retaliation claims. Employees have various protections, including statutory and regulatory protections, which put employers in a risk-reward analysis in firing an employee. Employees can refuse to work if they, in good faith, believe the employer has done an inadequate job responding to the safety issues surrounding the COVID-19 pandemic, which typically arise from the safety and protection measures employers have implemented to combat the virus.

At a minimum, employers should be mindful to implement CDC and OSHA guidelines and regulations as it relates to COVID-19 best practices in their industry. Employers beware! OSHA protects employees against retaliation from their employers for refusing to work based on these conditions or for terminating or disciplining employees for raising valid safety concerns.

The Americans with Disabilities Act (ADA) may also come into play when employees refuse to work. Primarily, the concern is disability discrimination. Due to the COVID-19 pandemic, the number of "at-risk" groups has grown substantially. This expansion widens the risk of liability for employers because the ADA protects more individuals. The ADA requires that employers provide disabled employees with reasonable accommodations unless doing so imposes an "undue hardship." Employers must engage in a back and forth dialogue with employees to analyze the potential accommodation.

Also, employers must consider if they are running afoul of the National Labor Relations Act (NLRA). The NLRA is a federal law that grants employees the right to form or join unions; engage in protected, concerted activities to address or improve working conditions; or refrain from engaging in these activities. Under the NLRA, which applies to union and non-unionized businesses, employers must be mindful of disciplining, terminating, or retaliating against employees for engaging in “protected concerted activity.” Protected concerted activity can arise in a variety of circumstances where an employee or group of employees is involved in work-related issues, such as raising COVID-19 pandemic safety concerns. Employees must only have an "honest belief" to be protected under the NLRA. That's a very low standard to meet, which, again, widens the risk of liability for employers.

Some businesses have less than 50 employees and have never been required to provide paid family or medical leave before the outbreak of COVID-19. With the enactment of the Families First Coronavirus Act in March 2020, those smaller employers must now navigate new waters by providing paid emergency sick leave and family leave based on the impact that COVID-19 has on its employees and their families. Lawsuits related to denied leaves and unlawful requests for documentation related to leave are on the rise.    

Lastly, its no secret the COVID-19 virus is dangerous and deadly, meaning wrongful death and negligence suits will inevitably stem from the virus. Inadequate safety measures at one’s place of work may lead to the contraction of the COVID-19 virus, which can result in death or severe bodily harm. Death or harm to an employee undoubtedly provokes employees and their families to bring a lawsuit against the employer. These wrongful death and negligence suits can be extremely detrimental to employers and their businesses – both financially and reputationally.

All of these litigation avenues (and others) can lead to employers feeling vulnerable to litigation. So, how can employers protect themselves when faced with or threatened with litigation?

  1. Document, Document, Document. One crucial action an employer can take is to document the interactions with its employees. During the litigation process, documentation helps establish the employer’s effort in providing a safe work environment and the reasoning behind the employment decisions and policies.
  2. Talk early and often. Opening productive two-way communication with employees shows an employer's good faith in establishing a safe work environment. Additionally, when dialogue with employees is a common occurrence, employers may receive valuable insight into what their employees are experiencing – and employers can adapt accordingly.
  3. Take a pause and evaluate accommodations. Employers must establish accommodations for employees that are at risk of contracting the COVID-19 virus. Accommodations can include: flexible work hours, separated desks, less client/customer or visitor interaction, and a plethora of others that may showcase an employer’s good faith intent to protect employees.
  4. Be proactive to ward off disparate impact claims. Before making employment decisions, employers should do a company-wide analysis of what groups and individuals would be affected by employment decisions. Company analysis can help employers identify what groups could be perceived as targeting.
  5. Put policies in place. Having thoughtful and thorough COVID-19 policies in place provides a strong starting point for a litigation defense. Connecting with your attorney to help draft policies will establish the employers' readiness to keep their employees safe. Gutwein Law can assist employers in developing COVID-19 policies.
  6. Consider seeking legal counsel before terminating or furloughing employees. Terminations and furloughs are delicate situations with many factors that can cause concern. Gutwein Law can help employers analyze specific situations, make recommendations on paths forward, and evaluate litigation concerns.

We at Gutwein Law strongly suggest you use legal counsel to prepare for potential litigation. We know from experience that it's better to be prepared for what may happen than to find yourself unprepared when litigation comes. As always, our team is here to help. Please don't hesitate to call us at 765.423.7900 or email us at with any questions.