COVID-19 Client Alert: What Your Business Needs to Know Legally

Q: Will business interruption insurance cover Covid-19 disruptions to my business?

A: It depends on your policy. Insurance companies are already on high alert to expect a jump in claims under business interruption policies as the impact of COVID-19 spreads throughout the United States. With big brands like Starbucks, Ikea and Apple shutting their doors across the country and restrictions imposed on restaurants, movie theaters and malls, there are huge losses piling up. Insurance companies do not specifically insure against corporate losses caused by epidemics. However, some policies may have extensions or endorsements that provide coverage. Typical business interruption policies are triggered by property damage, not viruses—some policies have language that covers government instructions to close, which would apply here for some local businesses. After the SARS outbreak, some insurance companies adjusted their policy language to exclude “loss in connection with notifiable infectious disease.” Governments have declared COVID19 notifiable at different times, which could have impact on whether your claims would be covered. Ultimately, potential coverage is independent on the individual policies and you should have your lawyer examine the policy.

Q: Can I send an employee home if he/she is exhibiting symptoms?

A: During a pandemic, employers may question the employee as to symptoms of COVID-19 provided that any medical information received from the employee is maintained confidentiality. Should the employer confirm that the affected employee is exhibiting symptoms associated with COVID-19, the employer may send the employee home and require they stay home until the employee has confirmed that he/she is not infected.

Q: Could I violate OSHA by failing to adequately protect employees from spread of COVID-19?

A: Yes. An employer’s failure to adequately respond to the effects of a pandemic in the workplace provides a basis for a general duty clause violation under OSHA.

Q: Can a healthy employee refuse to come to work?

A: Most likely. Under OSHA, an employee’s refusal to come to work over concerns of contracting COVID-19 may be considered a protected activity, which would implicate OSHA’s anti-retaliation guidelines. An employer is prohibited from discriminating against the employee for missing work, including termination or other retaliatory measures.

Q: Can a customer cancel its contract with me under a force majeure provision?

A: It depends on what the provision says. A force majeure provision typically states that the occurrence of certain unforeseen events or circumstances beyond a party’s reasonable control will that party from its performance or obligations and then it lists a series of examples that would be considered force majeure events. Often pandemics, epidemics, public health emergencies, and outbreaks are included in the language used. Even if it is not specifically included, it may still fall under general language such “acts of God” or “events beyond the control of any Party.” Even if the language applies, the customer must be able to link COVID-19 as the cause for why it cannot perform under the contract.

Q: What Federal SBA Loan Programs are Available for Florida Small Businesses?

A: The United States Small Business Administration (SBA) was recently authorized by federal legislation (H.R. 6074) to issue up to $7 billion in low interest federal disaster loans for working capital to small businesses and non-profits that have been severely impacted by COVID-19. The entire state of Florida is eligible for relief under this program. As a condition precedent to eligibility for the relief under this program, prospective borrowers will need to determine whether their business qualifies as “small” pursuant to the SBA’s size standard guidelines.

The following is a non-exhaustive summary of the characteristics of these Economic Injury Disaster Loans:

• Companies with up to 500 workers can borrow up to $2 million to provide working capital assistance to pay fixed debts, payroll, accounts payable and other bills that cannot be paid because of the disaster impact;
• The SBA is requesting prospective borrowers seeking more than $25,000 to put up collateral – preferably real estate – as security for repayment;
• The interest rate on these SBA Disaster Loans is 3.75% for small businesses with no credit available elsewhere (businesses with credit available elsewhere are not eligible), and 2.75% for non-profits;
• The interest rate on these SBA Disaster Loans is 3.75% for small businesses with no credit available elsewhere (businesses with credit available elsewhere are not eligible), and 2.75% for non-profits;
• The terms and conditions of repayment of SBA Disaster Loans are determined on a case-by-case basis, based upon each borrower’s ability to repay.

Q: What State SBA Loan Programs are Available for Florida Small Businesses?

A: Small businesses in Florida that have suffered economic damage as a result of COVID-19 may be eligible for short-term, interest-free loans. The Governor’s Executive Order 20-52 made businesses that maintain an office in Florida and have been in existence since at least March 9, 2020 eligible for one-year loans of up to $50,000. In special cases, loans up to $100,000 might be available. These loans are intended to bridge the gap between the onset of the catastrophe and the securing of longer-term financial resources. Eligible businesses must be for-profit and privately held. The deadline to apply is May 8, 2020 at www.floridadisasterloan.org.