Capital

Restaurant Owners Facing New Liabilities as a Result of the Pandemic

The law firm, Hunton Andrews Kurth, has developed a COVID-19 lawsuit tracker. As of this writing, 3,144 COVID-19-related complaints have been filed across the U.S.

For restaurants, the possibility of facing yet another financial hardship is like the final straw on the camel’s back. And yet, unfortunately, the possibility is real.

Here’s a look at the legal implications that the seemingly never-ending pandemic could bring.

Worker’s Compensation

Restaurants are used to some level of risk in this area. After all, the foodservice industry suffers from the highest number of burns of any employment sector, with cuts and punctures making up a third of worker’s compensation claims, and slip and falls account for over 4 times more in paid losses.

As if that’s not enough, we now have a new and sometimes deadly liability that’s come to town–COVID-19.

Can workers who get sick while working at your restaurant file for worker’s comp? Can a family member that lost a loved one who was an employee that contracted the virus sue for negligence? If the meat processing plants are any indication, the answer may be yes.

Despite congressional efforts to protect the meat processing industry, several plants across the nation are being sued by families that have lost their loved ones to the virus. Recently, on June 25, family members of three Tyson Food’s employees, that lost their lives due to complications brought on by COVID-19, filed a lawsuit against Tyson Foods, Inc. The lawsuit alleges that the company, located in Waterloo, Iowa, did not inform the employees when workers started coming down with the virus, even though they knew that the virus was spreading through the plant.

If you have performed due diligence, protecting your employees and guests according to the latest CDC guidelines, and keeping them informed of any outbreaks, your chances at winning a battle, should it come down to one, are good.

KXAN, a NBC-affiliated television station in Austin, reported that David Coale, an appellate attorney with Lynn Pinker Hurst & Schwegmann, said that “Businesses that follow public health guidelines carefully should be clear of liability, but there is a risk to reopening.”

Several members of the congress are pushing for liability protection for those businesses that are reopening. The road to passing such legislation may be an uphill climb considering that a national poll, conducted by Hart Research, found that two-thirds of voters oppose legislation giving guaranteed immunity to corporations and employers in cases involving COVID-19 infection.

Part of the public’s concern can be seen in this statistic: 60 percent felt companies would exert less effort to keep people safe if they knew that they could not be sued.

Unemployment and Employee Concerns

According to the U.S. Bureau of Labor Statistics, June saw a national unemployment rate of 11.1 percent, which included a gain of 1.5 million jobs in the food services and drinking places. Despite this increase, employment in this sector is still down by 3.1 million since February. The Cheesecake Factory, alone, furloughed 41,000 workers.

Many of these former employees lost their jobs due to a reduction in force (RIF)—separation from employment due to lack of funds, redesign, or elimination of positions or reorganization, with no likelihood that the employee will be recalled. If fired, for this reason, they are eligible for unemployment benefits. But what about those employees who refuse to work because of concerns about exposure to the virus?

If an employer is not taking the necessary precautions to protect their employees, these employees may also be eligible for unemployment. In the worst-case scenario, they may also choose to turn to the courts for litigation.

A woman working as a cook at R + D Kitchen in Texas alleges that she was told to work without a face covering once dine-in services resumed, or she would be taken off the schedule. She refused due to health concerns, and the disagreement has germinated into a lawsuit.

The best defense is to maintain written documentation proving compliance with all local, state, and federal guidelines. Develop a sanitation and safety program, train your staff when they return to work, and address any fears that they may have before they walk through your doors.

Liquor Liability

With multiple states and cities relieving restrictions on alcohol sales, this profitable avenue is also ripe for litigation. This is particularly true for those businesses that are selling alcohol to-go. It’s important to understand the law and specific guidelines that each city and state have mandated. For example, in Texas, the sale of alcohol to-go must be accompanied by a food order, be sold in a manufacturer-sealed container, with a limit of 375 milliliters (a little over 12.5 ounces) on distilled spirits.

Be sure to follow all regulations for your area and determine the possible exposure should the consumer partake in the beverage while driving and get into an accident.

Delivery

Most restaurants that have managed to remain open during the pandemic have had to turn to alternative income-producing strategies. One of the most common is delivery. For those that have opted to forego third-party delivery services and keep as many employees working by offering the option of becoming a delivery driver, the liability is clear.

To ensure proper insurance coverage, contact your insurance broker and discuss the changes you will need to make. It is likely that your insurer will request that hosts, bartenders, and servers turned delivery drivers consent to have their driving records reviewed in order to obtain coverage.

In addition, if your restaurant is in a state where minimum wage combines cash and tip, be sure that the tips the driver receives are sufficient to continue claiming a tip credit. If not, be sure to pay the full minimum wage.

Fortunately, the steps required to protect yourself from litigation are fairly straight forward—follow CDC guidelines, document the safety precautions your business takes, contact your insurance provider, and keep an open line of communication running between management and staff. This too, one day, shall pass.

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