How do I make sure I’m protected if I need to cancel my business event and event contracts because of a new COVID-19 shutdown?
Whether you’ve paid into a broader promotional package with other local shops, rented heat lamps for a sidewalk shopping display, made plans with caterers, or made contractual commitments in other ways, it’s hard to predict future COVID-related restrictions. If you have to cancel your event because spiking COVID-19 cases prompt your local or state government to shut down in-person gatherings, are you on the hook for these expenses?
It depends. While it’s generally a good idea to include “Force Majeure” clauses in contracts for services that are tied to a specific time and place, they’re even more important given the uncertainty caused by the pandemic. Force Majeure clauses provide insurance against so-called “acts of God,” or unforeseen circumstances beyond your control that make it impossible to perform your contractual obligations.
In order to be legally enforceable, though, your Force Majeure clause must include language that specifically references the type of event that is preventing the performance of a given duty. For instance, you should be able to get out of your catering contract if your event was cancelled due to a citywide ban on such gatherings due to a spike in COVID-19 infections as long as the Force Majeure clause in your contract includes “pandemic,” “contagion,” or other terminology alluding to the pandemic. It also must be the actual cause of the nonperformance (not just a convenient excuse).
Depending on the nature of your Small Business Saturday event, a Force Majeure clause could cut both ways. If, for example, you sold raffle tickets ahead of the date or your business provides event-related services to other businesses, you may have to give up any anticipated revenue tied up in that contract. Either way, make sure the language in these contracts prepares you for such cancellations or changes in plans.
Can I be sued if an employee, contractor, or customer tests positive for COVID-19 after working at, shopping at, or visiting my store?
Whether you can be sued for COVID-19 infections that occur on your premises depends on the individual’s connection to the business, the workers’ compensation laws of your state, and other factors. If you take reasonable precautions, however, you may be able to avoid legal action related to infections.
Requiring customers and other non-workers at your shop or off-site event to sign a COVID-19 Liability Waiver will provide some legal protection for your business, although the enforceability of these waivers varies by state law. In addition, you might want to reassure customers and visitors that you are taking all necessary precautions by following official social distancing and mask recommendations and providing conspicuously placed hand sanitizer stations.
It might be difficult for an employee to successfully sue your business for contracting COVID-19 at work, depending on the workers’ comp laws of your state. For instance, many states require proof that the employer intentionally infected the employee with COVID-19 in order to resolve the issue in court instead of solely through workers’ comp. Some states, including Michigan, have provided even more protections for employers against legal actions that are specific to COVID-19.
Independent contractors, however, are not employees from a legal standpoint and may have more leverage to sue you for a COVID-19 infection. Your best protection may be to make sure your Independent Contractor Agreement includes an indemnification clause that generally releases you from such liability.
How do I protect myself and my business if a customer tests positive for COVID-19 after visiting my store?
If a customer tests positive for COVID-19 after visiting your store or attending your Small Business Saturday event, they may have a difficult time proving that your business was the cause. Nonetheless, you want to do what you can to avoid a lawsuit or the possibility that a customer might complain publicly that your business was operating in a careless fashion.
If you are concerned about liability, here are some steps you may want to take to try and avoid potential lawsuits:
- Take proper health and safety precautions.
- Follow all applicable COVID-related health regulations.
- Have customers sign a COVID-19 Liability Waiver.
To avoid bad publicity, you’ll want to handle the situation delicately, both to assure the infected customer that you took all reasonable precautions and to prevent their infection from becoming a social media nightmare for your business.
Where do I find information about local COVID-19 regulations for small businesses?
There are several sources of information for best practices and regulations intended to slow the spread of COVID-19. Federal guidelines (such as those provided by the Centers for Disease Control) are not required, but they are well-researched and some of the best information we have about how to avoid the spread of COVID-19.
Since COVID-19 business regulations are generally being enforced at the state level, you’ll want to check your state and local government websites for details. For example, California offers a COVID-19 Employer Playbook that details state regulations and best practices, along with industry-specific guidance. Remember, your local municipality may have additional regulations not enforced by your state government.
Have a safe and successful Small Business Saturday event
Small businesses are the backbone of the U.S. economy. The restrictions put in place in the wake of the novel coronavirus pandemic have hit small businesses especially hard. Small Business Saturday is an opportunity to reconnect with your community and boost revenues as holiday shopping season kicks into gear. Just make sure you protect your legal interests while maintaining a healthy environment. If you have a question about liability concerns that are specific to your particular situation, don’t hesitate to ask an attorney. You can find additional small business documents at the Rocket Lawyer COVID Legal Center.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.