The COVID-19 pandemic has brought small business numerous challenges. We can now add another to the list: Employees filing increasing numbers of COVID-19 related lawsuits. In fact, according to the Fisher Phillips Employment Litigation Tracker, as of November 1, COVID-19 related lawsuits have been filed against 950 employers. The highest number of lawsuits were filed in California, Florida, Michigan, New Jersey and Texas.

In the hospitality sector, restaurants are the largest target of the lawsuits. The cases range from wrongful death actions filed by family members of deceased employees, to claims of failure to provide proper leaves of absence. This article looks at some of the more common litigation issues franchisees may face and strategies to minimize these risks.

Wrongful Termination

Many states recognize a cause of action for wrongful termination in violation of public policy and other similar claims. In these cases, the employee generally claims they were fired because they were doing something that is protected by law. The pandemic has brought us CDC and OSHA directives, numerous state and local guidance, ordinances and executive orders. Wrongful termination claims arise when an employee is fired close to or in conjunction with the employee’s exercise of some right or requirement under these new directives. Here is just a sample of some of the wrongful termination claims filed recently.

• Pennsylvania Restaurant: Employee claims he was fired because he was going to take time off to self-quarantine after a COVID-19 test.
• Michigan Restaurant: After being questioned about whether he had been irresponsible when he caught the virus, the employee claims he was fired from his assistant manager position when he tested positive for COVID-19.

Retaliation

Most employment laws and regulations have anti-retaliation provisions, meaning an employer cannot punish an employee for exercising rights under the law. In these COVID-19 lawsuits, employees claim they were fired as punishment for making safety-related complaints or taking other actions to protect themselves.

• Nationwide: There have been multiple lawsuits filed by employees alleging they were fired after voicing concerns that their employer was not following proper safety protocols, including social distancing requirements and mask mandates.
• Michigan restaurant: Employee claims she was fired from her manager position when she refused to perform unpaid work as she collected unemployment benefits due to the shutdown caused by COVID -19.
• Texas Restaurant: Employee was quarantined based on his doctor’s recommendation, but claims his boss fired him because the boss believed the employee faked his positive COVID-19 diagnosis to get time off over the 4th of July.

Discrimination

It is important to remember that the COVID-19 crisis has not changed employer obligations under the anti-discrimination laws. All employment actions taken during the COVID-19 crisis – layoffs, furloughs, reduction in hours, terminations, and recalls to work – are subject to anti-discrimination laws. To avoid claims of discrimination, your decisions in each of these situations must be made based on legitimate business needs and justifications. They cannot be made on the basis of a protected characteristic. Numerous employees are filing charges and lawsuits claiming their employers used the pandemic as an excuse to discriminate against them.

• Tennessee Restaurant: Female employee claims sex discrimination when she was terminated due to the owner’s COVID-19 related financial strain, but three male co-workers were not terminated.
• Minnesota Hotel: Employee asserted family status discrimination when her child became ill and she was unable to work her shift. She was permanently terminated shortly afterward when others were just temporarily laid off.

Wage & Hour

Before the pandemic, wage and hour lawsuits were already one of the fastest growing areas of employment litigation, including class and collective actions. Some recent examples include:

• California Hotel: Class and collective action lawsuit where employees allege they were not paid for time spent each day before and after their shift engaged in required safety measures, including sanitizing their uniforms, themselves, etc.
• Illinois Restaurant and Hotel Franchise: Employee brought claims for violation of the Fair Labor Standards Act and Illinois Minimum Wage Law because the employer failed to pay employee for overtime. Employee alleges he was not paid overtime for work on a weekend to prepare for outdoor dining and install signs and banners due to COVID-19.

Families First Coronavirus Response Act (FFCRA)

While most employers are aware of the PPP loans authorized by Congress, an unusual number of employers seem to forget that their employees may be eligible for Emergency Paid Leave (up to 80 hours paid) and Emergency FMLA (12 weeks of job-protected leave with up to 10 weeks paid) under the FFCRA. This law is in effect until December 31, 2020 and applies to employers with less than 500 employees. Surprisingly, FFCRA claims can be expensive as the law provides for actual damages, liquidated (double) damages and legal fees if the employee prevails. Further, the claims can be brought on a collective action basis. So, they can get expensive quickly.

• Texas Restaurant: Employee filed lawsuit for retaliatory discharge in violation of the FFCRA. The employee alleges he developed COVID-19 symptoms and tested positive for COVID-19 the next day. The employee advised his manager of the test results and requested several days off from work. When he later realized he had been removed from the schedule, he brought an action under the FFCRA claiming he was wrongfully terminated for taking leave in accordance with the act.
• Florida Restaurant: Employee filed a lawsuit for failure to pay sick leave and unlawful discharge under the FFCRA. The employee left work because he began experiencing COVID-19 symptoms. His employer instructed him to be tested and to stay home. The employee tested positive, self-quarantined and did not receive a negative COVID-19 test until one month later. The employee alleges his employer refused to pay him for Emergency Paid Sick Leave. The employee also alleges that after he informed his employer of his negative test, he was told his services were no longer needed at the restaurant. The employee also brought a claim for wrongful discharge under the FFCRA.

Minimizing the Risk of Litigation

Plaintiffs’ attorneys are actively recruiting workers for COVID-19 employment lawsuits. And their tactics are far more sophisticated than billboards and bus stop advertisements. They now use strategically designed social media campaigns to target employees in certain industries, geographic areas and even those employed by specific employers. These are very inexpensive solicitations that are sent repeatedly to employees. As a result, it is imperative for franchisees to take steps to minimize the risk of litigation. Here are five steps to consider.

Step 1 – Train: Train and re-train your managers and employees on your COVID-19 safety protocols. Do not let your guard down. Ensure compliance with the FFCRA and its requirements for Emergency Paid Sick Leave and Emergency FMLA leave. Keep up your expectation that your managers will enforce and comply with your EEO and harassment policies.

Step 2 – Compliance: Strictly comply with guidance from the CDC, OSHA, state and local guidance/requirements. Someone in your organization should be an expert on these requirements and the updates that come regularly. Make sure your managers and employees know and follow the COVID-19 guidance and your company protocols on cleaning, social distancing, restaurant capacity, mask requirements and the like.

Step 3 – Document: Document performance, attendance and other disciplinary issues to support a termination decision if needed. You have a business to run in very challenging times. Make sure your employees know your expectations on performance and behavior and consistently enforce those standards.

Step 4 – Terminate with Care: Handle all terminations with care. Require that all terminations be reviewed by the owner or your Human Resources expert. Often times, it is easier for someone not directly involved with the employee in question to see the potential problems that could arise related to his/her termination. Handle multiple terminations, such as furloughs or layoffs, systematically and make sure decisions are supported by business needs.

Step 5 – Arbitration Agreements: Consider whether to have employees sign arbitration agreements. There are many pros and cons to such programs. But they can help minimize the risk of a devastating class or collective action.

Conclusion

The global COVID-19 crisis has presented multiple challenges to small businesses and the food service industry has been especially hard hit. Don’t let your business be a victim to this latest lawsuit trend. Be proactive, not reactive. Be cautious with employee relations decisions. Be an expert on industry safety and cleaning protocols, social distancing, capacity limitations and mask requirements. Protect your business. Stay informed. The Fisher Phillips Litigation Tracker is updated daily and can be found on our website, www.fisherphillips.com, along with additional, free resources franchisees may find useful. •

J. Hagood Tighe is co-Chair of the Fisher Phillips Wage & Hour Practice Group. Andria L. Ryan is co-Chair of the firm’s Hospitality Practice Group. They concentrate their practice exclusively in the labor and employment area, representing franchisees across the country. Hagood can be reached at htighe@fisherphillips.com or (803) 740-7655, and Andria can be reached at alureryan@fisherphillips.com or (404) 240-4219.