COVID-19 and Liability Waivers: A Problematic Response to a Problematic Issue
In early 2020, the first case of COVID-19 was confirmed in the United States. For some time, life in many respects froze: Flights were cancelled. International borders were closed. Businesses were forced to shut down. The lights, indeed, went out on Broadway.
As New York and the rest of the United States slowly thaw, many questions remain. An important one to consider for business owners and employers is one of legal liability. This issue – illustrated by scores of patrons huddled together at beachside restaurants over the recent Fourth of July holiday weekend – is all too present. What measures can businesses take to mitigate the risk of being liable if a customer or employee claims to have been exposed to COVID-19? One potential option is the liability waiver. As discussed below, the efficacy of such waivers depends on the particular circumstances.
Liability Waivers – General Considerations
Under New York law, waivers designed to release businesses or individuals from the consequences of their own negligence are generally enforceable, although disfavored. Gross v. Sweet, 49 N.Y.2d 102, 106 (1979). Such waivers are subject to close judicial scrutiny, and must express their intent clearly and unequivocally. Id. at 106-07. Importantly, they cannot protect the releasee from its willful or grossly negligent conduct, only its negligent conduct. Id. at 106. In addition, liability waivers are unenforceable where there is a statutory prohibition, overriding public interest, or special relationship between the parties. Ash v. New York Univ. Dental Ctr., 164 A.D.2d 366, 369 (1st Dep’t 1990).
In terms of statutory prohibitions, New York law renders liability waivers void as against public policy in various business contexts. For example, any agreement between the owner or operator of a “pool, gymnasium, place of amusement or recreation, or similar establishment” and a user who has paid a fee for the use of such facility, which exempts the owner or operator from liability for damages resulting from its negligence, is void. N.Y. Gen. Oblig. Law. § 5-326. As a result, in these contexts, liability waivers will not operate as a shield from COVID-19-related liability.
Courts are also more likely to find a liability waiver to be unenforceable if it involves an “essential” business (such as a grocery store), due to the inequality in bargaining power occasioned by the customer’s need for the service. See, DeVito v. New York University College of Dentistry, 145 Misc. 2d 144, 146 (Sup. Ct. New York County 1989). In such cases, the unequal positions of the parties and the customer’s need for the service creates a substantial opportunity for abuse, rendering enforcement of the waiver against the public interest and improper. Ash, 164 A.D.2d at 370.
Liability waivers can also be void as against public policy due to New York’s “interest in the health and welfare of its citizens.” This exception to waiver enforceability has been applied, for example, where patients were required to sign a liability waiver to obtain needed healthcare. See, e.g., Rosenthal v. Bologna, 211 A.D.2d 436 (1st Dep’t 1995); Ash, 164 A.D.2d 366. But see, Jackson v. Black Ink Tattoo Studio, Inc., 2016 N.Y. Misc. LEXIS 609, at *7 (Sup. Ct. New York County Feb. 24, 2016) (declining to apply this exception where plaintiff sustained injuries resulting from the application of a tattoo, as “[n]o health or welfare considerations were implicated by her not getting the tattoo”). Whether this exception may apply in COVID-19 situations remains to be seen.
Lastly, in New York, a minor can generally void a contract into which he enters, and may not be bound by a release executed by his parent. See Alexander v. Kendall Cent. Sch. Dist., 221 A.D.2d 898, 899 (4th Dep’t 1995). For example, although parents may waive the right to sue their child’s camp if the child gets sick or injured at the camp, such a release may not be enforceable as against the child. Consequently, businesses should be aware that liability waivers involving minors may not be enforceable.
Liability Waivers in the Employment Context – New York’s Workers’ Compensation Law
New York’s Workers’ Compensation Law mandates that most employers obtain insurance covering injuries and diseases sustained in the course of employment, without regard to fault. N.Y. Workers’ Comp. § 1 et seq. Employees can receive Workers’ Compensation for “accidental injuries arising out of and in the course of employment and such disease or infection as may naturally and unavoidably result therefrom.” N.Y. Workers’ Comp. §§ 2(7). Subject to certain exceptions, Workers’ Compensation is the exclusive remedy against an employer for injuries and diseases arising from the course and scope of employment. N.Y. Workers’ Comp. §§ 11, 29(6). This means that employees are typically barred from bringing a separate lawsuit against their employers for injuries or diseases arising from their course and scope of employment. Accordingly, New York’s Workers’ Compensation Law will likely bar employees from suing their employers based on allegations that they contracted COVID-19 in the workplace.
Practical Considerations and Potential Federal Action
At first blush, COVID-19 liability waivers sound like a prudent measure to take. After all, at worst, the legal effect of an unenforceable liability waiver is the same as no liability waiver. And, in some circumstances, liability waivers are likely enforceable. There are a few things to keep in mind, however.
First, consider how the presentation of a liability waiver may seem to customers or employees, depending on the nature of the business. Businesses run the risk of liability waivers potentially dissuading customers from entering a business, employers from showing up for work, or damaging employee morale and employer perception. A liability waiver may raise a red flag in the customer’s or employee’s mind as to the precautions the business is taking to minimize the risk of the spread of COVID-19, and could end up hurting more than it helps.
Second, and more importantly, it will be very difficult for an individual who contracted COVID-19 to prove that they contracted it in a particular place, and causation will be a significant hurdle plaintiffs face to prevail in COVID-19 liability lawsuits. This is especially true if a business follows the COVID-19 mitigation guidance provided by the government. Agencies such as the Centers for Disease Control and Prevention and Occupational Health and Safety Administration have web pages dedicated to COVID-19 prevention and support (see, e.g., https://www.cdc.gov/coronavirus/2019-ncov/community/organizations/businesses-employers.html; https://www.osha.gov/SLTC/covid-19/). Local authorizations do as well (in New York City, see https://www1.nyc.gov/site/doh/covid/covid-19-businesses-and-facilities.page). It will be very hard for a plaintiff to prevail in a COVID-19 lawsuit against a business following these precautions.
On the other hand, disregarding the outlined precautions lends credence to a causation argument. It also may suggest that the business is operating in a willful or grossly negligent manner. In such cases, the liability waiver will be ineffective, as New York renders liability waivers protecting a party from its willful or grossly negligent conduct unenforceable.
As a final matter, more clarity may be coming on this issue in the near future. On July 6, 2020, Senate Majority Leader Mitch McConnell outlined proposed details of a potential additional COVID-19 relief package. Included in the proposed package is a five-year liability shield for businesses, protecting businesses from COVID-19-related liability from December of 2019 through 2024. Whether, and in what form, the bill passes remains to be seen. In the meantime, COVID-19 liability waivers will remain a problematic response to a problematic issue.