In the last week, the COVID-19 pandemic has forced businesses to make significant adjustments on short notice and with very little chance to prepare. Many have canceled events, restricted travel, closed offices, or encouraged employees to work remotely. Given the speed with which the novel coronavirus has spread, more drastic measures may be on the way. Businesses should consider the following when attempting to navigate these uncertain times and minimize long-term economic damage:
1. Provide Clear Instructions to Employees and Modify Agreements as Necessary
Employers throughout the country have been forced to adapt their work policies with very little notice and very little preparation. As a result, many offices have closed and employees have been asked to work remotely.
It is important for employers to review their employee agreements and manuals regarding the standards for telework and remote employment. Where necessary, amendments should be drafted and distributed to all employees to provide clear criteria regarding the company's policy on remote work, what is expected of employees, and potential consequences for failing to abide by such policies.
For some businesses, for example, security businesses or persons involved in supply chain or distribution, telework is not feasible. Please consider and adopt policies that minimize the risk of exposure to the coronavirus.
2. Review your contracts to ensure deadlines and deliverables continue to be met if possible, and make adjustments where necessary
You may have come across articles discussing the applicability of force majeure clauses—frequently known as "act of God" clauses—during this pandemic. Do not assume that the contract's force majeure clause will apply, because it is often dependent upon the language of the agreement and may require a careful analysis of the law of the jurisdiction that governs the contract.
It may also be worthwhile to take a proactive approach and, where feasible, discuss modifications to contracts that may be palatable to both parties. Such an approach may help ensure that (1) the two parties are on the same page, given the changing circumstances; and (2) the parties find a mutually agreeable means to satisfy each party's goals and needs. An amendment to modify the contract, if feasible, may be far more cost-effective and beneficial for both parties than months of litigation to determine whether a force majeure clause applies to COVID-19.
3. Review insurance policies
It is critical to review your insurance policies to assess whether losses related to COVID-19 are covered. In general, there are a host of factors that might impact whether a particular loss is covered. Some travel insurance policies now exclude coronavirus because it is becoming a "foreseen event." Some employees who have traveled to high-risk locations on business and become ill may be covered under a workers' compensation policy. And some employers may have business interruption coverage that covers losses due to the interruption of supply lines or coverage for event cancellations. It is thus critical to know what coverage your company does and does not have and to ensure that if you do have a claim, it is filed promptly.
4. Work with outside counsel to address litigation deadlines
State and federal courts throughout the country have already issued orders to continue upcoming trials and non-essential hearings. However, this does not mean that deadlines already established in scheduling orders are suspended. For example, if your company is involved in litigation and the deadline to complete depositions is March 31, that deadline is not automatically suspended unless the Court enters an extension order. It is better to ask for permission now rather than for forgiveness later.
Be sure to maintain frequent contact with your outside counsel, which in turn should maintain regular contact with opposing counsels and seek to modify scheduling orders as appropriate to adjust deadlines. If you need to press forward with a case or your opposing counsel will not agree to extend deadlines, many court reporting companies offer video or telephone deposition services. Most importantly, do not assume that any litigation will be suspended entirely until business returns to normal.
The same advice applies to pending motions before the Court. Many courts will require parties to submit briefs in accordance with a schedule that is derived from the hearing date. For example, your opposition to a motion may be due 7 days before the hearing date. If the hearing has been cancelled, do not assume that your opposition brief is no longer due. It is far more likely that your opposition brief is still due 7 days before the initially scheduled hearing and that the Court will instead rule on the papers if the hearing is no longer going forward. When in doubt, assume that nothing has changed.
5. Expect the Unexpected
It is important to think not only of the effects on your own company, but also about third parties that directly or indirectly impact your business.
By way of example, perhaps you have been negotiating a key deal with a trading partner for months and you are scheduled to sign off on the deal next week. Given the current uncertainty, your trading partner may want to back out of the deal. Now is the time to determine your potential back-up plans (or new trading partners), alternatives, and legal options. The same applies if you are the party who wants to back out of the deal. If your company determines that going forward with a deal may be cost-prohibitive, you may want to consult your legal adviser regarding your options and whether you can successfully terminate the deal without facing a lawsuit.
Your company should also be closely following the federal government's response to the pandemic to assess whether relief packages might assist you and your employees. Perhaps you can extend paid sick leave for employees with government assistance. It is thus important to keep track of how state and local governments are also responding in order to take advantage of any relief that might be available for your company.
6. Regulatory compliance
To date the federal government has provided guidelines, but has not issued any mandates to businesses or individuals. States, however, have been more proactive, closing schools, issuing "shelter-in-place orders," imposing curfews, and carrying out other measures. Make sure you consult with counsel to stay abreast of regulatory developments in any jurisdiction where you operate.
7. Consult counsel for assistance
The ultimate impact on businesses as a result of COVID-19 is unknown but is sure to be significant. While they may be looking to minimize extra costs as much as possible, companies may save significant costs in the long run by working closely with attorneys—whether in-house or outside—to evaluate all relevant policies and agreements to ensure all is being done to navigate these challenging times in a way that mitigates losses to the greatest extent possible.