COVID-19–Related Employment Litigation: How It Started … How It’s Going

Over 1,500 COVID-19–related employment lawsuits were filed in the United States in 2020. Ogletree Deakins’ Interactive COVID-19 Litigation Tracker highlights the industries impacted, locations, and types of claims in these matters.

The healthcare industry is outpacing other industries by almost double for the most COVID-19–related employment litigation thus far. The hospitality, manufacturing, and retail industries have also been heavily impacted. These trends are not surprising, given that it is often difficult for employees in these frontline industries to socially distance themselves from other employees and/or the public.

California leads the way with nearly 300 COVID-19–related employment lawsuits, followed by New Jersey (which is approaching 200 lawsuits), and Florida and New York, with each state breaking the 100-lawsuit mark. These states, along with Illinois, are seeing the most class action litigation, primarily in the wage and hour context.

Disability discrimination; failure to accommodate; interference with leave under the Family and Medical Leave Act, Families First Coronavirus Response Act (FFCRA), and state leave laws; and retaliation claims constitute the majority of the claims across the country. Few COVID-19–related cases have reached final disposition; however, certain trends are emerging from the courts faced with motions to dismiss in the past year.

Wrongful Discharge in Violation of Public Policy

A few decisions reflect a reluctance on the part of courts to dismiss COVID-19–related employment lawsuits at an early stage. For example, in January 2021, a California federal court denied a defendant employer’s motion to dismiss a number of claims, including a constructive discharge in violation of public policy claim based on an allegation of employees being subjected to “unreasonably harsh conditions” in the workplace. The employer argued that the plaintiffs were unable to establish any adverse employment action or intolerable working conditions in excess of those faced by their coworkers and that the alleged safety concerns stemmed entirely from the global outbreak of COVID-19. The court denied the employer’s motion to dismiss and held that the plaintiffs had met the pleading standard for their claims, particularly in light of the allegations that there were a number of COVID-19 cases at the employer’s facility during the relevant timeframe.

Appropriate Forum for Workplace Safety Complaints

Early on during the pandemic, courts confronted the threshold issue of jurisdiction in employee lawsuits alleging COVID-19 workplace safety concerns and claims that employers had not done enough to provide safe workplaces during the pandemic. Courts are split on the appropriate forum for these cases. For example, federal courts in Missouri and New York granted employer motions to dismiss in these cases, holding that it was not a matter for the courts to decide but rather that jurisdiction lies with the federal Occupational Safety and Health Administration (OSHA). However, an Illinois state court denied an employer’s motion to dismiss on the same issue, holding that the employee claims had created a “factual dispute that involves credibility determinations which the court is very well suited to handle.”

WARN Notices

Some courts have been reluctant to grant motions to dismiss in cases alleging violations of requirements of the Worker Adjustment and Retraining Notification (WARN) Act of 1988. For example, in January 2021, a Florida federal court denied the defendant employers’ motion to dismiss, which argued that notice was not required under the “natural disaster” and “unforeseeable business circumstances” exceptions to the notice requirements of the WARN Act. While the court acknowledged that COVID-19 may be a “natural disaster,” it held that the exception did not apply because the virus was an indirect—not direct—cause of the layoffs. Rather, the “dramatic downturn in business” the defendants had experienced as a result of the pandemic was the direct cause. Further, while the court acknowledged that the “unforeseeable business circumstances” exception might apply, it held that dismissal at the motion-to-dismiss stage was not appropriate, as there was a factual issue as to whether the defendant employers could have provided more notice. The decision demonstrates that employers may want to be mindful to provide as much notice as possible when undertaking plant closings or mass layoffs in the COVID-19 context.

Accommodation-Related Injunctive Relief

At least one court has considered and granted temporary injunctive relief in the context of failure-to-accommodate claims. A Massachusetts federal court in September 2020 granted a plaintiff employee’s request for injunctive relief ordering the defendant employer to permit the plaintiff to telework as a reasonable accommodation for 60 days or until further order of the court. The defendant employer permitted remote work at the start of the pandemic but later asked its managers, including the plaintiff, to return to work at the business location. The plaintiff employee, who suffered from asthma, sought an accommodation in the form of continued remote work, after the employer requested managers to return to work at the location. The defendant employer denied the request on grounds that it needed to have managers back in the building to support operations.

The court held that during the COVID-19 pandemic, the analysis of whether a plaintiff has a disability requires consideration of the totality of the circumstances, finding it likely that the plaintiff would be able to establish a disability under the Americans with Disabilities Act (ADA), given current conditions; that the plaintiff was able to perform the essential functions of the job with or without accommodation, given successful prior telework arrangements; and that the defendant employer had failed to sufficiently engage in the interactive process or establish that further telework would result in an undue hardship. Thus, employers may want to continue to consider the totality of the circumstances when evaluating accommodation requests and engage in—and document—the steps taken during the interactive process.

Arbitration Agreements Upheld

Some courts have been reluctant to grant injunctive relief when the parties are subject to an arbitration agreement despite the emergent nature of COVID-19–related claims. For example, a New York federal court in May 2020 denied a plaintiff nurses’ union’s request for temporary injunctive relief, which would have required the defendant employer, a private hospital, to take additional steps to mitigate the risk of COVID-19 spread, pending arbitration of the matter. While the court acknowledged that some nurses would likely contract COVID-19 in the time between its ruling and the conclusion of the arbitration proceedings, it determined that, given the defendant’s compliance with current guidelines issued by the U.S. Centers for Disease Control and Prevention (CDC), the risk posed to the nurses was outweighed by other factors, including the risks of frustrating the arbitration process and “unduly interfer[ing] with the hospital’s ability to make business decisions at a time when the judicial interference could be particularly problematic.”

Business Interruption Claims

Several courts have granted business insurer motions to dismiss claims brought by companies seeking coverage for business-interruption–related losses caused by the COVID-19 pandemic. District courts in California, Florida, Michigan, New Jersey, New York, and Texas have all granted motions to dismiss brought by insurers, holding that COVID-19 fails to cause sufficient physical damage to property to trigger coverage for business interruption losses since there is no “demonstrable” physical impact on property, which typically can be cleaned even with exposure to the virus.

In Ohio, one federal district judge issued a decision that the language of an insurer’s business income coverage was susceptible to the interpretation that an insured premises sustained “physical loss or damage” when state governments ordered that the premises could no longer be used for their intended purpose, while another federal district judge certified the following question to the Supreme Court of Ohio: “Does the general presence in the community, or on surfaces at a premises, of the novel coronavirus known as SARS-CoV-2, constitute direct physical loss or damage to property; or does the presence on a premises of a person infected with COVID-19 constitute direct physical loss or damage to property at that premises?”

Looking Ahead: 2021

The current rollout of COVID-19 vaccines amid varying views among the public as to their safety and efficacy has resulted in employers grappling with whether to implement mandatory vaccination policies, voluntary vaccination policies (with or without incentives), or strategies that leave it to employees to decide whether they will be vaccinated—while continuing to enforce other workplace safety measures. Given the large number of questions that arise when considering which approach is best for a particular employer and the varying public views on the topic, Ogletree Deakins expects to see a rise in litigation in this context in the coming months. In anticipation of these issues, Ogletree Deakins has developed resources related to employer vaccination policies and other relevant considerations.

Ogletree Deakins will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates in the firm’s Coronavirus (COVID-19) Resource Center as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.