Navigating Adapted Operations Advisory Series: Part Five – Liability Concerns and Managing Whistleblower Issues

By Rogers Stevens, Richard Gerakitis, Emily Schifter
Troutman Pepper

Oct 6, 2020

Who Needs to Know
Employers who are reopening (or have already reopened) by bringing employees back to their workplaces.

Why It Matters
Bringing employees back to the workplace, whether from teleworking, furlough, or layoff status, is an exercise with many moving parts. Employers need to develop a sensible back-to-work protocol to address COVID-19-related risks and other considerations associated with recalling some or all of a workforce.

Troutman Pepper is issuing a series of client advisories, Navigating Adapted Operations, to help businesses design workplace operations adapted to the challenges of sustaining business efforts during and after the COVID-19 pandemic. This series addresses how businesses can reopen, recover, or control workplaces in the face of operational changes that could last even longer than first planned. In Part One of the advisory series, we examined phased-approach considerations for workplaces, creating and implementing a COVID-19 response plan, and employee benefits concerns for a returning workforce. In Part Two, we examined insurance coverages and the Paycheck Protection Program (PPP). In Part Three, we examined widely applicable issues for returning to actual workplaces. In Part Four, we highlighted continued or expanded telework, other staffing arrangements, and workforce restructuring.

We invite your questions and feedback on every topic and also ones you may want addressed, but are not covered thus far. Our aim is to provide a comprehensive review of matters that will enable employers to make informed decisions about the overlap and interplay of health/safety, risk management, financial challenges, and workplace oversight. At the conclusion of the series, we will share a dynamic outline of the categories examined that clients may adopt to navigate their own adapted operations.

Liability Concerns from Discontinued, Resumed, and Continued Business Operations

Employers and businessowners should be thinking about the possibility of lawsuits or claims arising out of COVID-19 concerns related to the reopening of offices and places of business. How can employers protect themselves against liability in this event?

State Immunity Laws

Some states have passed laws limiting liability for businesses from claims related to COVID-19 infection or exposure. For example, Georgia passed the Georgia COVID-19 Pandemic Business Safety Act, which provides a rebuttable presumption of an assumption of risk for COVID-19-related tort claims, except for circumstances involving “gross negligence, willful and wanton misconduct,” or reckless or intentional infliction of harm, so long as the business owner complies with the law’s requirements, specifically, by posting a notice with certain prescribed language by each entrance.

Typically, state immunity laws do not exempt any tort claim based on purportedly grossly negligent behavior by the businessowner. What constitutes “negligence” (or “gross negligence”) for purposes of these laws is an open question. It remains to be seen, for example, whether compliance with CDC recommendations or nonmandatory state or local public health guidelines will be sufficient to defeat any negligence claim, or if a failure to comply will automatically constitute evidence of negligence (or gross negligence). Given the evolving state and local standards applicable to this area, employers should review the relevant laws in their jurisdiction(s) to ensure awareness of applicable recommendations and standards in their location(s) of operation.

Waivers, Releases, and Assumption of Risk

Some businessowners considered employing liability waivers, releases, or other similar measures to mitigate risks related to employees, independent contractors, customers, and vendors re-entering the workplace. Employers should be aware that these agreements are not a “one-size-fits all” endeavor and do not offer guaranteed protection from claims, particularly given that, like state immunity laws, they remain largely untested.

Releases and Waivers

Releases and waivers of liability are legally distinct from an assumption of the risk, although both concepts frequently appear in the same document. In general, a liability waiver and release (where the signing party relinquishes the right to bring a claim) is more complex to draft than an assumption of the risk agreement (where the signing party agrees to assume the risk relating to a particular activity or presence at a particular worksite). Releases and waivers are subject to many state-specific requirements and limitations, and some states bar them entirely. Employers should be aware that releases are more complicated in the employment context, as many states limit the extent to which they can be used with employees. When used for employees in states where it is permissible to do so, they must be drafted to ensure they do not inadvertently and impermissibly restrict an employee’s ability to bring a workers’ compensation claim.

Assumption of Risk

Another option is an acknowledgment and assumption of risk notice for employee-related elements of business operations, which may include an acknowledgement of the employer’s COVID-19 policies, consent to temperature screening or testing, or an agreement that the employee assumes the risk of COVID-19 exposure in the workplace. In the event a claim for exposure to or infection with COVID-19 in the workplace is somehow not covered by workers’ compensation in a given state, while having a signed assumption of the risk does not offer a level of security commensurate to a release of claims, it may constitute strong evidence in a defense to such a claim, i.e., that the employee knew and assumed that risk.

Workers’ Compensation

On a related note, several states have revised their workers’ compensation laws to reflect a presumption that an employee became infected with COVID-19 at work. These presumptions vary in in terms of coverage. For instance, some cover only health care employees or essential workers, and they vary in the strength of the presumption and for how long workers’ compensation boards will recognize it.

For example, one of the first states to revise its workers’ compensation policies, Illinois, passed an emergency rule to create a rebuttable presumption that a “COVID-19 First Responder or Front Line Worker[‘s]” (defined in the rule to include workers at essential businesses as defined in the state’s shelter in place order) exposure to COVID-19 would be considered causally connected to their employment. Though that rule was rescinded after being challenged in court, the state’s governor signed a new law in June with very similar language.

California has gone even further. A new law passed September 17 codified the governor’s earlier Executive Order N-62-20, which provided that all California employees who worked at a jobsite outside their home between March 19 and July 5 and who test positive for COVID-19 within 14 days of performing such work, are presumed to have contracted any COVID-19-related illness at work. For employers with five or more employees, the new law extends this presumption to employees who become sick or are injured due to COVID-19 on or after July 6, creating an additional rebuttable presumption of eligibility for workers’ compensation benefits for first responders, health care workers, and other employees who test positive for COVID-19, subject to specific criteria.

Questions of Proof and Liability Are Fact Specific

As noted, even in the absence of a liability waiver, in many states, a claim by an employee who demonstrates he or she was infected at work (subject to any COVID-19 presumptions the state has adopted) may be limited to the exclusive remedy of workers’ compensation, and any civil lawsuit would be barred.

That said, questions of proof regarding where an employee became infected will likely be fact-specific and difficult to dispute. With respect to the employer’s burden, the California Division of Workers’ Compensation has confirmed that “the employer bears the burden of proving that the injury or illness did not occur at work.” Given that COVID-19 is so contagious and difficult to track, it may be hard for an employer to marshal sufficient evidence to conclusively prove an employee did not become exposed to the virus at work – as compared to any other place where the employee may have spent time, such as a shop, restaurant, or school, or that they did not become exposed due to close contact with a family member or friend rather than a co-worker. Moving forward, it remains to be seen how workers’ compensation boards will adjudicate such questions, including what types of evidence will be sufficient to support or overcome the presumption.

Office Modifications

What can employers do to limit the risk of COVID-19 infections or exposures in their workplace? First, they should ensure that modifications of physical workspaces or workplace policies are consistent with CDC and appropriate state and local guidance to facilitate social distancing.

Consider physical modifications, such as:

Installing glass or plexiglass barriers;
Leaving every other workstation open, or spacing out desks;
Removing handles from doors, or leaving doors propped open (albeit ensuring continued compliance with code/fire safety) to reduce touchpoints;
Providing hand sanitizer throughout the workspace, particularly near frequent touchpoints;
Modifying or repurposing larger spaces like meeting rooms to create individual, distanced workstations;
Closing group spaces like kitchens, or enacting a policy limiting capacity;
Drafting a traffic flow plan to allow for social distancing.

Likewise, consider policy modifications, such as:

Implementing staggered shifts or start/end times, or alternating workdays/workweeks;
Limiting meetings to small groups;
Encouraging video conferencing rather than in-person meetings, when possible;
Encouraging use of employees’ own devices and supplies, and using paperless editing as much as possible;
Revising attendance policies to encourage sick employees to stay home, and to allow for flexibility — see Part 1 of our Advisory Series; and
Establishing travel guidelines for essential versus nonessential travel.

Screening of Workers, Temperature Checks, and Questionnaires

Employers should consider methods to reduce the risk that an individual, who may have been exposed to COVID-19, enters the workplace, including by implementing temperature screenings, questionnaires, and even COVID-19 infection testing, if available and appropriate for the applicable worksite.

Before implementing any screening or testing, however, employers should be aware that COVID-19 tests/temperature screenings/questionnaires must be applied in a uniform and nondiscriminatory manner. Similarly, all test results and completed questionnaires should be maintained as confidential medical information under the ADA – meaning, stored separately from the employee’s personnel file and kept private, and to a “need to know” basis. Finally, employers should plan for additional time in the workday for daily screenings, and moreover, remember that the time employees spend in the screening process likely is compensable.

Questionnaires

The EEOC has confirmed that employers may question employees regarding symptoms, provided those questions are limited to symptoms included on the list identified by the CDC. Currently, this list includes the following:

Fever or chills
Cough
Shortness of breath or difficulty breathing
Fatigue
Muscle or body aches
Headache
New loss of taste or smell
Sore throat
Congestion or runny nose
Nausea or vomiting
Diarrhea

The CDC has indicated it will continue to update this list as more symptoms are identified.

Finally, employers should be aware that they may not ask employees physically coming into the workplace whether they have family members who have COVID-19 or associated symptoms, as the EEOC has indicated that such inquiries would violate the Genetic Information Nondiscrimination Act (GINA).

Temperature Screening and Testing

Likewise, that employers may conduct temperature screenings and test employees for COVID-19, given that an individual with the virus poses a direct threat to the health of others.

For temperature screenings, employers should identify the specific temperature threshold for preventing an individual’s entry to the workplace. While the CDC has identified 100.4 degrees Fahrenheit, some cities and states have lower thresholds. Employers also should be aware that not all infected individuals will exhibit symptoms. Although temperature screens may mitigate the risk of an infected individual entering the workplace, they will not identify infected individuals in every instance.

As to virus testing, the EEOC has confirmed that while employers may test employees for active COVID-19 infection, tests for antibodies are not permitted under the ADA, given the CDC’s interim guidance indicates these tests are not sufficiently accurate or reliable. Before implementing any testing protocol, employers should confirm the reliability of any active infection test, keeping in mind there are false positives/negatives with such diagnostic testing.

Handling Whistleblower Complaints During a Pandemic

Businesses that have been shuttered (or forced to shift to remote work) due to COVID-19 face innumerable challenges in resuming operations. The pandemic has altered the fundamental nature of human interaction, and thus employers must now rethink workplace logistics to facilitate preventative measures, such as social distancing or the use of personal protective equipment. Also, businesses that have received emergency financial assistance must tread carefully to ensure compliance with the rules that attach to the receipt of government funds. Adding insult to injury, employers that fail to meet these challenges risk triggering a whistleblower complaint from an employee, fearing exposure to the COVID-19 virus in the workplace or suspecting misuse of government funds.

COVID-19 Safety and Financial Fraud Complaints

The most recent available data shows a marked uptick in whistleblower complaints to government agencies. For example, the Occupational Safety and Health Administration (OSHA) reported that almost three thousand safety complaints were filed relating to COVID-19 as of late-September 2020. In the absence of a vaccine, as businesses begin to recall employees to the workplace, it is not unreasonable to speculate that the number of safety complaints will continue to increase at a rapid pace. Likewise, with thousands of businesses now receiving federal funding for the first time under the CARES Act and other recently enacted emergency legislation, whistleblower complaints concerning financial fraud could spike as well. Should this trend continue, a corresponding increase in pressure for more aggressive government action will follow.

As such, employers should prepare now, not only to ensure employee safety and thereby mitigate the risk of a whistleblower complaint, but also to respond in the event that a whistleblower complaint is filed. The framework discussed in the sections below will provide the basis for many of the whistleblower complaints that may follow in the wake of the coronavirus pandemic.

Regulatory Scheme

A myriad of federal and state laws, enforced by a variety of government agencies, provide whistleblower protections to both public and private employees. Regarding workplace safety, for example, OSHA enforces the whistleblower provisions of almost two dozen workplace safety statutes across the spectrum of public and private enterprise, including construction, manufacturing, energy, transportation, and health care. Employers will be familiar with OSHA’s enforcement activity concerning some of these laws, such as the Occupational Health and Safety (OSH) Act, but they also should be aware that OSHA enforces whistleblower protections under laws governing areas not directly related to workplace safety, such as the Sarbanes-Oxley Act (discussed further below). While some observers have questioned OSHA’s resolve for enforcement action in the current political climate, the agency recently issued guidance in response to the coronavirus pandemic, reminding employers that “it is illegal to retaliate against workers because they report unsafe and unhealthful working conditions during the coronavirus pandemic,” whether by “terminations, demotions, denials of overtime or promotion, or reductions in pay or hours.” It is worth noting that if the executive branch flips after the November election, OSHA has the authority to do much more than merely remind employers of their statutory obligations if called to do so.

Occupational Safety and Health Act

Perhaps the most well-known of the OSHA-enforced statutes, the OSH Act extends protections relating to specific industries or occupations. Particularly relevant to the current crisis, the OSH Act also gives rise to a “general duty” for employers to maintain a workplace that is “free from recognized hazards that are causing or are likely to cause death or serious physical harm to employees.” In light of this duty, the statute forbids employers from retaliating or discriminating against employees for exercising their rights under the OSH Act, which include the right to report health or safety concerns to OSHA or to participate in a resulting agency inspection.

Even amid a pandemic, though, the OSH Act does not give employees a blanket right to simply walk off the job. According to recent OSHA guidance, an employee can refuse to work out of fear of an unsafe workplace, including if the employee has workplace safety concerns related to COVID-19, only if the employee:

Has a reasonable apprehension of death or serious injury, and
Refuses in good faith, and
Has no reasonable alternative, and
Has insufficient time to eliminate the condition through regular statutory enforcement channels, e., contacting OSHA or a State OSHA, and
Where possible, sought and was unable to obtain a correction of the dangerous condition from his/her employer.

It remains to be seen how this standard will fare in the face of the coronavirus pandemic. Given that symptoms of illness may not appear for days or even weeks after exposure to the virus, workers certainly will have a “reasonable apprehension” that the virus could exist in their workplace, at least until the arrival of an effective vaccine. Moreover, based on a holistic reading of the above guidance from OSHA, one might contend that an employee who meets the “walking off the job” standard effectively has made an internal whistleblower complaint.

In any event, there is no private right of action available to employees under the OSH Act. Instead, the law provides that based on an employee complaint, the Department of Labor (DOL) can petition a federal court for relief on the employee’s behalf, with available remedies that include back pay and compensatory and/or punitive damages.

False Claims Act

With the passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the federal government has distributed an unprecedented level of financial assistance to imperiled U.S. businesses during the pandemic. This massive outlay of federal assistance will likely trigger fraudulent activity by bad actors who see an opportunity to profit from the fast-moving crisis before regulatory agencies ramp up enforcement capacity. As such, the Department of Justice recently announced its intention to deploy the False Claims Act (FCA) in response to fraud relating to the CARES Act.

Under the CARES Act’s Paycheck Protection Program (PPP), companies receiving federal loans must certify that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.” When a company accepts federal funds and makes certifications about how those funds will be used, the veracity of those certifications may be analyzed under the FCA. Liability under the FCA may be found as to a PPP loan certification, where the recipient of federal funds knowingly submits a materially false claim for payment, or otherwise submits a claim with deliberate ignorance or reckless disregard for the truth of the information in the claim.

Under the FCA, employers may not retaliate against employees who report fraudulent activity relating to government funding. The FCA provides a mechanism by which employees can report various forms of misconduct, such as Medicare overbilling or fraud arising under a government procurement contract. For example, many nursing homes generate much of their revenue through Medicaid, and FCA litigation frequently arises when reimbursement claims are submitted for unprovided services. During the pandemic, the FCA may be particularly relevant if an employee reports fraud relating to a federal loan received by his/her employer pursuant to the CARES Act.

If an employer retaliates against an employee for filing a complaint under the FCA, the employee can file a discrimination complaint in federal court. If successful, the employee could be entitled to reinstatement, back pay, special damages, and attorney fees and costs.

Sarbanes-Oxley and Dodd-Frank Act

The Sarbanes-Oxley Act (SOX), as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, prohibits employers from retaliating against employees who report financial misconduct under regulations promulgated by the U.S. Securities and Exchange Commission (SEC). U.S. financial markets have been volatile during the pandemic, generating opportunities for securities fraud. Thus, in late March, the SEC announced that it will investigate and prosecute securities fraud related to the coronavirus crisis. As of late-September, the agency has suspended 35 companies from trading on Wall Street due to suspected fraud, much of which involved “claim[s] that the products or services of publicly-traded companies can prevent, detect, or cure coronavirus” in order to inflate stock prices.

Complaints: Form and Procedure

Forms in Which Complaints May Be Received

An employer’s response to a whistleblower complaint will depend in part on whether the complaint is made internally or externally. An internal complaint generally appears when an employee reports misconduct or safety concerns to human resources, an audit department, a compliance officer, a supervisor, in-house legal counsel, or an internal “tip line.” The allegations may address any number of issues the employee perceives to violate the law, including financial wrongdoing, environmental or health concerns, false reimbursement claims, discrimination, or retaliation. In most cases, there is no requirement that a complaint be in writing or even identified as a “complaint.”

For external complaints, the process and requirements for filing a whistleblower complaint depend on the statutory basis for the complaint. Each of the whistleblower statutes within the purview of OSHA has a filing deadline, ranging from 30 to 180 days from the date of the retaliatory action.

Complaints Raising Purported Violations of the OSH Act

Regarding the OSH Act, regardless of whether a complaint is made internally or externally, Section 11(c) prohibits discrimination against an employee for filing “any complaint under or related to this Act.” OSHA has interpreted the phrase “related to this Act” rather broadly to mean any complaint related to safety and health in the workplace. For example, an employee who complains to the employer about the lack of effective social distancing measures in the workplace likely would be protected against discrimination by Section 11(c). In fact, almost any employee safety complaint that leads to an adverse employment action could be the basis for a Section 11(c) discrimination complaint.

In sum, a whistleblower complaint to OSHA must allege four (4) key elements:

The employee engaged in activity protected by the whistleblower protection law(s), such as reporting a violation of law;
The employer knew about, or suspected, that the employee engaged in the protected activity;
The employer took an adverse action against the employee;
The employee’s protected activity motivated or contributed to the adverse action.

A Section 11(c) complaint is not required to be in any particular form — OSHA will accept online, oral, or written complaints. An employee alleging a violation of Section 11(c) must file a complaint with OSHA within 30 days after the violation occurs. The Secretary of Labor has the authority to investigate complaints and bring suit against the employer in federal court on for the employee.

The DOL has issued regulations detailing the requirements necessary to trigger such an enforcement action:

The employee has filed a complaint with a federal or state Occupational Safety and Health Agency; or
The employee has submitted a grievance or other complaint to his employer regarding a perceived occupational safety and health deficiency; or
The employee has suggested changes for improving workplace conditions; or
The employee has refused to perform a job that could reasonably result in serious harm or death.

Complaints Purporting to Raise Violations of the FCA

The False Claims Act permits private individuals to file a lawsuit against entities that have directly or indirectly defrauded the federal government. Whistleblowers who bring cases under the FCA must file the complaint under seal in a U.S. district court, where it remains confidential for 60 days while the government investigates the allegations. Before the complaint becomes public, the government will notify interested parties and the court of whether it will intervene in the case. Generally, a whistleblower must file an FCA action before the later of (1) six years after the alleged violation of the FCA occurred, or (2) three years after the government official responsible for acting on the violation knew or should have known of the material facts underlying the alleged FCA violation.

Complaints Raising Purported Violations of SOX

Under the Sarbanes-Oxley Act, employees who believe they have suffered retaliation for reporting misconduct in violation of SOX may file a complaint through their local OSHA office. To qualify as a whistleblower under the law’s anti-retaliation provision, employees must demonstrate that they reported a possible securities law violation in one of the following ways:

Providing information to the SEC in accordance with the statutory whistleblower incentive program; or
Initiating, testifying in, or assisting in any SEC investigation or SEC judicial or administrative action based on such information; or
Making disclosures “required or protected” under SOX, the Securities Exchange Act, or any other law, rule, or regulation under the SEC’s jurisdiction.

There is no official form for the complaint, other than that it must be filed in writing and include information identifying the whistleblower and the individual or entity responsible for the violation.

Click here to view the “Handling Whistleblower Complaints During a Pandemic” Checklist.

To recap our advisory series, in Part One, we examined phased-approach considerations for workplaces, creating and implementing a COVID-19 response plan, and employee benefits concerns for a returning workforce. In Part Two, we assessed insurance coverages and the Paycheck Protection Program (PPP) loan forgiveness requirements. In Part Three, we detailed widely applicable issues for returning to actual workplaces.In Part Four, we highlighted continued or expanded telework, other staffing arrangements, and workforce restructuring.

“Can OSHA Protect Coronavirus Whistleblowers?,” Stephen M. Cohen, National Law Review (April 21, 2020).

“U.S. Department of Labor Reminds Employers That They Cannot Retaliate Against Workers Reporting Unsafe Conditions During Coronavirus Pandemic,” available at https://www.osha.gov/news/newsreleases/national/04082020.

29 U.S.C. § 654(a)(1).

29 U.S.C. § 660(c).

Investigator’s Desk Aid to the Occupational Safety and Health Act (OSH Act) Whistleblower Protection Provision OSHA Whistleblower Protection Program, p. 6 (Jan. 9, 2019).

U.S. Dep’t of Justice, Principal Deputy Assistant Attorney General Ethan P. Davis delivers remarks on the False Claims Act at the U.S. Chamber of Commerce’s Institute for Legal Reform (June 26, 2020), https://www.justice.gov/civil/speech/principal-deputy-assistant-attorney-general-ethan-p-davis-delivers-remarks-false-claims.

31 U.S.C. § 3729.

https://www.sec.gov/oiea/investor-alerts-and-bulletins/ia_coronavirus.

https://www.osha.gov/whistleblower/WBComplaint.html. “Filing with this form is not required, as OSHA accepts whistleblower complaints made orally (telephone or walk-in at any OSHA office) or in writing and in any language.”

29 C.F.R. § 1977.

15 USCS § 78u-6(h)(1)(A).