During the COVID-19 pandemic, businesses are moving towards a “new normal” in dealing with customers. We’ve all had experiences like this: When you walk into a business, you are greeted by a masked employee. You are asked to sanitize your hands. Signs are posted asking you to disclose any symptoms you might be experiencing, whether you or a family member has traveled out of state. You provide your name and contact information to assist with contact tracing. An employee might perform a temperature check. Then you are handed a liability COVID waiver to sign.
While Congress fights over COVID-19 liability protection, businesses remain at risk of civil lawsuits from employees, customers and patrons. While some states have enacted limited liability protections, the vast majority of businesses are exempt from those protections. As a result of fears of COVID-19 liability claims, businesses large and small are turning to liability waivers to try to protect themselves. But do waivers really offer the protection that business owners think it does? How can a business owner be sure that the waiver a customer is signing is more valuable than the price of the piece of paper it’s printed on?
What is a liability waiver?
A liability waiver is a contractual agreement between a releasor (customer) and releasee (business owner), in which the customer is waiving their right to sue and assuming all risks and responsibility for any injuries caused by the delivery of services by the business. Liability waivers can be used to shield businesses from liability claims or suits for damages from injuries that were caused by the business’s negligent acts. The specifics of each liability waiver vary depending on the nature of the business. Liability waiver forms are commonly used by schools, recreational sports and activities, gyms and the like, but have not traditionally been used in other industries such as hair salons, shopping plazas, and restaurants. Now, in light of COVID-19, we are now seeing a wider use of these waivers in an attempt to protect businesses from liability for guests and customers contracting the virus, regardless of the nature of the business.
Enforceability Varies State by State:
Are waivers enforceable? The answer to this question varies state-by-state and depends on the type of claims made. Waivers must follow the specific requirements determined by state law, whether through statute or in case law. For business owners, knowing whether a waiver is effective means knowing your state’s law. Working with an attorney who understands the law and can help to develop a waiver that is right for a particular business is the first step to avoiding liability.
Liability waivers can be entirely unenforceable – for instance, the states of Louisiana, Virginia and Montana hold that waivers are unenforceable in personal injury cases. In most states, such as Colorado and New York, waivers are enforceable to bar plaintiff’s ordinary negligence claims but do not protect businesses against liability for gross negligence, reckless, willful, or wanton conduct or intentional acts.
Negligence involves unsafe conditions caused by a business’s failure to exercise “reasonable care” through unintentional acts (or failure to act). An example of this might be a hair salon requiring masks to be worn by customers but failing to enforce that policy or not taking any additional safety measures such as sanitizing or social distancing while in the salon. Gross Negligence on the other hand is a willful or intentional disregard for the customer’s safety despite a known hazard, such as a business’s failure to take any steps to mitigate the risk or protect its customers. A business owner who does not follow any Centers for Disease Control (CDC) guidelines, willfully ignores public orders to wear masks, and does not maintain six feet of distance among its customers could be found to have acted recklessly or grossly negligent.
In states that enforce liability waivers, many do so only if the waivers meet certain criteria. The following factors are typical examples of what a court might look to when determining if liability waivers are enforceable:
- Clear Language – A waiver that is clear in stating that customer is releasing the business from all liability including from claims or negligence.
- Identifiable, conspicuous, and easily understandable terms – A waiver that is clear and obvious, that does not try to hide certain terms in tiny print or use complex language that cannot be understood by the average person. While some people may impulsively sign legal documents without reviewing its terms, the waiver itself should not attempt to prevent an understanding of the ramifications of doing so.
- Clear statement of inherent risks – A waiver should clearly articulate the known risks to the customer, including those specific to its business. If the business owner misrepresents the activity or risks associated with it, the waiver can be deemed unenforceable. For example, if a business allows for commonly handling of objects by many people, it should state the risks associated with surface transmission of COVID-19.
- Consideration – A waiver that does not offer something of value to both sides is ineffective. Something must be exchanged, for instance the participation in an activity or permission to continue to use the premises.
- Signed and agreed to by customer – Waivers should be signed. Unsigned waivers are generally unenforceable in that there is no proof that its terms were reviewed, understood and agreed to. Where a waiver is signed by a minor, they are unenforceable as they are legally incompetent to enter a legal contract. Waivers signed under duress or illicit pressure may also be unenforceable.
- Terms do not violate law or public policy – Depending on the bargaining power of the parties, the relative value of the exchange, the nature of the business and a number of other factors, some states may rule that a waiver is ineffective as a matter of public policy.
The above factors on enforceability may vary state by state, and industry by industry. For instance, when the business involves inherently dangerous activities like skydiving or swimming with sharks, waivers are typically enforced. For employers, however, liability waivers are unenforceable under federal law. Since all states have a system for workers’ compensation that typically provide a remedy for injured workers, a worker’s right to take advantage of this system cannot be waived as they violate public policy. Encouraging employees to sign waivers raises additional concerns about the seriousness of the employer in following of COVID-19 safety workplace guidelines and may even result in complaints to agencies like the Occupational Safety and Health Administration.
Avoiding the Courtroom:
Whether a signed waiver shields a business from a COVID-19 lawsuit depend on the above factors as well as the facts and circumstances of each case. Issues relating to interpretation of contracts, such as waivers, are legal questions to be decided by a judge. Only questions of fact that might bear on the applicability of a waiver are put before a jury. The best waivers are those that leave little to no room for factual interpretation. They can provide a business with a ready-made defense to dismiss claims in the early stages of a lawsuit and without the need to engage in lengthy discovery or a costly trial.
Go One Step Further:
A business should not assume that a waiver will entirely avoid liability. In the era of COVID-19 pandemic, waivers have not yet been tested in court for COVID-19 related claims. We expect these waivers will be widely challenged across the country as lawsuits pile up. Attorneys bringing these claims are likely to point to public policy, arguing that a once-in-a-lifetime pandemic justifies that waivers be unenforceable.
Business owners should be prepared in the event a waiver is deemed unenforceable. It is still highly advisable for businesses to have guests and customers sign a liability waiver as they should articulate the risks customers face, even going so far as to post signs providing notice of COVID-19 risks with disclaimers of liability. The goal is to establish that they were aware of and willingly accepted those risks. Of course, a business must do its part to hold up its end of the bargain, by implementing best safety practices and procedures for preventing transmission of the virus and strictly adhere to them. Businesses should keep track of and follow the latest guidelines issued by the CDC, state and local government, as well as industry-specific guidance applicable to that business’s industry. Always follow proper procedures for responding to confirmed COVID-19 cases at your workplace. Doing so will place the business in the best position to defend potential liability claims and could serve to have a deterrent effect and discourage the filing of claims in the first instance.
While the risks associated with the pandemic are widely known, a business should not assume that those signing waivers are aware of those risks or how a particular business’s activities relate to increases in risk. It is strongly advised that each waiver be specifically tailored to the unique business or activity being undertaken. Avoid using generic template waiver forms found online. Rather, contacting an attorney to specifically tailor a waiver suited to the unique services and circumstances of each business is strongly advised. At CMBG3 Law, our attorneys are experts at risk management consulting and are experienced in helping our clients identify and protect against liability risks.
Please contact Attorney Seta Accaoui at CMBG3 Law to discuss how we can help your business.