Thursday, May 28, 2020

By Matt Daus

Face mask and gloves aren’t the only things operators need to protect themselves during the corona-crisis.

We recently explored labor laws and civil rights issues that could leave you open to a lawsuit. However, the personal nature of chauffeured ground transportation that we generally pride ourselves on—that is, providing one-on-one individual service with the public—may put owners in a legal bind if a client, chauffeur, mechanic, or detailer, gets exposed to the virus during daily operation. Further, the work-stoppage due to mandatory quarantine or simply not having manpower may put you into breach of contract with a client. It’s important that you make yourself aware of any potential liabilities to protect your business.

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Businesses that have contact with the general public could be targets of claims that their negligence led to a contract worker, customer, or client’s exposure to an infection of COVID-19.  In the case of a virus, there may be a duty to warn such third parties, or to prevent access to certain facility areas or vehicles. To reduce risk of liability, operators should identify risk levels in their vehicles and office to determine appropriate control measures to implement to address the specific exposure risks, including staying up-to-date and following guidelines established for employers by the World Health Organization (WHO), the U.S. Center for Disease Control and Prevention (CDC), and the federal Occupational Safety and Health Administration (OSHA).

Transportation companies may protect themselves against potential claims for the above-referenced actions in a variety of ways, including:

  • Following guidelines established by WHO, CDC, and OSHA to protect against exposure to the virus
  • Developing an infectious disease preparedness response plan that considers and addresses the risk level of the worksite and job tasks
  • Ensuring employees implement basic infection prevention measures
  • Performing routine environmental cleaning

Businesses should review their emergency operations to determine what procedures and coordination are designated for a pandemic. Windels Marx has prepared a checklist that is available here.

While ensuring your clients have a clean, safe ride is imperative, protecting your employees from exposure is equally important. "Ordinary diseases of life" (i.e., those to which the general public is equally exposed) are generally excluded from workers' compensation insurance programs, but if an employee can establish a direct causal connection to the workplace (e.g., a chauffeur transported a client who has tested positive for COVID-19), there may be a valid argument for workers' compensation insurance coverage. To the extent that other claims for employee-related coronavirus illness do not qualify for workers' compensation benefits, coverage might still be afforded under certain insurance policies. Business should review their insurance policies for relevant provisions.

The COVID-19 pandemic has raised questions as to whether the outbreak and ensuing government restrictions will excuse non-performance of otherwise binding contracts. Changing COVID-19 developments impact a party’s ability to potentially excuse contractual nonperformance through multiple legal theories, including force majeure provisions. The results will depend on the contractual language, the state law governing the contract, and purpose of the contract.

Traditionally, force majeure clauses can excuse a party’s nonperformance under a contract when extraordinary or unforeseen events prevent a party from fulfilling its contractual obligations. As defined by the leading treatise on contracts, a force majeure clause provides a means by which the parties may anticipate, in advance, a condition that will make performance impracticable.  When parties find that their contracts are silent on the force majeure issue, parties should assess alternative common law mechanisms for excuse of nonperformance. In the present circumstances, impossibility of performance via various government declarations would enable a viable argument that performance was rendered impossible “by law.”

As the COVID-19 pandemic continues to develop, businesses should take proactive steps to ensure continuity of operations sufficient to meet existing contractual obligations and evaluate whether their counterparties are doing the same. There are potentially multiple grounds to excuse non-performance due to the COVID-19 pandemic and ensuing government actions, which requires particular examination of the contractual language and the case law of the relevant jurisdiction.


Matt Daus is a partner with law firm Windels Marx and the former commissioner of the New York City Taxi & Limousine Commission. He can be reached at mdaus@windelsmarx.com.

[04.03.20]