KMK Law Corporate & Securities Blog

As more and more businesses begin to open their doors to customers, clients are asking what potential liability risk they incur by allowing customers onto their business premises.  Even for businesses that take all the recommended precautions to reduce the risk of exposing customers to the COVID-19 virus, there is no guarantee that the virus will not spread to customers of the business. There is also no guarantee that customers will not allege that they contracted the virus from visiting a particular business resulting in legal costs to that business. Because, in certain situations, contracting COVID-19 can result in missing a substantial amount of work, extended hospital stays and treatments, and even death, the legal costs could become significant. 

In considering the potential threat to your business from opening your doors to customers in the midst of the COVID-19 epidemic, it is important for you to understand that liability for any customer that might contract COVID-19 in your place of business is likely not absolute. Generally, assuming a business continues to comply with local, state and federal laws and regulations, businesses may only be held liable if they were negligent in the operation of their business or do not exercise ordinary or reasonable care to maintain their premises in a reasonably safe condition and to warn of hidden dangers, which typically requires a duty to inspect the premises to identify dangerous conditions. That said, with various local, state and federal guidelines changing regularly and sometimes conflicting with one another, it is sometimes unclear what might constitute “ordinary or reasonable care” in protecting your customers from exposure to the COVID-19 virus. As a result, there could be a significant risk of litigation associated with a customer who is allegedly exposed to COVID-19 at any particular business.

Various state and federal officials have begun to discuss creating potential liability shields to protect businesses who take reasonable efforts to stop the spread of COVID-19. There is significant questions as to whether these efforts will be successful. As a result, businesses which already have customers regularly execute liability waivers are considering expanding their liability waiver to cover the risks associated with COVID-19 and businesses who often have not had customers sign liability waivers are considering the benefit of having customers now sign liability waivers.

In considering whether a liability waiver would be beneficial to your business, you should consider a variety of factors:

• Business Implications. Now, more than ever, consumers want to go to a business that is safe. While consumers are used to signing a liability waiver when they enjoy rock-climbing or horseback-riding, consumers are not used to signing a liability waiver when they get their haircut or enter a store. If a business is not of a nature that typically has customers sign liability waivers, the business may only be raising the level of uncertainty for an already concerned customer base.   
• Sticking to Your Commitments. In order to maximize the benefit of a liability waiver, you actually have to hold to whatever commitments you make in or otherwise in connection with your liability waiver.  In other words, if you tell your customers you are going to do everything you can to protect the customers from contracting COVID-19, but you do not follow through on that commitment, you may actually increase your risk.  In this regard it is important that your reopening plan and liability waiver speaks the truth and is individually tailored for your business.  In any event, your liability waiver should be clear and unambiguous that customers are knowingly subjecting themselves to the risk of being exposed to or contracting the COVID-19 virus, that despite any preventative measures being taken by the business there is no guarantee that customers will not be exposed to or contract the COVID-19 virus, and that by entering the business customers could be increasing their risk of exposure to or contracting the COVID-19 virus.
• Liability Waivers Have Limitations.  While liability waivers provide businesses a significant first step to proactively protect against possible future liability for exposure claims, a liability waiver cannot protect you from all liability. Liability waivers have limitations and the degree of their enforcement varies among the states. Importantly, courts have not yet decided to what extent COVID-19-related liability waivers are enforceable, including whether or not a public policy reason exists to bar or otherwise limit their enforcement. Most jurisdictions will not permit the waiver of liability for intentional, willful, wanton, reckless or grossly negligent conduct. Businesses who do not make reasonable efforts at protecting their customers from the potential risks of exposure can still face liability even under the best written liability waiver.