Employment contracts in the face of back-to-back disasters

Employment contracts in the face of back-to-back disasters

| Jun 16, 2020 | Firm News |

The year 2020 has presented great challenges to many businesses in Ohio and elsewhere, affecting customers, employers, employees and insurers. Business as usual has been disrupted for thousands.

A Pandemic

First, the COVID-19 pandemic disrupted the usual routine for employers and employees in Cleveland and other communities. Ohio’s stay-at-home order, issued on March 22nd, was to lapse on May 29th and be replaced by a health advisory.

Civil Unrest

Almost like clockwork, the next major business disruption came right away, in the form of social justice protests and accompanying vandalism beginning about May 28th. Curfews were enacted in Cleveland, Columbus, Cincinnati and other Ohio cities in response to both peaceful  protests and riots statewide.

Many Closed Or Diminished Businesses

During the worst of the violence, large numbers of independent business properties were burned, looted and otherwise vandalized. Many had already been struggling to stay afloat throughout the COVID-19 disruptions. After the riots, many businesses closed “until further notice.” Employers and employees were left reeling with multiple issues to grapple with.

What About Employment Contracts?

A variety of stop-gap financial measures helped some workers during the pandemic and after the riots. Relief included temporary pay, unemployment benefits, government stimulus and private insurance. But what may happen with continuously disrupted employment agreements?

Ultimately, answers may come from multiple directions:

Legal definitions of the disasters: Does COVID-19 qualify as a force majeure (“act of God”)? If so, will this definition override insurance policy terms that specifically exclude viruses from coverage?

Insurance claims: Both claimants (like business owners) and insurers likely have great tasks ahead, including legal wrangling over insurance policies and the nature of the business disruptions.

Public assistance with rebuilding: Local, state and federal government agencies have pledged or are considering funding to help cities rebuild after the violent unrest. Some industries have already received financial relief post-COVID-19 allowing employers to honor some employment contracts.

Employment status: An employment contract may be “at will” or it may have termination compensation provisions built in. An employee with concerns should consult with an employment law attorney.

Resolution of bigger questions over time: These stories are not only local news, and do not only affect individual businesses. They also have ramifications for the resilience of economies far and wide. Much remains to be determined about the fate of employees with temporary or permanent job loss.