Retail Industry Pandemic Resource Center
The evolving COVID-19 pandemic has left retailers with limited options and in critical need of experienced guidance on a range of unsettling issues. Hunton Andrews Kurth has a dedicated team of more than 200 lawyers that regularly work with many Global 2000 retail and consumer products companies, as well as a myriad of small and mid-size retailers. This diverse perspective of the industry and our collective knowledge allows us to quickly provide experience-based answers to critical business issues.
As we work to get through this extraordinary situation, our lawyers are available to answer questions and assist clients as they respond to the impacts of these matters on their businesses and plan for the future.
Top 10 Common Issues for Retailers
COVID-19 Disruption
Our attorneys are responding around the clock to many diverse questions from retail clients about the evolving challenges of the COVID-19 pandemic. Following are the most frequent areas of inquiry and advice we are providing this week, with the broadest application to the retail industry:
1. Employment-Related Guidance Regarding the Families First Act and the CARES Act
The Department of Labor issued its Final Rule regarding implementation of the Families First Coronavirus Response Act on April 1, but it does not resolve all outstanding questions for employers. The Final Rule provides points of clarity on issues such as the definitions of health care provider and emergency responders, the small business exemption to the Act, and the effect of state or local stay-at-home orders on an employee’s right to take leave. But it also contains some apparent internal inconsistencies. See our most recent analysis of these evolving issues here.
We have previously covered the general structure and substance of the Families First Act here, and initial Department of Labor guidance about the Act here.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020 as a federal response to the economic crisis caused by the Coronavirus. As we previously reported, the Act greatly expands unemployment benefits for workers affected by the COVID-19 pandemic, but many questions remained about how the Act would be applied. The DOL recently issued guidance answering some of these questions. Here is our most recent analysis of the guidance.
Retailers also must be alert to risks of running afoul of the False Claims Act when preparing applications.
Click here for our summary and analysis on CARES unemployment provisions. Here also is fresh analysis on Families First and concurrent leave policies.
See our review and analysis of California and New York laws supplementing the sick leave entitlements under Families First, one targeting food service employees specifically:
> California Employers In The Food Sector Industry Ordered To Provide COVID-19 Supplemental Paid Sick Leave, April 17, 2020
> COVID 19: City Of Los Angeles Imposes New Paid Sick Leave Obligations on Employers With 500+ U.S. Employees, April 3, 2020
> New York Takes the Lead on COVID-19 Paid Sick Leave, March 20, 2020
2. Advising Retailers on Bankruptcy Options and Strategies, and COVID-Related Amendments of Insolvency Laws
The COVID-19 pandemic has already had a profound impact on the US retail economy. Many retail businesses will find it necessary to engage in negotiations with their lenders and investors on a revised capital structure, with their counterparties on long-term contracts, and to explore options for bankruptcy and restructuring. Hunton is assisting its retail clients of every size in exploring their best options for their workforces, investors and loyal customers. Following are some recent insights and reports on actions by the U.S. bankruptcy courts.
- Bankruptcies on Ice: Retailers Obtain Further Extensions of Stay Orders Through the End of May, May 7, 2020
- Emergency Relief – Bankruptcy Courts Grant Debtors Relief in Fight Against SBA’s Refusal to Provide PPP Loans, May 7, 2020
3. Pursuing Business Interruption Insurance Coverage
The wave of COVID-19 business interruption claims has only just begun. These claims will soon become the new normal worldwide as stay-home orders have only recently begun to be issued but are having wide-ranging and significant impacts on local businesses. Insurance companies are responding to COVID-19 insurance claims, so it is important for policyholders to take prompt action to notify insurers in the event a claim arises. Some insurers are readily denying these claims, and with little investigation. As we previously explained here, insurers have been vocal against the insurability of resulting financial loss under policies affording business interruption coverage. It is imperative, therefore, that policyholders engage experienced coverage counsel to review their policies and their specific circumstances. Recently, several state legislatures have taken action to ensure fairness in coverage decisions.
> Read the Hunton Insurance Coverage Blog posts:
- Lorie Masters and Michael Levine Set the Record Straight About Insurance for COVID-19 Losses, April 9, 2020
- Hunton Attorneys Author Insurance Coverage Law Center Article Concerning General Liability Coverage for COVID-19
- California Insurance Commission Issues Notice to Business Interruption Insurers Related to COVID-19
- OH, MA, and NY Join Push to Ensure Insurance Coverage for COVID-19 Business Interruption Losses
4. Complying with OSHA Guidance on Preparing Workplaces for COVID-19
The US Occupational Safety and Health Administration (OSHA) recently published Guidance on Preparing Workplaces for COVID-19 (Guidance), outlining steps employers can take to help protect their workforce. The Guidance focuses on the need for employers to implement engineering, administrative, work practice controls and personal protective equipment (PPE), as well as considerations for doing so. While there is no specific OSHA standard covering infectious disease or COVID-19 in particular, some OSHA requirements may apply to preventing occupational exposure to the virus, including OSHA’s Bloodborne Pathogens standard (29 C.F.R. § 1910.20), Personal Protective Equipment (29 CFR 1910 Subpart I), Hazard Communication (29 C.F.R. § 1910.1200) and Recording and Reporting Occupational Injuries and Illnesses (29 C.F.R. § 1904). There is also the General Duty Clause of OSHA, which requires employers to provide a “place of employment … free from recognized hazards that are causing or are likely to cause death or serious physical harm.”
> Read the full report on the Hunton Employment & Labor Perspectives blog.
In a related emerging trend, some jurisdictions and municipalities are mandating that retail employees and customers must wear face masks at the retail site. Click here to learn more.
Most recently, the EEOC has clarified it position on the permissibility of employers to require COVID testing before allowing employees to return to work.
5. Invoking Force Majeure or Impossibility Clauses to Stem Financial Losses
Retail businesses worldwide have felt the impact of the COVID-19 pandemic as business operations and supply chains are severely disrupted. Some retailers have been left unable to fulfill contractual obligations or are concerned their business partners will be unable to fulfill theirs. We are advising many retail clients on invoking force majeure contract clauses or the common law doctrine of frustration of purpose to address losses and risks.
> Read Contract Cancellation and the Doctrines of Impossibility and Frustration of Purpose
> Click here for Hunton’s survey of international distinctions in force majeure laws and the handling of these issues under international legal systems.
6. Reducing Payroll For Salaried Exempt Employees
COVID-19 has disrupted the global economy and employers are facing the need to reduce expenses associated with exempt employees. Employers can place exempt employees on furlough, or, in some cases, reduce salaries and hours, without jeopardizing the FLSA exemption, but exceptions may need to be made for certain employees on work-authorized visas.
> Click here for a full discussion of best practices, exemptions and possible pitfalls.
7. Managing Collective Bargaining Agreements and Union Organizing Matters In the COVID-Impacted Workplace
The recent CARES Act includes significant labor-related conditions on receiving relief through business loans. Businesses must agree that they will not abrogate existing collective bargaining agreements for the term of the loan plus two years after completing repayment, and that they will remain neutral in any union organizing effort for the term of the loan. This latter requirement means that employers cannot oppose union-organizing activities, which significantly increases the likelihood of unionization.
> Read Key Employment-Related Provisions in Newly Enacted CARES Act.
Further, retail employers with collective bargaining agreements and union relationships generally cannot make unilateral changes to terms and conditions of employment. But in an unprecedented emergency like the coronavirus (COVID-19) outbreak, union bargaining obligations may be relaxed, either based on the terms of a collective bargaining agreement or under National Labor Relations Board law. As employers are forced to make ever more difficult operational decisions in the face of this emerging threat, here are some issues unionized businesses should consider when contemplating major workplace changes.
> Read Coronavirus and the NLRA – Unilateral Changes in Emergency Situations
8. Navigating Privacy and Cybersecurity Risks in Changes Mandated by COVID-19
The outbreak of COVID-19 has dramatically changed the economy and working landscape of the United States and many other countries across the world. Companies suddenly find themselves dealing with a host of privacy issues and questions about sharing information with employees, customers and others. In addition, transitioning to a remote workforce can create privacy and data security concerns.
> Click here for a discussion of primary privacy challenges we are addressing with retail clients.
9. Addressing Safety, Health and SEC Compliance in Redesigning Shareholder Meetings
In light of the COVID-19 outbreak, publicly traded retail clients are highly concerned with the safety and health of personnel and the public around attendance at shareholder meetings. We are advising clients on alternatives to traditional shareholder meetings, designing logistics and advising on participation and attendance by management and directors.
> Read Coronavirus/COVID-19: Director and Management Attendance at Shareholder Meetings and Coronavirus/COVID-19: Considerations for Shareholder Meetings
10. Accelerating E-Signature Protocols to Conduct Business in the Age of COVID-19
Social distancing has created new challenges for retailers seeking to create or amend contracts to conduct business. More and more clients are seeking to introduce or improve electronic-signature protocols to reduce immediate business challenges and to introduce more health-conscious alternatives to wet signatures.