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June 2020

Initial Considerations for Managing Third Party Liability in a Post-COVID World

Last updated June 9, 2020

The COVID-19 pandemic has affected the way businesses operate and resulted in a mass reduction of many companies and sectors’ operations. As government restrictions begin to ease, businesses are slowly reopening their premises to employees and customers. While business owners may have already implemented measures to protect the safety of employees and visitors, it would be prudent to also consider third-party liability concerns.

As businesses reopen, business owners may wonder what effect an individual contracting COVID-19 on their premises can have on their business. Along with monitoring federal, state and local laws and guidelines, viewing such issues through a legal lens can further protect the continuity of a business. These third-party liability issues are not limited to one industry. Rather, they apply, but are not limited to, office-settings, construction sites, warehouses, retail establishments and in-home service providers.

For instance, what obligations do shopping mall owners have to protect customers entering their premises? Should indoor capacity be limited? What type of signage are we placing throughout the mall?

What steps should contractors take before entering a customer’s home? How can employees avoid face-to-face contact with customers? Is the business effectively sanitizing its tools? Is the business effectively communicating with customers about steps being taken to ensure customer safety?

Introducing CSG’s Back to Business: Navigating the Liability Roadmap series, where CSG attorneys will provide industry specific advice with the goal of answering a critical question for business owners: “Is my business protected?”

Liability Concerns for all Business Owners

Business owners have undoubtedly heard that Congress is considering legislation limiting or precluding lawsuits alleging liability for exposure to COVID-19. While some legislators believe that businesses need to be protected from the threat of frivolous litigation, others are concerned that immunity, whether complete or qualified, from the threat of litigation will encourage businesses to disregard necessary safety protocols and recommendations.

CSG will continue to monitor the debate as it unfolds. Based on our experience, however, even if Congress does eventually afford business owners protection from COVID-19 third-party liability claims, it is likely to be some form of qualified, rather than absolute, immunity. In the interim, business owners would be well-advised to prepare for the worst as they hope for the best.

Liability Waivers

One action that businesses may be considering before reopening is asking their customers and clients to sign liability waivers for claims related to COVID exposure. Many individuals are familiar with liability waivers in the context of gym memberships or athletic events that are participated in “at your own risk.” More recently, we have seen Disney post a purported liability waiver on its website warning its customers that “[B]y visiting Walt Disney World Resort, you voluntarily assume all risks related to exposure to COVID-19.”

Leaving aside the practical concern of how to ask your customers to execute a liability waiver in the most diplomatic and least offensive way possible, there is also the legal question of whether or not COVID-related liability would even be enforceable. Even in the more familiar contexts of gym memberships, athletic events, and the like, jurisdictions vary greatly when it comes to the enforceability of liability waivers.

Although too early to predict how jurisdictions will ultimately interpret COVID-related waivers, it is beyond dispute that most jurisdictions will generally: (1) strictly construe the waiver against the party that drafted it, (2) require that any purported waiver be described clearly and unequivocally, and (3) put limitations on the type of conduct that can and cannot be waived (e.g. negligent conduct versus reckless or intentional conduct).

If you are considering the use of liability waiver, we encourage you to reach out to our team to discuss these issues and concerns in more depth.

If there is a lawsuit, what are the standards of care?

If a customer sues alleging that they contracted COVID-19 as consequence of the way in which you conducted your business, the Plaintiff is likely to allege a number of liability theories ranging from ordinary negligence to willful and wanton conduct.

The New Jersey Supreme Court has stated that “negligence, gross negligence, recklessness, and willful conduct fall on a spectrum, and the difference between negligence and gross negligence is a matter of degree.” While “negligence” is generally defined as the failure to use that degree of care, precaution and vigilance which a reasonably prudent person would use under the same or similar circumstances, “gross negligence” is an act or omission that (1) is more than ordinary negligence but less than willful or intentional misconduct, and (2) creates an unreasonable risk of harm to another because of the failure to exercise slight care or diligence.

Critically, negligence and gross negligence are levels of conduct that are generally insufficient to open the door to a claim for punitive damages in the view of New Jersey courts. Courts have also said that willful and wanton conduct, defined as a deliberate act or omission with knowledge of a high degree of probability of harm to another and reckless indifference to the consequences of such act or omission, however, will establish a basis for a punitive damages claim.

In the post-COVID world, the question of whether a particular business acted with the same degree of care that a reasonably prudent business owner would have exercised under similar circumstances will be heavily influenced by whether or not that business followed existing guidelines that are aimed at minimizing the risk of contracting or transmitting COVID-19. Business owners should make every effort to review, implement, and enforce the guidelines and/or requirements published by each of the following entities:

  • CDC (Center for Disease Control)

  • OSHA

  • WHO (World Health Organizations)

  • State Governments

  • County and/or City Governments

  • Industry-Specific Publications

It goes without saying that we are all still learning about novel coronavirus and COVID-19. As we have seen, each week seems to bring new information and understanding of the ongoing pandemic. It is critical, therefore, that business owners continuously monitor the guidelines, standards, and laws published by the entities listed above to best ensure that they are complying with the then-current “State-of-the-Art” guidance.

By taking the time to research, apply, and enforce the applicable guidelines and safety protocols, business owners will not only take important steps to keep their customers and employees safe, but will also be setting up their defenses to any potential third-party liability claims.

“Even if my Business is Sued, I’m Covered by Insurance. Right?”

It is an unfortunate but all-too-common scenario: a business has a particular insurance policy in place that it believes will cover a loss only to find out that the loss is not covered because of a definition in the policy, a coverage limitation, or an exclusion in the policy. In the context of COVID-19, some businesses may have already seen that the coverage they thought they had for “business interruption” losses may not apply to the interruption that they have undeniably experienced over the last three months.

When it comes to coverage for third-party liability claims, the question begins – as it does with all coverage questions – with a review of the policy. Further, to the extent that there are any gaps in coverage that can be remedied, those gaps must generally be identified and remedied before an actual claim gets filed.

If you have a question regarding your current liability policies and whether they would potentially cover or exclude coverage for claims involving COVID exposure, we encourage you to reach out to your insurance agent or our team to discuss these important issues.

Stay tuned for the next installment of CSG’s Back to Business: Navigating the Liability Roadmap series, where CSG attorneys will continue providing industry specific guidance to help business owners avoid third-party liability as they reopen their businesses.

For additional information pertaining to the coronavirus outbreak, please visit CSG's COVID-19 Resource Center.


This publication contains general information on recent legal developments and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Attorney Advertising. Prior results do not guarantee a similar outcome.

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Visit CSG's COVID-19 Resource Center.