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Protect Your Business From COVID-19 Lawsuits

8 min read • Sep 05, 2020 • Katherine O'Malley

Businesses operating during the coronavirus pandemic face a new hurdle—how to protect themselves from COVID-19-related lawsuits. Customers or employees may sue a business if they believe they contracted the virus there.

Are there any protections from these lawsuits for small businesses? Are there any clear-cut lines between business and personal liability? Is implementing safety guidelines enough, and how should a business be expected to enforce those practices on non-compliant customers? The answers are still murky, but there may be legislation to protect your small business and steps you can take to limit your exposure.

What Does the Law Say?

Liability shields—laws that protect businesses from lawsuits if an employee or customer contracts COVID-19 at their business—are the new hot topic. The language of current legislation at both the state and federal level varies wildly, but 1 common theme is that “gross negligence” by a business isn’t covered.

State Laws

States’ liability shields vary from broad-reaching to industry-specific to still in-process. For example, North Carolina’s COVID-19 Recovery Act provides limited immunity to essential businesses. Louisiana passed 3 bills that are industry-specific: Louisiana’s Act 305, for example, only protects restaurants that offer carry-out. Other states, like South Carolina and Michigan, have introduced legislation but are still haggling over whether to make it law.

On the flip side, some states have amended worker compensation laws to give employees additional COVID-19-related protection by increasing coverage and reducing the burden of proving a claim. California has a pending bill that would provide a “rebuttable presumption of occupational injury”—placing proof of burden on the employer to prove the employee didn’t contract the illness at the workplace—to certain classes of workers such as direct healthcare workers.

Federal Law

Many businesses and associations like the US Chamber of Commerce are advocating for a federal solution. A possibility attached to the next stimulus package is the Republican-sponsored SAFE TO WORK Act, written to offer businesses protection from December 2019 to October 2024. According to Bloomberg Law: “The bill’s safe harbor provision would immunize employers from lawsuits or enforcement actions connected to the virus under 7 federal employment laws, including those that prohibit job bias, govern wages, and mandate minimum safety standards.”

A key advantage of a federal law: a company doing business in multiple states would have 1 law to follow versus having to comply with each state’s regulations. Another perk for businesses is that lawsuits tried in a federal court are usually more difficult for plaintiffs (your customers or employees) to win.

Legislation Pros and Cons

Depending on which side of the coin you’re on, liability shields (state or federal) could be either a blessing or a curse.

Upsides for businesses:

  • A decrease in frivolous lawsuits and their associated costs. Some lawyers believe that liability shields will discourage harassment-type litigation—or questionable lawsuits filed in an attempt to get settlement money or small wins.
  • Reputations are protected. Any lawsuit, even one that is dismissed, has the potential to damage a business’s reputation, the so-called “liability attaches” theory.

Downsides for customers and employees:

  • Some businesses seeking to recoup lost revenue and counter rising COVID-19-related costs may favor profits over safety.
  • It’s unclear how courts will interpret the broad language in each act—it could be to either the plaintiff’s or the defendant’s advantage depending on the court. For example, Georgia’s act is worded to offer business protection from any health issue that may be related to COVID-19 including “any mutation or viral fragments” to come—the expectation is if that clause is invoked as part of a lawsuit, it’ll be up to the court to interpret it.
  • The proposed federal SAFE TO WORK Act would limit employees’ right to sue for work-related COVID-19 illnesses.

Ultimately, liability shields benefit businesses more than customers or employees. Customers or employees “benefit” from liability shields primarily from the economic recovery that may occur with businesses opening.

Protect Your Business

Given the fluid nature of regulations and guidelines, what can you do to limit your business’s exposure to COVID-19-related lawsuits? While staying shut down is the only sure-fire method for avoiding lawsuits, you can take steps to reduce your risk while staying fully or partially open.

Know the Law

It’s a mind-boggling list of regulations to monitor—federal, state, local, and industry-specific guidelines—so enlist the help of your attorney and small business associations to help keep you up-to-date on changes that may impact your business.

Consider if disclaimers make sense for your business. Some liability shields provide immunity if the business followed guidelines and displayed disclaimers in a certain format. For example, Georgia law indicates that the consumer accepts all risk of contracting COVID-19 if the business follows best safety guidelines and posts disclaimers (with specific wording) on a receipt or business entrance.

Similarly, some businesses are opting to use waivers. The Trump campaign used waivers as part of its Tulsa rally registration process, and the University of New Hampshire pushed for students to sign an “informed consent agreement” regarding risks of exposure on campus. While these waivers may not pass the sniff test in court, they could be used to prove the customer understood the risk of doing business with you.

Safety Guidelines Are Your Friend

Follow and enforce guidelines from the CDC, your local health department, and your specific industry. Of course, you want to do this for the safety of your employees and customers—but following the guidelines is also a key requirement of most regulations written to protect businesses from COVID-19-related lawsuits.

Steps to take include:

  • Minimize exposure by altering employee schedules
  • Offer special hours for at-risk customers, such as elderly customers
  • Encourage safer retail shopping, including offering touchless payment or curbside pickup
  • Follow industry-specific guidelines, e.g., restaurant guidelines
  • Enact social-distancing protocols and a mask-wearing mandate. Even if your customers don’t comply, having those rules in place may afford you some lawsuit protection (but be leery of risking your employees’ safety if they interact with non-compliant customers)

Embrace Your Local Advantage

Don’t overlook using the “support local” movement to your advantage. While it doesn’t prevent opportunists from filing a lawsuit, showing your connection to the community shines a “we are all in this together” light on your business. It shifts the focus from someone’s belief about current guidelines to what your business provides to the community—jobs, tax revenue, and a local product or service.

While there’s no surefire way to prevent lawsuits, following safety guidelines is always a good plan. It’ll keep you protected while lawmakers struggle to find ways to protect both businesses and their customers from a virus that causes chaos for everyone.


The information provided in this post does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available in this post are for general informational purposes only. Readers of this post should contact their attorney to obtain advice with respect to any particular legal matter.


Katherine O'Malley

Katherine O'Malley is a contributor to the Lendio blog. A technology geek at heart, she splits her time between traveling, freelance writing, database administration work, and implementing SEO on her travel blog. In her free time, she loves to research the challenges small-to-midsize tourist suppliers face and find ways that technology can help them out.