COVID-19 is everywhere. Not just the virus itself, but the news coverage of the virus as well. On Wednesday the World Health Organization declared it a pandemic, the stock market has plummeted over 20%, professional sporting events are being cancelled, and to cap off a crazy day, the President banned all travel from  Europe to the U.S. for the next thirty days. The crescendo is deafening.

Regardless of how one feels about the risks from the virus itself or the scope of the coverage, companies are facing real legal issues with their actions or inactions over the next couple of weeks.  This alert identifies some of them in the areas of employment law, contract performance and special issues for Federal Government Contractors.

This summary was drafted by Lewis Rhodes, who co-leads GCPC’s GovCon Practice.  There are hundreds of articles discussing employer obligations related to COVID-19.  We discuss it briefly below.  However, we also discuss COVID-19 implications for business contracts and government contractors.  If you have questions, please do not hesitate to contact us.

Employment Law

Federal law requires employers to provide a “safe workplace” for its employees but there is little guidance about what a “safe workplace” means, especially in light of a new and relatively unknown pandemic.  We encourage all employers to focus on keeping lines of communication with employees open and to take the following steps:

• Tell employees to stay home if they are feeling sick and to seek medical attention if they are exhibiting flu-like symptoms, including fever, cough, and/or shortness of breath.  If employees in the workplace are exhibiting such symptoms, you may send them home before the end of the workday.
• Ask that any employees who test positive or are confirmed to have COVID-19 to notify a particular person (someone in HR or in leadership) so that the employer can take any necessary steps to protect other employees.
• Remind employees that they should avoid traveling to areas with high rates of infection, including any counties for which the CDC has issued a Travel Health Notice or any so-called “Hot Spots” in the US and that they should notify the employer if they do travel to such an area, they may be required to remained out of the workplace for up to 14 days
• Take steps to make sure the office is cleaned and disinfected as frequently as possible, and encourage employees to help with that mission – wash hands, wipe down surfaces, and limit or eliminate physical contact

There can be competing interests between the employer’s responsibilities and the employee’s rights and privacy. Other factors often come into play when making decisions about employees and even well-intentioned decisions can have significant negative consequences. We encourage you to tread carefully and seek advice.  Amy Muhlendorf is leading GCPC’s employment practice response to COVID-19.  If you have questions, she can be reached at amuhlendorf@gcpc.com or 703-226-2720. 

Contract Performance

Almost every contract has a force majeure clause – these clauses generally excuse a party’s performance under a contract; however, the devil is in the details.  Force majeure clauses tend to be viewed as legal “boiler plate” and are generally not read in detail or negotiated carefully before signing a contract.  Therefore, these clauses can range from simple two sentence paragraphs to complicated, detailed paragraphs that cover a laundry list of possible events.

Bottom line – do not assume that your contract is voidable because it has a force majeure clause; we told two clients this week that their contracts could not be cancelled. Everything depends on the factual circumstances (i.e. what actions have the local and State governments taken?) as well as the legal language in the clause – does it have to be impossible, impractical or is it a frustration of purpose?

If you have a contract that is impacted by the COVID-19 outbreak, you are encouraged to consult us to review your options to determine if you can terminate or otherwise alter the terms of the contract.  For specific questions, contract Merritt Green (mgreen@gcpc.com) or Lewis Rhodes (lrhodes@gcpc.com) or at 703-556-0411.

Federal Government Contractors

There are two general ways the COVID-19 outbreak will impact Federal Contractors: 1) you cannot perform because of issues with supply chain interruptions, closed offices or quarantines; or 2) the Government shuts the office where your employees are working on-site and demands that they work from home or in your offices.

For the first category, while Federal Government contracts do not have force majeure clauses, there are multiple FAR clauses that can excuse non or delayed performance for circumstances outside of the contractor’s control.  For instance, clauses such as 52.249-8; 52.249-9 and 52.249-14 all excuse delays for these extenuating circumstances.  However, as will force majeure events, these clauses require that a contractor taken certain actions and “reasonable” steps to provide notice and ensure performance as soon as practicable.

A Government decision to close its office and place a burden on the contractor to provide services at different locations may trigger the changes clause and require a modification. A contractor should not agree to take on extra work without a contract modification, and if the Government issues a unilateral no-cost modification, the contractor may be entitled to a request for equitable adjustment or a claim.

If you think your performance will be impacted or if the Government is trying to change the scope of your contract, please consult us to make sure that you are taking all proper steps to protect yourself.  Contact Lewis Rhodes (lrhodes@gcpc.com) or Carmody Daman (cdaman@gcpc.com) or 703-556-0411.