Reopening a Small Business During COVID-19
Episode 16: Louisville Attorney Parker Wornall and I discuss small business guidelines and considerations for getting started, now that small businesses are reopening during the COVID-19 crisis.
The government and the SBA are providing funds to help small businesses. There were initial questions about whether companies qualified for the funds. Now, the focus in on how the funds need to be used. New details are coming out and this is adding confusion and frustration. An initial step is to deposit the funds in a separate account to isolate them and provide an easier way to track how the specific funds were used.
Protecting Employees and Customers
As you consider reopening a small business, it’s important to be mindful of the CDC guidelines. Start with the basics. Consider hiring a cleaning service to ensure you’re actively taking measures to keep the environment and surfaces clean. You may need to consider appointment scheduling to ensure adequate spacing is provided.
Convert your plans into a policy and make sure you publish the policy for the benefit of both your employees and customers. Consider using printed formats, videos, internal podcast episodes, etc. Make sure you’re providing adequate access to masks, hand sanitizers and other PPE-related items.
Note that some of the guidelines are easy to understand, while others are more subjective. As a small business owner, considerable “the reasonable man status.” Even though it can be debated, you need to take reasonable steps. Was there a plan in place? How was the plan communicated? Did you take steps to protect employees and patrons?
The Department of Labor and other agencies have requirements for making specific business notifications visible. You may consider posting your policies and procedures near these other notifications. If a claim is being investigated or litigated, the attorneys will ask for your policies and procedures. Having these organized, published and updated will help your case.
Engage Your Attorney
Be sure to involve your business attorney in important communications and decisions. This is especially important with compliance issues. It also can add the protection of attorney-client privilege.
It’s a good idea to have an attorney act as your general counsel. Parker does this for many clients. The advantage is that documents, contracts and policies can be reviewed and updates made. Going forward, your general counsel can efficiently and proactively help you to avoid potential exposure to adverse claims and lawsuits.
Who is Monitoring Non-Compliance?
There aren’t any CDC police roaming the streets. However, small business owners may need to consider how other government agencies and regulators can use the CDC guidelines.
State licensing boards have enabling statues and regulations to give them the ability to govern your professional license. Communicable diseases have a history of enabling an entity to comply to federal guidelines.
OSHA inspectors may be able to incorporate CDC guidelines to levying notices and fines.
Tort Liability is another area to be concerned with, as a small business owner. If a patron makes a claim that you failed to take steps to comply with CDC guidelines, and that failure resulting in the patron becoming ill with COVID-19, you may be exposed to a negligence claim. In Kentucky, the governor has set up a hotline for citizens to report concerns.
Engage Your Employees
It’s critical that you actively communicate and reinforce your policies and procedures. When reopening a small business, consider team meetings to ensure your staff understands the steps you’re taking. It will enable them to ask questions, so they can begin to feel more comfortable. It also provides a way for you to demonstrate that you’ve taken necessary steps to educate your employees on the company guidelines.
Seek Out Original Sources Rather Than Interpretations
It’s important that small business owners stay informed and up to date on the information regarding COVID-19 and required measures. Don’t rely on commentary. It’s a good idea to seek out the information, directly from the source.
- Governor Beshear’s Executive Orders for Kentucky
- Governor Beshear’s 10 Rules to Reopening
- Team Kentucky Official COVID-19 Information
- Kentucky Cabinet for Health and Family Services
Managing Your Managers and Supervisors
Legally speaking, you need to be aware of who can bind your company. Communications to employees by managers and supervisors could expose you to adverse legal actions. You need to be sure you’ve effectively communicated the policies and procedures to your managers and supervisors, so they properly communicate it to your staff.
Force Majeure Clauses – Are You Still Covered by Your Insurance Policy?
Sometimes, a policy or contract contains language related to “acts of God.” This is commonly referred to as “force majeure.” Pandemics may be considered a nullification of coverage by means of a force majeure clause. Insurance companies may attempt to use this clause to avoid paying a claim. You may need to review your policies and other contract to see how a force majeure clause may impact your small business. However, this also applies to terms of various contracts you may have with third parties, such as vendors, suppliers or other business relationships.
Bringing Employees Back
Businesses need to be very careful in how they are bringing back their employees and independent contractors. Misclassification issues are taken seriously by the Department of Labor and the IRS. You may have to alter the individual’s scope of work. Some small business owners may attempt to reclassify the person as a 1099 individual contractor, thus reducing tax liability. This can be a dangerous decision. There are gray areas, but there are also very important red lines related to the amount of control you exert on the activities of the individual.
Before reopening a small business, you should consult your attorney to review any changes you are considering. If you misclassify an individual, there could be significant legal consequences, fines and other penalties.
FMLA vs. the Families First Corona Virus Response Act
There will be a lot of compliance issues with this. If you have fewer than 50 employees, you may not have to provide the paid leave, due to financial constraints. However, it’s a very subjective standard regarding whether the company can afford to pay this leave.
Complications will arise when an employee who is considered a high-risk by the CDC (e.g. 60 years or older). What happens if you ask an employee to return, but they don’t want to due to the Corona virus? Related to this is a cut-off for an employee who is 40 or older regarding potential age-discrimination claims. You need to approach these situations very carefully. Engaging your attorney is a very prudent step in helping you to avoid or minimize legal exposure.
Consistency is Important
Even when you have well designed policies and procedures, it’s critically important to be consistent in the application and enforcement of them. Deviations could open the argument that the actual policy in question, wasn’t actually a “real” policy. That’s when you may open yourself to unanticipated claims, lawsuits and expenses, beyond those directly related to reopening a small business.
For more information about Parker Wornall and his firm:
Commonwealth Counsel Group, PLLC
Office: (502) 805-2303
To listen to more episodes of the Grow For It podcast, please visit my small business consulting website, search for it on Apple Podcast (iTunes), Google Podcasts and other podcast directories. Be sure to subscribe, at no cost, to keep up with the most recent episodes.
Thanks for taking the time to listen!