Should Your Business Require Independent Contractors to Sign Coronavirus Waivers and Releases of Liability?

Many companies are asking, should we require independent contractors to sign advance waivers and releases of liability for contracting the Coronavirus?  Most commentators have urged companies to refrain from requiring employees to sign such waivers and releases, but there is little reason not to require independent contractors to sign well-drafted Covid-19 liability waivers.

Unlike employees, who may be covered by workers’ compensation and other laws that prohibit employers from using employee waivers for work-related injuries and illnesses, independent contractors are typically not covered by such laws.

Some states preclude the use of advance waivers in selected industries such as amusement parks, recreational activities, parking lots, and caterers, but those laws generally apply to customers and not to independent contractors.

Advance waivers and releases, however, are usually ineffective to protect against gross negligence, recklessness, or intentional acts. And typically they need to expressly cover the specific negligent acts that may cause an injury or illness. Generalized waivers of negligence are oftentimes stricken by courts in many states. Courts also require waivers to be written in clear and unambiguous language.

These types of limitations require the drafting party to closely examine applicable state laws regarding advance waivers.

What You May Wish to Include in a Coronavirus Waiver

A company drafting a Covid-19 waiver and release for independent contractors may wish to include language whereby the contractor acknowledges the inherent risk of contracting Covid-19 in providing services on an in-person basis to a company or its customers. Such assumption of the risk provisions oftentimes have some legal value even if a waiver and release is not enforced.

A company may also consider including in a Covid-19 waiver a provision whereby independent contractors represent and warrant that they agree to follow guidelines issued by the Centers for Disease Control and Prevention (CDC) and any state or local Covid-19 laws, including those regarding the use of masks and social distancing.

Companies may also wish to include an agreement by the contractor not to engage in in-person activities with employees or customers of the company if the independent contractor has a fever or any Covid-19 symptoms, recently has been in contact with another individual who has been diagnosed with Covid-19 or has exhibited such symptoms, or not long ago traveled to a state or country that is on a list of jurisdictions requiring the individual to self-quarantine upon return.

Three-Party Agreement

When a business contracts with independent contractors to provide services to its customers, the company may wish to create a three-party waiver and release agreement between it, the customer, and the contractor. In such an agreement, all parties waive and release claims against the other parties from specific acts of negligence that may lead to one of the parties contracting Covid-19.

Companies may wish to include a provision in such three-party agreements that all signatories should follow CDC guidelines to the extent feasible as well as all state and local Covid-19 laws.

Some companies may contemplate including indemnification provisions and covenants not to sue in Covid-19 waivers with independent contractors and their customers. But the longer and more complex the waiver form, the more hesitant an independent contractor or a customer may be to sign the document, which ideally should be on a single page.

Consideration should be given, though, as to whether a waiver would impact your rights  under an insurance policy such as a commercial general liability (CGL) policy.

Need to Enhance Compliance with Independent Contractor Laws

A worker classified as an independent contractor who signs a Covid-19 waiver and later on acquires the illness may still claim the waiver is invalid. How? By asserting that he or she was misclassified and is actually an employee covered by workers’ compensation.

Such a claim is more likely to be made in states that have enacted laws creating a presumption that the illness was contracted at work. According to an article published by the National Conference of State Legislatures in June, six states by then had enacted legislation creating a presumption of coverage for various types of workers who claim they contracted Covid-19 in a work-related setting.

Thus, a company that chooses to use a Covid-19 waiver and release form with independent contractors would be wise to take steps to enhance their compliance with independent contractor (IC) laws. By elevating their level of compliance, Covid-19 waivers and releases are more likely to be enforced and contractors will have far less grounds to assert that they have been misclassified.

Companies wishing to minimize their exposure to IC misclassification claims may wish to use a process such as IC Diagnostics™ to restructure, re-document, and re-implement their IC relationships in a manner that maximizes IC compliance.

Another reason to enhance IC compliance is to avoid liability if a customer claims a contractor’s actions or inactions caused the one or more of the customer’s employees to contract Covid-19. Unlike employees whose negligence can create liability for their employers, companies are generally not liable for the acts of independent contractors who have been properly classified as such.

In sum, while Coronavirus waiver and release forms for independent contractors need to be artfully drafted to withstand strict scrutiny by the courts, there are compelling reasons to require contractors to sign them.

By Richard Reibstein and Janet Barsky

THIS BLOG POST WAS BASED ON AN ARTICLE BY RICHARD REIBSTEIN AND JANET BARSKY THAT  WAS PUBLISHED BY BLOOMBERG INDUSTRY GROUP ON JULY 21, 2020, ENTITLED, “INSIGHT: SHOULD INDEPENDENT CONTRACTORS SIGN COVID-19 LIABILITY WAIVERS?” Reproduced with permission from © 2020 The Bureau of National Affairs, Inc. (800-372-1033) www.bloombergindustry.com.

 

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