Houston, TX – Although most coverage of COVID-19 litigation has centered on business interruption policies and force majeure clauses in commercial contracts, an avalanche of employment-related claims against employers is sure to follow. And as businesses lay-off workers, cut hours and salaries, but nevertheless begin to open up their doors, many new avenues for liability arise.

For starters, employers need to make sure that any changes made to pay or working hours do not counteract the specific exemptions on which they were previously relying. Absent newly-enacted legislative exemptions related to COVID-19, employers must rely on the current legal frameworks to fend off employee litigation—not all of which are readily applicable.

For example, certain employees must receive a minimum salary amount to be exempt from the Fair Labor Standards Acts’ (FLSA) overtime provisions under its “white collar” exemptions (i.e. those that apply to executive, administrative, or professional employees). However, employers across nearly all economic sectors have reduced employee salaries in an effort to cull the damage wrought by the COVID-19 pandemic. These employers should thus be careful not to lower exempt employees’ salaries below the threshold for triggering the particular exemption on which the employer previously relied.

Also, FLSA’s requirements have not been relaxed for employees who are now teleworking as a result of the pandemic. And in many cases an employer’s failure to keep track of hours worked and wages paid may result in courts approximating damages (potentially in favor of employees). Employers should thus keep in mind that compliance with the FLSA’s minimum wage, overtime, and record keeping requirements remains mandatory, even for employees no longer working at the office.

However, the COVID-19 virus need not directly affect employees’ hours and pay to have a significant impact on employment-related litigation. For example, the State of California recently sued Uber and Lyft alleging misclassification of employees as independent contractors, thereby depriving them of worker protections and benefits—including minimum wage and unemployment insurance—under a newly enacted state law. California State Attorney General Xavier Becerra cited the novel coronavirus outbreak as the event that shed light on the drivers’ lack of protections,[1] even though these same drivers were classified as independent contractors for years prior to the pandemic.

But much to the relief of some employers, United States Senate Majority Leader Mitch McConnel has recently signaled a willingness to push for the creation of legislative exemptions for COVID-19-related litigation. It is not clear whether new legislation will be enacted, or even the substance of the proposed legislation. Nevertheless, fearing the inevitable wave of employee lawsuits, McConnell has stated that he and other Senate Republicans will insist that liability protections for employers are built-in to future relief measures. [2] President Donald Trump and his top economic adviser, Larry Kudlow, have also indicated a willingness to side with the U.S. Chamber of Commerce and others who are likewise pushing for employer liability shields. Employers and employees alike should keep an eye out for potential legislative updates in this area.

As the legal landscape evolves due to the COVID-19 pandemic, the attorneys at McDowell Hetherington LLP continue to monitor the situation and stand ready to help both employers and employees navigate through this time. Please feel free to contact MH attorneys Nick Lawson, Avi Moshenberg, or Emil Sadykhov regarding the above, or with any other labor and employment law questions.

[1] Suhauna Hussain and Johana Bhuiyan, California sues Uber and Lyft, saying drivers are employees, Los Angeles Times (May 5, 2020), https://www.latimes.com/business/technology/story/2020-05-05/california-sues-uber-lyft-alleging-ab5-worker-misclassification.

[2] Andrew Kragie, McConnell Wants Broad Liability Shield In Next COVID-19 Bill,Law360.com (Apr. 27, 2020), https://www.law360.com/insurance/articles/1267837/mcconnell-wants-broad-liability-shield-in-next-covid-19-bill?nl_pk=a1569844-963e-4144-a9d2-cb017fd64250&utm_source=newsletter&utm_medium=email&utm_campaign=insurance.