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Aug 26, 2020

Using waivers to curb Covid-19 legal exposure

Companies should consider using a waiver to limit potential liability to pandemic-related claims, say Erin Bosman, Erin Lupfer and Julie Park

As states ease stay at home orders and individuals return to places of work and play, businesses are working hard to reduce the risk of transmission among their employees and customers. In addition to addressing compliance with health and safety guidelines, companies should think about other proactive steps that can reduce the risk of liability based on the transmission of Covid-19. One way to do so is through a liability waiver.

Liability waivers are a familiar sight for many people. We sign them before sending our children to camp, joining a gym or downloading a rideshare app. A waiver operates as a contract between the company and the signing party to acknowledge the risks associated with the activity or product and to agree not to hold the company liable for those risks, subject to certain limitations.

Companies that have never used a liability waiver should at least evaluate whether one should be used in order to mitigate potential liability or claims related to Covid-19.

Most waivers do not account for highly contagious diseases like Covid-19, meaning that even companies with pre-existing liability waivers may want to update them with language specific to the coronavirus. Here are key considerations to keep in mind when creating - or updating - a waiver to reduce legal exposure related to Covid-19.

1. General enforceability varies by jurisdictions
Although courts have not interpreted pandemic-related liability waivers, a Covid-19 waiver would likely be enforceable in jurisdictions that permit liability waivers for negligence and preinjury releases. In California, liability waivers are upheld so long as they do not violate public policy. A sample of other states that generally enforce liability waivers includes Colorado, Georgia, New York and Washington.

There are some states, however, that refuse to enforce waivers of personal injury claims. Both Louisiana and Montana have passed statutes expressly prohibiting such limitations of liability. And the Supreme Court of Virginia ‘universally’ prohibits preinjury releases for harm that may be caused by future negligence.

2. Limits on waivers
States that permit waivers often place limits on them. In most jurisdictions, a waiver would not curb liability for any conduct that goes beyond ordinary negligence. Some states, such as New York, prohibit liability waivers between the operator of an athletic, amusement or recreational establishment and customers who pay to use the facilities. Others limit a parent’s ability to sign waivers on behalf of a minor child depending on the nature of the activity. In contrast, states including Alaska and California have enforced releases signed by parents on behalf of their minor children.

Even where waivers are invalid, other avenues exist to reduce legal exposure. For example, despite rejecting prospective releases, Virginia generally enforces agreements that require a participant to indemnify the provider of the program, activity or event if the participant causes his or her own injuries, or if the participant injures someone else.

Another option is to provide a disclosure form that warns participants of the risks of exposure to and injury from Covid-19 as a result of entering the premises or participating in a particular activity. This form can be used as evidence that the participant knew and understood the dangers of participating in the activity but chose to do it anyway.

3. Sooner rather than later
To the extent possible, companies should require visitors to sign the waiver before entering the premises or engaging in a company-offered activity. If customers have the option not to enter the premises, providing the waiver serves the dual purpose of contractually limiting liability and putting the customer on notice that they are assuming the risk of contracting Covid-19.

4. Is a waiver right for your business?
Companies should consider how the nature of the particular industry or geographic location may influence how customers react to a waiver. Customers in the athletics space may be more comfortable and even expect to sign a waiver.

Other industries may experience more pushback, such as facilities where customers generally pass through for a short period of time, or where the activity in question is considered essential. Each company should weigh the pros of a liability waiver against the potential cons, which could include needing to dedicate an employee’s time to oversee the waiver process or turning away a customer who declines to sign.

We recommend conferring with legal counsel in order to weigh the legal benefits of a liability waiver versus any potential business considerations. In addition, legal counsel can advise on the specific wording and presentation of the liability waiver as it relates to Covid-19 and any jurisdictional requirements.

Erin Bosman and Julie Park are partners with Morrison & Foerster. Erin Lupfer is an associate with the firm

Erin Bosman, Erin Lupfer and Julie Park

Morrison & Foerster