Liability Waivers & Exculpatory Clauses in the Age of Coronavirus

As COVID-19 continues to spread, the question of viral transmission liability has been top of mind for all types of business and public venues. In response, several states have enacted laws to limit liability for certain industries or entities. The federal government has also released information clarifying the limits of COVID-19 immunity from lawsuits in certain areas.

But for most private organizations, legal immunity granted by law or official regulation isn’t likely to be forthcoming. Instead, these entities are turning to contracts containing clauses absolving them from transmission liability. The clauses protect from customer claims of contracting COVID-19 while on its property or using its services. Many such waivers exist, but most have yet to be tested in court. The legal waters surrounding COVID-19 waivers thus remain murky, with legal clarification to come.

Opportunities and Challenges of COVID-19 Waivers

For many businesses, liability waivers or exculpatory clauses in contracts offer an opportunity to provide protections that applicable laws or existing contracts, such as business insurance, do not offer. A clear, well-drafted waiver can help clarify the relationship between a business and customers when it comes to the novel coronavirus. Handled properly, a waiver may even boost customer confidence by indicating that the business takes the virus seriously—and that it recognizes the scope of its responsibility.

But liability waivers also have their limits. For example, waivers cannot be used to protect businesses from lawsuits involving an employee or contractor who became infected while on the premises. The Occupational Safety and Health Administration (OSHA) has stated that COVID-19 is a reportable injury when contracted in the workplace. Some OSHA claims involving COVID-19 have already been filed in federal district courts.

Additional assistance from the federal government could potentially be on the way— in the form of the much debated second COVID-19 relief package. In a provision to the bill, lawmakers have proposed a “safe harbor” protection for businesses, non-profit organizations, and universities that follow applicable precautionary guidelines for COVID-19. The status of this protection, however, continues to play out in Congress.

Industry Responses to COVID-19 Liability

Some industries have been quicker to embrace liability waivers than others. Sports venues, in particular, have quickly jumped to craft waiver language aimed to reduce their own risk when hosting games and competitions. Sports venues have long used lists of terms and conditions that attendees opt into, baked into the process of purchasing their tickets. With a waiver agreement already in place, these organizations have been able to more nimbly revise the language to ensure it covers COVID-19 than industries that must now draft a totally separate waiver document.

Another industry, real estate, has relied more heavily on individuals’ common sense health certifications. In some states, those entering a property showing must affirm that, to the best of their knowledge, they do not have COVID-19 nor have they been in contact with an infected person. These waivers often include language shielding realtors from liability, as well.

Doctor’s offices and restaurants have taken similar steps. In states that do not require individually signed waivers, some doctor’s offices and restaurants have posted waiver language at the front desk or in another part of the premises, where visitors can review it and express agreement before agreeing to service. Many waivers come with language affirming that the business is doing its best to follow applicable guidelines regarding COVID-19 transmission, as well. While this language may have no legal effect, it can provide reassurance to customers and patrons.

Examining Liability Loopholes

Waivers generally do not protect a business from all types of liability related to COVID-19 transmission. Most waivers focus on protection from ordinary negligence claims, but they do not apply to gross negligence, reckless conduct, or intentional transmission of the coronavirus.

Since the protections a waiver provides are limited by its specific language, such documents must be drafted carefully to ensure that the protection they do provide will hold up in court.

In addition, many states require that a signed liability waiver in order to apply. Simply placing a sign on the wall, or asking for oral agreement to waive liability, will be insufficient. In four states—Virginia, Louisiana, Montana, and Connecticut—waivers are not even recognized to be enforceable contracts.

Similarly, event waivers typically only apply to the person who actually attended the event. For example, a young adult signs a waiver to attend a rock concert. They then carry COVID-19 home to a grandparent who later develops symptoms. The grandparent may have the standing to sue the venue even if the young adult who actually attended the concert does not.

Even when a waiver fails to protect an organization from liability, proving fault remains an uphill battle for the infected party. Performing exhaustive contact tracing can be difficult, especially in a packed venue or public place. Also, since the virus has a long incubation period, plaintiffs may find it difficult or impossible to prove that they picked up the virus from the defendant’s location. Without clearly drawing these connections, plaintiffs will likely struggle to prove fault but it will be up to the courts to find just where this novel liability lies.