Virus Check: What is Your Liability as an Employer?

The virus situation we are currently facing is unprecedented from a legal standpoint. The ability to enforce contracts, loans, leases and all manner of legal relationships is now in question based on financial hardships as well as our court system working at greatly diminished capacity. Reasonableness, negotiation and working cooperatively are now more important than ever before. Businesses of all kinds are concerned about being sued. What do you need to know?

Negligence is your first concern. Can a business be sued if an employee or customer were to contract a communicable disease at the employer’s workplace, or from a co-worker or customer? It depends on whether the business took reasonable actions to protect its employees and customers in light of the information available to it – in others words, whether the business was negligent.

Tort law, or the law of negligence, applies in this situation. It holds that a person can be liable to another person to whom the first person owes a duty if the first person commits an act which is unreasonable (or fails to take a reasonably necessary action) which could reasonably be anticipated to cause damage to the second person, and the second person did not help cause the wrongful act or omission.

For example, the Governor had previously prohibited all “mass gatherings” of 50 or more people (since reduced to 10); therefore, it was legal at that time (at least in most counties) to have mass gatherings of less than 50. But would this be reasonable in light of the CDC’s warnings against gatherings of more than 10 people? It depends on the situation, but a strong argument could be made that such would not be reasonable - in other words, we could not assure you that you would not get sued if someone got sick from such a gathering.

You owe a duty of reasonable care to your customers and employees; failure to take reasonable care to protect these parties from infection could result in liability. Reasonableness is the touchstone, based upon all the facts and circumstances involved. Failure to abide by local orders or regulations when they are directly intended to preserve public safety, as well as customary standards of care, have been held to constitute actionable negligence in other contexts. Cruise ship operators are already facing numerous lawsuits from those sickened while onboard based on this legal theory. Please contact us if we can help you work through liability issues of concern.

Workplace safety is also obviously very much in play today. In addition to the above negligence standards, employers must abide by federal and state occupational health and safety requirements, typically as determined by OSHA. Employers must take efforts to maintain a hazard-free workplace, while still safeguarding the privacy rights of any affected employee.

OSHA requires that employers provide a safe workplace for all employees which is "free from recognized hazards … likely to cause death or serious bodily harm." OSHA has not adopted specific regulations regarding COVID-19 in the general workplace at this time, but has instead recommended that employers follow CDC guidelines regarding personal safety, as well as any state or local guidelines or requirements - North Carolina's being found here.

The North Carolina Department of Labor, like OSHA, has not adopted specific regulations, but has emphasized the need to follow social distancing guidelines, maintain a clean workplace, and work from home where possible, and has emphasized the importance of proper PPE. Both the NC Department of Labor and OSHA have especially emphasized worker safety with regard to respiration - in other words, being sure workers working with the public wear face masks, or more intensive respirators for those in healthcare, janitorial staff working with hazardous cleaning materials, and the like.

OSHA’s "free from recognized hazards" standard places much discretion in the hands of federal and state regulators if they feel an employer has not taken all reasonable steps to provide a hazard-free workplace for its employees. To be safe, employers should also implement procedures designed to promptly identify and isolate potentially infectious workers, per OSHA guidance. Illness or potential illness by employee must be kept confidential to the extent possible per federal ADA requirements; contact us if you run into this issue.

Contract law and force majeure clauses. Many contracts contain a force majeure clause, which translates from French as “superior force.” It refers to uncontrollable events that are not the fault of any party and which interfere with a party’s ability to complete its end of the bargain or receive what it bargained for in the deal. Common examples are hurricanes, riots, labor stoppages and war. At first blush, it would appear that a pandemic would constitute a force majeure, but the terms of the contract control. You must review the specific language of the contract in question. Language such as “circumstances outside our control” is very broad and will cover the current situation and allow the party benefited by the provision to avoid the contract. More specific language such as the common “acts of God, war, insurrection, civil strife, riots or labor disturbances” may not be as helpful depending since the list arguably excludes pandemics.

If you are facing language which may not cover the current situation, you may have to negotiate and reach an agreement with your opposing party. If you do so, please, please document the agreement. Obviously, we can help. But even an exchange of emails can be sufficient to amend a contract if both parties agree.

Common law force majeure, or the doctrine of impossibility, may also apply if it is impossible or illegal for the parties to carry out the purpose and intent of the contract. Send you contract to us for review if you have issues or concerns. If upon reviewing your contracts, you find provisions which do not suit your needs in the current climate, do not forget that you may amend the current contract or at least change it going forward. We can quickly supply you with alternative language and have already done so for some of our business clients.

If you are faced with legal issues of any kind during this crisis, please call us. We are working and take pride in helping businesses work through problems.

Your Free Government Cheese May Have Arrived - Paycheck Protection Loan Program Starts April 3

The Paycheck Protection Program is a Small Business Administration (SBA) loan program to incentivize small businesses to keep their workers on the payroll. $349 billion (that's right, billion with a "b") in forgivable loans has been authorized to help during the COVID-19 crisis. Just as with the Economic Disaster Loan (described below), virtually all small businesses with less than 500 employees are eligible, as are non-profits and even sole proprietors.

A company can borrow up to 2.5 times its average eligible monthly payroll costs up to $10 million with a maximum of $100,000 (annualized) per employee. The interest rate will generally be ONE HALF OF ONE PERCENT - yes, that is 0.5% - although for longer term, the rate will be no higher than 4%. No security, collateral or personal guarantees are required, and the application is only 2 refreshingly succinct pages. Final details are still being determined as of this writing.

The funds must be used for payroll, rent, mortgage payments or utilities. The best part: depending upon how much is borrowed and how it is used, all or some of the loan may be forgiven. And no payments are due in any event for 6 months. Only one loan per company.

The application (excluding attachments) should be submitted to a partner financial institution - the SBA does not lend funds directly. Rather, it sets standards for loans, provides the capital for them, and mitigates the risks for the financial institutions by insuring the loans. Get the loan from your local bank which provides SBA loans.

THIS LOAN IS FREE GOVERNMENT MONEY WHICH ALL SMALL BUSINESSES SHOULD CONSIDER TAKING ADVANTAGE OF. Take a look at the attached explanation and consider filling out the application and getting it to your local lender as soon as possible. Let us know how we can help you.

The SBA is also offering an Emergency Grant for up to $10,000 as a loan advance up under the SBA Economic Injury Disaster Loan program. The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Most small businesses under 500 employees, including non-profits, can apply. Funds can be made available within three days of a successful application. The rapid turnaround is due in part to the streamlined online application relying upon self-certification, and direct deposit into your account. For the application, confirm your company is still current with the Secretary of State, have your EIN ready and be prepared with 2019 financials as the application asks revenue and costs of goods sold for 12 months prior. The total local can be for up to $2 million over 30 years at a rate of 3.75%.

Contact Zac or Marjorie and let us know how we can help you!

Governor Cooper’s March 27, 2020 Stay At Home Order

Governor Cooper’s March 27, 2020 Executive Order is broader than the Mecklenburg or Cabarrus County orders; in other words, it allows a broader range of businesses and activities to continue. This is probably because local orders can always be more restrictive, but not less restrictive, than the state order. View Executive Order 121 here. There is also a FAQ here covering Governor Cooper’s latest order.

The Governor exempts a broad range of businesses like real estate, surveying, construction, many food and alcoholic beverage retailers, and a wide range of industry sectors considered “critical infrastructure”, which were not excluded in the Mecklenburg or Cabarrus orders. Look through the 16 different federal critical infrastruture sectors here to see if your business is included.

Email us if you’d like assistance in sorting through all this information. We can also provide assistance in preparing letters for your employees to carry, or to your suppliers and customers, informing them of your status.

Don’t miss our detailed advice and update from March 24 down below on this page.

COVID-19 and Your Homeowners Association

An update for homeowners associations, condo associations and property owners associations can be found at our NC HOA Law Blog. Please subscribe to the blog if you are one of our HOA clients for regular HOA law updates.

March 25 Update - Cabarrus County Institutes Stay-At-Home Restrictions

On March 25 Cabarrus County instituted a stay-at-home order. Residents must stay home and may not report to work or engage in non-essential travel other than for supplies, food, exercise and health care. As with the Mecklenburg County order, many industries are deemed Essential and are thus exempt. Click here to view the Cabarrus County order in its entirety. Note that the order became unavailable from the Cabarrus County website around 7 pm on March 25. The version provided here was downloaded by us before that happened. At this time we do not know if the order is being changed or if this is simply a problem with the County’s website.

We will provide further details as we analyze this order in detail, but meanwhile here is the list of the businesses deemed essential and therefore exempt. We have highlighted those which may be of particular interest to our clients.

1. Stores that sell groceries and medicine. Grocery stores, pharmacies, certified farmers’ markets, farm and produce stands, supermarkets, convenience stores, and other establishments engaged in the retail sale of groceries, canned food, dry goods, frozen foods, fresh fruits and vegetables, pet supplies, fresh meats, fish, and poultry, alcohol and nonalcoholic beverages and any other household consumer products (such as cleaning and personal care products). This includes stores that sell groceries, medicine, including medication not requiring a medical prescription, and also that sell other non-grocery products, and products necessary to maintaining the safety, sanitation, and essential operation of residences and Essential Businesses and Operations;

2. Food, beverage, and agriculture. Food and beverage manufacturing, production, processing, and cultivation, including farming, livestock, fishing, baking, and other production agriculture, including cultivation, marketing, production, and distribution of animals and goods for consumption; and businesses that provide food, shelter, and other necessities of life for animals, including animal shelters, rescues, shelters, kennels, and adoption facilities;

3. Organizations that provide charitable and social services. Businesses and religious and secular nonprofit organizations, including food banks, when providing food, shelter, and social services, and other necessities of life for economically disadvantaged or otherwise needy individuals, individuals who need assistance as a result of this emergency, and people with disabilities;

4. Media. Newspapers, television, radio, and other media services;

5. Gas stations and businesses needed for transportation. Gas stations and auto-supply, auto-repair, and related facilities and bicycle shops and related facilities;

6. Financial institutions. Banks, currency exchanges, consumer lenders, including but not limited, to payday lenders, pawnbrokers, consumer installment lenders and sales finance lenders, credit unions, appraisers, title companies, financial markets, trading and futures exchanges, affiliates of financial institutions, entities that issue bonds, related financial institutions, and institutions selling financial products;

7. Hardware and supply stores. Hardware stores and businesses that sell electrical, plumbing, and heating material;

8. Critical trades. Building and Construction Tradesmen and Tradeswomen, and other trades including but not limited to plumbers, electricians, exterminators, cleaning and janitorial staff for commercial and governmental properties, security staff, operating engineers, HVAC, painting, moving and relocation services, and other service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operation of residences, Essential Activities, and Essential Businesses and Operations;

9. Mail, post, shipping, logistics, delivery, and pick-up services. Post offices and other businesses that provide shipping and delivery services, and businesses that ship or deliver groceries, food, goods or services to end users or through commercial channels;

10. Educational institutions. Educational institutions—including public and private pre-K-12 schools, colleges, and universities—for purposes of facilitating distance learning, performing critical research related to COVID-19, or performing essential functions, provided that social distancing of six-feet per person is maintained to the greatest extent possible. This Proclamation is consistent with and does not amend or supersede North Carolina Governor’s March 10, 2020 Executive Order, except that affected schools are ordered closed through May 15, 2020; the Cabarrus County Schools and the Kannapolis City Schools remain under the command and control of the superintendent of such schools.

11. Laundry services. Laundromats, dry cleaners, industrial laundry services, and laundry service providers;

12. Restaurants for consumption off-premises. Restaurants and other facilities that prepare and serve food, but only for consumption off-premises, through such means as in-house delivery, third-party delivery, drive-through, curbside pick-up, and carry-out. Schools and other entities that typically provide food services to students or members of the public may continue to do so under the Executive Order on the condition that the food is provided to students or members of the public on a pick-up and takeaway basis only. Schools and other entities that provide food services under this exemption shall not permit the food to be eaten at the site where it is provided, or at any other gathering site due to the virus’s propensity to physically impact surfaces and personal property;

13. Supplies to work from home. Businesses that sell, manufacture, or supply products needed for people to work from home;

14. Supplies for Essential Businesses and Operations. Businesses that sell, manufacture, or supply other Essential Businesses and Operations with the support or materials necessary to operate, including computers, audio and video electronics, household appliances; IT and telecommunication equipment; hardware, paint, flat glass; electrical, plumbing and heating material; sanitary equipment; personal hygiene products; food, food additives, ingredients and components; medical and orthopedic equipment; optics and photography equipment; diagnostics, food and beverages, chemicals, soaps and detergent; and firearm and ammunition suppliers and retailers for purposes of safety and security;

15. Transportation. Airlines, taxis, public transportation, transportation network providers (such as Uber and Lyft), vehicle rental services, paratransit, and other private, and commercial transportation and logistics providers necessary for Essential Activities and other purposes expressly authorized herein;

16. Home-based care and services. Home-based care for adults, seniors, children, and/or people with developmental disabilities, intellectual disabilities, substance use disorders, and/or mental illness, including caregivers such as nannies who may travel to the child’s home to provide care, and other in-home services including meal delivery;

17. Residential facilities and shelters. Residential facilities and shelters for adults, seniors, children, and/or people with developmental disabilities, intellectual disabilities, substance use disorders, and/or mental illness;

18. Professional services. Professional services, such as legal services, accounting services, insurance services, real estate services restricted to appraisal and title services;

19. Childcare centers for specific employees exempted by this Proclamation. Childcare facilities providing services that enable first responders, healthcare workers, public health, HHS staff and others responding to COVID-19.

20. Manufacture, distribution, and supply chain for critical products and industries. Manufacturing companies, distributors, and supply chain companies producing and supplying essential products and services in and for industries such as pharmaceutical, technology, biotechnology, healthcare, chemicals and sanitization, waste pickup and disposal, agriculture, food and beverage, transportation, energy, steel and steel products, petroleum and fuel, mining, construction, national defense, communications, as well as products used by other Essential Businesses and Operations.

21. Hotels and motels. Hotels and motels, to the extent used for lodging and delivery or carry-out food services.

22. Funeral services. Funeral, mortuary, cremation, burial, cemetery, and related services.

Bookmark this page. More as we know it.

March 24 Update - Employer and Business Advisory Information Re COVID-19

The coronavirus situation is changing rapidly and each change has the potential to affect your business dramatically. Gatherings of 50 people or more are now prohibited statewide as of March 23, and the Mecklenburg County health director on March 24 instituted a stay-at-home order (although many business are deemed essential by the order and therefore are exempt.) How is your business affected? Because the COVID-19 situation is rapidly evolving, businesses must stay informed. Your course of action may be governed by focusing on employee morale or health, a desire to slow the epidemic, a need to address customer demands, public perception, and other imperatives. Your response will also vary depending upon your type of industry such as service or manufacturing. In this article, Moretz Law Group addresses several areas of law and stakeholder groups that are most heavily impacted by the pandemic response.

New Employee Leave Laws – The Families First Coronavirus Response Act" ("FFCRA") has become law and takes effect April 2. What do you need to know as an employer?

Applies to all private employers with 500 or less employees. Note that this is much broader than the FMLA, which excludes employers of 50 or less employees.
Adds “Emergency Paid Sick Leave” (a new mandate) and “Emergency Family and Medical Leave” (an enhancement to currently-required FMLA leave.)

Emergency Family and Medical Leave: Expands the FMLA to require paid leave for employees who are unable to work (including working from home) because they have or may have COVID-19 or are seeking a medical diagnosis, or who must stay home to care for such a person, or who must stay home to care for children whose school has been cancelled due to coronavirus concerns.

Employee must have been employed for at least 30 days.
Only applies when the employee cannot work from home or at the office.
The first 10 days are unpaid, but the employee can use paid time off if the employer offers it; maximum period, as with the FMLA, is 12 weeks.
After the initial 10 days, the employee must receive pay at a rate at least 2/3 their regular pay, not to exceed $200 per day or $10,000 total.
The employer will be reimbursed by the federal government by a quarterly credit to the employer’s payroll tax liability, including the employer’s share of any health insurance premiums if any.

Emergency Paid Sick Leave: Requires paid sick leave for employees who are unable to work (including working from home) because they have or may have COVID-19 or are seeking a medical diagnosis, or who must stay home to care for such a person, or who must stay home to care for children whose school has been cancelled due to coronavirus concerns

All employees are covered even if just hired.
Only applies when the employee cannot work from home or at the office.
Two weeks of paid time off in which the employee must receive pay at a rate at least 2/3 their regular pay, not to exceed $200 per day or $10,000 total.
Employee cannot be required to use other PTO first.
Does not apply where the employee is laid off, furloughed, or the business closes – in those cases, the new stronger unemployment insurance should apply.
The employer will be reimbursed by the federal government by a quarterly credit to the employer’s payroll tax liability for the full amount paid to the employee, including the employer’s share of any health insurance premiums if any.

Public Health Law and Stay-At-Home Orders - On March 10, Governor Roy Cooper declared the a state of emergency in North Carolina due to the COVID-19. NC G.S Chapter. 166A-19.3(6) defines an emergency as “[a]n occurrence or imminent threat of widespread or severe damage, injury or loss of life or property resulting from any … public health, … incident.” This declaration increased funding to address COVID-19 (e.g. monitoring, investigating, testing, disinfecting) and kicked in some of the consumer protections laws (for example, against price gouging). The laws clearly outline who has the authority to take specific actions to protect the public by cancelling events, closing schools and other facilities, and restricting the movement of individuals. Public health law allows county health directors to take very wide-ranging steps to protect public health. The steps taken so far, including today’s lockdown in Mecklenburg County through April 16, appear initially severe, but there are often helpful exceptions. For example, many businesses are excluded from that order as “essential” – please review the FAQ information carefully, especially the list of essential services on page 3, and determine if your business is excluded.

Negligence – While too complex to fully discuss here, we are being asked whether a business could be sued if an employee or customer were to contract a communicable disease at the employer’s workplace, or from a co-worker or customer. It depends on whether the business took reasonable actions to protect its employees and customers in light of the information available to it – in others words, whether the business was negligent. Tort law, or the law of negligence, applies in this situation. It holds that a person can be liable to another person to whom the first person owes a duty if the first person commits an act which is unreasonable (or fails to take a reasonably necessary action) which could reasonably be anticipated to cause damage to the second person, and the second person did not help cause the wrongful act or omission. For example, the Governor has prohibited all “mass gatherings” or 50 or more people; therefore it is legal (at least in most counties, as of this writing) to have mass gatherings of less than 50. But would this be reasonable in light of the CDC’s warnings against gatherings of more than 10 people? It depends on the situation, but reasonableness is the touchstone given all the facts and circumstances involved. Failure to abide by local orders or regulations, when they are aimed at public safety, has been held to constitute negligence in the past. We can help by drafting waivers or releases, for example, if you do need to hold a gathering or are concerned about liabilities to employees or customers in the current situation. Don’t hesitate to call or email us.

Contract Law and Force Majeure Clauses – Many contracts contain a force majeure clause, which translates from French as “superior force.” It refers to uncontrollable events that are not the fault of any party and which interfere with a party’s ability to complete its end of the bargain or receive what it bargained for in the deal. Common examples are hurricanes, riots, labor stoppages and war. At first blush, it would appear that a pandemic would constitute a force majeure, but the terms of the contract control. You must review the specific language of the contract in question. Language such as “circumstances outside our control” is very broad and will cover the current situation and allow the party benefited by the provision to avoid the contract. More specific language such as the common “acts of God, war, insurrection, civil strife, riots or labor disturbances” may not be as helpful depending since the list arguably excludes pandemics. Common law force majeure, or the doctrine of impossibility, may also apply if it is impossible or illegal for the parties to carry out the purpose and intent of the contract. Send you contract to us for review if you have issues or concerns. If upon reviewing your contracts, you find provisions which do not suit your needs in the current climate, do not forget that you may amend the current contract or at least change it going forward. We can quickly supply you with alternative language and have already done so for some of business clients.

Insurance – Business Interruption Insurance, a type of property insurance, applies when a business is damaged from an insured peril (e.g. fire or flood) and the collateral damages such as decrease in orders/sales, loss of customers, employees leaving result. Business interruption insurance protects against financial loss and allows businesses to insure its income. The application of Business Interruption Insurance to the pandemic is not clear in all cases. Often an exclusion is written into an insurance contract. For example, the ISO policy exclusion form CP 01 40 07/06 is frequently included in commercial insurance policies. It states, “We will not pay for loss or damage caused by or resulting from any virus… that induces or is capable of inducing … illness or disease.” Whether business interruption insurance applies, and what losses it may cover if it does apply, will vary from case to case. For example, if a manufacturing plant closes down upon governmental order, coverage may be available as loss due to a competent authority’s denying access, rather than due to a virus capable of causing disease. Statutes, executive orders, and the rulings of administrative agencies can affect the interpretation of contract language based on particular circumstances. Please contact us if we can assist.

Employment Law Issues

Employment law in the face of the COVID-19 is certainly wide-ranging and beyond the general scope of this update. We can provide specific advice for your particular issues, but typically concerns involve the Americans with Disabilities Act. Employers cannot take actions which might single out those with disabilities or which would require employees to disclose specific conditions which could potentially lead to discrimination, including being regarded as having a disability even if there is no actual disability. The questions we are hearing most often are:

May employers monitor the health of employees at work? Yes, but this must be done even-handedly and in the same manner for all employees. Employees may not be asked about pre-existing conditions or personal attributes which maymake them more susceptible to the virus, but may be asked general questions applicable to all employees. See this guidance by the EEOC: https://www.eeoc.gov/facts/pandemic_flu.html
How about monitoring asymptomatic employees? Yes, this can be done via questionnaire which is worded in a general manner. See the example on the EEOC website above.
Can an employee with a cough or other symptoms be sent home? Yes.
If so, with or without pay? North Carolina employers were previously not required to provide paid sick leave, but if your company does, any such leave should exhaust all PTO prior to becoming unpaid. But new rules kick in on April 2 as discussed above.
How should an employer treat an employee who becomes infected or one who has been quarantined? What measures should be taken in the workplace to avoid stigma? Paid leave is now mandated as discussed above. Private, personal information of employees is required to be kept confidential pursuant to N.C. Gen. Stat. § 75-66 and other statutes. All information and records which may identify a person who has or may have a disease required to be reported by the North Carolina Commission for Public Health must be strictly confidential. N.C. Gen. Stat. § 130A-143. Therefore, any information that an employee may have tested positive for COVID-19 or any other communicable disease should be kept confidential.
HIPAA, while generally not applicable to employers since they are not health care providers, does apply where employers have private personal medical information in their records. Such information is required to be maintained in a separate, locked file only accessible to those with a genuine need for it. Thus, such information cannot be disclosed formally or informally.

Of utmost importance, implement policies consistently and evenly among all employees. Communicate your message frequently and before you communicate check the facts from reliable sources and check them again. Consider issuing your company policies/directives in this growing situation in writing and as amendments to your company employee handbook.

Realtors – The NC Real Estate Commission has allowed 90 extra days to complete all continued ed, and all continuing ed must now be completed online or via webcast, not in person. See https://www.ncrec.gov/ More information also available from the NC Association of Realtors - see https://www.ncrealtors.org/nc-realtors-coronavirus-information/

Real Estate Transactions – Recording of deeds and other real estate documents is continuing electronically and we have in fact recorded a transaction just this morning electronically, which proceeded as normal with no significant delay from the Register of Deeds office. No in-person business can be conducted at the Register of Deeds office – call and make an appointment if you need a marriage license or your notary commission renewed, for example.

Legal Proceedings and Courthouses – Courthouses are still open but running on skeleton staffs. We are able to file lawsuits, motions, pleadings and the like, but no hearings will be held until the stay on all but emergency court hearings is lifted by the N.C. Supreme Court and the N.C. Administrative Office of the Courts. This does not change or extend any statutes of limitations! In addition, any filings which were due between March 16 and April 17 have now been extended until close of business on April 17. The legal system is considered an “essential service” and is therefore not directly affected by Mecklenburg County’s stay-in-place order issued on March 24, 2020.

Landlords, Homeowners Associations and Lenders – Your tenants, members and borrowers are still required to pay you and nothing is anticipated to change that at this time. Residential borrowers may receive special dispensation from the federal government but that is unlikely to apply to any private mortgage transactions. Lawsuits, liens and foreclosures may still be filed, but no hearings will be held until the stay on all but emergency court hearings is lifted by the N.C. Supreme Court and the N.C. Administrative Office of the Courts. We can assist you in getting things filed so that matters can be immediately heard once the stay is lifted.

Homeowners and Condominium Associations – Annual meetings are likely to have to be postponed since most associations require these to be held in person. Board meetings can, and should, be held telephonically in the current situation – all directors must be able to hear each other for the meeting to be valid. No such allowances exist by law in North Carolina for annual membership meetings to be held electronically. Boards should be meeting regularly by teleconference to adjust and react to current events. (Contact us if you need a review of your governing documents to see if there are ways to accomplish meetings electronically or other than in person.) Regarding common areas, be sure to read the section about Negligence elsewhere in this article. There is now plenty of information available from the CDC and others for best practices in keeping common areas clean and avoiding personal contact to quell the spread of disease – disregarding them could constitute negligence, making the association liable.

Taxes - An delay from April 15 to July 15 was announced by Treasury Secretary Steven Mnuchin for federal income tax filing for all taxpayers and businesses. North Carolina has also extended its state tax filing deadline to the same date. No specific written guidelines or rules had been published at the time we wrote this update, so be sure to consult your CPA for further details before relying completely on this informal announcement at this time.

Breweries, Distilleries and Other ABC Licensees – The NC Alcoholic Beverage Commission has issued very specific rules in response to the Governor’s COVID-19 Executive Orders. These new rules need to be followed strictly in order to ensure that you are not both in violation of the Executive Orders – a class 2 misdemeanor – as well as putting your ABC license in jeopardy. See the ABC Commission announcement: https://abc.nc.gov/PublicResources/LegalAnnouncement/261

Unemployment Benefits – This is an important change which provides a streamlined process to access benefits for those newly unemployed or with reduced hours or wages. Employees should be sure to specify that they are temporarily out of work or working reduced hours due to COVID-19 when filing a claim to make sure they are eligible for any extra benefits and to ensure that the employer’s unemployment insurance account is not charged for these benefits. Employers should be sure to indicate that the separation was due to COVID-19 when/if they receive a request for separation information from the NC Employment Security Commission. Details here: https://des.nc.gov/need-help/COVID-19-information

Parties, Events and Mass Gatherings - On March 23, 2020 Governor Cooper issued new Executive Order No. 120 adding further restrictions to businesses and prohibiting all mass gatherings of 50 or more people - down from 100 or more previously. Read the Executive Orders here for details.

Briefly, the Governor's orders cancel public schools (K-12) until May 15 and prohibits mass gatherings of 50 or more until further notice. The prohibition of mass gatherings has specific definitions and is worthy of clarification. These orders have the rule of law - violation constitutes a Class 2 misdemeanor pursuant to N.C.G.S. 14-288.204. There are more details on our website here.

Stay tuned for more legal updates from us on this continually evolving issue.

Resources for Businesses to Stay Informed:

Moretz Law Group is prepared to help you with your business needs in this situation. We are fortunate to have Marjorie Benbow as part of our firm due to her expertise in virology and public health. Prior to receiving her J.D. and M.B.A degrees from Wake Forest, Marjorie received her Masters of Science in Public Health from UNC-Chapel Hill. She worked as a virologist at Burroughs Wellcome after finishing her coursework. She also worked for the state's health agency in the areas of epidemiology focusing on communicable diseases. Marjorie is also a registered patent attorney and assists our clients with trademarks and copyright matters as well as with brewery and distillery law. Marjorie can be reached here. Reach Zac Moretz here. Our coronavirus updates are here.

March 16, 2020 Update - Impact on Event Spaces and Large Gatherings

This legal update is for our friends and clients who operate public or private event spaces, or are connected with those who do. This update was primarily prepared by Marjorie Benbow, JD, MBA, MSPH, with assistance by Zac Moretz. This update, and others which will follow from us, is designed to provide legal guidance for your business. You already know about hand washing and social distancing, but you may have legal questions. We are here to help on the legal side.

UPDATED ON MARCH 24, 2020: On March 23, 2020 Governor Cooper issued new Executive Order No. 120 adding further restrictions to businesses and prohibiting all mass gatherings of 50 or more people - down from 100 or more previously. Read the Executive Orders here for details.

On March 10, 2020, Governor Cooper declared a state of emergency and President Trump declared a national state of emergency on March 13, 2020 due to COVID-19 pandemic. The United States and North Carolina have many communicable disease and state of emergency laws in place designed to protect us. Several of the laws have been triggered. On March 14th, the Governor with the concurrence of the Council of State issued Executive Order No. 117 Prohibiting Mass Gatherings and Directing Statewide Closings of K-12 Public Schools to Limit the Spread of COVID-19.

- What is a "mass gathering?"

Any event or convening that brings together more than 100 people in a single space at the same time.

- How many people make it a mass gathering?

50 or more people.

- Does it matter if the mass gathering is inside or outside?

No. the law addresses an event or convening as something that occurs at a time, not a place - bringing many people together at the same time. Furthermore, it outlines that the gathering need not take place in a confined indoor or outdoor space (e.g. parades, fairs and festivals).

- What examples does the order give for a confined indoor space?

Auditorium, arena, stadium, conference room, meeting hall, and theaters.

-What types of locations and activities are not impacted by the Executive Orders?

Transportation (airports, bus, trains), medical facilities, retail centers (except the specific retailers listed), shopping malls and centers, restaurants, grocery stores, factories.

- How long does the prohibition of mass gatherings in effect?

Until further notice.

Business which host events are impacted by these Executive Orders. By the plain language of this order, events of this size are prohibited, regardless of whether they are inside or outside. Parades, fairs and festivals are specifically included as are auditoriums, arenas, stadiums, conference rooms, meeting halls, and theaters. If you host events of 50 or more in these types of spaces, you must follow the prohibition to cancel or postpone any such gatherings or events. Call us if there are gray areas we can assist you with.

You may have business interruption insurance or a hospitality endorsement to your insurance policy - you should check these immediately and contact us if we can help you in understanding your policy's language.

Should you still continue to host gatherings of less than 50? Our recommendation is to adopt best possible hygiene practices but leave it up to your customers and clients at this time as to whether or not they wish to proceed with gatherings of 50 or more people. We can prepare waivers for them to sign acknowledging and assuming the risk if you desire.

Because the face of the pandemic is rapidly changing, it is critical that you stay abreast of the changes. National and state information may be found at the CDC’s website at www.cdc.gov/coronavirus and NC Department of Health and Human Services’ website at www.ncdhhs.gov/coronavirus, respectively. Our local health department, Cabarrus Health Alliance, also maintains a trusted website and is your best source for local health information: https://www.cabarrushealth.org/555/Coronavirus-Information-Page

Moretz Law Group is prepared to help you with your business needs in this situation. We are fortunate to have Marjorie Benbow as part of our firm due to her expertise in virology and public health. Prior to receiving her J.D. and M.B.A degrees from Wake Forest, Marjorie received her Masters of Science in Public Health from UNC-Chapel Hill. She had a research assistantship in virology and worked as a virologist at Burroughs Wellcome after finishing her coursework. She also worked for the state's health agency in the areas of epidemiology focusing on communicable diseases. Marjorie is also a registered patent attorney and assists our clients with trademarks and copyright matters as well as with brewery and distillery law. Marjorie can be reached at marjorie [at] moretzlaw.com.

Stay tuned for more legal updates from us at www.moretzlaw.com/corona-updates on this continually evolving issue.