Nevada Laws Link Immunity and Business Licenses to ‘Controlling Health Standards’

August 13, 2020Alerts

Nevada recently enacted a pair of COVID-19 related laws that reward businesses for adhering to safety standards and carry the threat of serious business interruption for any that don’t.

The first law grants legal immunity that shields certain businesses from personal injury liability for COVID-19 exposure claims unless the business violated controlling health standards in a grossly negligent manner. The second empowers the Secretary of State to suspend a business’s license until it complies with controlling health standards.

Both provisions are vital for all businesses operating in Nevada to understand.

A Shield for Businesses

Most businesses, nonprofits, and governmental entities are immune from liability for personal injury or wrongful death claims arising from exposure to COVID-19, but this immunity is not absolute. To invoke the immunity, a business must be in “substantial compliance” with controlling health standards. If a business is in substantial compliance, then the business is immune from liability unless a plaintiff proves that the business violated controlling health standards with gross negligence and that gross negligence was the proximate cause of the plaintiff’s injuries or death.

The law, SB4, is also limited in another significant way: Businesses are immune only from personal injury and wrongful death claims. This means that an employee may still seek workers’ compensation for COVID-19 exposure claims.

“Business” includes natural persons, corporations, partnerships and other business organizations that engage in activity for profit at premises in Nevada. The law covers claims arising from exposure not only on a business’s premises, but also during an activity conducted or managed by the business.

Excluded from the immunity protections are businesses and nonprofits that provide health care services, such as hospitals and nursing homes, as well as public schools. While these entities cannot invoke the law’s protections, all other businesses are immune from liability as long as they substantially comply with the controlling health standards and are not grossly negligent.

‘Controlling Health Standards’

Under the law, “controlling health standards” are all COVID-19 related regulations, ordinances, and orders that dictate how an entity must operate at the time of the alleged exposure. The standards include federal, state and local laws, regulations, and ordinances, as well as any written orders or documents published by a government or regulatory body.

In Nevada, Gov. Steve Sisolak has taken the lead, issuing emergency orders and directives with little involvement from local governments. The Governor’s directives are all controlling health standards. Many resources are provided below to assist business in understanding the controlling health standards.

‘Substantial Compliance’

A business must be in substantial compliance to be eligible for immunity. “Substantial compliance” means the “good faith efforts of an entity to help control the spread of COVID-19 in conformity with controlling health standards.” The law provides that a business can demonstrate substantial compliance by establishing and enforcing policies and procedures to implement the controlling health standards. Accordingly, businesses that develop and enforce policies that implement the controlling health standards can show they are in “substantial compliance.”

The law also provides a little cushion, explicitly stating that isolated and unforeseen events of noncompliance do not demonstrate noncompliance.

Immunity Will End

Although immunity extends to any claims accruing before, on, or after the effective date of the law, the law’s protections cease either on the date that the Governor terminates the Declaration of Emergency for COVID-19 or on July 1, 2023, whichever is later.

What Can a Business Do Now to Protect Itself?

Step one is to develop written policies and procedures to limit exposure to COVID-19 that comply with the controlling health standards. Policies and procedures should be provided to, explained to, and enforced by all employees. Enforcing a written policy will demonstrate a good faith effort to comply with controlling health standards. There are many resources to assist businesses in developing their policies and procedures at the federal and state levels.

At the federal level, the Occupational Safety and Health Administration (OSHA) and the Centers for Disease Control (CDC) have published guidance and strategies on how to safely return to work. The CDC’s Reopening Guidance also explains what to do and how to clean.

At the state level,Nevada OSHA and the Gaming Control Board have issued guidelines for businesses to reopen and operate safely. Nevada OSHA’s guidelines clearly list what businesses are required to do to comply with the Governor’s directives. For one of Nevada’s largest industries, the Gaming Control Board’s guidelines constitute the minimum requirements for all establishments with nonrestricted gaming licenses. 

For the majority of the population residing in Las Vegas and Clark County, the Southern Nevada Health District published a checklist that sets forth what a business needs to do to comply with CDC guidance. The Southern Nevada Health District also provides resources for specific types of businesses, such as food establishments and child care facilities. For those residing in and around Reno, the guidelines on reopening from Washoe County are based on the Governor’s directives.

Most importantly, businesses should closely monitor the Governor’s directives, which are often announced first on Twitter and Facebook.

A Sword for the State

While the new COVID-19 related laws shield businesses from liability, they also expand the Secretary of State’s ability to suspend a business’s license for failure to comply with controlling health standards. Now, the Secretary of State is empowered to suspend a business’s license until the business complies, in good faith, with controlling health standards.

By developing and enforcing written policies and procedures to limit COVID-19 exposure, a business can demonstrate good faith compliance and keep its license. 

Key Takeaways

Nevada’s new immunity law is not absolute. The law shields businesses from personal injury and wrongful death claims only. It is important, now more than ever, for Nevada businesses to develop and enforce written policies and procedures to limit exposure to COVID-19. Enforcing such policies and procedures protects a business provided it is not shown to have been grossly negligent by failing to adhere to the controlling health standards. Likewise, enforcement of written policies and procedures will help Nevada businesses safeguard their licenses from suspension.