North Carolina Law Provides Limited Immunity to Certain Businesses Against COVID-19 Contraction Claims

Updated May 20,2020Alerts

[UPDATED MAY 20, 2020]

While it is no silver bullet, North Carolina’s new pandemic aid legislation (Session Law 2020-3) includes helpful liability limitations for certain businesses faced with claims by employees, customers and users of personal protective equipment (PPE) that the business caused them to contract COVID-19.

Under this new law, “essential businesses” and “emergency response entities” (which include manufacturers of PPE and ventilators, for example) are temporarily immune from civil liability to customers, employees or users for these claims unless the business was grossly negligent, reckless or intentionally caused the harm. This immunity aims to ensure that key businesses continue to provide essential goods and services to North Carolinians during the pandemic without the specter of COVID contraction claims. 

This strong, but limited immunity should curtail, but will not eliminate COVID-19 contraction claims. While it provides a defense, it does not prohibit would-be plaintiffs from asserting such claims in the first place. This means businesses still need to take great care to follow the (evolving) guidance on workplace safety and document their efforts, which will best position them to avoid and defend against these claims. 

The following is a more detailed discussion of this limited immunity.

Who is Entitled to Civil Immunity? 

To be entitled to civil immunity you must be an “essential business” providing goods and services in North Carolina or an “emergency response entity.”

“Essential businesses” are businesses, not-for-profit organizations, educational institutions and governmental entities identified in North Carolina’s “Stay At Home Order” (Executive Order 121).  The list of essential businesses is long. It spans numerous fields and industries including health care, critical infrastructure, law enforcement, government operations, grocery and hardware stores, pharmacies, banking, eateries for takeout and even lawyers, among many others. Notably, this list just got longer. Gov. Roy Cooper’s May 20, 2020 Executive Order 141, which allows additional businesses to open and operate, expands immunity to restaurants. As long as the restaurants comply with the occupancy, distancing, signage, sanitation, screening and other requirements, restaurants will also be immune from COVID contraction claims. If you are one of these essential businesses and you are operating in North Carolina or are a restaurant complying with the new operational requirements, you are entitled to this limited immunity.

“Emergency response entities” are businesses, not-for-profit organizations, educational institutions and governmental entities that manufacture, produce or distribute personal protective equipment, testing equipment or ventilators, or process COVID-19 testing results. Unlike essential businesses, “emergency response entities” are not limited to those operating in North Carolina. Thus, foreign companies providing this critical equipment and these services to North Carolinians would be protected.

What is the Scope of Immunity?

The immunity is not absolute. First, the immunity is for civil liability only. It does not, for example, prevent or preclude employees from pursuing remedies under North Carolina’s Workers’ Compensation Act. Nor would it prevent government, regulatory or criminal actions. Second, the immunity is only for COVID contraction claims, i.e., claims by an employee, customer or user who alleges the business or entity caused them to contract COVID-19. Third, there is no immunity for gross negligence, recklessness or intentional infliction of harm. But if the business simply made a mistake, i.e., was negligent, it should be immune from civil liability. Finally, the immunity does not prevent injured parties from asserting claims in the first place. And to get around this immunity, would-be plaintiffs almost certainly will include allegations of gross negligence, recklessness and intentional wrongdoing in their complaints. This means that despite the immunity, businesses should try both to avoid claims and prepare to defend them.

Is the Immunity Limited to a Particular Time Period?  

Yes. This immunity applies only to claims filed on or after March 27, 2020, and it covers acts or omissions on or after March 27 until North Carolina’s emergency declaration is rescinded or expires. As of this writing, we are aware of no immediate plans to rescind North Carolina’s emergency declaration, so this immunity would apply to acts occurring now and likely through a full reopening of the economy.

What Should Businesses do Now?

The immunity provided by this statute does not relieve an employer or PPE manufacturer from exercising due care. Now more than ever, businesses should take reasonable steps to understand and follow federal, state and local directives and guidance on workplace and product safety.  This helps ensure that the workplace and products are as safe as they reasonably can be, mitigating the risk of contraction. And if contraction occurs and a claim follows, compliance with government guidelines will put the business in a better position to defend the claim, which is something the business will have to do despite this immunity.

Resources are available to help businesses. At the federal level, the Occupational Safety and Health Administration (OSHA) has published guidance for reducing workplace exposure to COVID-19. The Centers for Disease Control (CDC) provides strategies on how employees who had COVID-19 may return to work, and the CDC’s  Reopening Guidance explains what to do and how to clean as you prepare for your business to reopen or expand operations. 

At the state level, North Carolina’s Department of Health and Human Services has a comprehensive resource page with numerous links and guidance for North Carolina businesses. Counties are also providing guidance. Mecklenburg County, for example, has aggregated links to state and federal resources, as well as certain county-specific information such as guidance on use of face coverings

But compliance with these myriad regulations and best practices is not enough. Businesses also need to document their compliance and safety efforts. This would include, for example, updating workplace policy manuals and documenting training on topics such as hygiene, distancing and other safety requirements. This documentation will be very helpful if a business later needs to defend against a COVID contraction claim. 

In addition, Fox Rothschild continues to produce alerts and resources to help businesses work through these challenges, particularly as many businesses are starting to reopen.   

Key Takeaways

As North Carolina now enters its phased approach to lifting restrictions to slow the spread of COVID-19, more businesses surely will expand commercial activities. While this new statute provides some protection and immunity from potential COVID contraction claims, it does not relieve businesses from their ongoing obligation to provide employees and customers a safe working environment, safe products and safe services. Businesses will be well-served to track and implement applicable guidance and to document these efforts.

Additional Information