COVID-19 LABOR & EMPLOYMENT PLAYBOOK

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DISCLAIMER

BFS is agnostic: our goal is to simply provide you with the best and most information possible, so this playbook may contain different points of view and information based on different experts’ experience and business models.

In response to Coronavirus (“COVID-19”), many states (such as California, Connecticut, Illinois, Massachusetts, New York, New Jersey and Virginia) have issued orders mandating that “non- essential” businesses, including gyms, close. Even in states which have not yet issued such orders, fitness businesses are struggling to stay afloat as their customers heed health agency warnings against gathering in small spaces to reduce community spread.

Now, more than ever, it is vital that boutique fitness owners take steps to ensure the safety of their staff, customers, and business. To that end, labor and employment specialized attorneys Danielle Moss, Harris Mufson, and Jacob Tucker of Proskauer Rose LLP summarize below some “best practice” checklists for boutique fitness businesses to respond, and adapt, to this new normal

Table of Contents

THE 5 C’S – HOW TO LIMIT EXPOSURE AND COMPLY WITH NEW LAWS:

  • Communicate. Designate and communicate to all staff appropriate internal points of contact (e.g., Human Resources or Legal) for Coronavirus-related questions and concerns (and ensure those points of contact have access to up to date information and guidance).

BFS NOTE: Don’t forget to utilize Zenefits, Paychex, ADP, etc Many payroll service providers have HR support that you can contact.

  • Check and Update Sick Leave and Related Policies. All relevant company policies (especially those relating to sick leave) should be checked in consultation with legal counsel to ensure compliance with the most up-to-date sick leave guidance and laws. For example:

    • If you employ less than 500 people anywhere in the United States, make sure that your business is complying with the Federal Family First Coronavirus Response Act.

    • If you employ any number of employees in New York State, ensure compliance with New York State’s newly enacted Coronavirus Response Bill.

      • See Proskauer’s alert summarizing the key points of the law, including its paid sick time and other statutory benefits, here.

  • Stay Calm and Current. There’s a lot of information out there, which can get pretty overwhelming for any business owner (let alone their staff and employees). To instill confidence in your staff and customers:

    • Monitor the CDC, WHO, OSHA, and other relevant state and local health agency guidelines and make regular announcements to your staff (and customers) to ensure they know you are on top of the situation.

    • Consider holding a WebEx, Zoom session or call with your staff to review the most updated information provided by public health agencies about the outbreak, and what steps the company is taking in response. Topics to consider covering include: signs and symptoms, precautions they should take to reduce the chances of transmission, updated policies, and/or other pertinent responsive steps the company is taking.

BFS NOTE: Scroll to the bottom of THIS page to sign up for email updates from the CDC.

  • Clean, Clean, Clean. Your employees are not the only ones who can help limit the chances of transmission. If your business is still open in a state and/or locality which has not yet required that it close, additional steps to consider taking include, but are not limited to: honoring social distancing recommendations in gym and studio spaces, increasing cleaning frequency, maintaining a sufficient stock of cleaning and disinfectant supplies, making sure that restrooms and sinks are in good condition, and posting signs encouraging frequent and thorough hand washing.

DO’S AND DON’TS – WHAT CAN I ASK MY STAFF ABOUT THEIR HEALTH?

Congratulations to those in the health, wellness, and fitness worlds who have been able to make the transition to offering virtual services online in this time of forced business closures during Covid-19. Way to turn those lemons into lemonade!
If you aren’t there yet, chances are you are interested in trying it, and there are a lot of different ways to do this. In this article, I’m going to spell out some common opportunities surrounding setup and pricing for offering your services online.

The U.S. Equal Employment Opportunity Commission (“EEOC”) has issued extensive guidance regarding preparing for and confronting a pandemic in the workplace, which can be found here.

WHAT ABOUT MY CUSTOMERS?

Because fitness businesses often rely on shared spaces, ensuring that your workforce takes all necessary precautions can only do so much. What can you do to limit the chances of a customer spreading Coronavirus?

Ask that customers not attend classes if they are exhibiting flu-like symptoms, have traveled to an affected area, or have otherwise come into contact with a potentially affected person in the last 14 days.

At (or even prior to) check-in, some fitness businesses are requiring that customers sign a statement attesting to the fact that they have not travelled to an affected area, shown flu-like symptoms, or otherwise come into contact with an affected individual within the last 14 days.

TO PAY, OR NOT TO PAY?

  • If your gym or studio remains OPEN, employees are not entitled to stay home from work simply to avoid getting sick. That said, if an employee has a medical condition that makes them vulnerable to infection, they may request to stay home as an accommodation.

  • If your gym or studio is CLOSED, you are not required to pay non- exempt employees for time not worked. However, exempt staff must be paid their full salary for any workweek in which they performed work.

  • If your staff is performing work REMOTELY. (e.g., playlisting, class planning, and/or live streaming fitness content through alternate means such as Zoom), you must ensure that non-exempt staff are paid for all hours worked in accordance with the Fair Labor Standards Act (“FLSA”) and applicable state wage/hour laws. Your obligation to accurately record and compensate non-exempt staff for all hours worked, as well as to pay them in accordance with timing and frequency payment laws, is the same for work performed remotely just as if they had performed the work in-studio.

WHAT DO I DO IF I HAVE A CONFIRMED (OR SUSPECTED) CASE?

Even if you take all of the above precautions, you may still confront a suspected or confirmed case of Coronavirus (COVID-19) in your workplace. If so, you can take the following steps to limit the exposure and reassure customers:

  • If it’s an employee, ask that they stay home for 14 days (which is the current time period recommended by the CDC) and return
    only if symptom free. If they show symptoms, require they seek medical attention and return only if cleared to work by a medical professional.

  • Consider whether to close and disinfect the workplace. If you decide to take this measure, make sure to consult the latest CDC guidance and consult with the local health department on the appropriate cleaning procedures.

  • Carefully inform your employees and your customers. You should make everyone aware of a suspected case. The message
    should be tailored to possible levels of exposure, convey all preventive measures being undertaken to instill confidence, and should not reveal the identity of the potentially infected employee (or customer, as the case may be).
  • Reach out to local health authorities. If you have a confirmed case, the first step should be to contact your local health department and follow their guidance.

  • Close and disinfect the workplace. Though many businesses will take this step even where there is only a suspected case, where confirmed, this is a must. After proper cleaning and consultation with local officials, the business may be re-opened.

  • Carefully inform your employees and your customers. You should make everyone aware of a suspected case. The message
    should be tailored to possible levels of exposure, convey all preventive measures being undertaken to instill confidence, and should not reveal the identity of the potentially infected employee (or customer, as the case may be).

WHAT IF I CAN’T AFFORD TO STAY IN BUSINESS?

The challenges presented by the Coronavirus (COVID-19) may ultimately necessitate that you lay-off employees, relocate, or close your business (even if temporarily). While present guidance suggests the pandemic may subside by the summer of 2020, it remains possible that as the situation continues to develop, layoffs may occur. Sometimes those layoffs are WARN-triggering events that require notice under federal and/or state “mini-WARN” laws.

Under the federal WARN Act, covered employers (of 100 or more full-time employees) must provide at least 60 days’ advance notice of a mass layoff or plant closing. State mini-WARN laws are often more protective (such as in California or New York), but may be changed in light of present circumstances (e.g., Governor Newsom’s executive order in California extending the “unforeseen business circumstances” exception to COVID-19- related layoffs, but still requiring notice).

For example, while the federal WARN Act defines an “employment loss” as a layoff that exceeds six months, the California WARN Act does not contain a similar temporal limitation. Thus, even employees who are laid off temporarily—for periods of less than six months—could trigger California WARN Act notice requirements depending on the circumstances.

Unfortunately, as with most legal questions, whether WARN (and/or mini- WARN laws) apply to your planned layoff, relocation or closure depends very much on the particular facts at issue. For this reason, it is imperative that you seek legal counsel before proceeding.

In the meantime, here are a few quick notes & tips that the AV Now team has learned from their conversations with instructors making this transition to streaming from their homes:

AM I ELIGIBLE FOR FINANCIAL ASSISTANCE?

Even with all of the above precautions, the reality is that any industry dependent upon groups of people gathering is likely to see a significant decline in business during this global health crisis. Consequently, federal, state and local leaders are discussing how to assist small businesses.

For example, if your fitness business is located in New York City, Mayor de Blasio has already announced that the City will provide relief for businesses with fewer than 100 employees who have seen sales decreases of 25% or more. Those businesses will be eligible for zero interest loans of up to $75,000 to help with losses. Smaller businesses with fewer than 5 employees are eligible for additional benefits.

If you are struggling, make sure to check and see if you are eligible for government assistance programs. As the situation progresses, we remain hopeful that governments at every level will take measures to support small business owners. You may also consider reaching out to a lawyer specializing in restructurings for the appropriate guidance and counsel.

WHO SHOULD YOU TRUST? IN ALL CASES, THE EXPERTS.

For virtually every question you have about Coronavirus (COVID-19), there are answers– you just need to be careful where you look, and who you trust.

International, national, state, and local health and governmental authorities have all published guidance on what to do in a wide range of scenarios. Below are just some helpful links that can be shared with employees and customers, or used for your own education:

TIME TO REOPEN: HOW BOUTIQUE FITNESS COMPANIES CAN NOT ONLY SURVIVE, BUT THRIVE

As states begin to greenlight business re-openings following shelter-in-place orders, boutique fitness operators should take steps to ensure that their facilities are safe for clients and staff alike. Before re-opening, employers should think critically and creatively about industry-specific approaches, as much of the general employer guidance is a poor fit for the unique realities of the fitness industry.

By being proactive and implementing some of the below “best practice” measures, boutique fitness operators may avoid a resurgent outbreak, and set themselves up for greater success as a trusted provider in the future:

Implement Social Distancing, Staffing, and Cleanliness Guidelines and Procedures

Fitness employers should develop and implement sanitizing and social distancing guidelines to mitigate against how the novel coronavirus may disproportionately impact their facilities. These may include headcount control and customer spacing measures, as well as disinfecting protocols for their facilities and any equipment.  Whether or not required by law, developing thoughtful approaches to help minimize the risk of spread will not only help to ensure the safety of members and staff, but further engender customer confidence.

As to in-studio capacity and customer spacing, some fitness companies have created new positions specifically charged with monitoring headcount in various areas of the studio (including the lobby, locker room, hallway, and studio spaces). These employees’ primary responsibility is to ensure that staff and clients alike abide by social distancing guidelines, and to monitor headcount in each segment of the physical space.  Whether or not such responsibilities are assigned to one or more dedicated employee(s), fitness employers should consider whether and how to address: (1) the maximum number of individuals that will be permitted in various parts of their facilities, (2) how to safely control and direct customer and staff traffic to avoid unnecessary contact, and (3) whether physical spaces need to be reconfigured and/or marked with tape or signage or cordoned off with protective barriers to ensure that people remain at least six feet apart at all times.  Certain gyms and/or studios may also consider limiting class sizes, or closing small confined spaces within their facilities altogether.

With respect to cleanliness, studios would be well-served to update sanitation practices to comport with the latest guidance from the Centers for Disease Control and Prevention (“CDC”) and any state or local public health agencies.  As an initial step, fitness operators should ensure that they are using cleaning products that have been approved for sanitizing against COVID-19 by the Environmental Protection Agency. 

Consistent with CDC guidance, studio operators should pay special attention to so-called “high touch” surfaces and be sure to adapt cleaning protocols to the specific surface type at-issue (e.g., non-porous surfaces, such as door handles and metal weights, versus porous surfaces, such as towels and yoga mats).  Regardless of the cleaning method, studio owners should endeavor to be transparent with customers and staff wherever appropriate about (1) what new disinfectant(s) and/or cleaning product(s) will be used, (2) how frequently (and where) they will be applied, and (3) how they will help mitigate against the spread of the virus. When it comes to cleanliness, communication is key; if customers and/or staff do not feel safe coming in, a fitness business may not succeed even if it is undertaking appropriate precautions.

Fitness businesses might also consider a variety of additional options with respect to the frequency and methods by which they clean their spaces and equipment. One option is to implement a mid-day “intermission” period or intermittent “class breaks” during which the facilities are cleaned between workouts. Alternatively, studios could implement staggered cleaning schedules so that some parts of the facility may remain open while others are closed for cleaning at different times throughout the day.

Notwithstanding the above options, some spaces or surfaces may require too frequent cleaning or, even with regular cleaning, still potentially pose some risk of infection (e.g., water fountains, closely positioned shower stalls, shared toiletry products, beauty stations, etc.). In such instances, fitness operators may consider whether to close these higher risk areas or decline to offer communal product spaces until the risk of infection can be better mitigated or avoided altogether. 

Fitness companies may also consider what (if any) personal protective equipment will be required to be worn to enter and/or work out at their locations. If staff and customers are required to wear face coverings during workouts, the policy should be applied consistently and even-handedly. If face coverings are not required (by law or otherwise) and/or are not practicable given the nature of the workout, studios may consider air purifiers and/or outdoor workout formats as alternatives to combat airborne transmission. Studios also should consider whether to provide face coverings or gloves to staff and/or customers, upon request.  And, in studios or gyms where staff previously touched customers to correct their form or provide assistance, employers should consider whether to switch to verbal-only assistance to further limit non-essential person-to-person contact. Of course, if the customer’s physical safety is at risk (e.g., attempting to lift a too-heavy weight or doing so in a manner that may cause serious injury), physical touching may remain necessary and appropriate. 

Wellness Certifications, Call-Outs, and Requests for Leave and/or Accommodation

Before returning to work, studios should consider whether to have employees certify that they are in good health and are not experiencing any symptoms associated with COVID-19. 

Across industries, many employers are already considering whether to check employees’ temperature before they enter the workplace. In addition to this measure and/or for those employers interested in an alternative, studios may require employees to fill out a short questionnaire and acknowledgment form before coming into work. 

If employers elect to implement questionnaires, the form can be simple and ask that employees certify, for example, that they: (1) are exhibiting none of the symptoms linked with COVID-19, (2) have not themselves been exposed to or diagnosed with COVID-19, and (3) have not been in contact with someone who has been diagnosed positive for the virus. If an employee cannot and/or refuses to attest to any or all of this information, the studio may consider requiring that the employee remain home until they can and/or agree to certify their fitness for duty, or otherwise take appropriate disciplinary action, to the extent permitted by law.   

In this unprecedented environment, fitness employers should also anticipate a greater number of last minute call-outs and sick days taken by employees. To avoid business disruption due to short-staffing, studios may consider designating “substitute” status to staff members not scheduled to work as “back-ups” for each shift in case the scheduled instructor calls out. 

Even in states where fitness establishments have been authorized to reopen, employees who are not themselves sick may still feel unsure about returning to work. In cases where such concerns stem from legitimate health issues, employers may have an obligation to reasonably accommodate the request.  However, in recent guidance, the U.S. Equal Employment Opportunity Commission (“EEOC”) signaled that employers may be given more latitude than before the pandemic in terms of when an employee’s accommodation request may constitute an undue burden or hardship on the business such that the employer may decline the request.  Nonetheless, to promote employee morale, even where there is no legal obligation to do so, fitness employers may wish to consider whether to accommodate employee requests to remain away from the workplace (and ensure that whichever approach is undertaken is applied consistently).  

Of course, in some instances, it may be appropriate to insist that employees return to work.  An employee who refuses to return to work due to a general fear of the coronavirus generally will not be permitted to continue collecting unemployment.  Some states, like Ohio and South Carolina, have proactively requested that employers report such employees for unemployment fraud. And, even when not required by law, there may be benefits to granting reasonable employee requests for continued absences or leave.  

Given the various federal, state and local laws which govern employer requests for medical information from employees as well as the highly fact-specific and individualized nature of handling requests for leave and/or accommodation, employers should consult with employment counsel to determine, among other things, whether they should compensate employees for time spent on wellness screenings (e.g., temperature checks and/or the completion of wellness certifications), as well as whether leave and/or accommodation is appropriate under the circumstances presented.

Liability Waivers and Potential Liability for Contracting Coronavirus in the Workplace

Many studios already require employees and customers alike to sign a standard liability waiver to cover accidents and injuries while exercising. During and after the pandemic, employers may consider whether their liability waiver is sufficient to encompass risks related to COVID-19.  

In some jurisdictions, including California, the liability waiver must be clear and unambiguous and not contravene public policy. Moreover, the injury-producing act or event must be reasonably related to the purpose for which the individual signs the release.  Consequently, employers who wish to address COVID-19 through a liability waiver should clearly state that, while the company is implementing numerous measures to avoid and/or minimize the risk of COVID-19 infection, contracting the virus is nonetheless a possibility. Fitness companies should consider whether to include additional information related to the risks of COVID-19, including whether to list the symptoms associated with the virus.

A fitness employer’s potential liability from customers contracting COVID-19 is uncertain in most—if not all—jurisdictions. Prior pandemics (e.g., SARS) did not result in significant litigation against gyms or fitness studios.  However, dozens of lawsuits already have been filed by customers who claim to have contracted COVID-19 from businesses in other industries, including by cruise ship passengers claiming that companies were negligent or failed to adequately warn them of risks. See, e.g., Weissberger v. Princess Cruise Lines Ltd., No. 2:20-cv-02267 and Nedeltcheva v. Celebrity Cruises Inc., No. 1:20-cv-21569. Given the recency of these cases, it will be important to monitor developments and potentially adapt liability waivers and/or warnings accordingly. 

In the interim, government officials are already considering measures to limit business owners’ liability. For example, in Alabama, the governor issued an executive order granting protection to businesses from potential liability unless the individual who contracted COVID-19 can show that they contracted the virus because of a business’s “wanton, reckless, willful or intentional misconduct.” At the federal level, the Senate Majority Leader has indicated in public comments that legislation addressing employer liability for COVID-19 infections in the workplace may be forthcoming, although no such legislation has been introduced as of yet. As a result, until there is comprehensive federal legislation, fitness companies will need to take a state-by-state approach, in consultation with legal counsel. 

From an insurance standpoint, a fitness employer’s general liability policy or errors and omissions professional liability policy may insure against COVID-19 related claims. However, each policy has nuanced exclusions and protections, so businesses should consider reviewing their policy language closely to determine whether claims relating to COVID-19 contraction might be covered.

In the event that an employee contracts COVID-19 while working, workers’ compensation insurance may cover the injury. For example, in California, employees who are still reporting to work who test positive for COVID-19 are eligible for workers’ compensation benefits, and any COVID-19 related illness is “presumed” to have arisen out of and in the course of the worker’s employment if certain conditions are met (see our article on the subject here).

Conduct a Classification “Wellness Check”

For studios that have laid off or furloughed employees, reopening may provide an opportunity to review and, if appropriate, adjust worker classifications before they are invited to return. 

Whether an employee is properly classified as exempt or non-exempt under federal and state wage and hour laws is an individualized inquiry that often depends on the employee’s daily duties. Now, more than ever, rote and/or manual (traditionally non-exempt) tasks such as more frequent cleaning will likely be desired and appreciated by customers. However, employers should be careful to assign these tasks to non-exempt employees, as much as possible, to avoid threatening exempt employees’ classification. 

This transitional period may also present a good opportunity for fitness industry employers to review their use of independent contractors. As more states (including California, and potentially New York and New Jersey) enact and/or propose legislation that makes it even harder for employers to classify workers as contractors (see our article on this subject here), studios should be mindful of misclassification risks. Indeed, this may be the perfect time to review and assess whether employees and/or contractors are properly classified, and there may be additional advantages to employee classification, including the availability of certain benefits (e.g., eligibility for repayment of Small Business Administration loan(s), workers’ compensation coverage, and/or leave entitlements) and related liability issues. 

To the extent that any positions are determined to have been misclassified and/or are “close calls,” employers should consult counsel to assist with resolving and carefully communicating reclassification(s) to staff before they return to work.

Conclusion

As Muhammad Ali aptly put it, “it isn’t the mountains ahead to climb that wear you out; it’s the pebble in your shoe.” There is no question that COVID-19 has presented the fitness industry with new and difficult challenges which may, at first blush, seem irksome (or perhaps insurmountable). However, the above-outlined practical steps taken before reopening can help fitness businesses achieve sustainable success – both during, and after, the pandemic. 

ABOUT THE AUTHORS

In light of this unprecedented epidemic, Proskauer has mobilized a cross-disciplinary, cross-jurisdictional Coronavirus Response Team that is focused on supporting and addressing any and all Coronavirus concerns you may have, including but not limited to labor and employment, intellectual property, and bankruptcy questions and concerns.

Please feel free to reach out to the undersigned for further information, and stay safe.

Harris M. Mufson

212.969.3794

Danielle Moss

Danielle Moss

212.969.3411

Jacob P.S. Tucker

212.969.3857

The information provided in this article is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the firm, our lawyers or our clients. No client-lawyer relationship between you and the firm is or may be created by your access to or use of this presentation or any information contained on them. Rather, the content is intended as general overview of the subject matter covered. Proskauer Rose LLP (Proskauer) is not obligated to provide updates on the information presented herein. Those viewing this presentation are encouraged to seek direct counsel on legal questions.

© Proskauer Rose LLP. All Rights Reserved.

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