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Nelson Mullins COVID-19 Resources

Nelson Mullins is continuing to monitor developments related to COVID-19, including guidance from the Centers for Disease Control (“CDC”); World Health Organization; various health officials; and federal, state, and local government authorities. The firm is taking appropriate precautionary actions and has implemented plans to ensure the continuation of all firm services to clients from both in office and remote work arrangements across in our 25 offices.

Nelson Mullins COVID-19 Resources

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March 20, 2020

Higher Education Coronavirus Advisory

In response to the COVID-19 national emergency, colleges and universities of all sizes are in the process of cancelling travel, shutting down campuses, and migrating to online learning platforms. This kind of rapid and unprecedented disruption to normal higher education operations, combined with new legislation and guidance from federal agencies, raises important legal and operational issues. This article identifies some of the key legal and operational issues that colleges and universities should consider.

Employment Implications of Families First Coronavirus Response Act

The Families First Coronavirus Response Act, signed on March 18, 2020, contains significant employment protections. Colleges and universities should understand these protections, which apply to both faculty and staff, as well as administrative and executive-level employees. Below is a summary of those provisions.

  1. Emergency Family and Medical Leave Expansion

This section of the Act provides employees of private employers with fewer than 500 employees and employees of governmental agencies of any size (including public colleges and universities) with the right take up to 12 weeks of job-protected leave under the Family and Medical Leave Act (FMLA) for a qualifying leave related to a “public health emergency,” defined as an emergency declared by a federal, state, or local authorities regarding COVID-19. 

In order to be eligible, employees need only to have been on the payroll for 30 days (as opposed to the FMLA’s usual 12 month/1,250 hour requirement). Employees may use the FMLA’s new COVID-19 “public health emergency” leave only when the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency. Thus, if area school districts are closed due to COVID-19, any college or university employee with children in the school district would be entitled to this leave.

The first 10 days of leave may be unpaid[1] (an employee may choose, but cannot be required, to substitute accrued vacation leave, personal leave, or other medical or sick leave during this period). After the first 10 days of unpaid leave, if the employee still requires the COVID-19 public health emergency leave, the employer must continue paid FMLA leave at a rate of no less than two-thirds of the employee’s usual rate of pay, subject to a cap of $200 per day and $10,000 total. As with traditional FMLA leave, this leave is job-protected, meaning employer must return the employee to the same or equivalent position upon their return to work. The Act does not exclude employees from being able to stack this COVID-19 public health emergency leave with traditional FMLA leave if they would otherwise qualify for traditional FMLA leave. Thus, it appears that it is possible that some employees could take protected leave for up to 24 weeks in the year. 

The protections in this portion of the Act will expire on December 31, 2020.

  1. Emergency Paid Sick Leave Act

This section of the Act provides that private employers with fewer than 500 employees and employees of governmental agencies of any size (including public colleges and universities) must provide employees with certain paid sick leave if the employee is unable to work (or telework) due to a need for leave because of any of the following reasons:

  • The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19;
  • The employee has been advised by a health provider to self-quarantine due to concerns related to COVID-19;
  • The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
  • The employee is caring for an individual who is subject to a quarantine or isolation order or who has been advised by a health provider to self-quarantine due to concerns related to COVID-19;
  • The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions;
  • The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor. 

Full-time employees are entitled to 80 hours of leave, and part-time employees are entitled to the typical number of hours that they work in a typical two-week period. The leave is paid at the employee’s full regular rate if the employee is taking leave for their own COVID-19 illness, subject to a maximum cap of $511 per day and $5,110 total. The leave is paid at two-thirds the employee’s regular rate if the employee is taking leave to care for others, subject to a maximum cap of $200 per day and $2,000 total. 

The paid sick leave is available to all employees who have a qualifying need relating to COVID-19, regardless of how long the employee has worked for the employer. To be clear, the 30-day employment requirement in the FMLA amendments above do not apply to these paid sick leave provisions, such that employees would gain the right to COVID-19 sick leave immediately upon employment. Further, The Act prohibits employers from requiring an employee to find a replacement to cover their hours while they will be taking this COVID-19 paid sick time. Finally, the Act prohibits employers from requiring an employee to use other pre-accrued leave before the employee uses the COVID-19 paid sick leave. [2] The paid sick leave hours provided under this Act do not have to be paid out upon an employee’s separation from employment and do not carry over from year to year.

The Act requires that notice of these provisions be posted where the employer customarily posts employee-related legal notices. These notices must be posted 15 days after the enactment of the Act (by April 1) and will follow the model notices that the Secretary of Labor will distribute within 7 days of the enactment of the Act. The Act also includes anti-retaliation protections, and generally provides for remedies in line with Fair Labor Standards Act penalties for failure to pay minimum wages.

The paid-sick leave requirements of the Act expire on December 31, 2020.

  1. Relief To Employers for the Added Expense of the Above COVID-19 FMLA and Paid Sick Leave Requirements

The Act provides exceptions to some of the above requirements for small private employers. The Act also provides tax credits to private employers to help offset the added expense of the above requirements. None of this relief is provided to government employers such as public colleges and universities, however. 

Managing Operations During Closure

As colleges and universities suspend in-person classes and move to online learning platforms, myriad operational issues can and will arise. Even when students return home and faculty/staff turn to telework, business operations still need to continue. Colleges and universities should prepare for those operations as follows:

  1. Payment of vendors

Colleges and universities rely on vendors to provide multiple services, and these vendors will need to continue receiving payments. Colleges and universities should prioritize those payments that are critical to ongoing operations and continue those payments. Meanwhile, reach out to other vendors to notify them that there will likely be a delay in processing current or new invoices.

  1. Accepting deliveries

In the event of campus closure, prioritize those deliveries that are absolutely essential for continuing operations. Cancel and reschedule those that are not. For deliveries that are essential, designate an individual in each campus building responsible to accept delivery and for being physically present to do so.

  1. Technology for employees

Prepare your faculty and staff for telework. Ensure that they have hardware and software needed for virtual meetings, virtual classes, and the like. Test that software and give your faculty and staff to take it for a test run. Faculty, in particular, may be especially uncomfortable using technology and unfamiliar with online learning platforms. The more guidance and practice they can get, the better. Establish a helpline for employees with technology issues, to be staffed by your usual helpdesk personnel.

Some college and university functions may be able to move readily to online platforms, such as telehealth services and may do so with less concern over privacy issues. Specifically, on March 19, 2020, the Office for Civil Rights at the Department of Health and Human Services notified health providers of flexibility under the Health Insurance Portability and Accountability Act (HIPAA). This notice stated that the department would not impose any penalties against covered health care providers for the lack of a business associate agreement with video communication vendors to provide telehealth services and would further not impose penalties for any other noncompliance with HIPAA rules that relate to the good faith provision of telehealth services during the COVID-19 nationwide public health emergency.[3]

  1. Securing campus facilities

Because campus buildings will be largely unoccupied for an extended period of time, ensure that they are physically secured from theft and vandalism. Facilities managers should develop a checklist for closures, ensuring that buildings are locked and windows are closed. Additionally, ensure that building alarms and security systems are operational, along with perimeter cameras and security lighting. Determine who will have access to your buildings during a period of closure and deactivate any access badges as necessary.

  1. Plan for reopening

Eventually, things will return to normal. Colleges and universities should plan for that now, so they can resume operations in an orderly way and welcome back faculty, staff, and students, including the following: (1) ensure that your facilities, including dorms, are clean and safe for people to return. Ensuring that facilities are clean and well-stocked, and technology is operational; (2) develop a pre-opening facilities checklist to ensure they ready for occupancy and if, not, a plan for remediation with a timeline and process for scheduling repairs/maintenance; (3) ensure that your food service operation is up and running for students on meal plans; and (4) develop a plan for your faculty and staff to return, prioritizing how and when various categories of your employees will return and how they will be notified.

Serving Students with Disabilities

As colleges and universities move to online learning platforms, their obligations to students with disabilities remain. The Office for Civil Rights of the United States Department of Education has reminded colleges and universities, in no uncertain terms, that their obligations under Section 504 of the Rehabilitation Act (applicable to all recipients of federal funds) and Title II of the Americans with Disabilities Act (applicable to public entities) remain intact during any period of school closure.[4] Accordingly, as the migration to online learning platforms continues, colleges and universities should make sure that those platforms are accessible to their students with disabilities, with tools such as text readers, high contrast options, and similar accessibility features.

Managing Vendor Contracts

Colleges and universities affected by the coronavirus should make sure they understand their contractual rights in agreements with vendors and any avenues of relief. Schools have contracts with food and beverage suppliers, bookstore operators, facilities maintenance providers, document production providers, and many others, most of which will be affected in some way by the presence or absence of students and faculty on campus. One of most helpful types of contract provisions in times of crisis are force majeure clauses. They allow for businesses to cease performance either temporarily or permanently when certain unforeseen and insurmountable circumstances beyond the parties’ control make performance illegal, impracticable, or impossible.[5] Typically, a mere increase in the expense of performance would not trigger force majeure relief, however. If your contract has such a clause, it is important to review it carefully and with the advice of counsel to determine whether it applies to you given the effects of COVID-19. 

While some contracts include broad relief provisions, force majeure clauses typically are drafted to cover specified events or categories of events such as natural disasters, government interventions, accidents, war, pandemics, or “acts of God.” The first triggering event that comes to mind in the COVID-19 context is a pandemic. The World Health Organization (WHO) determines whether an illness rises to the level of a pandemic. WHO designated COVID-19 a pandemic on March 11.[6] If your contract lists pandemics as a triggering force majeure event, COVID-19 likely will qualify, but watch out for additional restrictions, such as the time at which the performance must occur vis-à-vis the existence of the pandemic and the duration of the pandemic. 

Acts of God may also be an avenue for excusing contract performance based on the virus. Black’s Law Dictionary defines an act of God essentially as a natural disaster.[7] This reflects the traditional understanding of an act of God. However, courts interpret this type of event differently depending on the jurisdiction. Certain factors may influence a court’s decision on this point, such as whether the contract lists examples of acts of God, which do not include health emergencies. You should consult with counsel to determine the likelihood that COVID-19 will qualify as an act of God.

In addition, it is possible that government action will impede performance of your contracts in such a way as to trigger a force majeure provision. President Trump’s declaration of a national emergency and travel ban along with similar emergency declarations and restrictions imposed by state governments may very well operate to make performance of contractual obligations impracticable. Schools that have shut down or reduced operations in response to governmental guidance, as opposed to mandates, may have a more difficult time showing that government action rendered them unable to perform under a contract. Whether these governmental effects of COVID-19 trigger the force majeure provision in your contract will be a fact-specific inquiry.

For broader force majeure provisions, courts will analyze whether the risk of non-performance was foreseeable and able to be mitigated.

Assuming a triggering event is identified, schools need to be cognizant of any notice provisions in the contract. For example, a school may be required to provide the other party with written notice of its intent to cease performance a certain number of days before doing so under a force majeure clause.

Even if your contract does not contain a force majeure provision, there still may be a way to obtain relief from performance due to COVID-19. Common law principles of impossibility, impracticability, and frustration may apply. Impossibility of performance typically arises when performance of a party’s obligations becomes objectively impossible. This includes the doctrine of “legal impossibility,” where performance becomes illegal. Commercial impracticability is similar to force majeure and discharges a party’s duty to perform when the party’s performance is made impracticable by an event that is not the fault of the party and the nonoccurrence of which was a basic assumption on which the contract was made.[8] It is not enough that a contract becomes financially impracticable. Frustration of purpose may be available where — for unforeseen circumstances or events — the purpose of the contract can no longer be achieved. Generally, the frustrated purpose must be near total and so evident that without it, the transaction would have made little sense. Your attorney can assist you in finding alternative means to mitigate harm from contractual obligations during this turbulent time.

For more information on force majeure clauses and related defenses, please see Force Majeure and Other Potential Defenses to COVID-19 Related Contractual Non-Performance.

Risk Areas for Litigation

Among the myriad concerns that colleges and universities are facing due to COVID-19, new litigation may arise as a result of acts or omissions in response to the virus. We expect to see increased litigation for schools in the following areas, among others: employment and disability discrimination, suits by students denied on-campus housing, and vendor contract disputes. 

Schools should be careful to apply COVID-19 policies in a consistent manner and without regard to national origin, race, age, or any other protected class. For example, when granting leave requests, schools should not single out elderly employees, and if a school is closed but needs one employee to come in, a good practice would be to choose the most senior one so that your choice is not seen as discriminatory. On the student side, if you have closed your campus to students and are offering remote learning services, you must also provide those services to disabled students in a way that provides them equal access to education. 

Colleges and universities which have made the decision to send students home due to coronavirus are facing pressure and requests for relief from students who either do not have a home to which to go or for whom it would be financially difficult to find alternative housing. Some of those students may choose to bring lawsuits against their school because of the abrupt denial of on-campus housing in an attempt to remedy the financial and other harm they may incur. Schools are best served in these situations by maintaining open lines of communication with students and assisting them to find alternative housing.

Non-performance issues may arise in vendor contracts that could lead to litigation. One example of this is a dispute in interpreting the force majeure clauses discussed above. It is important to review all existing contracts to understand whether performance may be excused by either party due to coronavirus and consider the impact of the virus on any new contracts.

Conclusion

The education attorneys at Nelson Mullins are closely tracking the effect of COVID-19 on colleges and universities. If you need any assistance or have any questions, please contact Nina Gupta or Katherine Guarino Baker or any of the members of Nelson Mullins' Education Team.

At Nelson Mullins, our client relationships are based on a deep understanding of our clients’ business worlds and up-front communications regarding client objectives. Our firm’s 800+ legal and business professionals serve as trusted advisors to clients across a broad range of industry sectors, providing practical legal advice, advocating on their behalf, and working side-by-side towards shared goals. The firm has established a Coronavirus Resource Page. Please feel free to access this site for our thought leadership pieces and announcements as well as links to national and international resources.

 

[1] However—see the section below on the Emergency Paid Sick Leave Act which provides the equivalent of 10 days of paid sick leave that an employee can use to cover this period. 

[2] The final Act provides that it shall not be construed to diminish the employee’s rights or benefits under any other law or existing employer policy.

[5] Am. Jur. 2d Act of God §§ 2, 13 (Feb. 2020 update); 30 Williston on Contracts § 77:31 (4th ed.) (Jul. 2019 update).

[6] World Health Organization, “Who Director-General’s Opening remarks at the media briefing on COVID_19 – 11 March 2020,” https://www.who.int/dg/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19---11-march-2020; World Health Organization, Coronavirus disease 2019 (COVID-19) Situation Report – 51, https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200311-sitrep-51-covid-19.pdf?sfvrsn=1ba62e57_10.

[7] Act of God, Black’s Law Dictionary (11th ed. 2019)

[8] Restatement (2d) of Contracts § 261; UCC § 2-615.