Posts By: Gregory Cokinos

We at Cokinos | Young hope that you, your family members, and your loved ones, are doing as well as can be during these difficult times, as the Coronavirus impacts our communities. We want to make sure that we keep our valuable friends and clients aware of how Cokinos | Young is responding to the situation.

While our offices throughout the Great State of Texas and California have been impacted to varying degrees, we want you to know that we have taken every precaution recommended by the CDC and more. We have Policies relating to travel and self-quarantine. We practice social distancing in our offices as we still have core teams of Attorneys and staff hard at work. We routinely clean and sanitize our work areas and common areas throughout the day. Professional services disinfect and sanitize our common areas and frequently touched surfaces (ie. door handles, tables) daily.  We do this to keep our staff and the public safe, but we also do this because our clients mean everything to us.

Our team uses technology to our advantage to transcend any impacts from the Coronavirus. We continue to teleconference, conduct video depositions and attend court hearings via video or telephonically. We continue to meet through personal, phone and video on any meeting entrusted to us. Our document management system is secure, encrypted and cloud-based to allow our team of talented professionals to continue to work in our office or remotely to continue to provide our clients with the best possible outcome wherever.

In short, we continue to provide a safe, healthy, and sanitary work environment for our staff and clients who choose to come to one of our office locations. We are committed to our clients, and shall remain so. Please stay vigilant and safe in these uncertain times. And please feel free to contact us if you have any matters that need our attention or guidance, or if you need help in any way. In the meantime, stay informed by visiting the CDC website www.cdc.gov for the latest updates on the coronavirus, and visit us at www.cokinoslaw.com for the latest information for our clients on legal issues concerning the Coronavirus. We have just posted guidance as to the Families First Coronavirus Recovery Act, signed late yesterday by the President. You can read about it by clicking here.

Additional Coronavirus Articles

Families First Coronavirus Response Act:
What Does It Mean
Read Article

Covid-19 and Force Majuere
Read Article

By now, the majority of Americans have been impacted in some way by the spread of COVID-19.  Restaurants are closed, employees are working from home, projects are postponed and, local, state, and federal governments are implementing emergency measures to combat the spread.

As the virus spreads, the private and governmental reaction will steadily increase and continue to influence the daily affairs of countless Americans.  After the dust settles, thousands of individuals and businesses will be left to sort through the effect the virus and the governmental action has had on existing obligations.  One primary question will be whether the effects of COVID-19 excuses performance of a contract that was made impossible to perform.  The answer lies in what constitutes a “force majeure” under the contract.

What is Force Majeure?

“Force majeure” is French for “superior strength” and is generally defined as an unforeseeable circumstance or “act of God” which prevents the fulfillment of an obligation.  The term has been used for many years and historically embodied the idea that a party is relieved from performing a contractual obligation when such performance was made impossible by causes beyond the party’s control.

Application of Force Majeure

Schedules are critical in the construction industry.  Profits, availability of materials/labor, and excess costs can all be dramatically influenced by a contractor’s ability to stay on schedule.  Delay damages can become overwhelming and liability for failing to maintain the critical path can become insurmountable.

In the wake of COVID-19, some citizens are ordered to shelter in place, public gatherings are restricted, and new legislation requires employer compliance with an employee’s desire to remain away from work.

The shortage of labor in the construction industry will certainly result in significant delays.  Liability associated with those delays will be determined by strength of the parties’ contract.  A contractual clause which protects against unforeseen events, such as COVID-19, will be the deciding factor in assessing the cost and liability for the delay.

Construction is not the only industry that will feel the effect of COVID-19.  In other fields, payments are due, deliveries must be completed, goals must be accomplished, and deadlines must be made on time.  Who will bear the responsibility for falling behind and who will pay the cost?  The answer, again, rests on the strength of the contract—particularly the force majeure provision.

A strong force majeure provision will, excuse the non- or untimely performance of the party due to COVID-19; allow employers to shift their focus from liability to staying healthy during this pandemic, and enable an employer to pick up where they left off before the outbreak.

Force Majeure Contract Provisions

Parties have used force majeure provisions to excuse performance in events such as hurricanes, earthquakes, and floods.  Despite the historical underpinnings, the term can be broadened to account for a whole host of events beyond a party’s control.

Courts rely almost exclusively on a contract’s definition of the term to contemplate its applicability.  Thus, it is critical that any contract include a strong provision which excuses performance in light of a force majeure.  A strong force majeure clause will:

1. Be broadly defined;
2. Excuse performance in the event of an occurrence; and
3. Outline the parties’ obligations during the event.

COVID-19 and Force Majeure

In addition to our personal health, the global outbreak of COVID-19 has jeopardized the health of the economy.  In this light, COVID-19 has not only effected the ability to perform contractual obligations, it has also influenced the ability to financially recover once dust has settled.    While many courts have held that certain events, such as an economic downturn in the market, do not constitute force majeure, unforeseen events (such as COVID-19) which precipitate a market decline can certainly be accounted for in strong contract.

As stated above, whether the current crisis constitutes a force majeure is largely determined by the definition in the clause itself.  A force majeure clause which takes into account disease, governmental action, quarantine, and changes in the law will be critical to excuse performance during this crisis and help pick up the pieces in the wake of COVID-19.

If you have any questions regarding COVID-19 and its effect on your contractual obligations, please contact Stephanie O’Rourke in our San Antonio office to discuss.  Cokinos | Young also stands ready to assist in drafting and negotiating contractual provisions in the wake of recent events.  If you need assistance with incorporating events such as COVID-19 into your future contracts, please contact David Tolin in our Houston office.

Late on March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act.  Of note for all employers are three particular aspects of the new law: (1) paid sick leave requirements; (2) expanded FMLA benefits, including paid FMLA; and (3) financial assistance to employers to cover the costs of paid leave.  The law becomes effective on April 2, 2020.

Many of the fine points of the policies, forms, and implementation of the law are still being worked out in Washington, D.C., and may be subject to further changes, but below is a brief primer of what private employers need to know and be prepared for:

PAID SICK LEAVE:

• Applies to private employers of fewer than 500 employees
• Provides paid sick leave to workers unable to work or telework for the following covered reasons:
  • Employee subject to federal, state, or local quarantine or isolation order related to COVID-19
  • Employee advised by a health care provider to self-quarantine because of COVID-19
  • Employee experiencing symptoms of COVID-19 and seeking a medical diagnosis
  • Employee caring for an individual subject to or advised to quarantine or self-isolate
  • Employee caring for child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 precautions
  • Employee experiencing substantially similar conditions as specified by Health & Human Services, in consultation with DOL and the Treasury Department
• Employees are immediately eligible for leave, regardless of tenure
• Excludes health care providers and emergency responders
• Employers must post notice of paid sick leave availability (DOL will soon have poster available on its website)
• DOL authorized to issue exemptions to businesses with fewer than 50 employees if compliance would jeopardize the viability of the business
  • Details on how this will work have yet to be finalized or issued in regulations
  • It is uncertain how lenient or strict DOL will be in granting exemptions
• Full-time employees entitled to up to 80 hours of paid sick leave
• Part-time employees entitled to paid sick leave up to typical number of hours they are scheduled to work in a two-week period
• Paid leave for employee’s own illness or isolation (covered reasons 1-3 above) to be paid at 100% of daily regular pay rate, up to maximum of $511/day
• Paid leave for caring for others or school closures (covered reasons 4-6 above) to be paid at 2/3 of daily regular pay rate, up to a maximum of $200/day
• Retaliation prohibited
• Failure to pay sick leave treated like failure to pay minimum wages under Fair Labor Standards Act
• Law sunsets on December 31, 2020

EXPANDED FMLA LEAVE:

• Applies to private employers of fewer than 500 employees
• Excludes health care providers and emergency responders
• Provides 12 weeks of job-protected leave to workers unable to work or telework for the following covered reason:
  • Employee caring for minor child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 precautions
• Employee must have been on payroll for 30 calendar days (change from standard FMLA tenure requirement of 1 year & 1,250 hours worked)
• First 2 weeks of leave is unpaid
  • Employee may opt to substitute paid vacation, PTO, or sick leave during this time
  • Employer cannot require employee to use paid vacation, PTO, or sick leave (change from standard FMLA practice)
• Remaining 10 weeks of leave is paid (change from standard FMLA practice)
  • Employees entitled to 2/3 of daily regular pay rate for number of hours employee would otherwise be scheduled to work
  • Paid leave capped at maximum of $200/day
• DOL authorized to issue exemptions to businesses with fewer than 50 employees if compliance would jeopardize the viability of the business
  • Details on how this will work have yet to be finalized or issued in regulations
  • It is uncertain how lenient or strict DOL will be in granting exemptions
• Private employers with fewer than 25 employees may be exempted from returning workers out on COVID-19 FMLA leave to positions that have been eliminated
  • Position must have been eliminated due to operational changes occasioned by a public health emergency (e.g., dramatic economic downturn due to COVID-19)
  • Certain other as-yet undetermined conditions may apply to be eligible for this exemption
• Employers of fewer than 50 employees for each working day of 20 or more calendar workweeks of the current or preceding year exempt from civil FMLA penalties
• Retaliation prohibited
• Law sunsets on December 31, 2020

FINANCIAL ASSISTANCE TO BUSINESSES:

• Refundable tax credits to employers required to offer paid leave under this new law
• Broader economic relief and stimulus efforts currently under consideration by Congress in additional bills
• More guidance on forms, procedures, potential expediting of economic relief expected to be forthcoming as finalized

In addition to the above, the EEOC and OSHA have been providing regular COVID-19 updates and guidance to employers, so it would be wise to check their websites every few days.  If you have any questions regarding compliance with the employment law provisions of the FFCRA, or other employment law concerns, please feel free to contact Shannon Gatlin in our Houston office or Wilson Stoker in our Austin office.  Thank you.