Feeling Thankful This Thanksgiving: FDA Expresses Gratitude for Our Food and Agriculture Workers

Nov 25, 2020

It’s been a trying year for all, and this Thanksgiving many may just be feeling grateful that the end of 2020 is in sight.  While we heed the urgent requests from our governmental and health officials to enjoy a socially distant Thanksgiving in this most unusual year, the distance between us and our loved ones should not dampen our feelings of gratitude.

In keeping with this sentiment, the Federal Food & Drug Administration (FDA) is taking a moment to thank the essential workers who have worked tirelessly to continue to supply our food throughout the pandemic.  Sincere credit should be given to the FDA for publicly thanking the many people and businesses for their heroic efforts.  Gratitude is good and sorely needed, now more than ever.

We at Wendel Rosen also want to express our gratitude for our faithful clients, referral sources, and trusted business partners.  We cherish the deep relationships that we have formed with all of you, and we wish you and yours a healthy and happy Thanksgiving.

Wendel Rosen is also committed to helping our community.  We’re excited to be able to partner again with both the Alameda County Community Food Bank (ACCFB) and the Food Bank of Contra Costa and Solano.  The increase in need for food assistance is staggering.  The ACCFB estimates that the need has doubled since the start of the pandemic.  Every $1 raised will help provide two healthy meals for local families who need assistance.  If you are able this year, you can donate to the ACCFB by visiting https://www.accfb.org/give/.  You can also learn about how you can donate to the Food Bank of Contra Costa and Solano by visiting https://www.foodbankccs.org/give-help/donate.html.


Food & Beverage Update: FDA and OSHA Provide Health and Safety Checklist for Food Operations During Pandemic

Aug 24, 2020

On August 11, 2020, the U.S. Food & Drug Administration (FDA) and the Occupational Safety and Health Administration (OSHA) issued jointly developed guidance to assist the food industry as it continues to operate during the challenging times presented by the COVID-19 pandemic. The jointly issued “Employee Health and Food Safety Checklist for Human and Animal Food Operations During the COVID-19 Pandemic” draws upon existing guidance from the FDA, OSHA and the Centers for Disease Control and Prevention (CDC) to serve as a quick reference guide for assessing employee health, social distancing, and food safety.

With regard to employee health, the sixteen (16) page checklist focuses on CDC and OSHA guidelines regarding health screening and operational configuration to support social distancing. As for food safety, the checklist highlights existing regulations pertaining to food safety requirements with an eye towards assessing COVID-19 operational changes and their potential effect on food safety practices (ex. plant closures, changes to suppliers or ingredients, personnel changes).

While this new checklist is certainly useful, prudent food companies will also continue to stay abreast of the orders, guidance, or recommendations of their respective state and local governmental and health officials, as well as the guidance issued by the FDA, CDC and OSHA. Our collective understanding of COVID-19 and its impacts on health, safety and our economy continues to evolve. Prudence dictates one remain vigilant so as to follow best practices as they evolve in order to mitigate these impacts. Should you have any questions regarding your situation we remain available to assist.


COVID-19 Re-Opening Considerations, Part 4: Understanding the Risk of Re-Opening

Jul 16, 2020

Just a few weeks ago, the trend line showed that the infection, hospitalization and death rates were moving markedly downward.  States across the country were eager to re-open businesses and ramp the economy back up.  Now, we are in the midst of a retrenching of our positions, hunkering back down somewhere between a state of semi-open and shuttering of “non-essential” businesses.  As governmental leaders and healthcare officials navigate the political and health implications of the current moment, those businesses that remain open and their employees are struggling with the uncertainties presented by returning to the workplace.

Unfortunately, the reality of the situation is that there is no “right” answer; rather, it is simply a matter of understanding the risks of re-opening and deciding how best to address them.  In this final blog of the COVID-19 Re-Opening series, I take a look at those risks and present suggestions as to how to meet them head on.

RISK #1:  Transmission

Whether you want to acknowledge this truth, there is no escaping it:  your business cannot guarantee that an employee, vendor, customer or visitor will not contract COVID-19.  You have no control over who may contract the virus, so you may as well be honest about it.  Anyone coming into your place of business must be informed of the risk of contracting COVID-19, as well as your efforts to minimize that risk through a thoughtful and site specific re-opening plan.  In this regard, straightforward communications should be prominently displayed throughout your place of business so that anyone coming into the space can read, understand and accept the risk(s) presented by their choice to enter.  These communications may include:

●  Current, applicable local or state health orders;

●  Current guidance regarding measures that one can take to minimize transmission (e.g., wearing a mask, social distancing, frequent handwashing, etc.) issued by the CDC, OSHA and/or state and local officials.  The CDC, in particular, has many guidance documents for industry-specific businesses, and it has also prepared the Resuming Business Toolkit that can contains a visual guidance overview that can be printed out for display (see page 17 of the Toolkit), as well as a visual guidance document regarding face coverings. (Scroll to the bottom of the webpage and click to view and print it in a one-page pdf document.)

●  An express warning that while your business is making commercially reasonable efforts to minimize the risk of transmission, no express or implied promise that the risk of transmission has been eliminated can be made.  Anyone entering your business must be told that they do so at their own risk, and if they are unwilling to accept that risk, they must not enter your business.

●  Clear directions about what employees, visitors and customers must do to minimize their risk of transmission to themselves and others while in your place of business.  These directions are not suggestions.  They are mandates for acceptable behavior and actions.  For instance, it should not be left to anyone’s discretion about whether a mask is to be worn while on the premises.  This is not a political decision – it is an absolute requirement to minimize the risk of transmission that must be followed by all who enter your business.

Risk #2:  Gross Negligence, Reckless Conduct or Intentional Acts

You may have either heard of or seen some businesses requiring that people sign waivers to minimize the risk of liability including a company’s own negligence.  Waivers are commonly accepted for inherently dangerous activities (ex. bungee jumping operators, river guiding companies, rock climbing guides, etc.).  In California, liability waivers are generally enforceable if the release is clear and explicitly worded to apprise one of the risks presented and the parties’ intent in entering into the liability waiver, the scope of the release is reasonably related to the purpose for which the release is given (i.e., it covers “ordinary” negligence, which is the failure to use reasonable care to prevent harm to oneself or to others), and the release does not otherwise violate public policy.  See Madison v. Superior Court, (1988) 203 Cal.App.3d 589.

However, that does not mean that a business can throw all care to the wind.  Most states will not uphold waivers as a shield to liability resulting from gross negligence (i.e., lack of any care or extreme departure from what a reasonably careful person would do in the same or similar circumstances), reckless conduct, or intentional acts.  More importantly, as no court has considered whether a COVID-19 liability waiver is enforceable, it is not clear whether courts will enforce such waivers in the context of a COVID-19-related personal injury claim.  It is quite possible, though, that how a business conducted its operations in light of the risks associated with the pandemic could be determinative.

By way of analogy, consider that the Iowa, Kansas, Louisiana, Massachusetts, North Carolina, Oklahoma, and Wyoming have all recently passed legislation to allow for immunity from civil liability for COVID-19 claims provided that the particular business was acting pursuant to and in substantial compliance with applicable public health directives.  While it is beyond the scope of this blog post to analyze these statutes in detail, suffice it say, no legislature has immunized businesses from gross negligence, reckless conduct or intentional acts.  Good-faith and earnest efforts to comply with federal, state and/or local public health regulations and/or guidance serves as the baseline for any business to obtain liability protection.

Risk #3:  Shifting Landscape

As is now abundantly clear, what is understood about COVID-19 is constantly changing, as are the governmental orders, directives and/or guidance being issued in response to this pandemic.  At times, this information may be opposite of what was previously stated.  Early in the United States’ response to the pandemic threat, wearing masks was not recommended.  Now, wearing masks is encouraged and, in some states, required.  Staying on top of the near-constant stream of information is challenging for everyone, particularly businesses who are managing the risks of re-opening with the real economic harm of remaining closed or only partially open.  Even so, prudent businesses will task a group of individuals with the responsibility of monitoring applicable government and regulatory agencies to remain in compliance with the latest laws, regulations and/or guidance for safe business operations.  Businesses should also ensure that employees are routinely educated on the latest developments as well as the necessary operating protocols to achieve a healthy and safe workplace.  As the saying goes, knowledge is power.

Risk #4:  Employees

It is not an understatement to say that no business was fully prepared to address the challenges presented by this pandemic.  These challenges – such as, working remotely, workplace safety, and balancing the health risks with economic impacts – are not addressed in the abstract, either.  They are encountered and managed by a business’ employees on a daily basis.  Some employees may be fearful to return to the workplace, others may have no choice because their positions may not be ones that can be done remotely, while still others may be worn down by the juggling of caring for family and performing their job functions.  Businesses must be prepared to deal with both the physical and mental health implications of the moment.  Increased absenteeism, demoralization, anxiety, and potential employee-driven lawsuits are real threats to the ongoing operations of businesses in the COVID-19 landscape.

With regard to employees’ mental health, the CDC has provided helpful guidance  for employees to manage the stress of working in this pandemic, as well as suggestions for building resilience and getting help, if necessary.  Employers should direct their employees to this guidance and create an environment where employees feel comfortable seeking help coping with job stressors.

With regarding to employees’ physical health, lawsuit filings from across the country indicate that business are facing exposure to claims predicated on the Family and Medical Leave Act and the Americans with Disability Act.  The claims generally arise from an alleged failure to grant leave or otherwise provide reasonable accommodation such as allowing an employee to continue working from home.  Other claims being brought are predicated on alleged failures to address worker safety or purported wage and hour violations relating to overtime and/or additional time incurred due to pandemic conditions.

While it is beyond the scope of this post to analyze the particular facts of these lawsuits, a general takeaway can be stated:  employees are both a business’ greatest asset and liability.  Employees are aware of their rights, and to the extent that those rights and – in particular, workplace safety – may be ignored or taken for granted, employees are willing to pursue litigation.  Employers should regularly check in with their employees to address then-existing working conditions, safety procedures and/or concerns, and the latest applicable COVID-19 guidance.  These check-ins should be done in a manner such that employees know that they are encouraged to voice their concerns, that their concerns will be taken seriously, and that everyone is part of the business solutions to the challenges presented COVID-19.  Open communication without fear of retribution in any way will pay dividends in improving employee morale and commitment to working through these challenges, and – to the extent that difficult decisions must be made regarding headcount – employees may be in a better position to understand and accept those decisions.  Beyond that, the prudent employer will want to be in tune with its employees to meaningfully address, to the extent reasonably possible, issues such as employee anxiety, stress or burnout as they arise.

In closing, everyone realizes that businesses must re-open to remain in business.  Operating to generate revenue and operating to maximize the health and safety of employees, vendors and customers do not have to be competing interests.  As has been discussed in this blog series, a thoughtful approach to address these interests is a must-have, not a “nice to have” perspective.  Businesses must educate themselves on the latest health data and governmental/regulatory directives and guidance, they must conduct thorough analyses of their operations to understand the risks and opportunities of re-opening their workplaces, and they must act prudently to minimize risk to maximum extent possible.


Who’s Ready To Go Back To “Normal”? Re-Opening Your Business, Part 3: Business Plans

Jun 15, 2020

Whether you agree or not, the pressure to return to more “normalized” operations is upon us.  Federal, state and local leaders are now confronting the sobering impacts of an economy forced into hibernation for nearly a full fiscal quarter.  Employers and employees of every business are contemplating what the steps forward look like.  For essential businesses that have been operating all along, they may be further along in their COVID-19 operational modifications, tweaking what they have been doing to better align with the frequently updated governmental and/or regulatory guidance.  For the remainder of businesses, though, depending on the “phase” that they fall into, these businesses are planning to re-open, whether that start date be days, weeks, or possibly months ahead.  In this blog, I highlight three industries to analyze the State of California’s re-opening guidance to explore the gray areas that nonetheless remain for operating in the “new normal” economy.

The Centers for Disease Control and Prevention (CDC) has prepared its “Resuming Business Toolkit” to “assist employers in slowing the spread of COVID-19 and lowering the impact in their workplace when reintegrating employees into non-healthcare business settings.”  This toolkit contains essential information, including a comprehensive checklist of re-opening considerations, a worker protection tool to identify protective measures that can be taken, printable infographics that can be displayed in the workspace, and links to other informational resources regarding COVID-19.  This toolkit is a great starting point for planning to re-open, and the State of California requires adherence to CDC guidelines as a foundation of its own guidance recommendations.

The California Department of Public Health (CDPH) and Cal/OSHA have also issued statewide guidance for businesses to follow, if they’re permitted to open per county health rules.  The State regularly updates its County Variance page to show each county’s readiness to move through California’s phased re-opening process.  Generally, there are particular metrics that each county must hit:

●  Stable hospitalizations of COVID individuals on a 7-day average of daily percent change of less than 5% OR no more than 20 COVID hospitalizations on any single day in the past 14 days; and

●  Less than 25 new cases per 100,000 residents in the past 14 days OR less than 8% testing positive in the past 7 days.

For businesses to re-open, though, each business must satisfy certain additional requirements:

●  Perform a detailed risk assessment and implement a site-specific protection plan

●  Train employees on how to limit the spread of COVID-19, including how to screen themselves for symptoms and stay home if they have them

●  Implement individual control measures and screenings

●  Implement disinfecting protocols

●  Implement physical distancing guidelines

Naturally, though, the devil is in the details, and the most challenging aspect of any re-opening process will be the first requirement:  risk assessment and site-specific planning.  Businesses must comply with all Cal/OSHA standards and be prepared to adhere to its guidance as well as guidance from the CDC and the CDPH.  This, of course, is a lot of information to review.  Accordingly, a cross-functional planning team will likely need to be assembled to identify and analyze the risk factors presented by the particular operations of your business.

Generally, this team should include members from the following areas as they cover all the areas that must be considered as you decide when and how to re-open your business:

While it is beyond the ambitions of this blog post to review either the CDC’s toolkit or the State of California’s plans in granular detail, let’s take a look at three state guidance documents to understand why the guidance is just that – it is a guide, not a complete plan.  A business’ cross-functional planning team must interpret this guidance and customize it to fit the business’ particular operational factors and challenges.


The manufacturing guidance covers the necessity of a worksite specific plan, employee training about COVID-19 and how to prevent it from spreading, individual control measures and screening, cleaning and disinfecting protocols, and physical distancing guidelines.  This eight-page documents offers helpful advice and examples within each of these main categories.

However, the guidance does not cover the nuances that the various considerations present.  For example, with regard to employee training, have you developed your training program?  Who will be leading the training program?  Will it be an outside service provider to “train the trainer,” followed by reliance on designated employees who are charged with educating the workforce – as often as is required?  Will you be keeping a log of the employees who participate in the training program?  If you intend to rely upon written educational materials, will you require that employees sign a verification that they have read and understand the materials (or, to the extent that they have questions, that they have sought answers to those questions)?

With regard to cleaning and disinfecting protocols, it is recommended that manufacturers “[f]requently disinfect commonly used surfaces, including, doorknobs, toilets, and handwashing facilities.”  Additionally, touchable surfaces should be cleaned “between shifts or between users, whichever is more frequent.”

Increased sanitation is undoubtedly necessary to promote the health and safety of employees and customers, but who is responsible for this additional cleaning?  Must a business employ an outside cleaning company to be onsite for this purpose, are employees supposed to pick up this additional job duty, or is a combination of using a janitorial service and increasing employee responsibility for cleaning the best approach? Will your plan include regularly scheduled cleaning breaks in which all employees cease their activities and clean the workplace?  Do you plan to create sanitation stations throughout the facility to provide ready access to cleaning supplies necessary to accomplish this task and allow for social distancing in accessing the supplies?  Have you secured, or will you be able to secure, sufficient quantities of cleaning supplies to support this heightened cleaning schedule?

The answers, of course, depend on the particularities of your facility and what strategy works best to ensure that your facility is cleaned effectively.

With regard to delivery drivers, the guidance recommends that employers should provide alternative restroom locations and allow time for delivery drivers to use them.  Examples of “normally accessible restrooms” located along a delivery route include restaurants and coffee shops.  How can an employer provide alternative locations to these formerly acceptable options given that they don’t actually control any outside location nor can an employer guarantee that any particular location will be open and accessible for use by non-employees of the business establishment? What alternatives, then, will your cross-functional team recommend?  Again, it depends.  You must consider the particularities of your drivers’ routes, what businesses may be open, and whether you (and/or your drivers) believe that it is safe to have the drivers utilizing the restroom facilities of other businesses.


This guidance, too, covers the basics:  creating a worksite specific plan, employee training about COVID-19 and how to prevent it from spreading, individual control measures and screening, cleaning and disinfecting protocols, and physical distancing guidelines.  Let’s examine a few gray areas, though.

For screening, the guidance notes that temperature and/or symptom screenings can be done at the beginning of each shift and when any visitors enter the premises.  As an alternative, employees could also self-screen at home, provided that the employee do so in accordance with CDC guidelines.  Assuming that a business were to opt for self-screening to maximize employees’ medical information privacy, how would the employer ensure that each employee performs the proper and necessary screening each day?  Does the employee need to sign a verification to that effect each time he/she presents at the office?

Additionally, the guidance encourages employers to tell workers who are sick or exhibiting symptoms of COVID-19 to stay home.  This is particularly important given Governor Newsom’s Executive Order N-62-20, which provides that workers who contract the COVID-19 virus between March 19 and July 5, 2020 shall be presumed to have done so at work. Under this presumption, such workers will be eligible for workers’ compensation benefits. For this presumption to apply, the employee must test positive for COVID-19 within 14 days after performing work or be diagnosed with COVID-19 by a licensed physician within 14 days after performing work. If an employee is diagnosed with COVID-19, that diagnosis must be confirmed by further testing within 30 days of the diagnosis.

The Executive Order does provide that the presumption is rebuttable and may be controverted by other evidence. However, the employer bears the burden of proving that the illness did not occur at work. Additionally, if a claim is not rejected within thirty (30) days of its filing, the illness is presumed compensable, and an employer’s ability to rebut that presumption is limited to only that evidence discovered after the 30-day investigative period.

Has your office-specific plan accounted for this Executive Order?  Additionally, while the recommendation to allow for flexibility in sick leave policy is useful for those employees who have objective evidence of illness, how does either the employer or the employee account for asymptomatic situations?  Such individuals could be unknowingly spreading the virus throughout the office, and while the asymptomatic individual should be quarantined at home, neither the employee nor the employer would know that this is required. Also, additional requirements must be considered for vulnerable populations.  Does your office plan account for this sub-group?

Public Transit

This guidance document covers the same general categories noted above.  It also provides links to the CDC’s specific guidelines for:

● Bus Transit Operators

● Rail Transit Operators

● Transit Maintenance Workers

● Transit Station Workers

The State of California now advises that “[p]ublic transit or rail agencies must take reasonable measures to remind the public that they need to use face coverings and avoid directly facing other passengers when physical distancing is difficult.”  While signage can be placed throughout the stations and trains to remind passengers of these considerations, how are public transit agencies supposed to enforce them?  Will there be increased personnel monitoring mask use and/or social distancing, and if so, will they be empowered to take any action to ensure compliance with these safety measures?  What action is allowed?

Additionally, turning back to the rebuttable presumption of workplace injury established by Executive Order N-62-20, should an employer ask its employees to not take public transportation in an effort to limit this potential external source of COVID-19 exposure?  If an employer were to make such a request, should it be required to offer transportation alternatives (ex. paid parking) for employees who opt or are required to commute to the workplace?

The considerations that I raise are neither exhaustive, nor are they intended to suggest that a business cannot safely re-open.  Instead, they are merely to underscore the point that re-opening in an effort to return to “normal” operations is not a realistic goal.  Careful planning is required, and it may take much longer than a business anticipates to develop an effective plan.

Additionally, as the old saying goes, even “the best laid plans of mice and men often go awry.”  Employers must be prepared to alter their operations as those guidelines, or health conditions change.  Thus, creating a cross-functional team at the outset of your planning is the first step in re-opening, and you will need to rely on this team going forward to routinely evaluate your business plan and make revisions/improvements to it as the plan is implemented.


Re-Opening Your Business, Part 2: Navigating Government Orders and Regulatory Guidance

May 19, 2020

CNN has a helpful collection of information outlining where all 50 states stand on re-opening.  There is not enough space in this blog post to go through that data, especially as each state has a slightly different approach for re-opening.  Regardless of your particular state, though, one of the fundamental components of any re-opening plan for your business is understanding the applicable governmental orders and regulatory guidance.  As I stated in my initial blog post on this topic, re-opening will be a process, and you may well plan to go forward, but have to take steps back, as you move through your path to a new normalcy in your business operations.

California, where I am at, is seeing a rapid shift in governmental orders.  On March 16th, six Bay Area counties (plus the City of Berkeley) issued stay at home orders shuttering all but certain enumerated “essential businesses.”  On March 19th, Governor Gavin Newsom issued a statewide stay-at home order that had the same restriction for the entire state of California.  Other counties in California followed suit, issuing their own orders.  Since then, these numerous orders have been modified several times as developments in the COVID-19 healthcare crisis have emerged at the federal, state and local levels.  On May 8th, Governor Newsom relaxed his order to allow certain sectors of curbside retail to reopen.  In doing so, Governor Newsom announced that counties can apply for variances to allow for faster re-opening processes or they could maintain stricter controls.

The result of these well-intentioned state and local orders, though, has been a confusing patchwork of governmental requirements that have left pundits,  businesses and citizens alike scratching their heads to figure out which orders apply.  This confusion is not likely to fully abate any time soon as health, scientific, political, and economic factors are influencing the orders and policies that are being created.

In addition to these orders, various guidance documents have been issued by the Centers for Disease Control and Prevention (CDC), Occupational Safety and Health Administration (OSHA), and the Equal Employment Opportunity Commission (EEOC), the United States Department of Labor, and the White House.

At a high level, the White House’s Guidelines for Opening Up America Again set forth a three-phased approach intended to assist state and local officials to reopen businesses and protect lives.  The White House recommends the development and implementation of appropriate policies in accordance with federal, state and local regulations and guidance regarding:

  • Social distancing and protective equipment
  • Temperature checks
  • Sanitation
  • Use and disinfection of common and high-traffic areas
  • Business travel

Diving deeper, OSHA has issued various guidance documents outlining the measures that businesses must take to protect the workforce, as well as how COVID-19 related complaints will be handled.  Additionally, the CDC recently issued updated guidance for actions that people and communities can take to slow the spread of the virus.   Given the changing understanding of the virus, this guidance has changed over the past several weeks (ex. the CDC now advises that the virus does not spread easily from touching infected surfaces).  So, frequent review of these agencies’ websites is recommended.

These guidance documents are not standards nor regulations; they create no new legal obligations.  However, they do contain recommendations that include descriptions of mandatory safety and health standards (for example:  employers are obligated to provide their workers with personal protective equipment, but the guidance notes that the exact type of PPE to be provided will depend based upon the risk of exposure to be encountered by the worker).

So, what should a prudent business seeking to re-open do?

First, you need to assess which of the various local and state orders apply to your business.  If you operate in one county, this should be relatively straightforward.  If your operations span several counties, you will need to carefully outline the requirements of each of the applicable orders to understand where they are the same and where they differ.  The counties of Alameda, Contra Costa, Marin, San Francisco, San Mateo and Santa Clara, for example, issued similarly-worded orders outlining several indicators that are deemed to be critical to deciding when and how to ease shelter-in-place restrictions.  These orders are more restrictive than the most recent order from Governor Newsom.  The Health Officer of Fresno County, by contrast, issued an order allowing businesses to re-open that is predicated on state and CDC guidelines.  Regardless, all re-opening plans are phased approaches that are designed to allow businesses to re-open depending on the level of risk presented by their operations.  There is no one-size fits all approach.

Second, you will need to evaluate applicable regulatory guidance, which may be more detailed in some instances than local or state shelter-in-place orders regarding risk mitigation measures.  For example, the General Duty Clause, Section 5(a)(1) of the Occupational Safety and Health (OSH) Act of 1970, 29 USC 654(a)(1), requires employers to furnish each worker with “employment and a place of employment, which are free from recognized hazards that are causing or are likely to cause death or serious physical harm.”  Accordingly, OSHA recommends a framework called the “hierarchy of controls” to identify and select ways to control workplace hazards, and it has issued detailed guidance explaining how to do so.  With regard to COVID-19, these workplace controls include:

  • Engineering controls (e.g., high-efficiency air filters, increasing facility ventilation rates; physical barriers to separate workstations, etc.);
  • Administrative controls (ex. encouraging sick workers to remain at home, establishing alternating shifts, discontinuing non-essential travel, PPE;
  • Following existing OSHA standards (ex. PPE Standards, 29 CFR 1910 Subpart I);
  • Classifying worker exposure to COVID-19 (e.g., lower risk, medium, high, and very high) and adopting risk mitigation strategies based upon the exposure risk level; and
  • Workforce education and training.

Third, avail yourself of the resources that are out there.  For weeks, governmental officials, regulatory agencies, and the news media have reported the minimum necessary safety controls:  social distancing, frequent handwashing, frequent cleaning, and masks.  Beyond these effective baseline protocols, though, OSHA has various programs and services to help businesses establish a safety and health program.  California has created industry-specific checklists, which can be found at the state’s coronavirus webpage.  Each county and city is also working to respond to COVID-19, most of whom have dedicated webpages with links to useful local information.  While this may seem daunting at first, as you move through each level you will see that the information presented largely coordinates with the level above it (e.g., city, county, state, federal), and you quickly see similar strategies and recommendations for re-opening businesses at all levels of government.

In my next blog post, we will go through a few industry-specific checklists to show the similarities and variances of these orders, guidelines and recommendations to particular businesses.


Re-Opening Your Business is Going to be a Process, Not a Ribbon Cutting

May 14, 2020

In my very first class in college – a political science lecture – the professor stated, “Where you stand depends on where you sit.” In other words, every position is relative to the circumstances presented. That phrase has stayed with me over the years, especially as my profession is based upon the representation of my clients’ various interests. Everything is relative. That includes your desire to re-open your business and/or your goal to get back to work. Here are some considerations that you should keep in mind, though, as you go through this process.

First, the overarching goal of any re-opening plan should be your workforce’s health and safety. It is not a competing interest; it is the primary interest from which everything else must follow. Obviously, no business is immune to economic realities, but generating revenue is only one element. The potential economic harm that could brought about by not focusing on health and safety could reduce revenue because of increased employee absenteeism due to sickness, curtailed operations if the office must be deep cleaned and/or temporarily closed due to illness, and potential liability from claims (governmental and/or individual) that the business was operated in a grossly negligent or reckless manner.

Second, re-opening your business is going to be a process, not a ribbon cutting. The prudent business will create an operational plan outlining the processes and strategies that will be employed to operate safely. This plan must be set forth in writing, distributed to all employees, and acknowledged in writing by each employee that it will be followed.

In preparing such a plan, you should keep several considerations in mind, which I generally outline below. In subsequent blogs, I will go through the various elements in greater detail.

Governmental Orders_GuidelinesGovernmental Orders/Guidelines

Regardless of where your business is located, there are likely several potentially applicable orders and/or guidelines that have been issued by local, state and federal governmental officials. Some of these orders/guidelines may be expiring, may get extended, or may be more restrictive than other guidelines. Regardless, you must evaluate which ones apply to your business as they do represent current thinking from governmental authorities regarding how business may safely operate.

Regulatory GuidanceRegulatory Guidance

You must stay up to date on guidance from the Centers for Disease Control and Prevention (CDC), Occupational Safety and Health Administration (OSHA), and the Equal Employment Opportunity Commission (EEOC), the United States Department of Labor, and from state and local authorities. Key guidance documents are found on these agencies’ respective COVID-19 specific web pages.

Current Health of Biz Ops

Current Health of your Business Operations

Not all businesses are the same, so you must honestly assess the operations of your business when deciding how best to operate going forward. Is working remotely working for your company? Then, it should be encouraged. If working remotely is not feasible for all employees, then who needs to come back, and how is that best accomplished (i.e., staggered work shifts, reconfigured office spaces, PPE needs, childcare issues, etc.)?

Health & Safety MeasuresHealth & Safety Measures

You will need to evaluate the health and safety challenges presented by your facilities, employees, and third parties (ex. vendors, customers, deliveries). OSHA, the CDC, and the EEOC have provided various guidance documents for businesses to plan and respond to COVID-19. These documents deal with PPE, social distancing, facility modifications, and employment concerns such as body temperature checks, dealing with illness, and Americans with Disabilities Act compliance in the context of pandemic preparedness. For areas that these guidance documents do not address (ex. the elevator in the lobby of your multi-story office building), you may need to involve a greater group of stakeholders beyond your office (e.g. building management, local health agencies) to develop workable measures.

Phased re-entry milestones

Phased Re-Entry Milestones

Just like many governmental orders and/or guidelines have phases, so too should your business plan for re-opening. You should have a clear understanding for the metrics that will need to be achieved to move from one phase to another. A clear framework for returning to more “normalized” operations will help ease the potential anxiety of employees, customers, and business partners as you go along. Additionally, you need to have a clear understanding of what might require you to phase back to an earlier position of safety, should circumstances change.

Communication strategyCommunication Strategy

What, how, when and where you communicate about your COVID-19 operation strategy cannot be an afterthought. In the short term, this is crisis management. Over the longer term, your communications will be your business voice of reason, projecting a well-earned level of confidence in the “health” of your business operations.

Risk mitigation and managementRisk Mitigation and Management

I previously wrote about the need for liability protection for essential businesses as they operate to provide essential services. However, liability protection will be needed by all businesses as they move to re-open, and waiting for statutory immunity that may never come is not a recommended strategy. In analyzing how you can re-open, you should also consider how things can go wrong. By identifying the risks of your “new normal,” you can work on developing strategies to help avoid and/or handle such risks. As the old saying goes, the best defense is a good offense.


Eight Most Common Bankruptcy Questions

May 08, 2020

Bankruptcy can seem daunting and overwhelming. Often, our clients come to us with many of the same questions. Our team of experienced insolvency attorneys have assisted numerous companies, both large and small, as debtors or creditors. Once you have basic understanding of bankruptcy and its alternatives, it is important to discuss the unique factors of your case. Planning ahead and understanding all of your options is critical to your long-term success and may provide more opportunities than you previously considered. Here are answers to eight commonly asked questions.

Does bankruptcy provide immediate financial relief?

Yes, bankruptcy provides a debtor with breathing room. When a bankruptcy case is commenced, an Automatic Stay goes into effect immediately. All pending lawsuits, foreclosures and other actions against the debtor are immediately stayed, which means that creditors are not allowed to send a demand letter or take any action to collect against the debtor. (There are some limited exceptions.) The Automatic Stay does not apply to actions against guarantors or other parties to litigation. Creditors can ask the bankruptcy court for permission to proceed, which may be granted if certain criteria are met. Creditors that violate the Automatic Stay may be sanctioned. Creditors’ positions are determined as of the date a case is filed. If a creditor is properly secured as of the filing, and there is collateral that secures the debt, the creditor will be treated as secured during the bankruptcy case. Once the bankruptcy case is filed, it is too late to record any liens (except for some narrow exceptions), because that would be a violation of the Stay.

What if I need to shut down my business and have someone else liquidate it?

Chapter 7 provides for orderly liquidation. If the debtor files a Chapter 7 bankruptcy case, a trustee will automatically be appointed, the business is shut down, and its assets liquidated. After the case is filed, only the trustee has authority to act on behalf of the debtor. It is the trustee’s job to liquidate assets, and file lawsuits to pursue claims if appropriate to bring money into the estate for the creditors. It can take years before a chapter 7 is completed and there is a distribution to creditors. Trustees are paid a percentage of the funds that they distribute to creditors, so they are motivated to find assets. Creditors are invited to a meeting of creditors (341 Meeting) that takes place in 4-6 weeks after the commencement of the case to ask questions about assets, or provide other information.

What if I want to control the liquidation of my company or sell it as a going concern?

In a Chapter 11, debtors can liquidate their own assets or reorganize. If a debtor files a Chapter 11 bankruptcy case, the debtor will retain control of its assets (unless a trustee is appointed for cause), and will attempt to develop a plan to either reorganize or liquidate. The court oversees the bankruptcy process, and creditors receive notice of the debtor’s actions. Bankruptcy may be used to sell assets of an operating company to a purchaser who wants to buy assets without the fear of creditors’ claims following the assets. Some buyers require the seller to file a bankruptcy, so that they can be sure that the assets are free of creditors’ claims. For debtors who want to reorganize, bankruptcy allows the debtor to reduce debts and pay creditors over a period of time, so that they can continue in business. Debtors try to pay as little as they can over time, subject to statutory limitations. Creditors hope to receive as much as possible, and often believe that the debtor can pay more. For some creditors, having the debtor survive is a factor. There is a new type of Chapter 11, commonly known as a Subchapter V for debtors that have debts (secured and unsecured) of less than $7.5 million, that is meant to be less costly and quicker to proceed through bankruptcy. There are advantages and disadvantages under this chapter.

What rights do creditors have in a bankruptcy?

Once a debtor files bankruptcy, creditors can have wide access to all of the debtor’s financial information and other matters that relate to the debtor’s operations, if it impacts payments to creditors. Creditors are given opportunities to object to various transactions if appropriate. Creditors can monitor Chapter 11 cases. In most cases with assets, a committee of unsecured creditors (Creditors’ Committee) will be appointed, and that committee will oversee the debtor’s case. All creditors are invited to the 341 Meeting in a Chapter 11. Debtors are required to file monthly operating reports, and from time to time report to the court on the status of the case. Creditors can also review the filings, ask for copies of pleadings and tax returns or contact counsel for the debtor or the Creditors’ Committee. Creditors can also ask to depose the debtor (called a 2004 Examination) and third parties (who have knowledge of the debtor’s financial affairs ) to look for assets. There is a big role for creditors in a Chapter 11, and the Court gives consideration to creditors’ reasonable concerns and tries to balance those with the debtor’s statutory rights. A creditor should carefully analyze when it is appropriate to intervene in a bankruptcy, and what steps it needs to take to protect its interests. Pre-bankruptcy planning can be just as important for the creditor as it is for a debtor, if the creditor is concerned about a filing.

Will bankruptcy allow a debtor to exit a long-term lease?

Yes, bankruptcy may limit lease liability. Bankruptcy also allows debtors to limit damages when getting out of leases. The bankruptcy code limits the amount owed on leases that are rejected to one year or 15% of the rent for the remaining term, not to exceed three years (Capped Damages). Landlords still have a duty to mitigate damages, but can maximize their claims by filing claims for funds owed for the pre-petition period, the Capped Damages, and rent owed for the period after the bankruptcy is filed (Administrative Claim). All creditors that provide services to the debtor post-bankruptcy are entitled to administrative claims, which have priority over unsecured creditors Terminating a lease in bankruptcy often allows debtor’s to reorganize in a way that they would not be able to do outside of bankruptcy.

As a creditor should I be concerned that a debtor or trustee will try to claw back payments that I received?

Creditors who receive payments within 90 days (1 year for insiders) of the commencement of the bankruptcy case are at risk for having those funds clawed back as Preferences if they are payments on antecedent debts, made while the debtor was insolvent, and allow the creditor to receive more than the creditor would have received in a chapter 7, subject to defenses. Bankruptcy affords the debtor powerful tools to recover pre-petition payments to a creditor. Defenses are factually intensive. Payments made or liens recorded pursuant to workouts, and forbearance agreements made within the 90 day period risk avoidance by a trustee if certain defenses are lost, based upon the structure of the agreements. Payments should be deposited as soon as possible to avoid delay if a creditor thinks that a debtor may file a bankruptcy since the 90 days is measured based on when the check clears the debtor’s bank account.

Can a corporate bankruptcy ever result in personal liability?

Fraudulent transfers may be pursued in bankruptcy. Transfers for less than equivalent value or made with the intent to hinder, delay, or defraud a creditor can be avoidable as Fraudulent Conveyances, and may give rise to personal liability where there was none before. In addition, officers and directors owe Fiduciary Duties to creditors when a company is insolvent, and care must be taken not to run afoul of those duties. Transfers which violate those duties could result in personal liability. While the avoidance of a fraudulent conveyance and breach of fiduciary duty action could result in personal liability outside of bankruptcy, the appointment of a trustee or creditors’ committee, and the disclosure of financial records increases the ability of a trustee or committee to pursue such actions.

Are there alternatives to bankruptcy?

A debtor can try to do a workout with one or all creditors. Multi-party workouts can be effective, but all parties should know what they would get in a bankruptcy in comparison to a workout, and creditors need to feel confident that the debtor is truthful and reliable. Full disclosure is critical.

In addition, under some state laws, such as California, a debtor can opt to do an Assignment for the Benefit of Creditors. When there is an Assignment for the Benefit of Creditors, a third party is selected to be the assignee. That assignee will liquidate the debtor’s assets. The assignee can sell an ongoing business in much less time than a sale in a Chapter 11 , or the assignee can liquidate the assets in an another format, such as an auction. Since businesses usually don’t operate in a Chapter 7, an Assignment for the Benefit of Creditors can be preferable if there are insufficient funds to do a Chapter 11 and the debtor wants to sell its operations as an ongoing business. Because there is no court supervision (in California), an assignment can save time and expenses. Like a bankruptcy, creditors share pro rata in the distribution of assets. An Assignment for the Benefit of Creditors is a useful tool if the debtor does not need the hammer of the automatic stay, but it has limitations. Buyers may try to control whether an assignment can be used, or if they want the protection of a bankruptcy court order. If a company does not have the cash to operate in a chapter 11, an Assignment for the Benefit of Creditors may be its only choice.

Should you have specific questions on how this pertains to your company, please reach out to our Bankruptcy Practice Group.


Webinar: Navigating Real Estate Purchase & Sales Contracts During the COVID-19 Pandemic

May 07, 2020

On May 6, 2020, seasoned real estate litigators Mark Epstein and Al Flor, Jr. shared their knowledge on issues arising from the COVID-19 pandemic that could adversely impact real estate sale transactions. They provided tools and strategies on how to best protect your interests. The issues created by this crisis are not unprecedented, and Mark and Al discussed lessons learned from past events (e.g., wars) when these issues were litigated.

The topics they discussed include:

  • Legally recognized excuses for non-performance
  • Other contractual formation or enforcement issues to which the COVID-19 pandemic may give rise
  • Remedies for breach of contract (when performance is not excused)

Click here to watch Navigating Real Estate Purchase & Sales Contracts During the COVID-19 Pandemic: Strategies, Hurdles, and Legal Implications.


Statutory Liability Protection for Essential Businesses is an Essential Need

Apr 30, 2020

Since the inception of the COVID-19 shutdown of the American economy instituted by governmental officials across the United States, food and beverage businesses have been designated as critical infrastructure and essential businesses. Early on, little guidance on how to operate in a pandemic beyond social distancing was provided in conjunction with the hastily prepared governmental orders, leaving many food and beverage businesses to navigate the new operating landscape on their own. As the weeks have worn on, thankfully there have been updates to the initial orders and regulatory guidance that have clarified how to operate.

The most recent guidance update was jointly issued by the Centers for Disease Control and Prevention (CDC) and the Occupational Safety and Health Administration (OSHA) on April 26, 2020. This guidance was issued in response to the outbreak of COVID-19 cases in numerous meat and poultry processing facilities across the country. Recognizing that food processing workers may have a higher risk to potential COVID-19 exposure due to the close proximity in which they work along processing lines and other plant areas, the CDC and OSHA made more definitive recommendations regarding distance between workers, engineering controls (for a quick summary, see graphic below), administrative controls (e.g., social distancing protocols, sick leave policies, handwashing, etc.), the use of personal protective equipment, and employee education about the virus and how to prevent its spread.


"Meat Processing Workstations" provided by the CDC

While such guidance is both necessary and helpful, and with some tailoring can be applied to many essential businesses outside of the meat processing industry, it does not eliminate all risk to the essential workers or to the owners/operators of essential businesses who may be claimed to be liable to those workers should they become ill. Food and beverage businesses, even if they faithfully follow these recommended practices, cannot guarantee that none of their workers will be exposed to or contract COVID-19.

More importantly, governmental leaders view food and beverage businesses to be critical to the protection and maintenance of our food supply.  President Donald Trump just signed an Executive Order to re-open shuttered food processing plants to prevent shortages of pork, chicken and other products. Given the competing demands of meeting our nation’s food supply needs and workplace safety, food and beverage businesses need more protection at this time, and liability protection is a must-have tool while we grapple with this pandemic.

Such liability protection was most notably proposed by Senator Mitch McConnell. Senator McConnell, in response to nervous businesses across the country, indicated his desire to shield companies from liability over pandemic-related lawsuits. As reported by Bloomberg, he publicly worried that asking essential businesses to operate without protection from lawsuits could see those businesses end up in years-long legal claims over their efforts to restart the economy.

Senator McConnell is not alone in sharing this concern. Senate Bill 3007, sponsored by Utah State Senator Kirk Cullimore, was recently passed during a “virtual” special session of the Utah legislature. This bill provides protection from civil liability for damages or an injury resulting from exposure of an individual to COVID-19 on a business premises or during an activity managed by the business owner (i.e., claims brought by customers and/or employees).

Proponents of the Utah legislation noted that businesses need assurance that they will not face lawsuits claiming that they exposed employees or customers to COVID-19. This is not an unreasonable fear. Senator Cullimore, who is a practicing attorney, in a subsequent interview regarding the bill noted that he believes that it would be “very difficult to prevail on a negligence claim related to the contracting of COVID-19.” This is likely true given that establishing causation with legal certainty – when, where and how an individual was actually exposed to the virus – would be very difficult, if not impossible. Even so, “as business owners know, whether something may or may not prevail in litigation is not always necessarily the main economic concern,” said Cullimore. “Bringing a claim in and of itself is detrimental to business and an impediment to operating a business.”

Opponents of the Utah legislation openly questioned, however, whether such a measure would be the equivalent of endorsing negligence. It doesn’t have to be. Exceptions to any COVID-19 limitation of liability protections can – and should be – made for gross negligence, fraud or willful misconduct. But deeming certain businesses to be so essential to our communities’ health and safety that they can choose to operate (e.g., food processors, manufacturers, distributors, and retail grocers), and then not shielding them from pandemic-related liability when they do, is a false choice. It is reasonable for a business to argue that it cannot guarantee that a worker will never be exposed to COVID-19. It is also reasonable for a business to dispute that the mere act of working by an employee would establish the requisite causation for any tort claim brought by such employee for being exposed to or contracting COVID-19.

Yet, there must be limitations. Substantial compliance with governmental orders and/or regulatory guidance should be required, of course, and a willful disregard for workplace safety cannot be allowed. If a business is not following recommended governmental and/or regulatory guidance, if it has not made any modifications to its operations to improve worker safety, or if it can be shown that a business willful acted in disregard to applicable law, then the business should not be shielded from potential liability. (In fact, Utah’s law expressly does not preclude liability for willful misconduct or reckless or intentional infliction of harm, nor does it modify workers’ compensation or Utah laws pertaining to workplace safety.)

As statutory liability protections will be heavily negotiated, publicly debated, voted upon, and subject to judicial scrutiny, businesses, employees and customers should be reasonably assured that appropriate liability protections balancing the various concerns will be put into place. But, is it realistic to believe that a federal statute will be quickly put into place, and if so, whether it adequately addresses the concerns of all relevant stakeholders? Senator McConnell has publicly tied such liability protection to any new round of federal stimulus funding, and his Democratic counterparts appear to be resisting this approach for the time being. While it would be preferable for the federal government to establish statutory liability protection regarding COVID-19 exposure claims for essential businesses to prevent a patchwork of state laws of varying levels of protection, essential businesses need protection now. For this reason, I applaud the Utah legislature in passing its liability protection measure, but its broadly worded liability protection language may prove to be too sweeping to serve as a model for legislation covering each state – especially California where it can be argued that we love to do things our own special way.


COVID-19 Risk Factors Belong in Your Private Placement Memorandum

Apr 23, 2020

The COVID-19 pandemic will have lasting unknown effects on businesses and has already caused delays and cancellations with respect to fundraising efforts and investment transactions planned or already in progress. Although raising capital during a pandemic seems like an impossible task, there are investors and issuers that are carefully progressing through the process of pitching, conducting due diligence, negotiating terms, and even closing rounds of financing. Issuers and investors fortunate enough to move forward on their transactions will have some additional considerations to mull over as they negotiate terms and determine an appropriate valuation for a company at a time when the global economy appears to be on the brink of collapse.

This post will discuss the need for companies thinking about fundraising in a private offering of securities to make additional disclosures to prospective investors regarding the impact of the COVID-19 pandemic.

For non-reporting companies conducting a private offering of their securities to investors, disclosures about how the COVID-19 pandemic has and will continue to impact the issuer should be made in a private placement memorandum (PPM). A PPM is the primary disclosure document provided to prospective investors in private offerings of securities to help investors make an informed decision regarding whether to invest in a particular business. Generally, a PPM will provide information about the issuer, the securities to be issued, the issuer’s business, operations, and the advantages, disadvantages, and most importantly, the risks associated with the issuer and thereby the securities the investors intend to purchase. The COVID-19 pandemic will have a material adverse effect on the global economy and on many businesses. A failure to disclose or adequately describe the investment risk it poses may be a material omission or misstatement that could allow investors to have claims for damages or even rescind their investments.

Not all issuers will be affected equally by the COVID-19 pandemic. For many businesses, the impact of the pandemic will be far reaching and substantial, but it may not be material for others. This is why the risk factors disclosed in PPMs should be specifically tailored to address the issuer’s own unique, or not so unique, set of circumstances. Issuers and investors alike will be confronted with challenges caused by disruptions in the consumer marketplace, government regulations and restrictions in response to the pandemic, and other unknown changes in federal and state law. Disclosures should be made around the significant uncertainties regarding the effect of the COVID-19 pandemic on different aspects of the issuer’s business, such as labor and employment matters, supply chains, distribution and customer demand, and the short and long-term negative impact on the issuer’s operations, financial condition and projections.

Labor and Employment

In addition to the usual risk factors around hiring employees and/or independent contractors such as workers’ compensation, wage and hour compliance, availability of highly skilled workers, immigration laws, harassment claims, and management issues, the COVID-19 pandemic will likely have a major impact on hiring, retaining, paying, and managing workers. Shelter in place orders mean that non-essential businesses are forced to operate almost entirely remotely which will prove challenging for even the most tech-savvy and remote-friendly companies. Essential businesses that still operate during the pandemic must put into place and enforce social distancing policies, and may have additional liability if an employee contracts the virus at the workplace.

Supply Chain

The COVID-19 pandemic will likely have some sort of impact on an issuer’s supply chain. This might be in the form of delays in shipments of supplies, key vendors temporarily ceasing operations, service providers unable to perform their duties in a timely fashion, or distributors and sales teams unable to sell and market the issuer’s products. This could or may already have a negative effect on the issuer’s financial condition.

Closures for Non-Essential Businesses

It will be important to determine if the issuer is deemed an “essential business” in the jurisdictions in which it operates. Whether it is or not should be disclosed. Additionally, an issuer should have a general plan for how operations will continue during and after the pandemic. For businesses that are non-essential and require on-site activities (manufacturing, in-person service providers, etc.) it may prove impossible to carry on operations as normal and there are unknown risks and restrictions for future operations.

Demand and Market Downturn

The COVID-19 pandemic will likely have an adverse effect on the global economy as a whole, resulting in an economic downturn that could impact demand for the issuer’s products or services. Likewise, issuers should let investors know if they are in a position to take advantage of closures or other impacts of the pandemic, for example businesses offering medical supplies, remote collaboration technologies, or delivery services may see an uptick in demand and revenue.

Government Response

Federal, state and local governmental authorities have passed legislation and issued rules and executive orders aimed at blunting the economic impact of lockdowns and shelter in place orders to workers and businesses alike. The costs of such measures such as mandated paid sick leave may be borne solely or partially by businesses, which may have a material adverse effect on their financial condition. Uncertainty around how long the pandemic will last and its continuing effects on the economy may result in further government actions that could adversely impact the business and financial prospects of the issuer. Issuers are advised to monitor new legislation or orders to which they may be subject and assess how such government actions may impact their business. If the issuer’s business will be or might be materially affected, appropriate disclosures to investors should be made.

An issuer may either (1) revise or update its existing risk factor disclosures in its offering materials to address how each area has been or may be affected by the COVID-19 pandemic, or (2) include a new standalone risk factor disclosure regarding the COVID-19 pandemic and its impact on the issuer’s overall business. Either way, it is important to be fully transparent about the pandemic’s effect on the business of the issuer. Because of the rapidly changing nature of the pandemic and government and societal reactions, it is important that an issuer monitor these developments and their impact on its business and update its disclosures as circumstances change.

Issuers or investors with questions regarding COVID-19 risk factor disclosures may contact any member of Wendel Rosen’s Business Practice Group.