June 3, 2020
The following is an article that was published in an online daily discussing the consequences of a new wavier clause introduced by the New York Stock Exchange for employees who were joining back to work. The waiver aims to dilute the Liability of the employer, associated with the prospects of being infected from COVID-19.
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by Benjamin G. Davis is a Professor of Law at the University of Toledo College of Law
As recently reported, with the reopening of the New York Stock Exchanges, persons on the floor are required to sign what is called a COVID-19 waiver. The text of such a waiver is unclear but its effect pernicious.
For a person who has a contract already, the waiver amounts to a modification of the contract. At common law, such modification requires consideration (though there is a doctrine that has tried to liberalize the common law requirements to make them more like the Uniform Commercial Code which does not require consideration but does require good faith). So, one can imagine that a person who gets sick or dies from COVID-19 brings a complaint against the employer or the New York Stock Exchange would face a defense from the defendant asserting that the employee signed a waiver and therefore the employer cannot be liable. However, there may be an alternative argument based on reliance by the employer that would have to be weighed in that setting. A difficult conundrum for a worker.
One line of argument for such a worker would be to argue there was no consideration for the waiver so that it is unenforceable as a matter of basic contract law. However, there may be arguments made that by continuing to work in the exchange they somehow have become bound by waiver, similar to the idea of employers being able to change handbooks at will, and by showing up to work the employee is accepting the changes.
Assuming no misrepresentation or nondisclosure, another line of argument might be that these waivers are voidable due to duress, undue influence, unconscionability, or public policy. The problem with duress would be of course the issue of whether the employee had a reasonable alternative. The problem with undue influence is establishing the oppression by the dominating party objectively and the subjective weakened state of the employee. The problem with unconscionability would be with identifying the procedural unconscionability in that setting even if one was to find such waivers substantively unconscionable. One must understand that the background reality of a pandemic would not itself serve as a basis for such claims.
So that leaves public policy. But there are problems there. On the one hand, there is a presumption in favor of enforcing contracts – a public policy. So, to assert public policy one has to show some kind of clear countervailing public policy that would apply, and that said the countervailing public policy is advanced by the voiding of the waiver. In the absence of clear state or federal legislation or guidance, that public policy assertion might not prosper.
Add to this that most if not all of the people who are being required to sign such waivers are most likely in contracts that have arbitration clauses. The effect is that the jurisdiction of courts is ousted in favor of arbitral tribunals of private persons. Whether those arbitral tribunals will be sophisticated enough to do public policy or other types of analysis in the situation of a pandemic is an open question. After all, the arbitral tribunal gets its source of power from the arbitration clause in the contract – as opposed to a court getting its power through the jurisdictional power granted under state or federal constitutions and statutes.
And, keep in mind that such waivers may extend to tort analysis raising a specter of arbitral tribunals examining both contractual and tort claims, along with any statutory claims that might be raised. All of these claims might be subsumed in this COVID-19 waiver.
For the newbie, who just starts out in the New York Stock Exchange and signs an employment contract which includes this waiver, the situation with respect to consideration is of course different. That newbie would have to assert the grounds stated above as to the contract. However, as they would not be asserting those defenses against the arbitration clause, inevitably in the current state of Supreme Court doctrine, the newbie would have to argue their case before the arbitral tribunal with the attendant difficulties described above.
Now, if one is thinking that this is only a problem for these generally well-off persons in contractual settings like the New York Stock Exchange, one is wrong. I have been made aware of such waivers being required of parents of children with disabilities in order to continue the accommodations to which they are entitled under the Americans with Disabilities Act (ADA). Parents desperate to have their children learn are put in a spot where to fulfill their child’s needs, they have to put their child in front of a COVID-19 risk.
And, to make the Bar exam worse (there is an old adage that “the only thing worse than taking the Bar exam, is taking it twice), unlicensed lawyers who are recent graduates who take the Mississippi Bar Exam in a few weeks are required to sign a COVID-19 waiver. I have taught 3L Extended Bar Preparation for three years and I know intimately the stress for third-year law students about facing the Bar. I still can remember vividly my own experience thirty-seven years ago. To have added to the stress a requirement that the Bar applicant sign a COVID-19 waiver is simply appalling. The better way is to think through how to in fact hold such a Bar exam in a manner where there is no need for such a waiver – and to delay the Bar exam until a scientifically and medically sound approach is determined. Otherwise, in the middle of the most important exam of their lives whose passage is often a condition of employment, these unlicensed lawyers are being thrown to the wolves as are there family and friends who interact with and support them in this arduous rite of passage.
I expect that boilerplate language has been developed and is now circulating all across America with respect to every kind of contract with an employer-employee relationship or even for collective bargaining agreements and more.
They are a pernicious throwing of workers to the wolves as they are left with the Hobbesian choice of risking their health in exchange for keeping their jobs in a situation where thirty-six million Americans have gone unemployed in the last two months.
These COVID-19 waivers are pernicious and evil, and one would hope that the state and federal governments would institute clear rules that make it abundantly clear that these contractual waivers are completely unenforceable and void ab initio. One would hope so.
These COVID-19 waivers are nothing more than doing things on the cheap: place the risk on the workers rather than doing the hard work of providing for the workers’ safety in a meaningful way that requires resources and thought. Limiting liability is not how one responds to a pandemic unless one is just too cheap to do the proper things that address the sickness.
We should all be appalled.