During the early stages of the COVID-19 pandemic in the United States, we wrote an article discussing the potential benefits and limitations of waivers of liability for businesses considering ways to protect against potential liability for COVID-19 exposure claims. We explained that, despite the uncertainties of whether such a waiver would be enforced by courts, sound legal principles in this area of law could provide much-needed guidance to businesses and industries committed to continuing essential operations. Since our initial publication, discussions around potential liability of businesses for COVID-19 exposure claims have grown, and some states have even sought to limit liability for such claims by proclamation and legislation. We have closely monitored emerging trends in the area of liability waivers. Based on the developments we have observed, we saw it fit to revisit the topic of waivers in this brief update.
We have observed that a significant number of wide-ranging industries are considering use of liability waivers as they reopen business operations. In our first article, we focused on the types of businesses that traditionally rely on liability waivers as part of their regular operations. These included proverbial recreational industries, like sports clubs, gyms, summer camps, and homeowners’ associations with pool and other recreational facilities. While these still make up a significant portion of businesses looking to use waivers, they are by no means the only businesses interested in liability waivers. Other sectors, particularly the services industries, are also considering such waivers. For example, businesses that require employees to go into customers’ homes or business sites to provide cleaning, plumbing, or internet services, as well as some medical services for home-bound patients, are among those considering use of waivers to limit exposure claims from their customers, clients, and patients. More specifically, the industries where the ability to enforce and observe strict social distancing guidelines is toughest, like beauty salons or physical therapy and doctors’ offices, are among those where the topic of liability waivers has been trending.
As discussed in our first article, we are compelled to reiterate that waivers of liability may not be appropriate in every circumstance. Rather, there are some limitations to keep in mind if your business is considering liability waivers for potential COVID-19 exposure claims. For example, businesses should carefully consider the status of the person signing the waiver. In most states, a waiver signed by an employee that prospectively waives liability arising out of a negligent act of the employer will not be enforceable. This is because liability waivers in the employment context generally implicate the public interest and are therefore void as a matter of public policy. See, e.g., Brown v. Soh, 280 Conn. 494, 503 (2006). Similarly, waivers signed by parents on behalf of minors are unenforceable in some states because they, too, may violate public policy. See, e.g., Rutherford v. Talisker Canyons Fin., Co., LLC, 445 P.3d 474 (2019). And, in some states, waivers signed by consumers may not be enforceable to the extent they purport to waive the product suppliers’ strict liability for defective products. See Wheelock v. Sport Kites, Inc., 839 F. Supp. 730, 737 (D. Haw. 1993) (“there is a strong policy against allowing product suppliers to disclaim liability for injuries caused by defects in products they place on the market.”). The enforceability of a waiver of liability may also be governed, or limited, by statute or regulation. For example, some states will not enforce a waiver of liability for conduct that is covered under a premises liability statute, especially if governed by comprehensive state regulations and involving a matter of public concern such as rental of housing. See, e.g., Stanley v. Creighton Co., 911 P.2d 705, 708 (Colo. App. 1996). In some jurisdictions, a waiver will also be unenforceable in personal injury cases if the injury is caused by a failure to comply with safety laws and regulations. Slowe v. Pike Creek Court Club, Inc., No. CIV.A. 08C-08-029PLA, 2008 WL 5115035, at *6 (Del. Super. Ct. Dec. 4, 2008) (declining to enforce liability waiver “[b]ecause . . . the state’s involvement in regulating public pools suggest[s] that enforcing the liability waiver in this case could impermissibly release [the defendant] from liability for violating a statutory duty.”); cf. 46 U.S.C. § 30509 (providing that the owner or agent of certain water vessels cannot limit by contract its liability for negligence to its passengers). Lastly, some states, such as Connecticut, Montana, Virginia, and Louisiana, will generally not enforce liability waivers at all. See, e.g., Hanks v. Powder Ridge Restaurant Corp., 276 Conn. 314, 326 (2005); Mont. Stat. § 28-2-702; Hiett v. Lake Barcroft Cmty. Ass’n, Inc., 244 Va. 191, 195 (1992); La. Civ. Code Ann. art. 2004.
Despite the limitations above, liability waivers are valuable tools for businesses concerned about exposure claims, and there is no evidence that their usefulness in preventing liability and deterring litigation is eroding. Once you and the legal professional advising you determine a liability waiver may be appropriate for your business, be sure to keep the following principles in mind as your attorney drafts these waivers and as you ask your customers to sign them:
- Liability waivers are contracts—the parties to them should think of them as such. Because courts apply traditional rules of contract formation, construction, and interpretation, waivers should be drafted in clear, unambiguous, and specific terms. This requires the drafting party to consider carefully the activity or conduct the parties will engage in, the attendant risks of that activity or conduct, and the rights that are being waived. These should be clearly expressed in the waiver. See, e.g., Slowe, 2008 WL 5115035, at *3 (“The liability waiver therefore is not ‘crystal clear’ in releasing [the defendant] from [the plaintiff’s] claim that it was negligent.”). Like most contracts, the waiver should be signed by the person waiving liability (e., the customer or client).
- Almost uniformly, liability waivers cannot be used to prospectively waive liability for injuries arising out of intentional, reckless, or grossly negligent conduct. Waivers should not be so broad as to incorporate conduct that the person signing cannot waive—this may make the entire waiver unenforceable. Instead, limit the language in the waiver to cover liability arising out of specific conduct which, in most states, will be ordinary negligence. Alack v. Vic Tanny Int’l of Missouri, Inc., 923 S.W.2d 330, 337 (Mo. 1996) (declining to enforce a waiver of liability that purported to waive “any and all claims”).
- The waiver should also be fairly bargained between the parties. This will require the party signing the waiver to understand the conduct and risks covered by the waiver and to willingly sign it. To reduce arguments of ambiguity, a waiver can be placed on a separate page from other provisions with large font that is easy to read.
- The law of each state is different. Whether a waiver will be enforceable in your state and under particular circumstances will require the legal professional drafting the waiver to carefully assess the law in your state to ensure full compliance with all applicable laws.
As clients reopen their businesses and resume operations during these unchartered times, our firm is committed to monitoring and advising them on this and other relevant topics.