Tips for Nonprofits During the COVID-19 Pandemic

Last week, Venable LLP hosted a webinar called COVID-19: What Your Nonprofit Needs To Know, which examined current questions surrounding workers, insurance, events, travel, and workplace situations. Below are some tips for nonprofits in handling the COVID-19 pandemic. Note that, as the situation is fluid and changing rapidly, good practices recommended today may be different by tomorrow.

Insurance and Event Cancellation

Insurance may be very useful right now, particularly as nonprofit organizations cancel events and experience business interruption. Nonprofits should speak with their insurance providers and inquire about their coverage details and limits, and read their insurance policies carefully. If an organization obtained event cancellation insurance, for example, which is typically written to cover specific events, it should check to see if there is an exclusion for communicable diseases.  Nonprofits should provide timely notice to their insurance providers and keep accurate records, track expenses, and document losses carefully. Keep in mind that, communications, both internal and external, may be discoverable in litigation later on, and that communications with insurance brokers and agents are not privileged.

When considering the financial exposure of canceling an event, there are a few contractual provisions to look out for, such as termination, damages, and force majeure clauses. Each vendor contract should be reviewed, as they all may be different. For example, termination fees may increase over time depending on calendar targets, which could affect when a decision should be made about canceling a certain vendor or the event as a whole.

A force majeure clause is a contract provision that excuses performance when supervening circumstances, outside of the parties’ control, prevent or impede performance. Such a provision may contain a specific list of events that count as an “act of god,” or sometimes there may be a catch-all phrase such as “and any other occurrence beyond the parties’ control.” Some, more flexible force majeure provisions excuse performance when it would be “inadvisable, commercially impracticable, illegal, or impossible” to perform, while others may be more limited as to when performance may be excused.

Nonprofits should consider speaking with counsel, most likely a litigator, about the specific facts and circumstances, and whether excused performance may be sought. A litigator may also be able to help an organization formulate a plan for approaching each vendor about the possibility of terminating to see what might be negotiated. Additionally, it will be important to comply with any notice provisions in each contract and any other clauses that may require the mitigation of damages. 

Employment Issues, Generally

Under the Occupational Safety and Health Act (“OSHA”), generally speaking, there is an obligation for employers (to which OSHA applies) to assure safe and healthy working conditions, including a workplace free from recognized hazards. Nonprofits should keep in mind that the “workplace” may not be solely the physical office, but may be anywhere the organization’s business is being conducted. For recommendations intended to assist employers in providing a safe and healthful workplace, see OSHA’s Guidance on Preparing Workplaces for COVID-19

Nonprofits should also be thoughtful and deliberate in crafting employee policies about remote work and work travel, and ensure that all policies are being consistently administered. Inconsistent application of policies could create a risk of a discrimination claim.

Furthermore, as employee health issues are typically private, an organization may not be aware of the underlying health conditions of its employees and any necessary accommodations that should be sought during this time. Accordingly, communication is key, and any communications from the nonprofit employer to its workers should be accurate and consistent. Employees should feel safe to report that they are experiencing symptoms and should be told to stay home until they are symptom free. Employers must also inform all employees of any reported exposures.

Lastly, nonprofits should seek counsel from employment attorneys regarding the federal and state labor and employment laws that may apply to them and their workers during this crisis.

Additional Resource: Nonprofit Governance: Coronavirus and COVID-19