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The Implications of COVID-19 for International Clients

Client Alert

Gibbons Special Alert

March 23, 2020

Our international clients are facing some unique legal challenges and cross-border issues related to the COVID-19 pandemic, issues that go beyond those that may be encountered in their home jurisdictions. Foreign companies doing business in the United States will not only be affected by the restrictions and interruptions caused by travel bans of their employees and potential impediments to the movement of their goods, but they will have to monitor the rapidly evolving legal developments in the United States in addition to those in their home countries.

Global Supply Chain Disruption

Supply chains will be interrupted because supplier’s workforce may be required to stay at home, or manufacturing facilities may be forced to close. Additionally, shipping companies may be facing work shortages or problems related to newly implemented travel bans (even though these bans are not supposed to affect the movement of goods per se, it is unclear yet how the personnel accompanying worldwide shipping by vessel or plane will be implicated). Inevitably, disputes will arise between customers and suppliers located in the home jurisdiction and abroad. Contract provisions related to force majeure, choice of law, personal jurisdiction, or international arbitration, which may have received little or no attention while being negotiated, will become crucial in connection for the resolution of such disputes. Similarly, if a party intends to terminate an international supply or manufacturing contract, the requirements for such a termination, in particular if a (usually less costly) termination for cause is sought, will have to be closely examined.

International Employment Issues

Foreign employers have a duty in the United States to provide a safe work environment. In light of the COVID-19 pandemic, all employers, including non-U.S. employers doing business in the United States must:

  • Assess the risk of workplace disruption, including the protection of staff, implementation of remote working programs, cancellation of company events or conferences, implementing international or national travel bans, reporting of travel (in particular from high-risk regions, which change almost daily), implementation of self-quarantining obligations, or reporting obligations of infections within a family or circle of friends.
  • Communicate government health recommendations to employees, including advice published by U.S. public health authorities to minimize the risk of contagion in the workplace.
  • Consider whether employees who were directed by their employers to stay at home should continue to be paid during their absence under applicable state law and employment policies, as well as under the public policy of a parent company’s home jurisdiction.
  • Grapple with issues regarding work-at-home accommodations, employee hours, sick leave, medical benefits, and parental leave. In some cases, employers can take advantage of state-specific sick leave laws for their U.S. employees, which cover public health emergencies under certain conditions.

Data Protection and Privacy Law Issues

Responses to COVID-19 also raise unique U.S. and European data privacy and data protection concerns, which include the following:

  • When collecting information of employees to address COVID-19 risks, businesses need to consider any applicable statutory and regulatory restrictions on collection of personal data.
  • European companies doing business in the United States need to consider the European Union’s General Data Protection Regulation (GDPR) and home country laws when processing employee, visitor, and customer personal data, especially health related data.
  • If a European business sends personal data outside the European Union, transferors must ensure they are in compliance with the GDPR data transfer mechanisms.
  • Consider whether existing privacy policies and notices are sufficient to cover the data to be collected for purposes of COVID-19 response from employees, visitors, customers, and other data subjects, and the processing of such data.

Insurance Coverage

The applicability of business interruption and other types of insurance could be of assistance in recouping lost revenue, but the applicability of such policy to recoup losses for seconded employees or those who also work overseas is complicated and professional advice is often required to effect the proper notice provisions required under the policy.

U.S. Government Assistance

We have assembled an interdisciplinary team to advise you on the full range of state and federal programs being authorized by law, established, or expanded to assist businesses with losses related to the coronavirus crisis. In some cases, foreign-based entities may be eligible to participate in these U.S. programs depending on where they manufacture goods or employ individuals. Working with clients’ senior management teams, we can provide strategic advice on the internal measures to be initiated immediately in order to qualify and begin preparing applications for financial assistance from applicable U.S. government agencies.

For further information on any of these issues or other concerns relating to your concerns regarding cross-border issues arising from the COVID-19 pandemic, please contact Jeffrey Nagel or Peter Flägel.

To view all client alerts in Gibbons “The Coronavirus Pandemic and Your Business: How We Can Help” Series, click here.