Darshan: I wanted to talk today about the coronavirus and what is the role of the general counsel and what are some considerations for the general counsel/chief compliance officer.
Narrator: This is the DarshanTalks podcast. Regulatory guy, irregular podcast with host Darshan Kulkarni. You can find the show on Twitter @darshantalks or the show's website at darshantalks.com.
Darshan: This can have differing roles depending on the size of your organizations. This can have differing roles depending on the maturity of your organization. Some of the things you want to start thinking about is, well is the general counsel even supposed to be involved? So I did a little bit of research and again, obviously depends on how your organization sees it, but the general counsel is responsible for maintaining knowledge of the organization's operations and legal documents and promulgating and creating directives of corporate acts and decisions. So I would argue that, yeah, the general counsel, the chief compliance officer has a role in making sure that for the companies involved in this process and what is that role supposed to look like.
Darshan: So let's take a step back. Let's talk about the coronavirus. So the coronavirus is actually a type, it's a family of viruses and we had MERS and we had SARS a few years ago. Those all fall within that same virus family, if you will. And what we have now is something called C-O-V-I-D 19 or COVID 19 and that's just another one of them. Obviously it's spread significantly and it's caused global panics in many ways. But that's really what we're talking about. So the real question then comes out, what is the role of the general counsel in these situations? And I think that what you have to after take away is the fact that there's an inside role and there's an outside role.
Darshan: And when you're talking about the inside role, you're really talking about what are the connections to the employees, what are the connections to the board of directors, and what do you need to do in those scenarios. So from that perspective, you want to think about the OSHA general duty clause, which basically requires that employers provide employment and a place of employment which is free from recognized hazards that are causing or are likely to cause the death or serious harm to employees.
Darshan: So an employer, has an affirmative duty to protect employees from things like a pandemic virus. And I'm not sure we necessarily are in the world of pandemics right now, but there's an argument out there. So the Federal Protecting America's Workers Act, or I guess it could be considered power expanded coverage to the public sector in general. So, that's one consideration, just pure OSHA requires it that you, it requires that you make sure that you are protecting your employees in the best way possible. So let's consider that one step further. If you have global operations, which is true for a lot of pharmaceutic companies and for some healthcare companies, you need to start looking at the state department website, looking the CDC, looking at what the FDA is doing.
Darshan: For example, China and Italy have restrictions on travel. China, they actually go out one step further and they recommend against traveling to China. Italy actually they have a level three, I believe, essentially saying that we'd recommend against traveling to Italy. So keep an eye out to see what you really need to get into and if your employees really need to be there. If an employee has been in a real coronavirus hotspot, maybe consider making them stay a full 14-day incubation period at home. It doesn't really matter in this world if they work remotely, maybe they can work remotely this time. And you want to start thinking about, well, does the PTO apply during this period? And again, it's going to be a company by company decision, but maybe if you require that PTO apply, your employees may decide that they don't want to take PTO and that may have its own implications.
Darshan: And the next thing to start thinking about is the fact that if you have someone stay home without pay, if they don't have PTO, is that going to be a huge problem? So maybe you want to look at what the implications of that are. You want to make sure that your employees know of your sick policy and in certain states, for example, Massachusetts, the state actually has sick policies that apply to an employee taking care of a child, a spouse, a parent or a parent of spouse. The CDC recommends at this time that employers not require a note from employees who are sick from this type of problem. Now this may theoretically conflict with the ADA or state laws or state sick time laws in that they may recommend that in those scenarios. But again, which rules do you need to follow at this time, what makes the most sense is something that you need to decide on a company by company level.
Darshan: The next thing you want to start thinking about is insurance. So for example, well before we get to insurance, let's talk a little bit about, well, I guess technically this falls into your insurance. You have property insurance policies or business interruption coverage, which may be triggered as a result of direct physical loss or damage. So if you have to fumigate your location or if you are required to make sure that if the location becomes temporarily unavailable, maybe there is a claim under your insurance policy. You want to look at your directors and owner's policy, see if you need to look at coverage. for your board of directors. You may also want to be looking at your workers' compensation policies. So consider each one of those things as you continue the process of evaluating the impact of the coronavirus on your company.
Darshan: What else do you want to start thinking about? You want to start thinking about contractual impact. So communicate with your critical suppliers, identify mission critical materials and parts and that companies should actively and proactively reach out to these suppliers and ask them what is the inventory level? Do you need to be considering alternative suppliers? To the extent that they can cover it, are there going to be delays? Do those delays technically violate your agreement? How do you want to deal with that part of it? In some cases, you may actually have force majeure. So first force majeure is usually considered to be something highly unusual and therefore you're unable to comply, et cetera, et cetera, et cetera, and you have force majeure policies that may kick into place.
Darshan: On the other hand, if you are subject to English law, you may even have something called frustration. And frustration is different because frustration takes it one step further. Even if you aren't in force majeure, you can actually go one step further and say that the contract itself was satisfied and it was discharged by the operation of law. So what of the implications of that. So look into that a little bit further, see if that applies to you. Monitor your customer demands, your customers may actually be requiring that you meet certain contractual obligations. Well, how will you meet them and will you meet them in the appropriate timelines? Will you be able to provide them everything that asks for in terms of the allocation requirements or are you going to have to divide in light of just the type of product you produce, as a pharmaceutical manufacturer or as a medical device manufacturer, a food manufacturer, as a healthcare practitioner. if you have a merge and acquisition clause, does this constitute a material adverse change that you need to be considering?
Darshan: What are the reporting requirements? If you're a public company, do you need to consider what the implications of this are? So you may need to report an impact. If you look at Apple, you talk about Microsoft, they're all reporting that they may be impacted. If you are a pharmaceutical company and you are a single source supplier, you may need to inform the FDA. The FDA may have already reached out to you. So think about these issues as well. So these are some of the considerations. These are some of the questions that you should be considering as you get into evaluating the impact of the coronavirus. Stay tuned, listen in. If you have any questions, feel free to reach out to me. Happy to talk to you further.
Narrator: This is the DarshanTalks podcast. Regulatory guy, irregular podcast with host Darshan Kulkarni. You can find the show on Twitter @darshantalks or the show's website at darshantalks.com.
