An ongoing issue for many organizations during the COVID-19 pandemic has been potential liabilities arising from exposure to the disease in the workplace.

“Companies that can, would be smart to continue to allow flexible working conditions until COVID fears lessen, or they likely will face the prospect of COVID-related employment practice liability suits,” said Christopher Vlasich, Chicago-based assistant vice president, financial lines and liability, North America claims, at Allianz Global Corporate & Specialty, a unit of Allianz SE.

Requiring employees to be vaccinated and return to the office comes with risk. Not requiring vaccinations of employees is risky as well. 

If enough COVID-related EPL suits are filed, or filed as a class action against a company, “they could present D&O risk,” Mr. Vlasich said.

A big concern for D&O-related litigation is over-optimistic statements. “Companies would be wise to couch their future prospects carefully, until they are certain COVID-related issues are in the rearview mirror,” he said.

Sarah Downey, managing director at Lockton Cos. LLC in New York, said that failing to make accurate and complete disclosures could prove costly.

“You’ll spend about $1.5 million to $2 million in defense costs and lawyers’ fees just to win in court and make the lawsuit go away,” she said.

“If it goes further, especially in a securities class action, you could spend $5 million to $10 million, which doesn’t include the settlement.”

Adrian Atilano, executive liability practice leader at Hub California, a unit of Hub International Ltd., said that if a company’s stock drops 15% or more, “it’s important to notice if the rest of the market drops as well. The plaintiffs attorneys will have less argument to sue if the entire marketplace is down.”

However, he added, “if the stock market is doing well and your stock drops, plaintiffs lawyers will peel the onion and see if they have an opening for a lawsuit.”

How to head this off? Mr. Atilano summed it up: “Many publicly traded companies have a good public relations firm and their law firm on speed dial.” Because when something negative happens, “you are obliged to share it if it will impact the company’s stock. This is where communications and law firms can help to minimize the damage,” he said.