Coronavirus (COVID-19)

As featured in #WorkforceWednesday: California provides a detailed COVID-19 employer playbook, and a federal judge vacated parts of the Department of Labor’s Families First Coronavirus Response Act rule.

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On July 27, 2020, Virginia became the first state in the nation to implement workplace safety and health standards for COVID-19.  The Safety and Health Codes Board adopted § 16VAC25-220, an Emergency Temporary Standard for Infectious Disease Prevention: SARS-CoV-2 Virus That Causes COVID-19 (the “Temporary Standard”), which is designed to supplement and enhance existing

While businesses and their employees continue to operate in the “new frontier” of working-from-home during the COVID-19 pandemic and the gradual reopening of the economy, a serious risk continues to present itself: the threat of cybercrime. The increased use of remote access to work systems and related applications has made businesses a prime target for those unscrupulous individuals seeking to encroach on companies’ cyber-landscape. Flaws in VPNs, firewalls, and videoconferencing, for example, have exposed many companies’ electronic infrastructures to these incursions. Similarly, the at-home workforce has increasingly been subjected to social engineering attacks often cloaked as communications purporting to provide information about pandemic-related issues.

In addition to the technical measures necessary to confront these threats, businesses would be well-advised to ensure that their cyber insurance is up to date and responds to this challenging new environment. Such coverage may be found in a variety of insurance, including property policies, commercial crime bonds or in stand-alone cyber risk policies. Regardless of where it resides, cyber insurance typically provides coverage for data breaches, ransomware attacks and employee wrongdoing, and for loss of business income occasioned by covered occurrences.

While the jurisprudence related to these issues continues to develop, some recent cases provide insight into how courts may decide cyber coverage questions in the current environment. 

Ransomware – Covered

Earlier this year the U.S. District Court for the District of Maryland considered the issue of how first-party “computer coverage” responded to data loss resulting from a ransomware attack. In National Ink & Stitch, LLC v. State Auto Property & Casualty Ins. Co., No. SAG-18-2138, 2020 WL 374460 (D. Md. Jan. 23, 2020), the insured was an embroidery and screen printing business that stored business-related art, logos, designs and graphics software on a server that became compromised by a ransomware attack. Id. at *1. As a result, the insured needed to recreate stored data that it was unable to access because of the incursion. Id. Further, after the software was replaced and reinstalled by experts, there remained a likelihood that remnants of the virus lingered on the system, leaving the insured with the unpalatable choice of either “wiping” the entire system or purchasing a new server. Id.

The policy at issue responded to “direct physical loss of damage to Covered Property at the premises…caused by…any Covered Cause of Loss.” Id. “Covered Property” included electronic data processing, recordings or storage media such as film, tapes, disks, etc. in addition to data stored on such media. Id. at *1-2. Software was included as “covered property” in the policy. Id. at *1. The insurer denied the claim on the basis that the insured had not experienced direct physical loss or damage to its computer system to justify reimbursement of the cost of replacing the entire system. Id. at *2. That is, because the insured “only lost data and could still use its computer system,” the insurer took the position that there was no “direct physical loss” and, therefore, no coverage. Id.

In finding that the insured should be reimbursed for its losses, the court determined that the plain language of the policy “contemplates that data and software are covered and can experience ‘direct physical loss or damage’” Id. at *3. The court refused to credit the insurer’s argument that a loss of software and its related functionality was not a direct loss to tangible property simply because the insured could still use the system albeit in a diminished fashion. Id. Instead, relying on relevant case law, the court it recognized that the insured’s computer system, while still functional, had been rendered inefficient and its storage capability was damaged in a way that its data and software could not be retrieved. Id. at *4. Accordingly, the court ruled that the policy did not require the computer system to be completely unable to function in order to constitute covered “physical loss or damage”. Id. at *5.

In granting summary judgment in favor of the insured, the court viewed the system’s loss of use and reliability and impaired function to be consistent with the “physical loss or damage to” language in the policy. Id. This was so because “not only did [insured] sustain a loss of its data and software, but [it] is left with a slower system which appears to be harboring a dormant virus, and is unable to access a significant portion of software and stored data.” Id.
Continue Reading Cyber Coverage in the Age of COVID-19 Need Not Result in Pandemonium

As we previously reported, the COVID-19 pandemic has affected employers and employees across the globe.  Since the outbreak of COVID-19, governments have implemented measures to address the economic impact of the pandemic, including job retention schemes and promoting remote work.  Many employers have reconsidered the need for employees to return to the office

Featured in #WorkforceWednesday: This week, Virginia became the first state to issue workplace safety standards, but with guidance still varying widely, many nationwide businesses have begun requiring masks.

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On July 20, 2020, the Wage and Hour Division (“WHD”) of the U.S. Department of Labor (“DOL”) published new guidance for businesses reopening amid the COVID-19 pandemic. The guidance is in the form of additions to the WHD’s existing Frequently Asked Questions (“FAQs” or “Guidance”) and addresses issues arising under two leave laws—the Family and

As featured in #WorkforceWednesday: The latest FAQs from OSHA recommend wearing face masks, among other suggestions, for employees returning to work. Attorney Robert J. O’Hara discusses the significance of OSHA’s decision to issue recommendations, rather than guidance, and how rules on face masks in the office may differ at the state and local levels.

As summer kicks into high gear, and the Americans with Disabilities Act’s 30th anniversary looms large at the end of this month, businesses in many jurisdictions are in the process of gradually reopening to the public.

And if the long and difficult spring wasn’t trying enough, businesses now face yet another challenge — balancing maintaining

On July 2, 2020, New Jersey Governor Phil Murphy signed Executive Order 162 (“EO 162”) extending the state’s Public Health Emergency by thirty days, i.e., until approximately August 2, 2020. Pursuant to EO 162, all Executive Orders and actions taken by any Executive Branch departments and agencies (including Administrative Orders) that were adopted in whole

Trump Administration Amends Presidential Proclamation That Temporarily Suspends New H-1B, H2B, J-1, and L-1 Visa and Travel from Abroad

On June 29, 2020, the Trump administration issued an amendment to Section 3(a)(ii) of Proclamation 10052 (“Proclamation”) to suspend and limit foreign nationals attempting to enter the United States in H-1B/H-2B/H-4, L-1/L-2, or J-1/J-2 employment-based nonimmigrant