Is the coronavirus an 'Act of God'?
Who bears the risk and obligations of an employment contract when something unforeseeable happens, making it impractical to perform under the contract?
'Force majeure' clauses
Since the start of the pandemic and ensuing closures, I have advised several employers and employees wanting to know whether the terms of their employment contracts still had to be honored. Does an employer that has been put out of business by a public health order have to continue paying its contract employees? Some employers have demanded employees amend their contracts to reflect the change in the company's revenue. Some have terminated contracts altogether. The employers and employees alike have all had the same question: Is this a breach of the contract?
Many contracts in various contexts include an "Act of God" or "force majeure" clause, which excuses a party from their contractual obligations if something unpredictable and unavoidable makes it impractical for the party to perform. The clauses are often written into construction contracts when a natural disaster would make it virtually impossible to complete a building on time. They are often invoked when hurricanes, wildfires, floods, or other such events occur. An employer may also include a provision excusing itself from paying contract employees in similar circumstances.
Are pandemics included?