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Ask the Expert: Can a Waiver Limit a Restaurant’s Liability?



Businesses, including restaurants, are exploring ways to limit their legal exposure in the event an employee or customer contracts COVID-19 while at work or visiting a business. Liability waivers that are ubiquitous in sporting and recreational activities come immediately to mind. But just because a liability waiver is used—and, perhaps more importantly, legally enforced—in a particular context does not mean it necessarily should be used, or that it will be enforced, in every context.

The enforceability of liability waivers varies from state to state. Some states ban them outright, while others take a more permissive approach that focuses on the importance of the freedom to contract. There are certain common principles that a majority of courts apply in determining whether a liability waiver is enforceable.

First, liability waivers require that they prominently and unambiguously declare what rights the signer is waiving. They also do not allow businesses to disclaim liability for reckless or intentional conduct. States will not enforce liability waivers that violate its public policy. It is this third principle that presents the biggest impediment to the enforceability of liability waivers in the restaurant business.

 

For restaurant use

Whether a liability waiver violates public policy is determined on a state-by-state basis, but a majority of courts focus on (1) the signer’s relative bargaining power and (2) whether the service provided is an essential or public service. For example, Minnesota courts will not enforce a liability waiver if there is a great disparity of bargaining power (meaning there is some compulsion to sign, there is no opportunity to negotiate and the services cannot reasonably be obtained elsewhere) and the waiver releases the provider of an essential or public service.  When determining whether a service is an essential or a public service, Minnesota courts look at whether it is the type of service that is suitable for public regulation, such as hotels, public utilities, common carriers and hospitals. Similarly, Wisconsin courts typically will not enforce a liability waiver if there is a great disparity of bargaining power or it is presented as part of a standardized agreement with no opportunity to bargain. Wisconsin does not, however, place as much emphasis on whether the liability waiver applies to essential or public services.

Liability waivers between employers and employees are generally disfavored and, in most states, will not be enforced as against public policy because employees typically don’t have much bargaining power, and in most circumstances will feel compelled to sign a waiver in order to keep their jobs. 

Liability waivers between a restaurant and its patrons are so novel (who ever thought of one before the pandemic?) that so far they have not been tested in most (if any) state courts. It therefore is difficult to say whether they ultimately will be found enforceable. On the one hand, because there is little compulsion for a restaurant goer to sign a waiver—they typically have many dining options and are free to eat elsewhere—they may be enforceable in places like Minnesota that will enforce a take-it-or-leave-it waiver if an equivalent service is readily obtained elsewhere. On the other hand, in places like Wisconsin that disfavor non-negotiable liability waivers, if a diner is required to sign a standard form waiver or eat someplace else, the waiver may not be enforceable. Similarly, although the ability to eat-out may be considered by many a privilege and not a necessity, it is possible that courts will determine that restaurants, like hotels, provide an essential or public service. If that were the case, such liability waivers would not be enforceable in places like Minnesota that do not allow providers of essential or public services to contract around their own negligence.  

 

Think of it as 'off-putting' 

Regardless of whether waivers would be enforced in the context of restaurants, reliance on waivers alone is unwise. For one, asking customers to sign a waiver in the dining context may be off-putting. It is also important that restaurants not feel a false sense of security that a waiver will protect them from liability and therefore forego additional precautions, thinking they are unnecessary. 

Following Department of Health and Center for Disease Control and Prevention advice on proper use of masks and social distancing is important to protect both restaurant employees and patrons. No one wants to face a closure to clean and disinfect if there is a COVID outbreak traced to your restaurant. Besides following any local guidance or orders on capacity, etc., there are some additional steps restaurants can take to protect themselves from liability.

 

Extra steps to take

First, make expectations clear. If the restaurant adopts a mask policy, explain it to people calling to make reservations, post signs explaining the policy, and then enforce it. Masks and social distancing are consistently praised as the best way to prevent COVID transmission. Masks in the restaurant context present obvious challenges. However, having guests wear them when they are not seated at their own table will help protect other guests and employees. 

Second, each restaurant will have to make its own decisions on masks based on local requirements and a judgment about the preferences of its patrons. People’s attitudes and expectations are different in different areas. Some individuals may avoid a restaurant that requires masks; others will avoid those that do not require them. In making the decision on a mask policy, factor in the cost of a closure, of dealing with sick employees, etc., in analyzing the business case for or against mask usage.

Understand that a restaurant has every right to enforce a mask policy as they would any other diner’s code of conduct. Some restaurants require gentlemen to wear a jacket. Requiring use of a mask is no different. Indeed, some have taken to amending signs to say “no shirts, no shoes, no mask, no service.” If you do choose to require masks, consider providing disposable masks to a patron who arrives without one so you do not have to turn a customer away.

Any policy, however, must be equally enforced. Selective enforcement of any rule could lead to discrimination claims. 

Finally, use signage both inside and outside the restaurant to make expectations clear. Making guests understand expectations and that those exist to protect everyone’s health is the best way to encourage cooperation. 

Each restaurateur should carefully consider whether the potential benefit of making customers sign liability waivers outweighs the potential downside of discomforting her clientele and endangering customer good will. But whether a restaurateur chooses to utilize liability waivers or not, he or she should not forego reasonable measures to protect customers from COVID. Customers will notice and appreciate it. Moreover, there is no better way to reduce liability exposure because taking reasonable precautions is the antithesis of negligence. 


Matthew Murphy and Amanda Cialkowski are attorneys with Nilan Johnson Lewis in Minneapolis. Matt can be reached at mmurphy@nilanjohnson.com and Amanda at acialkowski@nilanjohnson.com

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