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The COVID-19 pandemic is having a dramatic impact on the lives of everyone in New Orleans. The long-term financial impact of this outbreak may not be known for months, but there are immediate impacts which everyone should be aware of at this time. For example, service industry workers, particularly those in the hospitality industry as well as small business owners are suffering today. For them, the long-term impact is already here.
First, it is important to understand what types of businesses are considered part of the service industry. According to Business Dictionary, service industry companies are involved in retail, transport, distribution, food services, as well as other service-dominated businesses. With the state government requesting restaurants shut down except for takeout and delivery services, the impact will be felt initially by these workers, as well as the owners of the businesses. According to the Bureau of Labor Statistics (BLS) there were more than 66,000 employees in food service alone. This excludes the hundreds of people who are employed in hotels, which is significant given the number of tourists visiting the state of Louisiana and the Crescent City in particular annually.
Overall, 80,000 to 100,000 jobs in New Orleans are tourism related. Currently, because of COVID-19, a large segment of this population is either working reduced hours or have had their hours cut completely. Some employers are hoping to stem the economic pain many of these employees are suffering due to this challenge, but that may also leave small businesses out of the mix since their margins are often smaller meaning they have less reserve.
One challenge many service workers are facing during this time is managing their finances. Many of these employees have little to no savings and during a time when their hours are cut or eliminated, they still must feed their family, pay their rent, and maintain their utilities. The Department of Labor has allowed states to expand unemployment benefits as well as allow for use of sick time to make employees temporarily whole with the Federal Government offering tax credits to businesses who take these steps.
Employees who may be infected with COVID-19, for instance, workers in the healthcare industry, they may also be entitled to collect Workers’ Compensation. Keep in mind however, there may be a dispute over benefits allowed because the insurance company may attempt to deny the claim, especially if an employee traveled recently to any country where the coronavirus outbreak was known. This is one reason why an employee may need to work with an attorney from the Law Office of John W Redmann, LLC. We have experience handling denied workers’ compensation claims and we can help you with the claims while negotiating with the insurance company.
While a medium or large business may have some options where they can put off filing taxes, perhaps negotiate with vendors to allow them to pay bills at a later time, or cut their costs by laying off employees temporarily, others may not have these options available to them. When a business is forced to close by the state, there are many concerns which the business owner may need to address.
If you are one of the thousands of small business owners who have been forced to reduce your services or have had to close your doors to the public, the first thing you should do is check your business insurance policy. Thousands of small businesses have business interruption services in their policies. However, because the coronavirus is considered a pandemic, this type of interruption may not be covered. There are thousands of policies which were issued after the H1N1 outbreak which started covering these types of closures but there are still thousands of policies where a pandemic is not covered. Your insurance agent should be able to tell you if you have coverage.
Should you learn your policy does not have a pandemic exclusion, your next step will be to file a claim with your insurance company. You should have a plan in place in the event your claim is denied. Chances are your insurance company will have details of any state-specific restrictions placed on your business by the government during this COVID-19 outbreak. However, this does not always guarantee they will approve your claim for compensation under your policy.
Generally, business interruption coverage will provide compensation for lost profits for the time your business was closed, operating expenses, employee wages, taxes, loan payments, and other financial losses. Currently, there is no clear idea of when businesses may be able to reopen their doors and get back to business as usual. Therefore, businesses may have to wait out the pandemic and this will result in a huge influx of claims immediately following Louisiana allowing businesses to return to normal business hours.
Business owners may also be facing lawsuits if a customer or employee files suit claiming they contracted COVID-19 from someone at the business location. This could mean additional legal costs and other problems which could ultimately bankrupt a business.
For most of us in the United States, the uncertainty of this pandemic is leaving everyone feeling vulnerable. However, few are as vulnerable to the financial catastrophe of this pandemic as service workers and small business owners.
If you are a service industry worker or a business owner who has been negatively impacted by COVID-19, you may wish to speak with an insurance claims attorney to discuss what options you have once you can return to work or you can open your doors to do business again. Those who are negatively impacted may need to hire a lawyer to provide help when a workers’ compensation claim or a business interruption claim has been denied. If this is the case, contact the Law Office of John W Redmann, LLC at 504-500-5000 immediately for a free consultation. We will be happy to review your case with no obligation and help you determine what steps you should take next.