New legal risks for credit unions as coronavirus cases spike
With state reopening efforts continuing but coronavirus cases spiking in many parts of the country, credit unions face a landmine of liability issues as they balance service and safety.
The branch experience has transformed dramatically as a result of the pandemic. Member and employee safety continues to be top of mind for credit union leaders, but determining how to safely operate remains an obstacle the nation nears 3 million diagnoses. On June 19 the National Credit Union Administration announced plans for a phased on-site reopening, only to walk back those plans one week later.
The combination of reopenings and rising case numbers have created new questions for credit unions about liability issues should members or staff contract the virus.
“We’re managing liability when people come back into the office,” said Michael Abraham, president and CEO of First Financial Credit Union. “Obviously there’s always liability having people in an office, but it’s different now since there’s not any guidance if someone gets sick and there’s a spread in the office. What are our actual liability limits in that situation? That has changed significantly.”
First Financial and other credit unions have had to deal with situations in which employees have contracted the virus, a process which includes tracking down members who have been in the branch.
Still, it’s a challenge when figuring out the best way to communicate to a member that they’ve interacted with someone who has coronavirus.
“We try to keep it confidential as possible, but we had to toe that line to make sure we don’t overnotify,” Abraham said. “But we were able to get into contact with members who may have been affected.”
Enforcing measures such as wearing face masks or temperature checks can help mitigate COVID-19, though it presents a thorny ring of liabilities for CUs. Abraham acknowledged that there’s a new precedent being set as financial institutions learn to collect personal medical information from members while complying with Health Insurance Portability and Accountability Act laws.
Asking for a temperature check from employees or members may seem trivial in the context of public health crisis, but it could create a slippery slope that CUs should pay attention to. Financial institutions must be mindful of violating HIPAA, the Fair Labor Standards Act, the Family and Medical Leave Act and other health or labor laws when they collect this information. Sources said this is important for credit unions to be aware of so that when they’re enforcing new policies they don’t make the mistake of infringing on any member’s rights or discriminating against an employee or a subset of membership.
“The liability comes into play if perhaps the customer has a medical or mental health condition that may be exacerbated by wearing a mask,” said Scott Wortman, a partner at Blank Rome LLP. “It’s certainly not within the purview of the financial institution to demand confidential health records supporting such claims.”
If a credit union were to turn a member away, there is potential liability for excluding them from banking activities based on disability, Wortman explained. Consistency is also key — if a credit union is enforcing health measures with one member who may be violating social-distancing guidance, a credit union must do so with anyone else found in violation.
The consideration of where to draw and enforce these new rules is something First Financial continues to heavily weigh each week, Abraham said.
The credit union has posted its guidelines and instructed members to abide by them as much as possible, including wearing a mask. According to Abraham, the $91 million-asset shop had to redraft those rules multiple times in order to ensure it was not infringing on any existing policies since limitations had to be changed to reduce risk.
Other liabilities pose risks to credit unions as well. Though members have been instructed to wear masks when entering financial institutions, some CUs are requiring members to temporarily remove masks when entering for identification purposes. Because of that, there’s not much stopping a member from claiming that they fell susceptible to the coronavirus when they removed their mask, especially if they become privy to information that a branch employee was ill.
“That’s partly where the security cameras come into play,” said Jim Burson, managing director of channel solutions at Cornerstone Advisors. If a camera is able to capture that social distancing was enforced when a member entered a branch and removed his or her mask, any liability risk is mitigated in that instance, he said.
“But that doesn't mean that you're not going to have some bad actors who try and do that — someone’s going to get sick and someone is going to try to sue someone whether it’s a credit union, a grocery store or a gas station,” he said.