March 25, 2020 – With thanks to our chaver Rav Yona Reiss
One of the questions that has arisen in connection with the Covid-19 virus is the effect of the pandemic upon contractual agreements and employment arrangements. To the extent that programs or simchos have been canceled, or workers are no longer needed, who bears the burden of prior commitments? With respect to some of these issues, there are differing views, which also complicates the question in terms of which position to adopt in terms of halacha l’maaseh. While a full discussion of these issues is not being presented here, some useful resources are the eighth volume of the Sha’arei Zedek journal, the responsum of Rav Asher Weiss in the second volume of Minchos Asher, and the responsum of Rav Ovadia Yosef Toledano in the first volume of Meishiv Mishpat (Siman 47). There is also a brief discussion on the subject (by the undersigned) in volume LXVII of the Journal of Halacha and Contemporary Society.These are some of the basic principles and parameters:1. In an normal employment situation, when an unforeseen circumstance (ones) occurs that makes it impossible for the employment to continue, the worker bears the loss of not getting paid except in the case in which the employer could have foreseen that the event would occur but the employee would not have known similarly known about such a possible eventuality.
2. In all events, the employee should be paid for work that was already performed.
3. In the event of a Makas Magefah, meaning an “act of G-d” that affects the entire region and prevents jobs from being performed (see Bava Metzia 103b), there is a difference of opinion regarding the effect that this has on employment agreements: (a) according to the Mordechai as quoted by the Rema (CM 321:1), and as understand by the Shach, it appears that the worker would have to be paid in full (his case was when the government decreed that Torah teachers could no longer teach Torah in the country; the Mordechai ruled that a teacher already retained would need to be paid in full for the contractual term); (b) according to the understanding of the Sema (321:6), when there is a Makas Magefah, both parties have to suffer (and this is the true meaning of the Mordechai) and therefore the employee gets paid half of his/her wages; (c) according to the Nesivos Hamishpat (334:1), there is no reason to treat this case differently from a normal employment arrangement, and therefore the worker bears the loss (the case of the Mordechai was different because the Torah teacher gets paid for babysitting, which the teachers were still willing and able to do).
4. Each of these opinions must reckon with the apparently contradictory ruling of the Rema (CM 334) that if a teacher leaves town because the air quality was bad, he no longer gets paid. According to the Shach, if everyone or most people leave, then he gets paid, but if only a minority of the population left, it’s not a Makas Medinah so he doesn’t get paid. According to the Nesivos Hamishpat, this second ruling of the Rema proves his point that the worker doesn’t get paid when there is an ones preventing him from working. In fact, the main distinction between the cases in his opinion is that the worker only gets paid when he/she is prepared to do the job, but the employer is not interested. In a situation where the worker would not want to come in to work, and possibly even when a worker would not be allowed to come to work (such as in the Mordechai’s case if even babysitting has been outlawed), then one could argue that the worker does not have the right to be paid. Interestingly, the Aruch Hashulchan (CM 334:10) explicitly draws this same distinction between the cases, indicating that the worker is only entitled to be paid if the worker is theoretically prepared to continue to do the job.
5. There are a number of teshuvos (e.g., Maharam Tiktin, Maharam MeRutettenberg) that dealt with rental situations in which an area no longer remained viable for rental based on Makas Medina considerations, and they drew distinctions between when the renter couldn’t possibly live there, as opposed to a situation where the renter or at least someone else could have continued to rent, as well as distinctions between when the rent was already paid or not already paid. Various authorities utilize these distinctions in the context of an employment arrangement or in the context of the termination of a caterer or catering hall as well, and are thus more likely to exempt an employer or renter of a hall from having to pay the worker or catering hall if the money wasn’t paid yet, and less likely to award them their money back if the money was already paid. Likewise, if it is clear that a catering hall would not have remained open even if the person had not canceled the contract or simcha, it is harder to justify the position that the caterer would be entitled to the money even if it had already been received (see, e.g., Rav Asher Weiss’ teshuva regarding rental payments for properties that need to be abandoned, in contrast with Rav Toledano’s teshuva in this regard).
6. If a contract stipulates that a deposit is non-refundable, or even that there is the obligation to pay a cancellation fee as liquidated damages, this will generally be enforceable (as Rabbi Bleich writes in Contemporary Halachic Problems, volume IV) as long as the damages”are reasonably calibrated to actual loss sustained by the party. However, when the contract has not been performed at all and there is a complete lockdown preventing others from utilizing the contract, this is a more difficult argument, because that might be a real asmachta especially in the case of the cancellation fee as opposed to the case of the down payment that might be used to offset expenses or overhead.”7. If an employment term has not yet begun, there is more of an argument that the employer is off the hook when the job cannot be performed and the employee would not have been able to secure other employment for that period of time had they not depended on the contract. This would be true even in a non-ones situation of cancellation (see CM 333:1-2).
8. If employment can continue, and the employer terminates it anyway, then the employer would generally be held responsible to pay at least the rate of Poel Batel (wages for a worker who is idle from work) which the Taz understand to be 50 percent of the promised wages (CM 333).
9. Arguably, certain types of employment can be continued virtually. If a school, for example, continues to provide education virtually, and nobody asks for their money back or for a discount until after this service has been provided, arguably there has been a waiver of any kind of claim. However, to the extent certain services are not provided (such as room and board) then the previous considerations would be applicable (it would seem difficult, for example, to justify charging for food when it is not even made theoretically available).
10. Because of the divergent views, what is generally recommended in these situations is a spirit of compassion and compromise given the reality that everyone is financially disadvantaged by a Makas Medinah. This was the approach followed by the Chasam Sofer when he dealt with the suspension of schools in the Franco-Austrian war.May we successfully navigate the myriad of Dinei Nefashot questions that have been occupying our attention, and may all those afflicted have a speedy Refuash Shlemah, so that we will have the luxury of only dealing with the Dinei Mamonos issues.