Introduction:
Childcare for children has become an increasingly vital part of the working couple’s needs with the search for acceptable and beneficial childcare a primary task of most families in which both husband and wife earn a living outside the home. Significant statutory requirements are imposed upon childcare facilities in California and as more and more families require such services, increasing statutory obligations are imposed upon those providing childcare services.
Most workers in the industry earn remarkably little salary and the need to have excellent childcare providers conflicts with the budgetary constraints imposed upon most families. Recognizing the economics, California has allowed more flexibility in locales of childcare, allowing family homes to be used subject to various restrictions.
One key area is the potential liability faced by childcare providers especially in a time in which pandemics may occur. Unlike the occasional teenage babysitter, childcare providers are considered a formal ongoing business and their regular provision of services means that they are held to the same standards as any other type of business providing services to children. This necessarily means that such providers should have sufficient liability insurance to handle the potential claims that injury or illness to a child in their care could entail.
Some of the providers have sought to limit such liability via specific waivers and releases from liability contained in the contractual documents that parents are asked to execute. Are such releases an effective bar to legal action? That is the topic of this article.
The Basic Law:
Normally a release clause in a contract can act as a complete defense to a civil claim for negligence. Clauses that release a party from liability, such as assumption of risk and advance waiver of liability, can act as complete bars to a negligence lawsuit. Coates v. Newhall Land & Farming, 191 Cal. App. 3d 1, 7-8 (1987). However, California imposes limits on the effectiveness of certain types of waivers of liability.
Clauses that directly or indirectly absolve an individual from liability for an injury caused by fraud, willful injury, or a willful or negligent violation of a statute are against public policy. Cal. Civ. Code § 1668.2 and not enforceable.
Further, if the “public interest” is adversely affected by such a release, courts can nullify their effectiveness, even if the act complained of was simple negligence and not gross negligence or intentional wrongdoing.
Ordinary negligence is defined as a breach of the duty of reasonable care, whereas gross negligence is, “an extreme departure from the ordinary standard of conduct.” City of Santa Barbara v. Superior Court, 41 Cal. 4th 747, 75 (2007).
Thus, the question is whether childcare agreements which contain such an advance waiver of simple negligence would be considered in violation of public policy and not enforceable. The key case was a 2003 case that involved the YMCA and their childcare program in which such a waiver was attempted to be used to bar a complaint in which alleged sexual abuse was claimed. Gavin W. v. YMCA of Metro. Los Angeles 106 Cal. App. 4th 662 (2003). The parents had signed a release of liability for negligence claims against the YMCA.
The Court applied the test of the Tunkl case, described below. The Court noted that contracts that directly or indirectly absolve an individual from liability for an injury caused by fraud, willful injury, or a willful or negligent violation of a statute are against public policy under Cal. Civ. Code § 1668.2. But the Court added that under said statute, courts have found releases of liability for ordinary negligence unenforceable if they implicate “the public interest.” Tunkl v. Regents of Univ. of Cal., 60 Cal. 2d 92, 96 (1963).
To determine whether a release of liability is void as a matter of public policy, the courts look to the transaction that gave rise to the contract—surprisingly, not the alleged negligent conduct. This places the focus on the service being provided: childcare.
In Gavin W, the court of appeal applied the Tunkl factors to establish that due to its essential nature, there is a public interest in childcare and therefore releases of liability are against public policy. Id. at 674, 676.4 Under Tunkl, the California Supreme Court enumerated six factors that determine whether public interest has been implicated: (1) the contract concerns a business type that is generally considered subject to public regulation; (2) the party that seeks to be released from liability is performing a service of “great importance to the public;” (3) the party holds itself as willing to perform the service for any member of the public, or for members that fall within established standards; (4) due to the essential nature of the service, the enforcing party has a superior bargaining position; (5) the contract is a contract of adhesion with no opportunity to negotiate additional fees for protection against negligence; and (6) the person or property of the signing party is subject to the risk of carelessness by the enforcing party. 60 Cal. 2d at 98-99.
The absence of any one factor is not dispositive. Id. at 98. But the Gavin W. court found that all of the above factors were present in childcare. In applying the Tunkl factors, Gavin W. noted that childcare is a comprehensively regulated, essential service. The question becomes whether “‘the service [is] merely an optional item consumer can do without . . . or [if] it [is] something they need enough [, creating] little choice if the provider attaches a liability disclaimer?’” Gavin W., 106 Cal. App. 4th at 672 (quoting Gardner v. Downtown Porsche Audi, 180 Cal. App. 3d 713, 718
To answer this question, the court referenced a 2001 study by the California Child Care Resource & Referral Network.6 The study concluded:
For all working families, regardless of income, access to affordable, quality childcare is essential. Yet millions of families in California, even those who can afford to pay, struggle to find the childcare they need. For some, the shortage of care is the main problem, since waiting lists for childcare centers and family childcare homes are commonplace. Thus, the court concluded that the answer is an unequivocal no—childcare is not optional for working parents.
In addition, the childcare provider, the YMCA of Metropolitan Los Angeles, was open to the general public and possessed a superior bargaining position. Gavin W., 106 Cal. App. 4th at 672-73. A condition of enrollment was that the parents paid a pre-established price, making the program open to the general public under set standards and satisfying the third factor. Further, the essential nature of childcare and the “relatively small number of [childcare providers]” gave the YMCA superior bargaining power, noting that “[a]s of 2001, the supply of licensed childcare met only 16 percent of the estimated need for licensed care for children in Los Angeles County”. This, combined with a standard contract required to be signed by all of the childrens’ parents—a contract of adhesion—provided no ability to negotiate.
Finally, “parents surrender their child(ren) to the provider when using their services, making the child vulnerable to the risk of the provider’s negligence.” For all of the reasons stated above, the court held that if a childcare provider is negligent—whether ordinarily or grossly—the provider can be held liable despite the presence of a signed release agreement.
Note that the type of injury does not change the enforceability of the waiver because childcare involves the public interest.
The Gavin case holds that such waivers will not be effective in childcare agreements.
CONCLUSION
Due to the public’s interest in childcare, pre-injury releases of liability—abrogating a provider’s duty to a child or a child’s family member—are probably unenforceable in a California court of law.
It may be noted that the Gavin W case involved sexual abuse which undoubtedly influenced the court despite its claim that it was not the criteria that the court applied. It may be expected that a slip and fall of a child leading to a claim might find the court more open to allowing the waiver to be enforced.
Most childcare providers will probably continue to ask for waivers since signing those can act as disincentive for parents to bring a suit-one more obstacle that they must overcome.
But the wise owner of such a service should have significant liability insurance, the owners personally should have umbrella insurance, and they should assume that in California such clauses will find a hostile atmosphere in the court room.