Can a Business Legally Refuse a Customer?

Topics: Small Business

Summary: Health measures to help prevent the spread of COVID-19 have produced robust debates. Do business owners have the right to refuse customer service based on not wearing a mask or not providing proof of vaccination? This article explains the legal complexities, anti-discrimination laws and federal agency rulings that allow a business to refuse customer service.

Can a Business Legally Refuse a Customer?

Is It Legal to Refuse Customer Service Based on Mask or Vaccine Mandates?

Last year, state and federal governments enacted health and safety measures to help limit the spread of COVID-19. As health mandates end, some businesses owners are establishing their own mask and vaccine mandates. The question arises if it is legal for businesses to refuse customers service if they refuse to show proof for vaccination or wear a mask.

The answer is yes, it is legal. Businesses do have a constitutional right to refuse service to anyone, especially if they are making a scene or disrupting service to other customers in their business. However, there are limits to the refusal. Businesses need to walk a fine line or they could risk a discrimination case or negative customer reviews that can impact their business.

Constitutional Right to Refuse Service

Business owners have the right to refuse service or turn away a customer to protect their patrons and business. For example, “no shirt, no shoes, no service” and other dress codes are the types of requirements that private businesses can impose on potential customers as long as they are not discriminatory.

Anti-Discrimination Laws

Anti-discrimination laws apply on the local, state and federal levels. The Federal Civil Rights Act of 1964 states that no business (public or private) serving the public can discriminate based on a customer’s national origin, sex, religion, color or race. Title VII of the Civil Rights Act maintains no business is allowed to turn away a customer based on the person being a member of the following protected status:
  • Race or color
  • National origin or citizenship status
  • Religious beliefs
  • Sex
  • Age
  • Veteran status
  • Disability or pregnancy
  • Sexual orientation
  • Gender identity

Likewise, the Americans with Disabilities Act (ADA) prevents a business’s refusal of service based on a customer’s disability and prohibits discrimination in employment, transportation and public accommodations, including stores, theaters, restaurants, hotels, daycare centers, gas stations and doctors offices. However, it is important to remember that the ADA only applies when a person has a disability; it isn’t valid when a person does not want to be vaccinated.

Refusing Service Based on Vaccine Status

Can a business ask for proof of vaccination status from their customers? Legal experts say that businesses do have the right to deny entrance to patrons who can’t show proof of vaccination, as unvaccinated people are not a protected class.

Private businesses cannot discriminate based on protected classes or disabilities, but otherwise, they have the right to conduct transactions with whomever they choose. However, companies would likely have to provide reasonable accommodations for customers who cannot be vaccinated because of a disability or religious beliefs before they refuse them service. For example, businesses can require unvaccinated customers to wear a mask as they enter a business or offer no contact/pick-up shopping service to these individuals.

In a recent ruling, The U.S. Equal Employment Opportunity Commission (EEOC) states that companies can require COVID-19 vaccines while allowing people to request exemptions for medical and religious reasons. They also said that asking a person for proof of a vaccine is not a disability-related injury.

Social Media Misinformation

There has been misinformation shared on social media claiming that businesses cannot legally require customers to provide proof of vaccination or deny entry based on vaccination status. One such message says that vaccine mandates are against the Fourth Amendment of the U.S. Constitution and Title III of the U.S. Civil Rights Act. This message is false as the amendment applies only to government entities. Also, Title III does not mention discrimination based on medical conditions.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is also often cited, erroneously, that businesses cannot require customers to show proof of vaccination. HIPAA applies to healthcare plans and healthcare providers and not restaurants or retail stores. Requiring proof of vaccination is not protected health information.

Right to Refuse Service for Not Wearing a Mask

Throughout the COVID-19 pandemic, businesses needed to adapt to federal and state health measures, including mask mandates for employees and customers. A private business can legally require a customer to wear a mask because people who wish not to wear face masks are not a protected class. Business owners can think that these people pose a health or safety threat to their business.

The National Law Review explains, “At this time, businesses concerned about the safety of their staff and customers should be justified in relying upon guidance from the CDC as well as state and local governments’ orders to justify policies forbidding customers without face masks from entering their stores.”

Denying Service as a Last Resort

While business owners have the legal right to refuse service to a customer, they should always try to deescalate a situation. Employers should have a workplace violence training program in place and make sure that all staff understands it. Employees should practice the procedures and policies and recognize specific customer behavior that could lead to an angry customer.

Denying service should be a last resort solution and only used if there is a potential threat to the health and safety of the employees and customers. Any time a business refuses to serve a customer, it makes them vulnerable to a discriminatory lawsuit. Also, refusal of service could lead to negative online reviews and social media posts that could damage your business’s reputation.

Bob Pizarro, Vice President, Commercial Specialty at AmTrust Financial explains, “Because of these unprecedented times, businesses are faced with a myriad of HR and legal dilemmas they’ve never had to confront. Small businesses are especially affected as they may lack guidance on how to address these issues. However, many EPLI providers have employment-related legal resources for businesses to make the best decisions for their business and their customers.”

EPLI Insurance from AmTrust

AmTrust offers Employment Practices Liability Insurance (EPLI) that protects small and mid-sized businesses in employment-related claims, including alleged discrimination, wrongful termination or demotion, sexual harassment and retaliation. The policy applies to all employees of an insured’s business, including temporary, part-time, full-time, seasonal, volunteers and independent contractors. Enhanced coverage protects the policyholder against punitive damages and inappropriate third-party conduct, including customer claims.

AmTrust Protects Your Business

AmTrust is a leading small business insurance carrier for small to mid-sized businesses across the country. We work closely with our agents and policyholders to design the specific small business packages they need to comply and succeed. Contact us to learn how we can create the right coverage for your organization.

This material is for informational purposes only and is not legal or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.

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