Businesses Want Liability Protection In The Next Stimulus Bill. Here’s Why

By Robin Saks Frankel

The next hot button issue in the second round of stimulus legislation isn’t about payroll or unemployment checks. Instead, the parameters of proposed liability protections for businesses have taken center stage in the latest draft of the bill currently under review at the White House.

Senate Majority Leader Mitch McConnell (R-Ky.) and Sen. John Cornyn (R-Texas) have proposed rules to broadly shield businesses who make “good faith” efforts to protect their employees from contracting the coronavirus. As written, the proposed standard would extend through 2024 and apply retroactively to when the coronavirus first began to circulate in December 2019.

Liability protection is a red line in particular for McConnell (R-Ky.), who is up for reelection in November and has repeatedly stated that the issue is paramount to legislation moving forward.

“Nobody should have to face an epidemic of lawsuits on the heels of the pandemic that we already have related to the coronavirus,” McConnell said to reporters at a July 16 event in his home state.

Advocates of the liability protections believe these safeguards will enable businesses to operate without the risk of an employee or customer claiming they contracted COVID-19 on the premises and taking legal action.

“If you’re a small business, the filing of a lawsuit, even if it doesn’t go anywhere, consider the time that it takes, the deductible kicking in, the burden of potentially having to settle. The nature of litigation is that the costs are significant,” says Tiger Joyce, president of the American Tort Reform Association. “The legal system does not work well when there’s great uncertainty.”

The Limits of Waivers
Some places, such as offices, salons and gyms, are taking matters into their own hands and requiring their staff and guests to sign waivers that won’t hold that business responsible for any coronavirus transmission that could occur from patronizing their establishment. But those waivers may not provide the legal protections they’re seeking.

“I think some legislators and businesses feel that providing this limitation of liability will provide an incentive for reopening,” says Brian Marks, J.D., Ph.D., a professor of economics at the Pompea College of Business at the University of New Haven.  “In many states depending on the legal standard, those waivers may be considered unenforceable.”

Detractors of the liability legislation say that widespread immunity from lawsuits would unfairly place the burden of proof on an employee or customer to definitively show that they contracted the virus within a particular business or workplace, an onerous task given the current lag times between taking a coronavirus test and receiving the results.

“It’s going to be very difficult to prove causation in the context of COVID-19,” says Marks. “It will be very difficult for someone to pinpoint where they caught COVID-19.”

Are Stricter Standards the Answer?
Others say a liability shield could also disincentivize businesses from providing the proper protections to reduce the risk of contracting or spreading the coronavirus in the first place. Democrat lawmakers say supporting stricter OSHA standards, including better access to protective gear and no risk of retaliation should an employee express concerns about their workplace safety standards, would be a more equitable approach. The opposing views leave Democrats in a push-pull with Republicans.

“They’re saying ‘Let’s give immunity — no liability — for employers,’” said Democratic House Speaker Nancy Pelosi to reporters last week. “We’re saying the best protection for the employer is to protect the workers.”