Business & Lobbying

Liability shield for businesses emerges as new fight over reopening

The business community is pressuring the White House and Congress to shield companies from lawsuits as they seek to reopen, setting up a politically charged battle at a time when coronavirus restrictions around the country are beginning to ease.

As Congress considers more legislation to jolt the economy back to life, Democrats, labor unions and trial attorneys have voiced fierce opposition to a liability shield for employers. But top Republican lawmakers and the Trump administration appear eager to extend businesses of all sizes a layer of legal protection from coronavirus-related litigation.

The debate over liability protections has quickly emerged as a new sticking point as Congress weighs another round of coronavirus relief aid. Senate Majority Leader Mitch McConnell (R-Ky.) has said the GOP-controlled Senate won’t pass a bill providing more assistance to state and local governments if it doesn’t include those legal protections.

“Imagine you are a businessman thinking about reopening, and you’ve heard that the trial lawyers all over the country are sharpening their pencils getting ready to sue you, claiming that you didn’t engage in proper distancing or other issues related to health and safety,” McConnell said this week on Fox News.

His remarks came on the heels of similar comments from Larry Kudlow, President Trump’s top economic adviser.

“You’ve got to give the businesses some confidence here that if something happens, and it may not be their fault — the disease is an infectious disease — if something happens, you can’t take them out of business,” Kudlow said on CNBC.

Legal experts say businesses could face a wide range of lawsuits related to the coronavirus, which has killed more than 58,000 people in the U.S. and sickened more than a million. The most likely plaintiffs would be customers who contract the virus.

Employees could also take legal action, but experts are split on whether workers’ compensation laws would prevent some legal claims.

While some liability protections could be created through federal regulation and executive actions, Congress is best suited to put in place broad protections. Doing so, however, would require overriding state laws.

“Only an absolute safe harbor from liability for any type of cause of action arising from exposure to the virus would provide absolute reassurance, but that will never be politically doable,” said Randel Johnson, a lawyer with the firm Seyfarth Shaw.

Safe harbor provisions are among the host of measures the U.S. Chamber of Commerce, the powerful pro-business lobbying group, has pushed Congress to pass as employers nationwide take steps to reopen. But critics say an overly broad shield from liability would allow businesses to evade accountability in the face of a deadly disease.

The debate isn’t just a theoretical one.

Meat processing company Smithfield Foods is being sued over allegations that it failed to protect workers at a Missouri plant by forcing them to work “shoulder to shoulder” without providing adequate personal protection equipment.

And on Tuesday evening, Trump signed an executive order saying meat processing plants must remain open despite the recent outbreaks. That same day, he told reporters he planned to sign an order to address “liability problems” related to the food supply chain — another indication that the White House was considering how to reassure the business community.

Business lobbyists, labor unions and other stakeholders are already gearing up for a pitched battle on Capitol Hill.

Neil Bradley, executive vice president and chief policy officer for the Chamber of Commerce, said Congress needs to provide adequate protections for employers.

“There ought to be regular liability protection for folks who are taking reasonable, commonsense steps,” Bradley said on a call with reporters on Tuesday, following the Chamber’s release of its proposed framework for reopening.

The National Association of Manufacturers, another major business group, has called for expanded liability relief, arguing since the beginning of the coronavirus crisis that manufacturers need “sensible liability protections” so that essential workers can continue to work.

Democrats agreed to limit the legal liability of manufacturers and distributors of face masks in the second major coronavirus relief bill that Trump signed into law on March 18. But Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles Schumer (D-N.Y.) have since pushed back on additional measures that could leave workers overall more vulnerable.

“At the time of this coronavirus challenge, especially now, we have every reason to protect our workers and our patients in all of this,” Pelosi said on Wednesday. “So we would not be inclined to be supporting any immunity from liability.”

The retail industry is among those faced with tough decisions over how to open brick-and-mortar stores safely for both employees and owners.

“We’re looking for a solution that is equitable to employees, who in some cases have been exposed to COVID-19 in the workplace, but as well as a solution that is fair to businesses who did not cause COVID-19 and who took all of the reasonable precautions a store would take to prevent their customers and workers from being exposed,” Stephanie Martz, general counsel for the National Retail Federation, told The Hill.

The American Association of Justice, which advocates for plaintiff’s lawyers, is among those going after proponents of the shields. 

“There are more than 50,000 dead Americans and counting and our economy is at a standstill, yet Leader McConnell and the U.S. Chamber of Commerce want to give immunity to corporations that harm consumers and workers by not taking precautions against COVID-19,” CEO Linda Lipsen said, adding that the economy won’t restart if “bad actors” cannot be held accountable.

Major labor unions like the SEIU and AFL-CIO also have been vocal against companies providing inadequate protections for workers during the pandemic.

“It’s absolutely outrageous that employers and corporations are trying to shirk their legal responsibility at the same time they’re refusing to provide protective equipment and paid sick days to their workers,” Mary Kay Henry, president of the SEIU, told The Hill. 

If Congress fails to pass an agreement on liability protections, legal experts say the Trump administration could take some unilateral steps.

Samuel Estreicher, a law professor at New York University, said the administration could draw on executive power to issue guidance on best practices for employers that would reduce their likelihood of being sued.

Employers typically avoid asking employees about their medical history for fear of running afoul of health privacy and worker discrimination laws. But Estreicher said the Labor Department and Equal Employment Opportunity Commission could issue guidance that carves out an exception for inquiries about COVID-19.

“Companies should be allowed to ask about the virus history of an employee, both for employee’s safety and other workers’ safety,” he said.

Federal guidance could also help establish a standard for what constitutes a reasonably safe work environment, like requiring masks and practicing social distancing as much as possible. Businesses that follow such guidance would have a stronger defense against claims of negligence, Estreicher said.

“It would dampen the incentive of plaintiffs’ lawyers to take the case,” he said.

Some legal experts argue that the business community’s concerns are overblown, noting that customers who bring suits alleging exposure to the virus would have difficulty proving it was the business’s failure to exercise reasonable caution that caused the infection.

“Once things open back up, if someone contracts it, it’s not very likely that they will know where they contracted it,” said Gregory Keating, a law professor at the University of Southern California. “It could be the grocery store, the dry cleaners, the gym, a clothing boutique or a car wash.”

Tags Charles Schumer Coronavirus COVID-19 Donald Trump Larry Kudlow liability protections Mitch McConnell Nancy Pelosi National Association of Manufacturers Pandemic Smithfield Foods U.S. Chamber of Commerce

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