Incentives for COVID recovery: A single-edged sword?

Incentives for COVID recovery: A single-edged sword?
© Greg Nash

Apparently, for Mitch McConnellAddison (Mitch) Mitchell McConnellSara Gideon wins Democratic race to challenge Susan Collins Schumer pushes for elimination of SALT deduction cap in next coronavirus relief bill Dunford withdraws from consideration to chair coronavirus oversight panel MORE, “incentives” are for employees, not employers.

When the Senate majority leader assesses policies for getting the economy up and running, he seems to have very different movies playing in his head depending on whom the policy targets. When he thinks about extending the CARES Act’s enhanced unemployment benefits beyond July, he evidently sees in his mind’s eye the chuckling furtive loafer, feet up on the coffee table, joint a-roll, who’s figured out that he can make more staying home than clocking in.

When he thinks about shielding employers from COVID-related liability – and what this will do to the incentive to safeguard the workplace – the screen goes black-and-white, the fuzzy electric guitars become violins and the camera closes in on the principled homespun business owner willing to sacrifice profits to go the extra mile to insure his workers are safe.

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“Damn it,” he says, reprimanding his callow callous son, “We’re responsible for these people.”

The great (Republican) jurist Oliver Wendell Holmes, who sat on the Supreme Court for the first 30 years of the 20th Century, advised always keeping in mind the “bad actor” when thinking about and designing laws. It seems clear from his judicial pronouncements on proscribing child labor that he didn’t much care whether those actors earned wages or profits.

Taking Holmes’s broad view, we can ask ourselves what is the thing that we want to incentivize?

To focus so much on “getting people back to work” and so little on keeping workplaces safe is like focusing on getting soldiers out of the trench with only a vague notion of what’s waiting for them up on the field. What matters is winning the battle, not just entering it. Winning will require attacking from many different angles with many different weapons. It will mean incentivizing many different (potentially bad) actors who play many different roles. Yes, it means coaxing the worker off the couch. But it also means coaxing the owner to sacrifice some part of profit to precaution.

McConnell’s two responses to these concerns are both red herrings.

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First, the senator emphasizes that employers will still face liability for intentional harm and “gross negligence.” But exposure to these tepid forms of liability will not induce employers to go the extra mile, let alone the extra yard. Discussing these two standards of liability, Holmes famously said: “even a dog distinguishes between being stumbled over and being kicked.” Liability for intentional harm will protect the dog from someone taking aim with his foot. Gross negligence will protect the dog from people who have willfully decided to ignore his presence on the floor after strapping on pointy boots. Neither form of liability coaxes anyone to give the dog a bath.

Second, McConnell takes aim at plaintiffs' lawyers. He’s concerned that without liability protection, plaintiffs’ lawyers will have – you guessed it – an incentive to sue employers and so will, in effect, “steal all this public money we’re sending down to hospitals and doctors and non-profits.”

Two problems here. First, lawyers, avaricious as they are, are also known to work for defendants when that pays well. And we can be certain that defendants’ lawyers (who in some cases are the same people) will be doing an excellent job of making sure that employees have little chance of proving in a court of law that an employer had the sufficiently depraved state of mind that defines gross, as opposed to ordinary, negligence — let alone intentional harm.

But the second, bigger problem is that shielding employers from liability for ordinary negligence – and offering nothing as a replacement – means designing the law with the beneficent actor in mind. And that won’t do. It didn’t protect 12-year-olds from 16-hour shifts six days a week. And it won’t protect employees from having to choose between feeding or infecting their families.

If plaintiffs’ lawyers aren’t going to be paid for policing the workplace, somebody else has to be. If the court system isn’t going to be deployed, some other system must be. A tripartite regulatory approach – new safety regulations, new safety regulators and new whistleblower protections for employees – is one approach. If that is not what the senator has in mind, and it seems unlikely to be so, what exactly does he propose?

Chris William Sanchirico is Samuel A. Blank Professor of Law, Business and Public Policy at the University of Pennsylvania Carey Law School.