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As Businesses Re-open, Congress Mulls Shielding Them From Liability

Philip R. Stein

Talk of a broader “re-opening” of the economy has led to a fierce debate in Congress about whether it would be advisable to include, as part of a new COVID-19 legislative relief package, provisions creating certain immunities from potential liability for businesses that re-open. Specifically, some U.S. senators want to insulate companies from liability for claims by employees or customers that their health was compromised by unsafe workplace conditions that the company permitted to exist. Others say leaving employees or customers with little to no legal recourse for coronavirus exposure would be unjust, and may even make employees less willing to return to work in the first place. This debate is, in turn, sparking a re-examination of other related legal issues, like what the “standard of care” should be for protecting health at workplaces, whether that standard should be federal or local, whether standards should be established on an industry-by-industry basis, and what insurance coverage companies might have for claims by employees or customers that they were exposed to COVID-19 on the company’s premises.

Senate Majority Leader Mitch McConnell has touted a broad liability shield for companies as something integral to encouraging business owners to re-open their businesses. He and other supporters of this idea say it will be a major priority, and perhaps even a necessary condition, for a next coronavirus relief bill. The liability shield that McConnell envisions, he said in a Senate floor speech, would be “a legal safe harbor for businesses, nonprofits, governments, workers, and schools who are following public health guidelines to the best of their ability.” He added that the contemplated bill would not provide immunity for “actual gross negligence and intentional misconduct.”

There have already been well over 1,000 coronavirus-related lawsuits filed across the country. Of those, the substantial majority have been suits related to insurance coverage (including business interruption insurance claims) or conditions at prisons, rather than personal injury or medical malpractice lawsuits. Nevertheless, many businesses see significant protection from liability for COVID-19 exposure claims as critical to their assessments of, among other things, the extent to which they should re-open, and the conditions under which their businesses can operate. Moreover, employers operating in more than one state – or even just in multiple regions in a single state – are in many instances confronting a patchwork of conflicting regulations and guidelines regarding re-openings and workplace safety. Their advocates are pushing for a uniform federal standard. That push may run counter, however, to the larger context of the response to COVID-19 in this country to date, a response that has principally involved empowering states, counties, and municipalities to establish operating guidelines for businesses. There are also real questions about whether a uniform federal standard can be crafted that does not ultimately require at least significant industry-specific variations, and perhaps even more granular guidance.

Plaintiffs’ attorneys have voiced opposition to coronavirus-related business immunity, stating that a company with substantially diminished reason to worry about potential health-related liability will have no real incentive to take measures necessary to prevent community spread of the virus. At a recent Senate Judiciary Committee hearing that featured testimony reflecting a range of contending viewpoints, witnesses for both employers and employees asserted a preference for the federal government to issue enforceable workplace standards.

Multiple witnesses called, in particular, for science-based guidelines from public health agencies. There was far less consensus on many other issues. As to whether business immunity is even necessary, a Georgetown Law professor testified that there really is no need under present circumstances. He noted that plaintiffs suing as a result of COVID-19 infection will have to surmount daunting legal hurdles, not least of which is the burden of proving that the defendant’s premises or policies indeed caused that infection. His opinion was that, without a thorough and reliable contact tracing system in place as of yet in this country, it would be virtually impossible for a retail customer, for example, to prove the location at which he or she was not merely exposed to the virus, but actually infected.

Another interesting question to consider at this stage of the debate is whether businesses’ existing insurance policies will generally be deemed to cover claims against them for exposure to COVID-19. Commercial General Liability insurance and Errors & Omissions (“E&O”) policies are among the types of insurance that may be available to a company to help it withstand lawsuits and threatened suits that may be directed at the company as a result of an employee or customer’s infection. But such policies, which may contain express exclusions for communicable diseases (or other exclusions or barriers to coverage), must be reviewed on a case-by-case basis to assess whether this is a possibility. For those members of the United States Senate that are intent on fashioning some degree of immunity for businesses that are re-opening, a bill that includes direction or incentives to insurers to provide coverage – which may be at odds with what the insurers bargained for in particular polices — may ultimately be a means that is at least somewhat less fraught with legislative peril.

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