Business Decisions to “Normalize” Being Impacted by Liability Concerns.

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  • 03/02/2023

Recently, the Metropolitan Opera of New York announced it was canceling shows until at least September of 2021. The cancellation falls in line with some large companies like Google, Facebook, and Zocdoc also announcing long-term work-from-home directives. These decisions are being made without any scientific knowledge of the future of COVID-19, deep into next year.

A major factor in the long-term cancellation of in-person business activities that is not being widely publicized or discussed is the potential for lawsuits against employers should employees or customers become ill after being on-site at their place of business. As the country grapples with finding solutions to the economic impact of the coronavirus, one key action that could be taken might be to mitigate the COVID-19 related liability these businesses now face.  

"As the impact of COVID-19 spreads, class action lawsuits are likely to rise,” The American Bar Association (ABA) warns. The ABA notes that the country can expect to see a rise in employment, breach of contract, and tort claims, among others.

The ABA explains that tort claims are “expected for allegedly negligent responses to COVID-19. These claims may allege a failure to protect from or a failure to warn of the potential exposure to COVID-19.” Such claims may, or may not, be covered under a business’s various insurance policies. Regardless of coverage, the costs would still need to be incurred, by some paying party, the effects of which would ripple through the economy.

The Senate’s SAFE TO WORK Act legislation introduced back in July by Sen. John Cornyn (R-TX) is one attempt to address the potentially negative impact from these types of lawsuits.  Proposed under the powers of the Commerce Clause, the bill would provide protections to employers that make good-faith efforts to comply with coronavirus laws and guidelines. The opening to the bill reads:

“These lawsuits pose a substantial risk to interstate commerce because they threaten to keep small and large businesses, schools, colleges and universities, religious, philanthropic and other nonprofit institutions, and local government agencies from reopening for fear of expensive litigation that might prove to be meritless … These lawsuits also risk diverting taxpayer money provided under the CARES Act and other coronavirus legislation from its intended purposes to the pockets of opportunistic trial lawyers.”

Unfortunately, the legislation has no hope of passing the Democrat-controlled house.

"Nobody should have to face an epidemic of lawsuits on the heels of the pandemic that we already have related to the coronavirus,” Senate Majority Leader Mitch McConnell (R-Ky.) said in mid-July, commenting on the effort. 

But lawsuits have already been mounting, and, as all businesses face critical decisions around how and when to re-open, small business owners in particular admit to concerns about the potential litigation costs.

According to a June report from the U.S. Chamber of Commerce, two-thirds (67%) of small businesses with 20-500 employees, and a majority (51%) of even smaller firms (5-19 employees), are worried about the possibility of lawsuits related to the coronavirus. And, as little to no action has taken place for abatement, it is reasonable to assume that these concerns remain.

The Chamber noted that businesses with under 500 employees, employing 54 million American workers, "could be impacted if their place of work closes due lawsuits against their employer. “

Moreover, Cornyn’s bill does not affect the applicability of state laws regarding worker’s compensation for coronavirus—yet another frontier raising concern among small businesses and their insurance providers.

A handful of states have passed laws that limit COVID-19 liability for businesses, but most states still do not have those provisions in place. What makes the current situation more complicated for companies is that traditional workman’s compensation insurance may not cover COVID-related illnesses for their workers.

Workers’ compensation policies have typically covered communicable diseases in situations where the contraction of the disease was demonstrably contracted while the employee was at work, and where the disease in question was in some way unique to the job—not conditions that present a general threat to the public at large. Common conditions that fall into this category include mesothelioma from jobs that expose employees to asbestos, and black lung disease from inhaling coal dust.

Some states, like California and New York, have issued specific directives for COVID-19 workers compensation-related claims, noting that individuals who contract COVID may be eligible to file for workers compensation benefits. California, for example, assures its residents that, "If you reported to your employer’s worksite between March 19 and July 5, 2020 and tested positive or were diagnosed with a COVID-19-related illness, you may be eligible for workers’ compensation benefits under the Executive Order issued by Governor Newsom on May 6."

While the liability issue is complex, it does seem clear that it is a critical element to address in getting the economy to reopen safely, but swiftly. Concerns over safety can be lost when conflated with concerns over liability.

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