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A COVID-19 Liability Compromise to Unlock Federal Fiscal Aid

If businesses looking to reopen are going to be shielded from coronavirus-related lawsuits by their workers and customers, there should be stringent, OSHA-style regulatory enforcement.

Sign in a store window that says the location will be closed due to COVID-19, or the coronavirus, pandemic. The original date of reopening is crossed out and a date a month later is handwritten in.
(Rachael Martin/Shutterstock)
Rachael Martin/Shutterstock
The outcome of the battle now being fought in Washington over shielding companies from legal liability for workplace and consumer transmission of the coronavirus is likely to be one of the factors governors and mayors take into account as they consider easing or lifting business-closure orders. As of this writing, the political parties are at an impasse on the issue.

In the Senate, Majority Leader Mitch McConnell is using it as a bargaining chip in the larger negotiations over aid to states and localities, and the White House has begun raising the same issue. In return for supporting a fiscal aid package, it’s likely that Republicans will be trying to extract some kind of compromise that addresses tort reform and corporate liability.

Without getting too deep into the legal weeds, and in the interest of helping to move the fiscal aid package along to enactment, I offer this nonpartisan, pragmatic compromise framework:

Congress would require that for any tort liability to be waived by statute for workplace infections, Occupational Safety and Health Administration (OSHA) regulators must establish clear, stringent and unambiguous requirements based on science-based guidelines from the Centers for Disease Control and Prevention. None of the mush that’s been given to the meatpackers about what they “should consider” or “might do, if practical.”

Since it will take some time to put the ground rules in place, a temporary interim blanket waiver, perhaps until mid-July, should allow businesses to achieve compliance as long as they practice social distancing, provide adequate personal protective equipment to their workers, and follow other existing guidelines in good faith.

● Small businesses with annual payrolls under $1 million, and certain critical services employers such as hospitals, public safety and emergency services, can be granted permanent legislative safe harbors. Some states have already granted similar waivers. But larger businesses and their attorneys should be put on notice now that stringent requirements will make up the legal framework heading their way. After mid-July, the liability gloves can come off for workers and customers who thereafter are harmed by negligence, carelessness or sloppiness.

● Where states have their own versions of OSHA, as more than two dozen do, the same framework should be required. If blue states perceive federal rules as too lax, it’s a sure thing that they will step up with tougher requirements. But national businesses with state-level compliance exposure will clamor for uniformity, which will pressure the feds to be firm with employers and management to be fair to workers from the outset.

● For a business to acquire tort immunity at both the state and federal level, an OSHA inspection must be conducted on the premises. Ideally this would occur prophylactically, but it could also be invoked as a liability defense if, following a complaint, an inspector finds clear evidence of past compliance. If the inspection process can cover both federal and state rules, then a single inspection should suffice. Nevertheless, independent whistleblower hotlines should be established.

● Where employees are represented in collective bargaining, employers must negotiate terms for waiver of liability by contract or memoranda of understanding, ratified by the workers. Impasses can be settled by compulsory arbitration.

With this framework in place, nothing should stop employers from opening their doors for business and calling workers back if their states allow general reopening. Without a proper legal inoculation, it’s entirely up to companies to take a business risk if they are that anxious to restart their operations. Their attorneys can always show a court all the good faith efforts they made even without OSHA involvement, and those that made a serious effort should do fine. But if they want indisputable statutory immunity from liability, they must play by unambiguous safety rules. Businesses can’t have their cake and eat it too.

I’m fully aware that the plaintiffs’ bar is licking its chops to start up the lawsuit mills, filing class-action claims against any business that dares to reopen and then discovers that workers have contracted the virus. To discourage nuisance lawsuits, Congress and the states can impose stiffer penalties and even taxes on frivolous attorneys in losing cases, along with other reasonable measures long advocated by tort reformers. But a free hall pass for neglectful employers is equally obnoxious to the American sense of fairness.

If ever there were a time for compromise, this would be it. Let’s not allow business liability issues to blockade the much-needed fiscal assistance to states and localities. Failure of both parties in Congress (and the states as well) to act will only ensure that liability lawsuits will inevitably pile up and clog the courts for a decade. We have better things to do with our justice system.

Governing's opinion columns reflect the views of their authors and not necessarily those of Governing editors or management.

Girard Miller is the finance columnist for Governing. He can be reached at
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