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Businesses Need Clarity on Liability Questions

American employers face a great deal of uncertainty as they seek to find some semblance of “new normal” or “near normal” in their operations. The recent spike in positive COVID-19 cases has only added to the difficulties.

Congress can help reduce the burden of uncertainty by providing clarity on the question of liability. The Bipartisan Policy Center has submitted a letter to Congress on this issue. A version of that letter appears below.

Over the last three months, BPC has hosted a series of events looking at the difficult issues facing organizations of all types as they figure out a way forward. Out of these discussions, several themes emerged. One of those was the importance of offering some protection from liability, provided that organizations operate in good faith and follow public guidelines in protecting customers, employees, and vendors.

Based on these discussions, it is our sense that a bipartisan bill such as the Get America Back to Work Act (H.R. 7528), sponsored by Reps. Henry Cuellar (D-TX) and Garret Graves (R-LA), strikes the right balance between liability protection and ensuring customer and employee safety. The bill limits liability for those employers “acting in good faith” to comply with guidelines from public health authorities. No such protection is offered to those employers who may act with “gross negligence” or engage in “reckless misconduct” with “flagrant indifference” to safety.

Importantly, the act is retroactive to January 1, 2020. This recognizes the constantly changing landscape of information in which employers must operate. Early on in the pandemic, face masks were held to be of small help in stopping the virus’ spread while it was thought to linger on surfaces for considerable periods of time. Today, masks are mandatory in many places and we have learned that surfaces may not spread COVID-19. As new knowledge is gained, guidelines change. It is critical not to hold employers’ past actions to a present-day standard informed by new findings.

This is a vitally important issue for American employers and workers across all sectors of the economy. It deserves bipartisan support. We urge congressional leaders to consider inclusion of H.R. 7528 in the next COVID-19 relief package.

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Bipartisan Precedent

There has, in fact, been bipartisan agreement on limiting liability in the past. The CARES Act included Good Samaritan language providing protection for volunteer health care professionals during the COVID-19 emergency response. That protection, like the Cuellar-Graves bill, preempted inconsistent state and local laws—but not state laws providing greater protections. The CARES Act also extended to manufacturers of personal protective equipment the liability protections of the PREP Act, which also enjoyed bipartisan support in 2005.

The federal response to prior crises, including the September 11 attacks, also included bipartisan support for liability protection. In preparation for the feared Y2K computer breakdowns in 1999, then-President Bill Clinton signed two bipartisan bills to protect companies from losses and damages.

Bipartisan agreement has also been reached at the state level in response to the COVID-19 crisis. Governors in New York and Illinois signed liability shield measures targeted at hospitals and nursing homes. Democratic governors worked with Republican legislatures in North Carolina and Kansas to enact liability protections.

During the most recent BPC event on this topic, Cuellar specifically cited “common sense” in saying he was trying to find a balance between the health of individuals and the health of the economy.

Compliance and Clarity

A reasonable response to calls for liability protection for employers is that such protection is already available under state tort laws. Regulatory compliance, it is said, provides adequate defense against lawsuits; nothing more is needed.

This, unfortunately, has proven to be inadequate. The regulatory compliance defense has been eroded and undermined in many court decisions. Additionally, survey data indicate that a quarter of Americans would be willing to sue their employer even if the employer had followed guidelines and even if they had signed a waiver holding their employer harmless.

That points to the core of the challenge—the need to protect employers from lawsuits being filed in the first place, in addition to protecting them from liability when lawsuits are filed. That need is particularly acute among small and young businesses, which often do not have the resources to survive legal challenges, let alone lengthy litigation. During a BPC event, Graves noted that no one wants small businesses to be sued “for something they couldn’t foresee.”

Providing a clear national standard for employers—and tying protection to good faith compliance—should dissuade many lawsuits from being filed. As former Rep. John Delaney of Maryland pointed out in one of the BPC events, most small business owners do think and act responsibly because they’re connected to their communities and have an interest in ensuring their customers and employees are safe. At the same time, bad actors should not be shielded from accountability. This was stated clearly by Vincent Orange, president of the D.C. Chamber of Commerce: “Anyone operating in an unsafe manner should be held responsible.”

A national standard—one that preempts state and local laws that do not adequately protect customers and employees—is necessary because of patchwork guidelines. During a BPC discussion about essential employers, participants spoke about the challenges of navigating this patchwork. While guidance has been issued from the Centers for Disease Control and Prevention, states operate differently and, within those states, local jurisdictions often interpret state guidance in varying ways. A clear standard that adequately protects employer certainty can help ensure a high floor for customer and employee safety.

An Issue for All Sectors

Liability protection is important for employers of all types and sizes. Large companies are certainly not immune from the threat of litigation. Laura Robertson, deputy general counsel at Conoco Phillips, pointed to a related risk during a BPC panel, noting that if companies chose to settle a first wave of lawsuits, that could spur a second, larger wave of litigation.

The risk is not confined to for-profit companies. Colleges and universities, in approaching how to resume classes, face multiple challenges. Dr. Raynard Kington, president of Grinnell College in Iowa, said during a BPC panel that every campus is changing every variable all the time and seeking to balance risk at the same time. The equation, he said, is different at every institution—judgment is the key because there is no “clinical trial” for this.

A clear liability standard, then, is as critical for higher education as it is for business, according to Peter McDonough, vice president and general counsel at the American Council on Education. Presidents of colleges and universities are making countless judgments on a daily basis. There should be no “Monday morning quarterbacking,” said McDonough, that faults schools later on for the hundreds of decisions that need to be made to reopen today.

A clear national standard will provide a welcome backstop for colleges and universities as they seek to reopen while protecting students and staff.

Americans Support Liability Protection

Liability protection is supported by Americans on all sides. One survey last month by Morning Consult found that 47% of Americans supported liability protection, compared to 22% opposing such protection. While such support was stronger among Republicans, four in 10 Democratic respondents supported liability protection, compared to one-quarter who opposed it.

More strikingly, two-thirds of Republicans and nearly half of Democrats in the survey supported liability protection for “essential” businesses. Many respondents said they would place the blame more squarely on customers rather than businesses if COVID-19 exposure did occur. Americans know that getting the economy going again is essential and that the virus is a shared risk. If reasonable steps are taken and employers act in good faith—as outlined in the Get America Back to Work Act—they should enjoy the certainty that their actions will not be second-guessed.

BPC welcomes the attempt by Cuellar and Graves to add some measure of resolution to the massive uncertainty facing employers of all types. We urge lawmakers to continue the pattern of bipartisan cooperation in providing limited liability protection for employers that also protects customers and employees.

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