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Congress Needs to Solve the COVID-19 Liability Problem

Simply making businesses immune to lawsuits risks infecting the rest of us.
April 29, 2020
Featured Image
US House Speaker Nancy Pelosi speaks to the press before signing the additional 484 billion dollar relief package amid the coronavirus pandemic at the US Capitol in Washington, DC, on April 23, 2020. - The House of Representatives passed a new $483 billion economic stimulus bill April 23, 2020 as US job losses due to the coronavirus soared and businesses clamored for more support.The House voted overwhelmingly for the bill, already passed by the Senate, and President Donald Trump indicated he would quickly sign it into law to pump more emergency funding into the world's largest economy. (Photo by NICHOLAS KAMM / AFP) (Photo by NICHOLAS KAMM/AFP via Getty Images)

As Jonathan V. Last observed last week, no government official can singlehandedly “reopen” the economy. Never mind the president, whose rhetoric has far outpaced his actual powers. But even the state governors and local mayors with actual legal power in local matters of public health and safety can only do so much: They can relax public health closings and stay-at-home orders but they cannot actually require stores to open their doors, or require customers to walk through them. Rather, the economy will reopen, slowly but surely, as people begin to feel safe returning to their businesses, going back to their jobs, or going out to shop and spend.

But in that process, some laws will play a significant role in shaping people’s expectations and apprehensions—especially laws assigning liability for customers or employees who get infected with COVID-19 while working or shopping. Until America has developed immunity to COVID-19, American businesses will want immunity to COVID-19 lawsuits. And so business and insurance companies, increasingly worried about these risks, are already lobbying state and federal policymakers for “liability shields”—new laws freeing them from any legal responsibility for COVID-19 infections that their businesses might help to cause.

Their worries are understandable, in a nation full of plaintiffs’ lawyers keen to file class-action lawsuits. And the risk of litigation appears even more daunting when one considers how hard it can be to prove or disprove that a given person’s COVID-19 infection actually occurred at a particular place and time, when symptoms will not develop for days after the fact. Any one infection could spur lawsuits against multiple businesses.

At the same time, the risk of abusive lawsuits is not the only problem policymakers need to consider; they need to take seriously the safety of employees and customers, both because it is the right thing to do and because it is necessary to make people feel comfortable entering the economy again.

But the problem with liability shields is that they are never big enough to protect everyone. A liability shield simply shifts the costs of harm from one person to another. When a government shields businesses from liability, they are imposing liability on workers and customers by forcing them to bear the cost of the disease—either by paying medical bills or paying higher insurance bills, or both.

Congress needs to take these issues seriously and enact legislation balancing the interests of businesses, employees, insurers, and all other Americans. Unfortunately, President Trump’s initial statements have been exclusively in favor of business owners. In his April 20 press conference, in response to a reporter’s question about liability risks, the president said that although no businesses had asked him about liability shields yet, he was keenly interested in providing one: “we have tried to take liability away from these companies,” he said, urging that liability shields are necessary “because we want the companies to open and to open strong.” Days later, White House economic adviser Larry Kudlow told CNBC that “businesses, particularly small businesses,” need “some confidence here that if something happens, and it may not be their fault—the disease is an infectious disease—if something happens, you can’t take them out of business.”

White House lawyers and other officials have joined the debate, according to the Washington Post. “Attorneys in the White House Counsel’s Office are reviewing the matter, but some administration officials have raised objections to the idea,” in terms of both the risk that the federal government might assume legal liability, and also the broader political implications of the federal government erasing legal protections for American workers and consumers simply for the sake of jump-starting the election-year economy.

Congress needs to decide this issue, and not in the all-or-nothing terms offered by President Trump. Given the important interests on all sides of the COVID-19 liability issue, Congress needs to legislate a framework that creates the right incentives for minimizing the risk of COVID-19 infections. Congress or state legislatures can enact laws that remove liability from companies that take reasonable steps to keep infected employees and customers away, and to keep the businesses’ own facilities as clean as possible.

The key is for Congress or state legislatures to actually make the hard choices of what we expect of businesses. While no legislation on this subject can be perfectly precise, legislators can at least specify the types of protective measures that are required: testing employees and customers, or at least taking their temperatures, asking about other symptoms, and trying to keep the sick away; distributing masks and gloves; cleaning all surfaces a particular number of times per day; and so on. The key is to give businesses protections based on criteria that are as specific as possible, so that they can be as sure as possible that their activities satisfy the law’s requirements. There will always be at least some lingering legal uncertainty, but precise legislation can remove much of it, making businesses feel much more comfortable about reopening their doors.

And when those doors reopen, employees and customers will feel much more comfortable walking through them. Yes, those employees and customers will bear more of the risk associated with catching COVID-19, but they will at least have the reassurance that those businesses are taking significant steps to keep their premises and personnel as COVID-free as reasonably possible.

COVID-19 infection liability raises many difficult questions, and it requires striking balances between many interests for the sake of the overall public interest. In other words, it is a job for a legislature. Congress needs to do its job, so that Americans can return to theirs.

Adam J. White

Adam J. White is a resident scholar at the American Enterprise Institute and director of George Mason University’s C. Boyden Gray Center for the Study of the Administrative State.