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Employers Get Major Protections in GOP Liability Shield Bill (1)

Aug. 3, 2020, 9:46 AMUpdated: Aug. 3, 2020, 4:20 PM

The Senate Republicans’ sweeping bill to shield businesses from coronavirus-related liability includes significant proposals that would protect employers from a range of workplace laws while also attempting to enact what some call “radical” tort reform.

The bill’s safe harbor provision would immunize employers from lawsuits or enforcement actions connected to the virus under seven federal employment laws, including those that prohibit job bias, govern wages, and mandate minimum safety standards.

Companies could invoke the safe harbor if they make good faith efforts to follow government standards and guidance to stop the spread of Covid-19, and attempt to meet the legal requirement at issue. The provision is so broad that employers could use it to defend against claims involving changes to working conditions prompted by pandemic-related laws and executive orders.

The GOP proposal also features a separate plan to help businesses defend against legal claims for allegedly exposing workers and consumers to the coronavirus, by funneling those suits through federal courts and altering procedural rules to favor corporations.

“This is as sweeping a tort reform bill as we’ve ever seen,” said Michael Duff, a law professor at the University of Wyoming. “It’s radical.”

But for most employees, the tort reform portion of the bill is “much ado about nothing” because nearly all cases of on-the-job injury and illness go through state workers’ compensation systems, rather than as tort claims litigated in court, said Martin Malin, a law professor and co-director of the Institute for Law and the Workplace at Chicago-Kent College of Law.

The bill, introduced by Sen. John Cornyn (R-Texas), argued that the threat of lawsuits could prevent businesses and other institutions “from reopening for fear of expensive litigation that might prove to be meritless.”

Limiting corporate liability has been a top priority for Senate Majority Leader Mitch McConnell (R-Ky.) since the start of virus relief talks. The liability shield bill, dubbed the SAFE TO WORK Act, is one part of the Republicans’ $1 trillion package of pandemic measures.

But critics say Republican lawmakers and business groups have overblown the danger posed by potential litigation over Covid-19 to justify an extreme bill that benefits corporations over workers and consumers. Democrats maintain that liability provisions are a “non-starter.”

Although McConnell has said a liability shield must be included for the next virus bill to pass, the White House has indicated a willingness to leave it out.

‘Radical’ Tort Reform

The tort reform component of the SAFE TO WORK Act involves the creation of a new type of legal claim for resolving all allegations of personal injury or risk of injury from exposure to the virus. Those “coronavirus exposure actions” generally supersede claims brought under any other rule, statute, or law, including tort claims brought under state common law. They cover alleged injuries occurring from December 2019 to October 2024.

Federal courts, which companies typically favor over state courts, will end up hearing exposure actions based on how the bill treats jurisdiction, legal observers said. And federal courts will routinely dismiss them based on the array of provisions making federal virus exposure actions more difficult for plaintiffs to win than state negligence torts, they said.

Plaintiffs would have to show by “clear and convincing evidence” that a business committed a “conscious, voluntary act or omission in reckless disregard” of their legal duties. They also must prove the company’s action caused exposure to the virus, and that the exposure caused their injuries.

The proposal also would require a federal lawsuit to include a detailed record of possible exposure over the two weeks prior to showing symptoms, cap potential damages, provide for automatic emergency appeals if a judge rejects a defendant’s motion to dismiss, and give businesses the right to sue over meritless demand letters.

The bill essentially extinguishes negligence torts related to Covid-19 for more than four years, said Duff, the University of Wyoming law professor. President Abraham Lincoln’s suspension of “habeas corpus” rights of prisoners to challenge their detention during the Civil War is one comparison for that type of effort to eliminate an entire area of the law due to a crisis, he said.

The legislative proposal to prevent plaintiffs from winning tort claims “looks like a direct response to what’s been a very sloppy handling of the Covid pandemic,” said Michele Bratcher Goodwin, a law professor at the University of California-Irvine.

Workers’ Comp Exclusivity

Nevertheless, most worker injury claims are required to go through state workers’ compensation systems, so they would be unaffected by the proposal’s exposure action procedures, lawyers and law professors said. Workers’ compensation is the exclusive route for workers to seek payment for occupational injuries and illnesses.

Every state except Texas requires employers to pay compensation to workers hurt or sickened on the job. The systems give workers benefits regardless of fault and employers receive protection from lawsuits unless they’re accused of committing serious misconduct.

The stringent requirements for proving diseases are occupational will make it difficult for workers to obtain benefits for Covid-19, legal scholars said. A handful of states, however, have drastically lowered the bar by creating presumptions that certain workers with the disease contracted it at work.

But there’s a massive gap in workers’ compensation systems: They don’t cover gig economy workers, freelancers, and other independent contractors. That means those workers would have to file coronavirus exposure actions if they get Covid-19 on the job.

Covid-19 lawsuits brought under the public nuisance doctrine—such as those pending against McDonald’s restaurants and Amazon.com Inc.—also would be swept into the exposure action process, legal observers said.

Safe Harbor from Workplace Laws

The safe harbor provision applies to the Occupational Safety and Health Act, Fair Labor Standards Act, Title VII of the 1964 Civil Rights Act, Americans with Disabilities Act, Age Discrimination in Employment Act, Worker Adjustment and Retraining Notification Act, and Genetic Information Nondiscrimination Act.

The bill would give companies immunity if they were “relying on and generally following applicable government standards and guidance.” That potentially includes a wide range of government directives designed to prevent or mitigate the virus, from voluntary guidelines to mandatory protocols at the local, state, and federal level.

The safe harbor provision also calls on employers to have known about and attempted to satisfy their duties under the relevant law.

That threshold for immunity is “less specific and less robust than other compliance standards,” making it “very much a good faith standard,” said Joshua Ditelberg, an attorney at the management-side firm Seyfarth Shaw. The safe harbor provision doesn’t include a federal preemption clause, so state and local workplace laws would still apply, he said.

“It seems to create a structure where the federal umbrella of laws is taken off the table and lets things devolve to localized standards, which may or may not be more employer- or employee-friendly than federal law,” Ditelberg said.

For example, the U.S. Supreme Court recently ruled federal civil rights law covers LGBT workers, but a majority of states don’t have similar anti-discrimination protections.

Job-Bias Differences

Although claims of intentional discrimination aren’t covered by the safe harbor provision, claims involving neutral employment policies and practices that have an unintentional “disparate impact” on certain workers do fall under that clause.

The language in the safe harbor provision is so broad that employers could use it to try to block claims that aren’t directly connected to the coronavirus, said Cara Greene, an attorney at the plaintiffs’ firm Outten & Golden. For example, an employer could argue it applies to a claim that an employee who’s working from home due to the pandemic wasn’t paid for all hours worked, she said.

Moreover, the provision “handcuffs” the Occupational Safety and Health Administration from enforcing workplace safety standards, said Hugh Baran, an attorney at the National Employment Law Project, a worker advocacy group.

Other Pro-Employer Provisions

The Republican liability shield proposal includes several other provisions that would benefit employers, including amending the WARN Act—which requires employers to give workers advanced notice of plant closings—to exclude facilities shuttered due to the pandemic.

“The WARN Act doesn’t have a lot of teeth, but this totally defangs it in the very realistic scenario of a plant closing, or mostly closing, in reaction to Covid issues,” said Joseph Slater, a University of Toledo law professor.

Employers have only been hit with a handful of WARN Act lawsuits since the pandemic started, although legal observers said that could change as the pandemic stretches on. The GOP liability shield wouldn’t affect the “mini-WARN Act” laws in more than 20 states.

The bill calls for a limitation on evidence that can be used to prove one company is the joint employer of another company’s workers—a major concern for franchisers and companies that rely on outsourced labor. The measure would forbid using common virus protocols or financial assistance related to the pandemic as proof of a joint employment relationship.

The proposal also shields employers from being hit with lawsuits related to Covid-19 testing provided by a third party, absent a showing of gross negligence or intentional misconduct.

—With assistance from Jaclyn Diaz.

(Updated with additional reporting.)

To contact the reporter on this story: Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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