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Virus Liability Shields May Hinge on New Agency Guidance

May 14, 2020, 6:33 PM

Some Senate Republicans eager to kick-start economic recovery are pushing for clear, enforceable agency guidelines for businesses in conjunction with legislative safeguards to protect employers against coronavirus-related lawsuits. But calls for new guidance could compound efforts to forge and implement a political compromise.

A liability shield for businesses is the “red line” Senate Majority Leader Mitch McConnell (R-Ky.) has marked out in any future talks on another stimulus package, yet Democrats are largely resistant to blanket protections.

While any agreement between Republicans and Democrats is likely weeks away, at best, a deal that emphasizes agency guidance to protect businesses would likely require federal agencies such as the Labor Department, the Occupational Safety and Health Administration, and the Equal Employment Opportunity Commission to ease up on enforcement efforts and focus on providing compliance assistance to employers, management-side attorneys told Bloomberg Law.

“That way, they’re trying to assist companies rather than trying to figure out how to sue them,” said Michael Lotito, co-chair of the Workplace Policy Institute at Littler Mendelson.

At a Senate Judiciary Committee hearing this week, chairman Lindsey Graham (R-S.C.) said the sooner a regulatory, OSHA-driven guidance process is established, “the better off we’d be.”

Other Republican members backed Graham’s call for more guidance, and Democrats on the panel agreed. Republicans previously blocked Democratic attempts to add provisions to coronavirus-relief laws that would have required OSHA to establish an emergency standard for employers to provide workplace protections against airborne pathogens like the coronavirus.

Graham said he’d stress with the White House the need for agency guidance, but underscored his party’s overarching push: “The goal is to define limited liability protection in time and scope to deal with a Covid-related reopening of the country, and to do so without rewarding bad actors,” he said. “That’s the challenge.”

Businesses Want More Guidance

Agency and administration officials have been reluctant to issue regulations that would establish new, legally binding requirements for businesses during the pandemic. They have also shied away from clear, industry-specific guidance marking out a path for businesses to return to office-based operations.

The White House reportedly shelved a step-by-step framework from the Centers for Disease Control and Prevention advising local authorities on how and when to reopen businesses. The administration instead issued a three-part reopening plan that offered broad-brush suggestions for local governments and employers. That plan put the onus on state and local leaders to make decisions on reopening.

A White House spokesperson declined to respond on the record when asked whether the administration believes agency guidance is sufficient to protect businesses from liability.

The Occupational Safety and Health Administration, the Labor Department’s workplace enforcement agency, has issued some guidance during the pandemic, particularly in relation to whether employers must record on-the-job transmission of the virus. Multiple bills proposed in the House would have directed OSHA, in crafting a virus-related rule, to essentially require employers to follow CDC guidelines.

Labor Secretary Eugene Scalia has defended OSHA’s approach, arguing that the agency can rely on the “general duty” clause in federal workplace safety law to police hazardous job conditions.

The agency also would be hard-pressed to quickly write a rule from scratch or re-tool a prior effort. OSHA proposed an airborne transmissible disease rule in May 2010, during the Obama administration, but it still hasn’t advanced the process by issuing a notice of proposed rulemaking.

Some management attorneys have called on the Labor Department to issue guidance on the Worker Adjustment and Retraining Notification Act, the federal law requiring employers to provide advance notice of mass layoffs. Facing cash and liquidity problems amid the unprecedented economic downturn, businesses want to avoid liability for layoffs, fearing yet another area of major litigation.

Meanwhile, the National Federation of Independent Business and other groups are asking DOL’s Wage and Hour Division to refrain from taking enforcement actions against employers that make a good-faith effort to comply with new paid sick- and family-leave mandates, in addition to the Fair Labor Standards Act.

On Thursday, OSHA and the DOL’s Employment and Training Administration issued guidance and safety tips for retail pharmacies and workers in nursing homes and long-term care facilities. That could give business owners in those sectors some protection from future litigation, but it fell short of the enforceable guidelines some Republicans support.

The EEOC, which enforces workplace civil rights law, also has updated guidance during the pandemic. But there are ways it can use further guidance to assist employers in the reopening process, said Rae Vann, a labor and employment attorney for Carlton Fields who advises employers.

“The CDC considers persons over the age of 65 to be at higher risk of severe illness if infected by COVID-19,” she said. “However, we know the [Age Discrimination in Employment Act] bars excluding or otherwise discriminating on the basis of age. It would be helpful for the EEOC to provide some strategies or best practices that employers should consider to protect vulnerable groups short of being accused of acting on the basis of an individual’s protected status.”

Agency Guidelines Enough?

Many businesses and management representatives want McConnell and Republicans to play hardball in coming talks with Democrats because they are skeptical agency guidance would go far enough to protect them from expensive, time-consuming litigation.

Others question the feasibility of legislative protections for businesses. David Vladeck, a law professor at Georgetown University who teaches civil procedure and administrative law, told the Senate panel that enforceable agency guidance could be enough to protect businesses.

“Clear guidelines from federal agencies would provide what’s called the regulatory compliance defense,” he said, noting that business that argue they followed federal guidelines would have a strong argument in court.

Without clear guidelines from the CDC and other agencies, “liability cases are all the more important,” Vladeck said, criticizing calls to establish broad liability protections via legislation. “You only regulate the economy in two ways: Statutes and regulations that are enforceable, or enforcing liability” through the courts, he added.

Business lobbyists have said it’s unlikely that lawmakers could successfully create a broad shield protecting companies from personal injury and workplace safety lawsuits and other types of litigation. Many have noted that there would be conflicts with state laws, especially workers’ compensation and personal injury statutes—two primary tools for workers and consumers who contract Covid-19.

Earlier this week, a group of 21 state attorneys general urged Senate leaders to pass “timely, targeted and tailored civil liability protections.” They wrote that federal action on business liability should “set a foundation for states,” not prevent them from enacting additional protections of their own.

The attorneys general added that “civil liability protections should be extended to all businesses and non-profit organizations, without regard to size or for-profit or not-for-profit status, that work in good faith to comply with guidance provided by government authorities and consistent with industry best practices.”

Lotito and Laura O’Donnell, a partner with Haynes and Boone in San Antonio, said additional agency guidance should go hand in hand with a legislative backstop.

“Guidance is great in that we should get as much as we can, but we also have to be realistic in realizing that it won’t cover everything,” O’Donnell said. “Legislation limiting liability would be great and would be helpful in this time when so many companies are struggling.”

With assistance from Chris Marr, Paige Smith, Bruce Rolfsen, and Ben Penn

To contact the reporter on this story: Jaclyn Diaz in Washington at jdiaz@bloomberglaw.com

To contact the editor responsible for this story: John Lauinger at jlauinger@bloomberglaw.com

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