Give Small Businesses Liability Protection

By Alfredo Ortiz, president and CEO of the Job Creators Network

May 28, 2020

 

As published by Real Clear Politics.

As America opens up, businesses need Washington’s help. Those that survived the pandemic now face a new outbreak: lawsuits. Without legal protections passed by Congress, businesses large and small will face a tidal wave of crippling litigation that will extinguish any hope of a successful recovery.

 

McDonald’s, Tyson Foods and Smithfield Foods are already battling overzealous attacks by trial lawyers. Companies like these are big enough to weather the storm. But small businesses could be washed away if lawmakers fail to protect them.

 

In fact, liability protections for U.S. businesses are the linchpin of America’s reopening. Factories, restaurants, and gymnasiums were abruptly shuttered to advance the cause of public health. They watched their revenues dry up. Many were forced to furlough or even fire their workers. Paying rent became a challenge.

 

The federal government has stepped in by offering forgivable loans to help in the short term. But reopening is the only way to save these businesses over the long haul. Yet, as it stands, small businesses face the prospect of opening only to be shut down by frivolous lawsuits. 

 

If patrons catch the virus, for example, they can accuse business owners of inadequately shielding them. The result could be lawsuits -- which, let’s say it flatly, are greedy -- can close struggling businesses because they are unable to pay the lawyers’ costs alone. Many owners of small businesses say the mere threat of such legal complaints is preventing them from reopening at all.

 

Trial lawyers argue that most Americans oppose giving businesses “guaranteed immunity.” But nobody is asking Congress to provide such blanket protection. Rather, businesses want Congress to limit liability to instances in which COVID-19 exposure results from provable neglect. No one, least of all America’s small- and mid-sized businesses, expects to be shielded from responsibility in cases where COVID-19 exposure resulted from reckless indifference to health concerns. At the same time, businesses must be protected from opportunistic and marauding lawyers. 

 

This is common sense. Businesses should not be persecuted for their inability to protect their customers or workers from contracting a disease as infectious as the novel coronavirus.

As Sen. John Cornyn said recently: “It seems intuitive to me that if you’re a marginal small business and you’re making the decision whether to hang in there and try to survive ... or give up and either declare bankruptcy or just become insolvent ... this [liability protections] could make the difference."

The senator is correct. He is also making a practical point. Additional legislation to address the severe economic impacts of the pandemic won’t make it through Congress to the president’s desk unless liability protections are included. Senate Majority Leader Mitch McConnell has made that very clear.

 

McConnell argues that when the government first asked businesses to shut down, Congress helped mitigate the economic risk by passing more than $2.6 trillion in economic support. Now that businesses are being asked to reopen, he says Congress is obliged to take the next step and reduce the legal risk to businesses by offering limited protection against frivolous lawsuits. It’s hard to deny the point.

 

The Democrats have tried. Indeed, partisan tomfoolery stands in the way of McConnell’s common sense. House Speaker Nancy Pelosi calls McConnell’s drive for liability protections “disgraceful.” We disagree. Congress must rise above the all-too-familiar posturing and the Democrats’ fealty to trial lawyers to protect American businesses at this critical time. The do-nothing alternative that Pelosi prefers would be catastrophic for American businesses and the U.S. economy. 

 

Several states, such as Maryland and Illinois, have already implemented COVID-19-related liability protections for key industries, such as health care. But a broader, uniform law is needed. Small businesses, in particular, are vulnerable already. They don’t need to worry about litigation on top of everything else. Washington must step in and help. Congress should take strong action to stop frivolous lawsuits from getting in the way of what we all want and need: healthy citizens and a robust economy.

 

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