A Public Health Framework for COVID-19 Business Liability (WP-20-21)
Daniel Hemel and Daniel RodriguezBusinesses that reopen amid the COVID-19 pandemic face possible legal liability to customers and workers who contract the novel coronavirus as a result of those enterprises’ operations. Federal and state lawmakers are actively considering proposals to narrow or expand the scope of such liability. These proposals have important implications not only for economic activity but also for public health. This article presents an analytical framework for evaluating liability regimes in the context of a communicable and deadly disease. The framework highlights the contrasting public-health consequences of liability before and after a customer or worker is exposed to the virus. Ex ante (before an exposure), the specter of liability generates incentives for businesses to take precautions that reduce the risk of virus transmission. Ex post (after an exposure), fear of liability may deter businesses from proactively informing customers and workers that they have been exposed to the virus through the business’s operations. The desire on the part of businesses to spare themselves from litigation may interfere with comprehensive contact-tracing efforts. To minimize the potentially perverse ex-post consequences of liability without sacrificing significant ex-ante benefits, the article proposes a limited safe harbor from liability for businesses that promptly contact customers and workers after learning about a possible exposure. The article also suggests changes to workers’ compensation rules that are designed to strike a balance between ex-ante benefits and ex-post costs.