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This most recent effort to limit corporate accountability must be examined in the larger political and legal context. (Photo: Spencer Platt/Getty Images)

This most recent effort to limit corporate accountability must be examined in the larger political and legal context. (Photo: Spencer Platt/Getty Images)

Republicans and Corporate Interests Exploit Coronavirus Crisis to Erase Companies' Liability

Any effort to immunize corporations from responsibility to ensure workers a safe workplace will only lead to fewer protections for working people.

Senate Majority Leader Mitch McConnell (R-Ky.) and Senator John Cornyn (R-Texas) announced that they are working on legislation to give companies enhanced protections against lawsuits by employees and consumers who contract COVID-19 and claim that the business is responsible for their infection. Instead of advancing crucial worker protections and aid to state and local governments, Republicans and corporate advocacy organizations have made “liability shield” legislation the main priority for additional pandemic relief and recovery measures—claiming that it is necessary to remove liability from businesses in order to reopen the economy. To be clear, removing legal accountability from businesses would jeopardize the health and safety of workers and consumers and threaten the overall economic recovery.

In the last several months, there have been many examples of businesses failing to provide workers with the necessary personal protective equipment to enable them to perform their jobs safely and effectively. Further, some workplaces have continued to operate when workers reported infection and have become epicenters of a local outbreak. Eliminating all legal liability for businesses will likely lead to more businesses acting irresponsibly and placing potential profits ahead of worker and consumer safety.

Compounding this problem is the fact that policymakers have gutted federal budgets for worker protection enforcement over the last decade, as shown in Table 1.

As the workforce has expanded, the number of inspectors available to ensure that businesses are operating in compliance with health and safety regulations have also declined. According to the Occupational Health and Safety Administration (OSHA), there is approximately one compliance officer for every 59,000 workers. Figure A shows worker protection agencies are responsible for far more workers than they were a decade ago.

In addition to weak federal enforcement of worker protections, policymakers have failed to impose meaningful penalties when employers violate labor and employment laws. For example, OSHA has a maximum penalty of just $13,494 per each violation that results in the death or serious harm of a worker. These penalties are insufficient to serve as a deterrent. Companies merely factor these penalties into the cost of doing business. Therefore, it is imperative that corporations have some legal incentive to adhere to health and safety guidelines.

Ensuring that workers and consumers can hold companies accountable for their actions is critical to establishing a safe reopening of our economy. Currently, workers who are injured or become ill as the result of workplace exposure face tremendous hurdles in holding their employer accountable. Many workers are barred from taking legal action against their employer because their state workers’ compensation laws preclude them from filing suit unless they can demonstrate that their employer’s gross negligence caused their injury. The lack of OSHA guidance makes it difficult for workers to pursue or win a personal-injury claim because it is difficult for workers to demonstrate that an employer did not take the necessary steps to protect workers. Even if the worker is able to build a case and take their employer to court, the worker may be subject to forced arbitration to resolve the claim.

Ensuring that workers and consumers can hold companies accountable for their actions is critical to establishing a safe reopening of our economy.

This most recent effort to limit corporate accountability must be examined in the larger political and legal context. It is not, as Republican lawmakers suggest, simply a response to the pandemic. Republicans and corporate interest groups have long-pursued policies aimed at making it more difficult for workers and consumers to sue corporations. In fact, over the last several decades corporations have severely restricted workers’ and consumers’ right to sue by forcing them arbitrate all claims. In the employment context, companies require workers, as a condition of employment, to resolve all workplace disputes through arbitration, often on an individual basis. This makes it nearly impossible for workers to hold their employers accountable for violating their labor and employment rights.

A recent study found that forced arbitration clauses already bar 56.2% of nonunion private-sector workers from seeking justice in court. Forced arbitration is imposed in nearly two-thirds of low-wage workplaces. Based on the dramatic increase in forced arbitration in recent years and the free rein granted to corporations by the Supreme Court in the Epic Systems decision, it is likely that within five years over 80% of nonunion private-sector workers will be unable to sue their employers.

Forced arbitration clauses often include class and collective action bans as well. This means that workers must pursue their claim in arbitration individually. Although their rights have been diminished, workers depend on collective and class actions to enforce many workplace rights. Employment class actions have helped to combat race and sex discrimination and are fundamental to the enforcement of wage and hour standards. Without the ability to aggregate claims, it is very difficult, if not impossible, for workers to find legal representation in these matters. This is particularly true for low-wage workers, whose cases are unlikely to involve large enough awards to attract attorneys to invest time in the case. Class and collective action suits allow workers to pool their claims, making it possible for an attorney to earn enough to make the case worth pursuing. Additionally, class and collective action efforts enable workers to gather supportive evidence from each other and demonstrate pattern and practice violations that inure to the benefit of the entire workplace, not just one worker.

Further, corporations set the rules in arbitration and may impose costly fees on workers, shorten periods for initiating a claim, limit workers’ ability to collect evidence to prove their case, and prevent arbitrators from awarding the level of relief that would be available in court. In addition, employers also select the arbitrator pool. Because employers are “repeat players” (who will be hiring arbitrators in the future, unlike their employees) arbitrators have a big incentive to find in their favor. As a result, businesses win in arbitration the overwhelming majority of the time—even more often than they do in federal court. A 2015 report found that workers in mandatory arbitration win only about a fifth of the time (21.4%), whereas they win over one-third (36.4%) of the time in federal courts. And, when workers do win in arbitration, they are awarded far less money than they would receive in the courts. This makes individual arbitration completely different from the bilateral—and voluntary—arbitration used in unionized workplaces to resolve disputes arising under collective bargaining agreements. As a result, an estimated 98% of workers who would otherwise bring employment claims in court abandon their effort when the only option is arbitration.

Workers and consumers already face significant challenges in holding corporations accountable. Any effort to immunize corporations from responsibility to ensure workers a safe workplace will only lead to fewer protections for working people. Unfortunately, several states have already taken steps to shield corporations from liability of exposing workers and consumers to COVID-19. Compounding this problem is lax enforcement of worker protections and the Trump administration’s and congressional Republicans’ efforts to deregulate. Many companies had safety and health issues before the pandemic, and they should not be benefited by the public health crisis and awarded with a shield from liability.

© 2021 Economic Policy Institute
Celine McNicholas

Celine McNicholas

Celine McNicholas is labor counsel for the Economic Policy Institute and a core member of EPI’s Perkins Project on Worker Rights and Wages, a policy response team that tracks the Trump administration’s wage and employment policies.

Margaret Poydock

Margaret Poydock is the policy associate at the Economic Policy Institute. In her role, she assists the policy team in managing EPI’s legislative and policy initiatives to build a more just economy. Previously, Poydock was EPI’s communications assistant. In that position, she provided support for the media relations, publications, and web departments.

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