Coronavirus liability protection for companies remains 'red line' and 'poison pill' of stimulus talks

Liability protection for employers remains a stubborn obstacle to an ongoing effort to reach a new stimulus deal before year-end, with Republicans calling it their “red line” and Democrats insisting it’s a “poison pill.”

The provision would protect businesses, educational institutions, and other employers from coronavirus-related claims from workers who get sick while also regularly going into work.

The two proposals that are currently on the negotiating table both include this protection, but with different durations, which could be key to whether a stimulus deal can be reached before the new year.

“What it does is it puts every possible roadblock, making it basically impossible for you to bring a claim if you are a worker or a consumer,” said Remington Gregg, counsel for civil justice and consumer rights at Public Citizen, a left-leaning group. “It would force all types of claims into federal court [and] federal courts are much less hospitable.”

The provision was initially introduced in July as the SAFE TO WORK Act — also part of the GOP’s HEALS stimulus proposal — both supported by Senate Majority Leader Mitch McConnell (R-KY). McConnell has called the liability provision a “red line” and said, “there’s no chance of the country getting back to normal without it.”

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Democratic leaders House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) oppose the provision, saying the Republican legislation contains “deadly poison pills.” Sen. Elizabeth Warren (D-MA) also criticized the provision last week as the two parties resumed negotiations.

“Let’s be clear about what COVID-19 ‘liability protections’ would mean: Letting corporations off the hook if they decide they care more about making a quick buck than keeping workers safe,” Warren said in a tweet last week. “We can’t let businesses escape accountability for putting people’s lives at risk.”

‘You’re going to have to accommodate both parties’

While Democrats seek aid for state and local governments, a sticking point for Republicans, the GOP wants to include liability protections, a no-no for Democrats. But to come to a deal in the lame-duck session, both provisions might need to be included, according to Norman Ornstein, a scholar at the American Enterprise Institute.

“If you want to get a COVID package, I think the reality at this point is you’re going to have to accommodate both parties,” he told Yahoo Money. “The question is going to be what you get in return for the liability.”

McConnell’s latest stimulus proposal, which is worth less than $500 billion, includes the SAFEE TO WORK Act that could give companies protection from claims either until the end of 2024 or until the coronavirus is no longer a public health emergency.

“We’re going to see some kind of liability provision because for Republicans, it is a bottom line,” Ornstein said. “The basic negotiation is going to be for how long.”

The one-page summary of the $908 billion bipartisan proposal unveiled last week includes “short term federal protection from coronavirus-related lawsuits.” But until the legislation’s text is introduced, it’s unclear how long the protections from lawsuits would last.

“Now, they have said that the bill they’re working on will be for six months,” Gregg said. But the liability provision could be “for a year or two years, that’s a possibility, too.”

‘Pressure coming from Republican senators and House members’

The bipartisan proposal has not only been backed by Democrats leaders Pelosi and Schumer, but also some Republican senators. That puts more pressure on McConnell to put the legislation up to a vote and agree to a compromise, according to Ornstein.

“There’s going to be a pressure coming from Republican senators and House members, but particularly senators that will hit McConnell,” he said. “My guess is they’ll get something done and they’ll probably end up with some kind of a compromise on the length of the liability provisions.”

Along with the four Republicans senators that unveiled the bipartisan proposal, more have backed the deal in the last week, including Sen. Lindsey Graham (R-SC), Sen. Marco Rubio (R-FL), among others.

The broadening support comes as up to 12 million Americans are expected to lose unemployment benefits coverage when two programs enacted under the CARES Act expire on December 26 if no stimulus deal is reached. The federal eviction moratorium, paid sick leave, aid to state and local governments, among other relief, also will lapse.

“You have a lot of members who are just desperate to get something done because they know what devastation is occurring out there,” Ornstein said. “One reason is all hell breaks loose on January 1 when some of these provisions just expire.”

Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.

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