How to Fix the Employer Liability Problem

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Donald Trump and Nancy Pelosi have been in talks about a stimulus bill for the last month or so. One reported barrier to reaching an agreement is that Trump wants there to be a provision that prevents coronavirus victims from suing their employers for creating the unsafe work conditions that caused them to be infected. Pelosi and other House Democrats do not want such a provision to be in the bill.

Insofar as getting $1.8 to $2.2 trillion of stimulus out the door is very important, Pelosi and Trump need to find some way around this impasse. Denying specific compensation to victims is bad. But denying trillions in stimulus is also bad, including to these victims and their families.

One simple solution to this impasse is to provide the employer liability waiver that Trump seeks in exchange for setting aside a public fund that will compensate the families of workers who have died or suffered serious permanent disabilities due to coronavirus. This fund would be similar to mass tort funds established for things like asbestos liability.

Relative to the size of the bill being discussed, a coronavirus victims fund of this sort would not be that costly. According to the CDC, around 43,000 people between the ages of 15 and 64 have died from coronavirus. If you paid $1 million to all of their families, that would only cost $43 billion. If you restrict eligibility only to those who were currently employed at a job that required them to work at a worksite when they contracted the virus, the number would be considerably lower. If you dropped the compensation to $500,000, the number would also be considerably lower. You get the point.

A fund like this would actually compensate the victims better than employer liability would because, in an employer liability scenario, workers would need to bring individual civil lawsuits (or private arbitration claims) and prove their case before a judge. The cost and difficulty of this process would dissuade many from filing suits and the proof problems would probably result in many failed lawsuits as well.

The downside of using a fund like this is that it lets employers off the hook. In theory, this could create incentive problems in the future if employers believed that they will always get away with creating unsafe workplaces during a pandemic. In reality, this seems like a minor concern in the current circumstances. Pandemics are rare and when the next one does come, e.g. in year 2120, employers are not likely to believe that, because the 2020 congress did an employer liability waiver, the 2120 congress will also do one.

For the sake of getting a deal done, getting stimulus out the door, and better compensating victims of unsafe workplaces, creating a public fund like this is a no-brainer. Pelosi, or other House Democrats, should start pressing this idea right away.