The threat of lawyers planning aggressive coronavirus class-action suits is putting off businesses from reopening even when it is safe to do so, according to the Heritage Foundation, which is calling for liability protection.
The latest report by its National Coronavirus Recovery Commission warned that next month could bring a tipping point for the economy as businesses fight for survival.
Without urgent action to encourage consumer demand and to ensure workers can return, the result could be an economic depression regardless of whether or not COVID-19 can be suppressed, it said.
Paul Winfree, Heritage Foundation fellow and former White House economic adviser, said businesses were “hemorrhaging liquidity” and that reform of the federal Paycheck Protection Program and liability protection are urgently needed.
“One of the things that we have heard from businesses of all sizes is that they are really worried about being held liable for coronavirus cases that are traced back to their business establishment even if they do everything right,” he said. “We know, because they are pretty vocal about it right now, there’s this whole community of lawyers who are more than willing to begin class-action suits.”
The latest recommendations from the think tank’s National Coronavirus Recovery Commission focus on preparing America for future pandemics. It urged state policymakers to focus on equipping hospitals to cope with major pandemics and called on the Trump administration to review and reform federal public health agencies’ functions within the Department of Health and Human Services.
Senate Republicans are working on a bill to broaden protections for employers who fear being sued by workers and customers exposed to the coronavirus.
But the latest draft also warned that the economy is heading for a crunch as businesses prepare for what should, under normal circumstances, be their busiest time.
“Most small- and medium-sized businesses are seasonal,” Winfree said.
“The reason why they stay open in the winter is so they can do business in the summer. If we see that workers aren’t willing to come back, if demand isn’t coming back as states begin to reopen as we enter the summer, I think we are going to see a lot of business failures.
“If that’s the case, then we are risking prolonged unemployment and a long recovery.”
President Trump said the economy will bounce back rapidly.
However, an April jobs report revealed the historic nature of the impact so far. The Labor Department said the economy lost more than 20 million jobs during the month, sending unemployment to 14.7%.
