- As small businesses reopen their doors to customers after months of limited operations, Main Street advocates are putting out the call to enact liability guidelines and provide protections at the federal level from potential coronavirus-related lawsuits.
- Small businesses fear lawsuits from customers who get sick with Covid-19.
- Many businesses discovered their insurance didn't cover interruptions from a pandemic and they fear the same will be true if they are sued for damages related to the virus.
At Chris Purcell's Firehouse Subs location in Elizabeth City, North Carolina, things aren't quite business as usual.
After suffering sales drops of as much as 60% during the height of the coronavirus pandemic, customers are starting to return. Now it's all about making them comfortable and keeping employees and patrons alike safe in his store, which means going above and beyond guidelines for operating in the new normal.
Workers are wearing masks and gloves, and washing hands every 15 minutes. Purcell has plexiglass up between the point-of-sale and customers, barriers between customers and employees and he's operating at less than the 50% capacity he's allowed to, just to be safe. The threat of a Covid-19 lawsuit looms over his head.
"There's really no way to prove or disprove that someone did or did not catch it in any particular location. And that scares a lot of the small business owners, like myself and fellow restauranteurs, in town," he said.
"We've done everything that the CDC, the state of North Carolina, WHO, anybody can think of, for us to do, we're doing it," Purcell continued. "And that's our concern, if we're doing everything that we're told is correct to do, we can still be open for liability. We have no recourse against it."
As small businesses like Purcell's around the country begin to reopen their doors to customers after months of limited operations, Main Street advocates are putting out the call to enact liability guidelines and provide protections at the federal level.
The U.S. Chamber of Commerce and 200 trade groups across the country sent a letter to Congress in late May addressing the issue, and pushing for temporary and targeted relief legislation related to the pandemic.
The groups ask for temporary liability protections for businesses, nonprofits and educational institutions that follow public health guidelines; workers and facilities providing critical Covid-19 services; manufacturers, donors, distributors, and users of vaccines, therapeutics, medical devices, as well as PPE and other supplies critical to the pandemic response, and finally public companies targeted by "unfair and opportunistic" Covid-19-related securities lawsuits.
"These crucial protections should safeguard businesses, non-profit organizations, and educational institutions, as well as healthcare providers and facilities from unfair lawsuits so that they can continue to contribute to a safe and effective recovery from this pandemic," the letter said.
The International Franchise Association has also followed up with its own Congressional petition, including 7,000 signatures from members, to protect business owners from potential lawsuits. The group's president and CEO, Robert Cresanti, said, it's tracking lawsuits and has already seen 1,000 across the country tied to the coronavirus.
"In the midst of the economic crisis and just having stood up your business, having been shut down for a long time, and now having to face lawsuits because someone got sick, even though you may be taking the best available precautions … you end up in a situation of near hopelessness," Cresanti said.
As the pandemic took hold and states forced nonessential businesses to close, many small businesses sought the relief of their business interruption coverage only to find that Covid-related closures were not covered.
"It turns out that business interruption insurance is not what it sounds like," Cresanti said. "Most of the insurance companies are telling our people that business interruption insurance is actually business destruction insurance. So if your business is burned down or destroyed by a flood, you're covered. But you're not [covered] in a crisis like this where your business is truly interrupted."
The insurance industry is facing new questions from small business owners, this time about general liability coverage for incidents involving a customer getting sick after patronizing a business. Specific policy exclusions vary between insurers, but most liability policies include an exclusion for virus- and bacteria-related losses. Industry executives warn without these exclusions, the large burden could bankrupt the industry or leave it unable to cover other catastrophes in the future.
Liability protections promise to be another battleground between Republicans and Democrats as Congress considers additional stimulus. Senior Republicans said they won't consider another stimulus bill without the inclusion of liability protections for doctors and businesses.
"Liability protections would be the No. 1 thing I would look at," House Minority Leader Kevin McCarthy told CNBC's Squawk Box last month. "No bill will pass without it."
The public, though, is divided on the issue. Data from CNBC and Change Research on liability for coronavirus risk shows that 37% of likely voters nationwide believe businesses should have protections from lawsuits, while nearly 49% think that employees and customers should be able to sue.
Still, Purcell is hopeful the government will come through.
"It's scary for all of us that we could be bankrupt [and lose] what we've worked so hard for, for so many years," he said.