Michigan Small Business Needs Protection from Frivolous COVID-19 Lawsuits

Date: August 03, 2020

The threat of unfounded lawsuits looms as businesses reopen

As Michigan small businesses struggle to survive during Michigan’s COVID-19 shutdown, a new challenge looms as they look to re-open: the threat of unfounded lawsuits.

For most small businesses in Michigan, the safety of employees and customers is always of paramount importance. They have done their utmost to follow the precautions and safety measures set forth by the Governor and other health organizations and agencies to help stop the spread of COVID-19. As small business owners across Michigan begin the process of reopening, it is imperative that we establish protections from the threat of frivolous lawsuits that seek to exploit the already damaging effects of COVID-19. According to a recent NFIB survey, nearly 70% of small business owners are concerned about increases in liability claims when reopening their businesses.

Enterprising trial attorneys are waiting to take advantage of vulnerable small business owners with questionable COVID-19 lawsuits. The precedent has already been set: there’s an entire cottage industry of litigation harassing small business owners surrounding the federal Americans with Disabilities Act (ADA). The abuses by the trial bar are well documented. Many shops and businesses nationwide have been hit by lawsuits demanding payment over alleged minor violations of the ADA. Law firms file multiple suits against a host of small businesses and then offer to settle for a specific sum. Many small business owners are often forced to settle because they cannot afford the cost of going to court to prove they did not violate the law. Legislation has been introduced in Congress to halt these shakedown abuses by attorneys.

Legislation has also been introduced here in Michiga in the state senate and house that address COVID-19 liability concerns. Our state’s small businesses, which have already fought to survive over the course of this pandemic, deserve to get back to work without fear of unnecessary and costly legal battles. NFIB, alongside many other organizations and institutions, support this commonsense legislation to assure that employers in all sectors who take reasonable steps to follow public health guidelines will be protected against needless lawsuits.

The proposed legislation would shield a business or organization (such as churches, schools, hospitals etc.) from liability from lawsuits brought by customers or other third parties unless the customer or third party proved that the business knowingly failed to take reasonable steps to reduce the risk of COVID-19 and that that failure caused them harm. The legislation would not protect any business or organization that intentionally or recklessly disregards a substantial risk that would increase the likelihood that an individual would be exposed to COVID-19, or intentionally exposes a person to the virus. The legislation also distinguishes actual injuries and legitimate claims from “phantom-injury” lawsuits claiming “emotional distress” or injuries that cannot be documented to have occurred on the premises of the defendant. Just one of these “no injury” lawsuits in a fragile economy can stop a small business from reopening and mean shutting their doors for good.

The legislation NFIB supports will be effective because it incentivizes employers to protect and promote workplace and customer safety while also protecting organizations against the economic threat of groundless COVID-19 related lawsuits. NFIB will be working with the legislature to quickly to pass this legislation and urges the Governor to sign it into law as soon as possible so Michigan can get back to work.

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