Small Business Owners Say Punitive Damage Legislation Will Provide Needed Protections
Small business owners from across the state, along with NIFB State Director in Missouri, Brad Jones, are thanking the Missouri General Assembly for passing legislation that would not only provide peace of mind but make Missouri a more friendly place to own and run a small business. Small business owners are now urging the governor to sign the bill, which will provide much needed protections against frivolous lawsuits.
“For small business owners, the threat of being sued and losing their business is always in the back of their mind. Even when a small business is able to win a lawsuit, they actually lose because of the high court costs,” says NFIB State Director in Missouri Brad Jones. “A lot has changed since legislators started debating this bill. Now, more than ever, small businesses need protection. They’re already damaged by forced closings and loss of revenue from the coronavirus. Many are hanging by a thread. This bill will provide some peace of mind as Missouri small businesses work to re-open and get back to the business of keeping Missouri’s economy running.”
More than 15 million lawsuits surface each year, according to NFIB congressional testimony. While some are legitimate, others are frivolous—which means lost opportunities for small businesses to expand and create jobs.
Approximately half of small business owners were “somewhat concerned” or “very concerned” about the possibility of being sued, according to an NFIB Research Foundation National Small Business Poll.
It’s not hard to see why. In any given year, small business owners in the United States pay an estimated $35.6 billion to settle civil suits. NFIB data shows that 95% of small business owners settle out of court.
SB 591 will protect small businesses from frivolous lawsuits that could destroy a business that took decades to build. Right now, in Missouri employers can be held liable for the actions of their employees simply because they were working for that employer when they harmed someone else. This legislation changes that standard to something much more fair: employers may only be found liable for the acts of their employee if they ordered the employee to act in a manner that caused harm, if they knew about the act, or if the employer knew that their employee was unfit to do their job.
Missouri has awarded some unprecedented punitive damage judgements including one lawsuit last year which ordered Johnson & Johnson to pay nearly $5 billion in punitive damages. SB 591 would change the standard, offering more protection for small business and making sure punitive damage lawsuits are not about hitting the jackpot.
Small business owners are especially at risk for punitive damages. Most punitive damage payments are not covered by insurance policies.
The legal climate is one of the critical factor’s companies look at when they expand to other states. According to a study from the Perryman Group, frivolous lawsuits cost the state of Missouri $2 billion in direct costs, $3.1 billion in output, and 32,205 jobs. You can read the entire survey here.