Executive Orders: Business Liability Protections
The pandemic changed the way we did business, and one of the more contentious issues to emerge was whether individual businesses should be shielded from lawsuits over customers’ or employees’ exposure to the virus. Across the nation, states were left to decide the issue after a Republican-led effort to enact liability shields for businesses failed at the federal level.
Arkansas was among the many states to adopt its own version of legal immunity for businesses. Though nationally, this was a controversial issue in many states and even a stumbling block to stimulus negotiations in Congress, the issue was met with little opposition in Arkansas.
Read more about how this issue evolved from an executive order into law with little fanfare here in Arkansas.
Executive Order 20-33
Three months after the pandemic began, Governor Asa Hutchinson signed Executive Order 20-33, which protected Arkansas businesses from liability related to COVID-19. In an effort to encourage businesses to reopen, the order declared businesses and employees immune from civil liability for damages or injuries caused by or resulting from exposure to COVID-19 at the business. The order specified the immunity did not apply to “willful, reckless, or intentional misconduct.” Actions were presumed not to be willful, reckless, or intentional misconduct if businesses substantially complied with health and safety directives or acted in good faith while attempting to comply with directives. Finally, the order clearly stated it does not extend to workers’ compensation benefits.
HB1487, filed on February 10, 2021 by Representative Justin Gonzales closely mirrored EO-20-33, including the same language on “willful, reckless, or intentional misconduct,” the presumption when substantially complying or acting in good faith while attempting to comply with health and safety directives, and the exclusion of workers’ compensation benefits. The bill specified it was intended to be temporary legislation and would expire in two years.
The bill was presented before the House Judiciary Committee on March 11, 2021. In his presentation, Rep. Gonzales stated, “this is just another one of those bills that we’re doing to codify the Governor’s executive orders.” Discussion from committee focused on concerns that the injured individual would have no recourse, marking a change from typical tort law processes. Justin Allen, an attorney at Wright Lindsey Jennings, who assisted Rep. Gonzales in presenting the bill, indicated this was a give and take necessitated by the pandemic. The committee also inquired about the two-year time limit on the bill, posing questions about its necessity when the emergency declaration ends. Allen advised the guidance on COVID-19 would not go away in the near future and this timeline allowed the next general assembly to reevaluate as needed. The bill passed through committee by a roll call vote, with 11 Yeas and 4 Nays. On March 15, the bill passed the House, with a vote of 79 Yeas and 11 Nays.
The bill faced little opposition in the Senate. On the evening of March 31, the Senate Public Health Committee passed the bill with limited discussion. Senator Bob Ballinger presented the bill, specifying that the bill intended to codify the Governor’s executive order. While there had been questions concerning whether the language related to the health guidelines added more or less protection for business owners, Sen. Ballinger indicated no attorneys could provide a solid conclusion. Accordingly, he stated they were moving forward with the language as is, “in order to provide some protection for our business owners if and when the Governor’s executive order is no longer in effect.” The following day, the bill passed the Senate with 34 Yeas and 1 Nay.
On April 5, 2021, Gov. Hutchinson signed HB1487 into law, codifying Executive Order 20-33. Act 559 became effective on that date via the Emergency Clause adopted by both the House and Senate. Arkansas is not alone in its efforts to protect businesses, as well over half of all states have enacted similar COVID-19 liability shields.
Continued Liability Protections
Though the state’s emergency health declaration ended on May 30, COVID-19 liability protections for businesses will continue in Arkansas through 2023. The law includes immunity for substantial compliance with “health and safety directives or guidelines” issued by “the Governor, the Secretary of the Department of Health, the Centers for Disease Control and Prevention, and the Centers for Medicare & Medicaid Services concerning Covid-19.” While the guidelines from the Governor have subsided, guidelines remain in effect from the remaining entities. Accordingly, based on the plain language of the bill, businesses only enjoy immunity under this Act if they substantially comply with the guidelines still in place.
From Executive Order, to bill, to Act 559, Arkansas’s efforts to provide civil immunity to businesses acting in good faith during the pandemic met less opposition than similar efforts in D.C. and nationwide. We will continue to monitor the bill’s impact here in Arkansas, and whether its protections evolve to outlast the pandemic.
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