Kentucky Legislature Enacts Covid-19 Liability Protection for Businesses
Stites & Harbison Client Alert, April 22, 2021
by Ashley W. Ward, Alisa Micu, and Chelsea Stanley
As the country slowly recovers from the economic devastation caused by the COVID-19 pandemic, Kentucky’s lawmakers have stepped in to provide protections to the businesses and workers that will help get the Commonwealth back on its feet. On the last day of the most recent legislative session, Senate Bill 5 became law when the Governor declined to sign or veto it. This legislation, similar to laws in 30 other states, offers immunity from COVID-19-related negligence actions to business owners and essential service providers working to prevent the spread of the virus.
With the passage of SB 5, Kentucky businesses who reopen their doors to the public can do so without fear of certain COVID-19-related lawsuits. As long as business owners are complying with executive actions for COVID-19 safety (including federal, local, and industry-specific guidelines), SB 5 provides immunity from negligence lawsuits by patrons who may have been exposed to the virus on the business’s premises. The law also protects businesses that are working to treat the virus, and services performed outside the normal course of business in response to the pandemic, like bourbon distilleries which produced desperately-needed hand sanitizer.
Despite the wide immunity it offers, the new law does not protect business owners who act in a malicious or grossly negligent manner, or who intentionally ignore executive orders relating to the declared COVID-19 emergency.
The other group protected by the codified version of SB 5 is essential service providers. Under the law, the term “essential service providers” encompasses the groups that remained working throughout the mandated COVID-19 shutdowns, but also adds to that group teachers, home healthcare workers, funeral home employees, and local government employees. For the time SB 5 is in effect, essential service providers cannot be liable for COVID-19 related claims.
From its inception, many organizations, like the Kentucky Chamber of Commerce, lobbied for SB 5 and praised the effect it would have on businesses. However, several amendments were introduced to curtail SB 5 and ensure that citizens still retained some jural rights.
For example, when originally proposed, SB 5 provided liability protections that extended for one year after the emergency declaration is withdrawn, revoked, or lapses. Later amendments shortened these protections to expire on the date the state of emergency expires.
The passage of this legislation appears to leave some uncertainties as to the rights of businesses and citizens alike. For instance, it is unclear to what extent a business needs to be compliant with COVID-19 regulations in order to be protected under this law. Does the bill protect businesses that comply with some, but not all, executive actions and regulations related to COVID-19 such as the anticipated COVID-19 emergency standard soon to be issued by OSHA?
Also, what implications, if any, does the bill have on the jural rights of citizens, which ensures access to courts and prevents eliminating a citizen’s ability to sue for certain causes of action? Supporters have argued that SB 5 aligns with Kentucky’s jural rights doctrine because it is limited in scope and protection—it deals with an isolated situation, and it calls for additional protections of private, non-governmental entities that act as agents of the state during an emergency, and comply with public orders. It remains to be seen whether this law can withstand constitutional muster in the face of challenges, as the answers to these questions will likely find their way to the courts.
Kentucky’s neighbor to the north, Indiana, has enacted similar legislation. Indiana law now provides civil tort immunity to a person for damages arising from COVID-19 (1) on the premises owned or operated by the person; (2) on any premises on which the person or an employee or agent of the person provided property or services to another person; or (3) during an activity managed, organized, or sponsored by the person. The law further precludes class actions based on tort damages arising from COVID-19. Additionally, the law specifically protects manufacturers and suppliers of COVID-19 protective products from civil tort liability for harm resulting from the design, manufacture, labeling, sale, distribution, or donation of such products. The law, of course, is not without exceptions. For example, there is no immunity provided for gross negligence or willful or wanton misconduct, and these statutes remain in effect only until December 31, 2024. Implications of this new law largely remain to be seen, and additional legislation is still being considered that would provide even more expansive immunity.