New w/@DBRodriguez5: An incentives analysis of business liability to consumers and workers who contract COVID-19 ... plus an original proposal to allow a safe harbor for businesses that promptly inform customers about possible exposures ex post. ssrn.com/abstract=36063…. 1/ 
We begin w/survey of legal landscape. Tl;dr (but it's not long, so please read): These won't be easy claims for plaintiffs to win. Causation will be especially tough to prove. Workers' comp exclusivity will bar lots of employee claims. But occasional outsized awards are likely 2/
Intense media coverage of large awards may amplify behavioral effects. & CGL insurance policies may not provide coverage. So liability can shape incentives even if successful claims are relatively rare.
So let's talk about the incentive effects .... 3/
So let's talk about the incentive effects .... 3/
Ex ante, liability encourages businesses to take precautions against transmission. (Yes, there's victim moral hazard, but tempered by self-preservation incentives + low recovery rate.) Ex post (after exposure) incentives generated by liability are potentially perverse. 4/👇
If businesses don't want to alert customers & workers about exposures ex post b/c of liability concerns, comprehensive contact tracing will be much more difficult. So how do we retain the ex-ante benefits of liability w/out the ex-post costs? 5/
We suggest a safe harbor: Businesses should be relieved of liability if they contact a customer via telephone, voicemail or email w/in 24 hours of learning about a potential exposure. More details in the paper. 6/
We also consider workers' compensation reforms. The presumptive-causation rule adopted by CA (and struck down by a state court in IL) ends up looking pretty good from an incentives perspective (& doesn't radically disrupt the workers' compensation "grand bargain") 7/
A few final points:
This is not (primarily) about the economy vs. public health. To have a functioning economy again, we need to contain the virus. Liability can make that easier ... or harder. A public health framework for liability can yield economic payoffs too 8/
This is not (primarily) about the economy vs. public health. To have a functioning economy again, we need to contain the virus. Liability can make that easier ... or harder. A public health framework for liability can yield economic payoffs too 8/
This also isn't solvable w/a safe harbor conditional on businesses following "guidelines." There's simply no way authorities can generate guidelines to cover every possible fact pattern. Even w/guidelines, businesses will exercise discretion, which will then be 2nd-guessed 9/
Lastly, & sadly, this isn't just about COVID-19. We've faced similar challenges in designing liability regimes around infectious diseases in the past (syphilis, TB, HIV/AIDS). & even after we beat COVID-19, we'll almost certainly face this challenge again (& again & again) 10/
Comments, corrections, suggestions, objections all very much appreciated (via email, DM, carrier pigeon, etc.) 11/11
