What are the avenues for corporate liability for COVID-19-related human rights abuses?

By Maysa Zorob & Andrea Hearon, Business & Human Rights Resource Centre

June 22, 2020

The devastating human rights implications of the global COVID-19 pandemic have been thoroughly documented:Civil society has exposed the failure of many governments to protect their citizens and of many businesses to respect human rights in accordance with the UN Guiding Principles on Business & Human Rights. Workers are routinely forced to work without adequate equipment to protect them from contracting the disease, are denied paid sick leave when they get sick or need to self-isolate and are laid off without notice or compensation. To what extent does the corporate responsibility to respect human rights translate into liability for failure to do so?

Existing Liability Avenues 

National tort, labour, contract and/ or criminal law provisions may provide potential avenues for workers to seek redress for COVID-19 related abuses of labour and other human rights. Over the past couple of months, we have seen a number of tort-based lawsuits brought against companies for allegedly failing to take necessary safety precautions, thus violating the duty of care they owe their workers. One such lawsuit was brought in the US against Walmart by the family of a Walmart employee who died from COVID-19. The lawsuit alleges wrongful death caused by Walmart’s failure to properly clean stores and provide personal protective equipment to its work force. McDonalds and Celebrity Cruises are facing class action lawsuits alleging negligence for lack of protective measures implemented. Other corporations will see suits requesting injunctions to stop commercial activity until the company puts in place appropriate procedures to mitigate employees’ risk of contracting the disease. The French court in Nanterre has already issued such a measure for Amazon’s failure to implement appropriate safety procedures.

Moreover, employers who fire employees without just compensation or withhold wages for work already completed may be held liable under national labour and employment legislation. Companies who refuse to pay sick leave for workers who contracted COVID-19 but are asymptomatic and need to stay home to self-isolate, may also be held liable under contract law (if and when they are under a contractual obligation to pay for sick leave).

In addition to civil liability, employers may face liability under criminal law. Many European countries have updated national regulations to address new safety measures to protect citizens during the pandemic. Some of these provisions are specifically aimed at criminal liability for failing to protect workers. In Italy, the government enacted new emergency legislation which seems to consider contraction of COVID-19 as a workplace accident. This invokes liability for the employer under the crime of personal injury through negligence, or in the event of death, for manslaughter. Criminal liability extends to such persons who have operational authority, such as directors and managers. 

In Spain, emergency legislation stipulates that the contraction of the disease is considered a regular work accident (if the employee contracted the virus exclusively due to performance of the work),  which may result in both criminal and civil liability of the employer. The company’s director or supervisor who failed to take preventative measures to ensure workplace safety during the pandemic may potentially be held criminally liable, as well as the corporate entity itself. Criminal punishment can include a penalty fee, dissolution of the legal entity, and temporary suspension of economic activities. 

Limitations

While the legal claims outlined above provide important avenues for corporate accountability, they are centered predominantly around workers in formal employer-employee relationships. Most of these justice avenues are not accessible to the world’s informal workforce, who perform precarious work based on non-standard employment that is poorly paid, insecure and unprotected. Daily wage earners, casual supply chain workers, and migrant workers are disproportionately harmed by the impacts of the pandemic and are also those with least access to remedy.

In the lowest paid sectors, such as the garment industry, the rights of workers are routinely violated with impunity. Global brands are taking advantage oftheir disproportionate power over factory suppliers to cancel agreed orders, pay suppliers substantially less than agreed, or to grossly extend payment terms, with devastating impacts on the 40 – 60 million garment workers in global fashion supply chains.Our COVID-19 tracker has highlighted £2.5 billion in cancelled orders by UK retailers in Bangladesh alone.

Meanwhile, suppliers - who rely on the income from global brands to pay their workers - have responded with mass layoffs, and are reducing or even withholding the wages of their workforce. Massive layoffs have been reported in countries such as Cambodia, where the $7 billion garment and footwear industry is the country’s largest employer, supplying global brands as H&M, Adidas, PUMA and Levi Strauss. Over 250 factories have been suspended due to COVID-19, affecting more than 130,000 workers, many of whom have been protesting unpaid wages. In Myanmar garment workers allege that factories are using COVID-19 to retaliate against critics and dismiss union members. 

The Way Forward

Current governance mechanisms have proven insufficient in adequately protecting workers from human rights abuses across business operations and supply chains. Where legal frameworks exist, they often fail to provide remedy to the most vulnerable. Voluntary standards such as the UNGPs and other soft law – while important - have been unable to fill the protection gap in a meaningful way.  It is time to create effective, legally binding, and rights-centric mechanisms that prevent human rights abuses from occurring in the first place and redress harm when things go wrong. 

While some leaders, notably in the European Union, have highlighted the importance of human rights and environmental due diligence to protect workers in COVID-19 resolution, others are more concerned with shielding companies from liability. In the US for example, senators have suggested corporate immunity from pandemic related lawsuits, and several states have already passed such legislation granting immunity. Meanwhile law firms are advising their corporate clients on how to mitigate COVID-19 related litigation risks, concerned that lawsuits over labour abuse during the pandemic may become the next asbestos litigation.

 The pandemic has highlighted that now, more than ever, governments, corporations, and civil society must work together to ensure that the rights of workers are respected, and to search for solutions to “build a better world.” Efforts to build back better and shape a new social contract must include legal systems designed to protect workers from abuse, not to shield companies from liability.