Will There Be More ‘October Surprises’ for Boardrooms?

Surprise! The month of October in the United States is famous for them. Political candidates often save their best for last—and this year is no different, despite the surge in early voting by more than 28 million Americans, according to a Politico report. Prior to this month, as reported in our Q3 Washington Review, Congress had only passed 158 laws; now in mid-October that tally is 169 and growing. The pace is one new law per day, rather than barely one or two per week.

For directors, the most significant laws thus far this year have been the stimulus bills offering relief to businesses and individuals—especially the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Of course, the big law everyone is waiting for is the next $2 trillion-plus relief bill—and that could be on the docket soon. As of October 1, 2020, more than 1,000 bills have been introduced in US Congress mentioning coronavirus in the title, text, or summary. Of those, nine have become law, as described below. In the House of Representatives in the first half of the year, we saw the passage of six relief bills, including the $2.3 trillion CARES Act, H.R. 748, mentioned above and covered in this blog and fact sheet.

Still pending are the several hundred COVID-19 bills proposed earlier this year—including financial relief bills sponsored by Democrats and liability protection bills sponsored by Republicans. Of note is the updated H.R. 8406, the $2.2 trillion Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, a major COVID-19 relief bill that passed the House on October 1. (For legislative history, see this summary from the House Committee on Appropriations.)

Meanwhile, states have been busy, as reported by the National Conference of State Legislatures (NCSL), who has a database on State Action on Coronavirus (COVID-19) which lists COVID-19–related bills in 37 categories, such as education, health, or transportation. To be included in this COVID-19 legislative database, a bill must include provisions related to the coronavirus. As of October 1, all 50 states had enacted coronavirus legislation; the total for COVID-19–related bills at the state level was 3,030, with 577 enacted as laws. (For more on coronavirus legislation, see the Board Implications of the CARES Act, as well as the NACD COVID-19 Resource Center.)

So far, one in three states (16) have enacted laws that limit liability for businesses during the COVID-19 crisis. Most recently, in Georgia, the state’s legislature passed GA S 359, Georgia COVID-19 Pandemic Business Safety Act, which provides for certain immunities from liability claims regarding COVID-19. The law refers not only to health-care providers but also to businesses, nonprofits, and governments. The law includes the wording of a warning sign posted outside of a business that says those who enter do so at their own risk.

COVID-19 has also been a focus for the US Securities and Exchange Commission’s June 23 CF Disclosure Guidance: Topic No. 9A regarding COVID-19 disclosures, as well as a COVID-19 roundtable held June 30, during which Commissioner Elad Roisman argued against rules that would dictate what environmental, social, and governance topics must be covered in disclosures, saying “Who is in a position to codify a list of environmental or social issues for the foreseeable future?” Commissioner Roisman, a Republican, notes that COVID-19 was not predictable, so it could not have been disclosed as a risk factor.

As far as courts go, COVID-19 has affected a variety of company stakeholders, some of whom are taking legal action. So far in 2020, more than 2,000 lawsuits have been filed in federal and state courts, says this article. For details on how customers, employees, and shareholders are suing over COVID-19, see our Q3 Washington Review report, which also covers other developments from the quarter with regards to finance and investment, environmental regulation, and diversity—in particular, a new California law mandating racial inclusion. This newly enacted AB 979 mandates inclusion of directors from “underrepresented communities” on the boards of California-based public companies.

In summary, stay alert for surprises, especially with respect to COVID-19 funding. In this volatile month, almost anything can happen.