As you undoubtably know by now, California’s Governor Newsom had declared a state of emergency related to the ongoing COVID-19 pandemic.  Since then, he has issued two major Executive Orders:

1. The shelter-in-place order from March 19, 2020; and

2. An creating a rebuttable presumption that COVID-19 claims are compensable under Workers’ Compensation on May 6, 2020.

The latter order shifts much of the burden of COVID-19 exposure to employers.  That is, people who contract COVID-19, will be presumed to have contracted the virus at work, if they meet certain criteria.  Here, we will review those criteria, several implications of the temporary order, and what employers may do to manage these claims, should they arise.

Overview:

• How does the Executive Order change things?

• Which COVID-19 claims and affected employees will be covered under Workers’ Compensation?

• What are the details of a rebuttal presumption?

• What can employers do to manage these types of claims?

• How will this affect my Workers’ Compensation policy or premiums?

How does the Executive Order Change things?

Creating a rebuttable presumption

The initial burden to create a presumption of a virus being “work-related,” is on the employee.  They must show:

Either:

1. A positive COVID-19 test result; OR

2. Diagnosed with COVID-19 by a physician who holds a physician and surgeon license issued by the CA Medical Board.  This diagnosis needs to be supplemented a positive test within 30 days,

AND

1. The positive test or diagnosis must be withing 14 days after the day the employee performed work at the employer’s business at the employer’s direction

2. The employee’s workplace was not their home or residence

3. The date the employee performed work linked to exposure is between March 19, 2020 and July 5, 2020.

Broad Application

As stated, the Executive Order does not just apply to “essential workers.”  As we see more businesses opening, we will see more employees go back to work at the direction of their employer.  Those employees will all be covered under the presumption, except those who work strictly from their home or residence.   

What is different about COVID-19 claims’ coverage under Workers’ Compensation?

There are several unprecedented changes in how insurance carriers will need to handle these claims.

Investigation Decision Period

The period to determine compensability (AOE/COE), or whether a claim will be accepted, is shortened to 30-days, as opposed to the typical 90-day window to make that determination.  If a claim is not denied within the 30-day period , it will be presumed compensable.  This reduced window only applies to claims filed after May 6th.

Temporary disability

As many of you know, there is a 3-day waiting period in California for temporary disability, this is waived under the new order.  However, before temporary disability kicks-in, sick leave under the Families First Coronavirus Response Act.  The temporary disability must also be recertified every 15 days for the first 45 days, as opposed to a typical 45-day update for work statuses.

Permanent disability

The Executive Order also provides that disability benefits are subject to apportionment.  Labor code 4663(e) usually bars apportionment for presumptions.  This means the defense can use discovery to find “other causes” to apportion a disability from a case or if a claimant has prior awards involving the respiratory system. 

Death claims

A deceased employee’s dependents are entitled to death benefits as long as COVID-19 was a contributing factor.  However, if an employees covered by the presumption dies without benefits, no payments are due to the State (typically $250k is paid to the Department of Industrial Relations in these cases).

What are the details of a rebuttal presumption?

Rebuttable definition

The “rebuttable” portion of a claim that is presumed to be work related means that it may be refuted by “other evidence.”  That is, if an employee meets the aforementioned criteria that presumes they contracted the virus at work, the burden to shifts to the employer to disprove the virus was due to work—a difficult standard to overcome for employers. 

“Other evidence”

The types of evidence the employer can provide to rebut the presumption is vague.  A possible example would be testimony establishing a family member living with the employee tested positive or medical records establish contraction prior to coming back to work.  Even with some evidence to the contrary, it may be difficult to prevail on these issues in litigation. 

How will this affect my Workers’ Compensation policy or premiums?

Proposals

The WCIRB is the rating bureau in California analyzing data from qualified employers for what amounts to your Workers’ Compensation credit score or X-Mod rating (experience modification).  They aggregate claims data to compare different industries and employers.   In response to the COVID-19 pandemic, they have unanimously approved some changes related to claims related to the virus:

1. Removal of COVID-19 claims from the X-Mod calculation

2. Re-classify certain workers (such as remote workers) to new lower risk class-codes for rating purposes. 

3. Payments to employees who are continuing to be paid while not engaged in any work would be excluded from reportable payroll for rating purposes.

These will be implemented by the beginning July 1, 2020, after approval from the Department of Insurance (headed by Commissioner Ricardo Lara).

Pending Legislation

There are several related pending Bills in California that might supersede this Executive Order.  We will defer discussion about the pending legislation until they becomes law, but many of them would create a permanent presumption for certain classes of workers. 

AB 664 – injury defined as direction into quarantine for firefighters, specified peace officers, and health care employees

AB 196 – presumptions for “essential employees”

SB 893 – additional rebuttable presumptions for certain hospital workers

SB 1159 – rebuttable presumptions for “critical employees” working on infrastructure

AB 2447 – rebuttable presumption for post-traumatic stress for emergency medical services

We will keep a close eye on those developments and share them as they become available. 

What can employers do to manage these types of claims?

Claims Reporting

These is no uniform answer to deciding whether to give an employee a claim form (DWC-1).  If any employee is alleging a work related injury or illness, you always want to report to your insurance carrier as soon as possible.  Some insurance carriers are requiring employers to report any COVID-19 diagnosis to them so they may address any potential for coverage.  We recommend you use your discretion and err on the side of caution by providing any employee with a positive diagnosis or test the claim form.  Even if you do not believe it is work related, the insurance carrier has a limited time to investigate and issue proper notices.

Communication

As with any Workers’ Compensation claim, it is important to keep in contact with your employees and the insurance carrier.  Make sure to provide all necessary information, red flags, wage data, dates worked, and any other relevant information.  Assuming a positive diagnosis, an employee may be worried about transmission to co-workers, the public and their families.  They may be worried about their health and livelihood, make sure you are doing your part to communicate and help them through a difficult time.

Recordkeeping

As mentioned, there are several types of employees on payroll that may be excluded from rating calculations, which translate into insurance premiums.  Keep track of employees working from home, dates employees are directed to work outside of the home, discussion regarding exposure, and employees being off work due to COVID-19, along with any claims filed. 

Resources

Here at ESM, we have been working on COVID-19 resources since the pandemic began, so you do not have to reinvent the wheel.  We have everything you need from:

• Exposure Control Plans (infectious disease preparedness)

• Remote Work Programs

• Return to Work Resources

Visit our Compliance Center at: www.esminsite.com/covid-compliance-center

Governor Newsom also has evolving Re-opening Requirements & Resources you can find here:

https://covid19.ca.gov/pdf/guidance-office-workspaces.pdf

https://www.gov.ca.gov/2020/05/07/governor-newsom-releases-updated-industry-guidance/

Conclusion

We want you to have the resources you need as an employer.  The information provided gives an overview of Governor Newsom’s Executive Order, the rebuttable presumption it creates, and what you can do to manage any COVID-19 that come your way.