On May 6, 2020, California Governor Gavin Newsom issued Executive Order N-62-20, immediately creating a monumental change in how claims of industrially contracted COVID-19 suffered by the state’s “essential workforce” will be addressed. While employees typically must prove that they were injured on the job to qualify for workers’ compensation benefits, Executive Order N-62-20 creates a rebuttable presumption that an employee who tests positive for COVID-19 contracted the virus at work if the following conditions are met:

1. The employee tested positive for or was diagnosed with COVID-19 within 14 days of performing labor or services at the employee’s place of employment at the employer’s direction;
2. The day the employee performed labor or services at the employee’s place of employment at the employer’s direction was on or after March 19, 2020;
3. The location where the employee performed labor or services was not the employee’s home or residence; and
4. The diagnosis was done by a physician who holds a physician and surgeon license issued by the California Medical Board and that diagnosis is confirmed by further testing within 30 days of the date of the diagnosis.

The governor’s stated reasoning for this executive order includes the need to protect California’s employees who are not subject to the shelter-in-place orders, recognition that people who report to work while sick pose an increased risk to the health and safety of themselves and those who they come into contact with, and that swift provision of workers’ compensation benefits to those affected by COVID-19 will provide prompt and effective medical treatment and access to disability benefits that will ultimately mitigate the risk of COVID-19 to all Californians.

By creating this presumption, the state of California is attempting to streamline these cases, and eliminate the difficult causation issues that would otherwise exist. In the absence of such a presumption it would likely be very difficult for many workers to prove that they contracted COVID-19 on the job. Without this presumption, the baseline position of most workers’ compensation administrators would likely be to deny these claims out of the gate and delay medical treatment and benefits. Similar presumptions already exist in cases where causation is otherwise difficult to establish, and such presumptions are typically applied in cases involving essential workers such as fire fighters and law enforcement. 

This rebuttable presumption is retroactive to March 19, 2020, when Governor Newsom issued his first shelter-in place order, and extends for 60 days, until July 5, 2020. However, the order may well be extended past its initial 60-day shelf life depending on what happens in the coming days and weeks. Making the order initially effective for a relatively short period of time could also serve to dissuade industry groups that may otherwise consider legal challenges to the constitutionality of the order.

In addition to the presumptive diagnosis of industrially contracted COVID-19 itself, another major aspect of this executive order is that it significantly reduces the period in which the employer has to deny a claim from 90 days to 30 days. The 30-day clock begins on the date the claim form is filed and it will therefore be crucial for employers to report all COVID-19 work-related claims to their insurance company or claims administrator immediately.

Additionally, while employers should know that while employees with accepted COVID-19 workers’ compensation claims pursuant to Executive Order N-62-20 will be entitled to disability benefits, before those benefits go into effect any other sick leave benefits pursuant to local law or ordinance or the Families First Coronavirus Response Act (FFCRA) must be used and exhausted first. Only after such other sick leave benefits are exhausted will any workers’ compensation temporary disability benefits become due and payable. Therefore, it is critical for employers to determine the employee’s eligibility under the FFCRA and communicate that to their insurance carrier to avoid duplicate payments. Where an employee would have been entitled to greater benefits through workers’ compensation than they might be through other sick leave benefits, however, there could be an open issue whether additional workers’ compensation benefits retroactive to the initiation of the claim would be owed. Also, similar to what has been done with unemployment benefits, Executive Order N-62-20 eliminates any waiting periods that would otherwise apply.

Which Workers are Covered by the Executive Order?

While it is clearly the governor’s intention to protect the state’s “essential workforce” with this executive order, it appears to go a bit further than that. This order applies to claims made by any employee performing work in the state of California at the employer’s direction or control, and where those services are performed outside of the employee’s residence or home. While this would certainly cover “essential workers” such as medical professionals and grocery store employees, it also would appear to apply to employees who are performing work in violation of the shelter-in-place orders so long as it was at the employer’s direction and at the employee’s place of employment outside of their home.

How Can Employers Rebut this Presumption of Compensability?

There are essentially two ways to rebut the presumption: (1) establish that the injured worker does not meet one of the four criteria listed above; or (2) use “other evidence” to establish another cause of the COVID-19 illness.

If the four criteria above are not met, the analysis would be fairly straightforward. But as to the second method for attacking the presumption, employers should investigate facts and the employee’s activities outside of work to determine if “other evidence” shows that the employee most likely contracted the COVID-19 illness outside of work.

Employers will place themselves in a firmer position if they can establish that they are following applicable local, state, and federal health and safety guidelines. This becomes especially important when defending against an employee’s claim of serious and willful misconduct. Serious and willful misconduct claims allege that the employer was aware of a dangerous condition and failed to take corrective action to reduce or eliminate the risk of injury, and create penalty liability directly against the employer. It goes without saying that employers are aware of the risk of contracting COVID-19 in the workplace. Therefore, it is necessary that employers take all reasonable steps to reduce or eliminate that risk. Depending on local or state ordinances, CDC guidelines, and the specific workplace, such protective measures could include, but are not limited to, providing masks or face coverings, personal protective equipment (PPE), maintaining social distancing, limiting the numbers of customers at any given time, inserting physical barriers to protect employees, facilitating delivery or contactless pick-up, and conducting temperature screenings.

Employers and claim administrators will have their hands full investigating these claims, but should certainly do so as many of these are likely to be high-value claims potentially entailing disability benefits, lengthy hospital stays and even death benefits. In the lead-up to this executive order it had been discussed that these COVID-19 claims would not count against an employer’s experience modification rate, but that language did not make it into the order; therefore, insurance carriers and employers will ultimately foot the bill for these claims.   

Conclusion

For employers, now more than ever, it is imperative to work closely and monitor their workers’ compensation claims with their insurance carrier. Because denial timelines have been shortened, it is crucial to move quickly once a claim form has been filed. Failure to timely deny or investigate COVID-19 workers’ compensation claims could greatly reduce the ability to defend against the presumption created by this executive order. With the financial impact that is at stake, this order should provide yet another incentive to provide a safe and healthy workplace following all CDC guidelines, and to have employees work from home wherever possible so long as the stay-at-home orders remain in effect.