Keenan Briefings

Briefings

Governor Newsom’s Executive Order Creates Workers’ Compensation Presumption for COVID-19 Diagnosis

May 08, 2020

On May 6, 2020, Governor Gavin Newsom signed an executive order establishing a rebuttable, time-limited legal presumption that certain cases of COVID-19 arise out of and occur in the course of employment for purposes of workers’ compensation coverage. This order was signed after much debate in the insurer, employer and injured worker communities, and was different in important ways from earlier drafts as well as from the presumption bills that are currently under consideration in the legislature. Important aspects of the executive order are discussed in more detail below.

The presumption is rebuttable, which means that an employer can provide evidence that the employee’s exposure to COVID-19 did not arise out of and occur in the course of employment. Earlier drafts of the order would have established a “conclusive” presumption, which would have precluded an employer from introducing such evidence. However, a rebuttable presumption still shifts the burden of proof from the employee to the employer, which means that it is no longer the employee’s burden to prove that their work caused their illness. Instead, with a rebuttable presumption, the employer must prove that the work did not cause the illness, which is very difficult to prove. Additionally, the order provides just 30 days for an employer to deny compensability, as opposed to the 90 days under the Labor Code.

The presumption is time-limited. The order applies the presumption to claims occurring from March 19 until 60 days after the issuance of the order (or July 5, 2020). This does not mean that claims made for illness occurring outside this period will be denied. It just means that claims made by employees to whom the presumption applies for illness arising during that time will not be subject to a burden of proof that the illness was work-related. There is also a potential that either a further executive order or legislation could expand the current time limits on the presumption.

The presumption applies to all employees working outside of their home or residence. Normally, workers’ compensation presumptions apply to narrow classes of employees whose jobs put them at higher risk for certain types of illness. This order grants the presumption to any employee who is diagnosed or tests positive for COVID-19 within 14 days after a day that the employee performed labor or services at the employee’s place of employment at the employer’s direction. This would at least seem to leave a question as to whether the presumption applies to an employee who was not directed by the employer to go to their place of employment but did so of their own volition.

The presumption requires a positive test or diagnosis. An employee must either test positive for COVID-19 or be diagnosed with COVID-19 by a California-licensed physician and have that diagnosis confirmed by further testing within 30 days of that diagnosis. This is an improvement over prior draft language which would have provided workers’ compensation coverage to individuals who were exposed and caused to quarantine, regardless of whether they were infected.

Covered benefits include full hospital, surgical, medical treatment, disability indemnity and death benefits. This is an improvement over some draft presumptions which would also cover costs of temporary housing, personal protective equipment and other expenses that are not normally covered by workers’ compensation.

An employee needs a certification of disability to qualify for temporary disability benefits. To qualify for temporary disability benefits, an employee must satisfy one of the following:

  • If the employee’s positive test or diagnosis is on or after May 6, 2020, the employee must be certified for temporary disability within the first 15 days after the initial diagnosis and must be recertified for temporary disability every 15 days thereafter, for the first 45 days following diagnosis.
  • If the employee’s positive test or diagnosis was prior to May 6, 2020, the employee must obtain a certification within 15 days of the May 6, 2020 (that is, before May 22, 2020), documenting the period for which the employee was temporarily disabled and unable to work, and must be recertified for temporary disability every 15 days thereafter, for the first 45 days following diagnosis.

Certain paid sick leave benefits must be exhausted before temporary disability benefits or benefits under Section 4850 of the Labor Code are paid. The order provides that if an employee has paid sick leave benefits specifically available in response to COVID-19, those benefits must be used and exhausted before any temporary disability benefits or benefits available under Labor Code § 4850 are due and payable. If a claimant does not have such sick leave benefits, he or she shall be provided temporary disability or Labor Code § 4850 benefits from the date of disability. In no event should there be a waiting period for temporary disability benefits. While it appears that the intent of this provision is to prevent employees from double-dipping on paid leave time, it could be problematic to administer, especially for claims where an employee has already received temporary disability benefits. The order does not give any guidance on how to coordinate the payment of benefits with sick leave or the reimbursement of benefits already paid.

The order also lacks specificity with regard to which sick leave benefits are “specifically available in response to COVID-19.” COVID-related emergency paid sick leave benefits have been made available to certain workers through the federal Families First Coronavirus Response Act (FFCRA). Those benefits are available to employees of state and local public agencies as well as employees of private sector employers with fewer than 500 employees, and employers may exclude employees who are health care providers or emergency responders from taking paid sick leave under FFCRA. Local jurisdictions including Los Angeles County have enacted their own COVID-19 related paid sick leave ordinances, and certain employers have also created special COVID-19 related sick leave entitlements for their employees. We are currently working with the Division of Workers’ Compensation (DWC) to obtain clarity on what leaves are considered “specifically available in response to COVID-19” in the coming days.

Moreover, for schools and colleges, the Education Code provides for industrial accident leave benefits. While the executive order does not specifically address Education Code benefits, it appears the intent is for the paid sick leave available in response to COVID-19 to be paid first and then the integration of Education Code benefits (60 days industrial accident leave, etc.) with temporary disability benefits. This is another area where we are seeking clarification from the DWC.

The order waives collections on unclaimed death benefits. Under Labor Code § 4706.5, if an employee dies without dependents, the employee’s death benefit would be payable to the Department of Industrial Relations. This welcome provision recognizes the extraordinary circumstances of the COVID-19 pandemic and waives collection on any death benefits due to the DIR pursuant to Labor Code § 4706.5 arising out of claims covered by the order.

Impacts will vary by industry. For schools and colleges, the vast majority of teachers and faculty have been working remotely during the time period covered by the order. The presumption will apply to staff members, like custodians, food service workers and others who have been required to work at school sites. For healthcare providers, the presence of a presumption will not have an enormous impact on the claims of front-line medical providers who have tested positive after coming into contact with source patients—the claims of those workers have not generally been disputed. However, the presumption will apply to a wider swath of healthcare workers who are required to be at the worksite and may not be providing direct patient care, including administrative, custodial, and other employees.

The DWC will issue more guidance. The order gives the DWC regulatory authority to enact its provisions. As the DWC issues guidance, we will continue to alert clients and incorporate it into our processes and procedures.

The executive order may not be the final word. The legislature is considering a number of bills that would enact a presumption for COVID-19. With the Assembly and Senate back in session, we may see the legislature change the rules before the end of the summer.

If you have any questions about this Briefing or how the Governor’s executive order impacts your workers’ compensation program, please contact your Keenan Risk Management Analyst.


Keenan & Associates is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Clients are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the clients’ business activities.