Two new statutes now codify and supersede the prior executive order.

In what could be a sign of things to come across the country, a new workers’ compensation insurance law recently took effect in California that may make it easier for employees to obtain workers’ compensation insurance benefits if they become ill from COVID-19. On September 17, 2020, California Governor Newsom signed into law SB 1159, which presumes employees who test positive for COVID-19 contracted the virus at work for purposes of workers’ compensation eligibility if an outbreak occurs at work and certain conditions are met.

The Prior Executive Order

Earlier this year, on May 6, Governor Newsom issued Executive Order No. N-62-20, through which California employees were presumed to have contracted COVID-19 in the course and scope of their employment for purposes of workers’ compensation benefits so long as all of the following conditions were satisfied:

• The employee tested positive or was diagnosed with COVID-19 within 14 days of working at their employer’s direction and worksite;
• The employee worked at that worksite on or after March 19, 2020;
• The worksite was not the employee’s home or residence; and
• The employee was diagnosed by a medical doctor and tested positive for COVID-19 within 30 days of the date of the diagnosis.

The prior executive order applied to all employees in California who worked outside their homes. It expired after 60 days, leaving employees and employers in limbo as to whether workers’ compensation coverage was available after July 6, 2020, for COVID-19 infections related to the workplace.

A More Narrow Presumption for More Recent Illnesses

Two new statutes now codify and supersede the prior executive order.

One statute confirms the earlier executive order and provides that COVID-19 illnesses that occurred between March 19, 2020, (the day California’s statewide stay-at-home order was issued) and July 5, 2020, (the day the executive order expired) are presumed to be workplace-related.

The other statute also applies a presumption that COVID-19 illnesses are work-related for employees who contract COVID-19 after July 5, 2020, but makes it more difficult to qualify for the presumption. For those later-diagnosed employees, all of the following conditions must be met:

• The employee must work for an employer with five or more employees;
• The illness must have occurred between July 6, 2020, and December 31, 2022,
• The employee must have tested positive for or have been diagnosed with COVID-19 within 14 days after a day that the employee performed labor or services at the employee’s place of employment and the employer’s direction, so long as the place of employment is not the employee’s home; and
• The employee must have tested positive during an “outbreak” at his or her specific place of employment.

The definition of an “outbreak” under the new law depends on the size of the employer, the location of the employees, the number of employees who test positive for COVID-19 and in some situations on whether the employer was ordered to close:

• For employers with 100 or fewer employees at the specific place of employment, four employees must test positive; or
• For employers with 100 or more employees at the specific place of employment, 4 percent of the employees must test positive; or
• The place of employment is ordered to close by a government or public health official due to the risk of COVID-19 infection.

In short, employees who contracted COVID-19 after July 5, 2020, are not presumed to have contracted the disease at work unless a critical mass of employees also tested positive within a 14-day period. Those working from home do not qualify.

A separate but related law addresses police officers, firefighters and healthcare workers, including janitors who are in contact with COVID-19 patients.

Taking Steps to Rebut the Presumption

If the required factors are met, the employee’s COVID-19 injury or illness is presumed to have arisen out of and in the course of employment. However, that presumption is disputable. The new law expressly provides that evidence of employer measures taken to reduce potential transmission of COVID-19 in the employee’s place of employment can be used to rebut the presumption under the law. In addition, employers may offer evidence of an employee’s nonoccupational risks of COVID-19 infection.

The burden of proof is on the employer. Employees who do not meet the presumption are still able to pursue a claim for workers’ compensation benefits under the usual rules through a preponderance of evidence.

Relationship with COVID-Related Emergency or Supplemental Paid Sick Leave

The new law takes into account other COVID-19 laws. Employees must exhaust all paid sick leave benefits specifically available in response to COVID-19, including paid sick leave available through the federal Families First Coronavirus Recovery Act, the California Emergency Paid Sick Leave law and local paid sick leave ordinances specific to COVID-19 passed by some cities in response to the pandemic, before resorting to workers’ compensation.

Reporting Requirements

Employers must act fast in reporting positive COVID-19 tests. Reporting is required when an employer knows or reasonably should know that an employee has tested positive for the virus.

Within three business days, workers’ compensation carriers must be notified―even if the employee does not pursue a claim or is ineligible for the presumption. The law specifies what is to be reported, including testing dates and information specific to the worksite and workforce. Confidentiality is also addressed.

Stiff Penalties for Failure to Comply

The new law imposes harsh penalties―up to $10,000―issued by the labor commissioner against employers who fail to comply with reporting requirements or who intentionally submit false or misleading information. Those acting on behalf of the employer may be penalized as well.

What This Means for Employers

This new law serves as a reminder that all businesses with even a single employee in California must carry workers’ compensation insurance. If an employee becomes ill due to COVID-19 within 14 days of coming into work, it may be considered a workplace injury. Remember your obligations to provide required notices to employees who become ill or suffer an injury at work. Take steps now to minimize the risk of COVID-19 infection at work. Put measures in place to reduce potential transmission and document your efforts. Create cleaning and health and safety protocols that follow the myriad federal, state and local COVID-19 requirements. Formulate a site-specific return-to-work plan as required by California law. Know what to do if an employee tests positive for COVID-19. Be prepared to accurately and timely report incidents of COVID-19 in accordance with federal, state and local law. These simple steps may go a long way in preventing claims and incurring penalties.

About Duane Morris

Duane Morris has created a COVID-19 Strategy Team to help employers plan, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.

For More Information

If you have any questions about this Alert, please contact Lori Ocheltree, Brooke B. Tabshouri, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group, any member of the COVID-19 Strategy Team or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.