On May 6, 2020, Governor Newsom issued Executive Order N-62-20, creating a rebuttable presumption that an employee’s COVID-19-related illness arises out of employment for purposes of obtaining workers’ compensation benefits. This is not the first order of its kind; other states including Alaska, Michigan, Minnesota, Missouri, Utah, and Wisconsin, have imposed similar rebuttable presumptions. However, most of these jurisdictions have limited the rebuttable presumption to first responders. California’s order doesn’t.

At the federal level, House Democrats are looking to follow suit, proposing a similar presumption for certain federal workers under the Health and Economic Recovery Omnibus Emergency Solutions Act (the “HEROES Act”). If enacted as proposed, the HEROES Act would create a presumption that certain federal employees who contract COVID-19 did so in the course and scope of their employment if the employees have a risk of exposure to COVID-19 at work and on-the-job contact with patients, members of the public, or co-workers. A similar presumption would apply to certain maritime workers.  The House passed the HEROES Act by a vote of 208-199 on May 15, 2020, but tremendous opposition is expected when the bill reaches the Republican dominated Senate.

Is California’s order likely to stick?

It’s difficult to tell. California business owners are unhappy with the likely significant increase in workers’ compensation liabilities and the inequity of shifting the cost of employees’ COVID-19 illnesses to employers. Challenges to the California order would not be surprising.

However, California’s order has outlasted a similar order in Illinois, which was also not limited to first responders, and was quickly and successfully challenged by businesses. On April 16, 2020, at the request of Illinois’ Governor Pritzker, the Illinois Workers’ Compensation Commission passed an emergency amendment creating a rebuttable presumption that essential employees’ exposure to the virus arose out of their employment. Like the California order, the rebuttable presumption extended beyond first responders–to any “essential” business workers, including grocery store clerks and gas station attendants. A coalition of business groups sued in Sangamon County Circuit Court requesting a temporary restraining order to block the new rule, and on April 24, the court granted their request, finding the Commission had improperly entered the province of the Illinois legislature by creating substantive rights for employees and liabilities for employers. The Commission withdrew the emergency amendment three days later, though it has stated it will continue to examine problems and possible solutions related to COVID-19. And with Governor Pritzker calling on the Illinois legislature to “act expeditiously” on a COVID-19 relief package, and Illinois lawmakers returning to Springfield for a three-day special session beginning May 20, 2020, the issue could be raised again in Illinois in a matter of days.

Though the rebuttable presumption is not applicable in Illinois for now, California’s order remains. Here’s what you need to know.

When does the presumption apply?

The presumption applies if:

  1. An employee is diagnosed with or tests positive for COVID-19 within 14 days of last performing work for the employer;
  2. The work is performed at the employer’s direction or at the employee’s place of employment (at a location other than the employee’s home or residence);
  3. The injury occurs (the “date of injury”) is between March 19, 2020 and July 5, 2020; and
  4. If the employee is diagnosed with COVID-19 without being tested, the diagnosis must be made by a physician holding a physician and surgeon license issued by the California Medical Board, and the diagnosis must be confirmed by further testing within 30 days of the date of diagnosis.

What can I do to dispute the presumption and reject liability?

The presumption can be controverted by an employer providing “other evidence.” Practically, this means providing evidence disputing any of the factors above, such as showing that the employee had not been working at the worksite in the 14 days prior to the diagnosis, or that the diagnosis was not made by a licensed physician. Unless the presumption is controverted, the Workers’ Compensation Appeals Board is “bound to find in accordance with” the presumption.

Timing is critical.  If liability for a claim of a COVID-19-related illness is not rejected within 30 days after the date the claim form is filed under California Labor Code section 5401, the illness is presumed compensable, and only evidence discovered after that 30-day period can be used to rebut the presumption.

What benefits are employees entitled to?

Employees impacted by COVID-19 will be eligible for all benefits applicable under California workers’ compensation laws, including full hospital, surgical, medical treatment, disability indemnity, and death benefits, subject to laws including Labor Code sections 4663 and 4664 (apportionment of permanent disability). However, 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 under Labor Code section 4850, enabling certain law enforcement officers and firefighters to receive full payment of their salary if temporarily totally disabled) are due and payable. The order imposes certain requirements for temporary disability benefits, and confirms the elimination of the  waiting period for such benefits.

I’m a self-insured employer. Does this order apply to me?

Yes. The order applies to self-insured employers, and any other employer carrying its own risk, in addition to all workers’ compensation insurance carriers writing policies providing coverage in California.

If employees are diagnosed with COVID-19, but they don’t report their illness, am I required to do anything?

No. An employee must report an occupational illness or injury to commence an employer’s workers’ compensation claim obligation. If, however, an employee tells you he or she contracted COVID-19 at work, you are required to follow the same steps you would otherwise follow under California workers’ compensation laws, including: providing a claim form within one day of learning of the diagnosis; returning a copy of the completed form to the employee within one day of receipt; forwarding the completed claims form along with your report of the occupational illness to the claims administrator within one working day of receipt from the employee; and authorizing up to $10,000 in appropriate medical treatment within one day of receiving the claim from the employee.