Governor Newsom Issues Executive Order Establishing Workers’ Compensation Presumption Regarding Contraction of COVID-19

Category: Special Bulletins
Date: May 12, 2020 01:49 PM

On May 6, 2020, Governor Gavin Newsom issued Executive Order N-62-20 establishing “presumptive eligibility” for workers’ compensation benefits to any employee who is directed to report to their place of employment and then subsequently contracts COVID-19 during the time period between March 19 and July 5, 2020. As applied to nonprofit employers, this Order covers all nonprofit employees who were designated by their respective employers as “essential employees,” exempted from stay home orders, and directed to report to work since the Governor issued the stay-at-home order on March 19, 2020.  

Furthermore, as this Order is now in effect and will remain operative through July 5th, to the extent the Governor’s stay-at-home order is either modified or lifted to allow non-essential employees to return to work, the same rebuttable presumption would apply to these employees in the event that any such employee contracts COVID-19 after returning to work during this timeframe. 

This bulletin briefly explains the State’s Workers’ Compensation Law, the changes to that law as a result of this Order, and the implications for nonprofit employers as the State begins to loosen restrictions on non-essential operations.   

Background on Rebuttable Presumption of Industrial Injuries

California’s Workers’ Compensation Law (Labor Code § 3200, et seq.) establishes an exclusive system of compensation for injuries or death to employees arising out of and in the course of employment, including those that result from contraction of communicable diseases.

Under these laws, an individual who sustains an injury arising out of employment, and establishes that fact in an administrative or court proceeding, will be entitled to medical treatment as well as a number of other benefits, including temporary disability, permanent disability, vocational rehabilitation, and death benefits, where applicable. These benefits are provided either through the employer’s workers’ compensation insurance carrier or by the employer itself, if self-insured.

Prior to the Governor’s Order, while rebuttable presumptions existed for certain types of employee injuries – primarily for public safety employees – these presumptions never applied to communicable diseases, such as COVID-19.  As a result, an employee bringing a workers’ compensation claim based on injuries resulting from contracting a communicable disease had the initial burden to establish that the injury arose out of and in the course of employment through the production of evidence.  Failure to do so would result in the denial of such a claim.

How Does the Executive Order Change the Presumption?

Executive Order N-62-20 now changes the workers’ compensation presumption for all employees who were directed to report to their place of employment and then contracted COVID-19 during the period between March 19 and July 5, 2020, so long as certain criteria are met. Assuming that an employee who contracts COVID-19 satisfies such criteria (as discussed in more detail below), the Order provides that “[a]ny COVID-19-related illness of an employee shall be presumed to arise out of and in the course of employment for purposes of awarding workers’ compensation benefits.

Effectively, the Order creates a rebuttable presumption for the claims filed by qualified employees, which the Workers' Compensation Appeals Board (“WCAB”) will apply unless the employer produces sufficient evidence to rebut that presumption.

Which Employees are Potentially Covered by this New COVID-19 Presumption?

Executive Order N-62-20 covers “employee[s who] performed labor or services at the employee’s place of employment at the employer’s direction” after the issuance of the Governor’s initial stay-at-home order (Executive Order N-33-20) on March 19, 2020 and going forward through July 5, 2020. 

Importantly, the Order does not cover any employee - essential or non-essential whose “place of employment” during the covered time period was their home or residence. As a result, any employees who contracted COVID-19 between March 19 and July 5, 2020, but who remained at home and were not directed to report to work during that time – regardless of whether they were working remotely – would not qualify for this presumption.

Therefore, there is a strong incentive for nonprofit employers to carefully consider whether to bring back to work employees who have remained at their homes since the issuance of Executive Order N-33-20. Employers who elect to require that such employees return to work must consider how to do so safely in order to minimize the potential risk of transmission of COVID-19 to such employees. 

How Does a Covered Employee Qualify for the Presumption?

A covered employee who is diagnosed with or tests positive for COVID-19 will qualify for the presumption that the injury occurred in the workplace if the employee satisfies the criteria set forth below:

  • The employee tested positive for or was diagnosed with 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 direction;
  • The day on which the employee performed labor or services at the employee’s place of employment at the employer direction was a day between March 19 and July 5, 2020, inclusive of those days;
  • The employee’s place of employment was not the employee’s home or residence; and
  • The diagnosis of COVID-19 was made by a physician who holds a physician and surgeon license issued by the California Medical Board, and that that diagnosis is subsequently confirmed by testing conducted within 30 days of the date of the diagnosis.

If a covered employee satisfies the above criteria, then the employee has established a rebuttable presumption that they contracted COVID-19 while at work and that the disease is an industrial injury.

Applying these criteria, the presumption would technically extend beyond the July 5, 2020 expiration date of the Order because the Order provides that it will cover an employee who tests positive for or is diagnosed with COVID-19 within 14 days after a day that the employee performed work at direction of the employer at the place of employment. Therefore, an employee who is directed to work at their place of employment on the last day of the order on July 5, 2020 and who then tests positive for COVID-19 on July 19, 2020 (14 days later) would be covered by the Order and presumed to have contracted the disease at work.

As a threshold matter, in order for an employer to have the opportunity to rebut this presumption, the employer must first reject the employee’s claim for workers' compensation within 30 days of its filing. Otherwise, the claim will be presumed to be industrial in nature, absent new rebuttable evidence only discovered after the 30-day period. Employers should note that this 30-day timeframe is significantly less than the standard 90-day timeframe for other types of workers’ compensation injuries.

What Workers' Compensation Benefits Apply Under the Order to a Covered Employee Who Contracts COVID-19?

A covered employee who contracts COVID-19 is eligible for temporary total disability (“TTD”) benefits in the following manner:

  • If an employee tests positive for or is diagnosed with COVID-19 on or after the date of the Order, the employee must be certified for TTD within 15 days after the initial diagnosis. Thereafter, the employee must be recertified to be TTD every 15 days for the first 45 days following diagnosis; or
  • If an employee tested positive for or is diagnosed with COVID-19 prior to the date of the Order, the employee must obtain a certification within 15 days of the date of the Order documenting the period that the employee was temporarily disabled. Thereafter, the employee must be recertified to for TTD every 15 days thereafter for the first 45 days.

Such certifications must be performed by a physician who holds a physician and surgeon license issued by the California Medical Board, and may include certain designated workers’ compensation physicians.

In addition, if an employer provides paid sick leave benefits specific to COVID-19, such benefits should be used and exhausted before any TTD benefits referenced above are applied.

Additional Provisions of Executive Order N-62-20

The Order authorizes the Department of Industrial Relations (“DIR”) Division of Workers’ Compensation to adopt, amend or repeal any regulations that it deems necessary to implement the Order, with such regulations being exempt from the Administrative Procedures Act (“APA”) requirements. Finally, the DIR will waive collection on any death benefit payment made pursuant to Labor Code section 4706.5 arising out of claims covered by the Order.

Impacts of Executive Order N-62-20 on Nonprofit Employers

In conclusion, the Order applies to all essential employees that a nonprofit employer has directed to report to work at any point since March 19, 2020.  Such essential employees who have contracted COVID-19 to date will likely qualify for this rebuttable presumption. Nonprofit employers should work closely with their workers’ compensation insurance carriers or risk management departments (if self-insured) to ensure compliance with this Order as applied to these employees.

However, and perhaps more importantly, nonprofit employers that are or may be considering reopening their facilities and worksites to non-essential employees may wish to reconsider this position because the presumption of industrial injury will apply to all employees directed to return to work through July 5, 2020.

Even if the Governor modifies or lifts his stay-at-home order to allow such non-essential employees to return to work, this Order would remain operative such that any non-essential employee subsequently infected with COVID-19 would be entitled to the presumption that they contracted COVID-19 in the course of their employment. This presumption would apply even if the nonprofit took all appropriate steps to ensure a healthy and safe workplace for the employee.

Therefore, nonprofit employers should carefully examine any plans to reopen government facilities and worksites as well as those that return non-essential employees to work in light of the potential for increased exposure to workers’ compensation liability.

LCW is closely monitoring legal developments related to the evolving COVID-19 situation, including several bills that have been introduced in the California Legislature concerning workers’ compensation and which may affect the presumptions discussed in this bulletin.  For additional information and the latest updates, visit: https://www.lcwlegal.com/responding-to-COVID-19

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