COVID-19 and Workers’ Compensation: A New Burden of Proof for California Employers

Amid the COVID-19 pandemic, a number of states have passed legislation or enacted new regulations to establish rebuttable presumptions that claims filed by frontline employees are occupational and thus compensable. The latest state to introduce such a law: California, where employers now face greater complexity in managing and reporting COVID-19 workers’ compensation claims and greater potential liability.

A Difficult Bar for Employers to Clear

On September 17, California Governor Gavin Newsom signed into law SB 1159, which codifies a previous executive order establishing a rebuttable presumption that applied through July 5 to employees directed to work outside of their homes. SB 1159 provides for a similar disputable presumption — retroactive to July 6 and effective through January 1, 2023 — for first responders, peace officers, certain health care professionals, and other workers who meet specific requirements. 

In some respects, California’s law is similar to those enacted in other states. Under the bill, first responders, peace officers, and health care professionals who visit their workplaces at the direction of their employers and contract the coronavirus are presumed to have done so on the job, provided that positive test results are received within 14 days of the employee’s alleged exposure. These employees are thus eligible for workers’ compensation benefits unless their employers can prove their exposure was not occupational.

But California’s new bill goes further than other states have. In addition to creating presumptions for first responders and similar workers, SB 1159 establishes a presumption of occupational exposure in all workplace settings if the employees in question work outside of their homes and the number of employees who contract COVID-19 exceeds the threshold defined as an “outbreak” within a 14-day period:

• For organizations with 100 or fewer employees, four or more people testing positive in a specific place of employment is considered an outbreak.
• For those with more than 100 employees, an outbreak is defined as 4% of all employees contracting COVID-19.
  

Burden of Proof Now on Employers

In a typical workers’ compensation claim, an employee must demonstrate that an injury or illness occurred during the course and scope of work. SB 1159, however, shifts the burden of proof for COVID-19 claims in California to the employer.

To rebut the presumption created by the law, an employer must meet several tests, including that:

• The employer has measures in place to reduce the potential transmission of COVID-19.
• The employee had “non-occupational risks” of infection — for example, living with a family member who has tested positive for COVID-19.
• In the case of health care facilities, the employee did not have contact — within the last 14 days — with a patient who has tested positive.

First responders and health care employers have 30 days to dispute a claim; other employers have 45 days, with the clock starting on the date a DWC 1 form is submitted.

Companies Must Report All COVID-19 Cases

SB 1159 also mandates that employers continuously report positive test results to claims administrators and insurers to identify potential outbreaks. When an employer knows or reasonably should know that an employee has tested positive for COVID-19, even if the exposure is not work-related, the employer is required to report the following — in writing via email or fax — within three days:

• The date the employee tests positive, meaning the date the specimen was collected for testing.
• The address(es) of the employee’s specific place of employment during the 14-day period preceding the date of the employee’s positive test.
• The highest number of employees who reported to work at the employee’s specific place of employment in the 45-day period preceding the last day the employee worked at each specific place of employment.

Employers are required, within 30 days, to retroactively report positive tests dating back to July 6, 2020. Failure to comply can result in civil penalties of up to $10,000.

Staying on Top of Workers’ Compensation Claims

Just over 40,000 COVID-19 workers’ compensation claims with injury dates of between January and August 2020 were reported in California through September 8, according to the California Workers’ Compensation Institute. Governor Newsom’s previous executive order, issued in early May, undoubtedly contributed to that total.

Whether SB 1159 will have a similar effect remains to be seen, but employers should be prepared for a potential uptick in COVID-19 claims. Risk professionals should work with their brokers and claims administrators to understand the bill’s key provisions, comply with new reporting requirements under the law, and ensure they have sound strategies in place to effectively manage the cost of workers’ compensation claims.