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California Gov. Gavin Newsom issued an executive order Wednesday extending workers compensation to essential workers who contract COVID-19 on the job.
The order creates a rebuttable presumption for essential workers diagnosed with COVID-19, meaning that it will be presumed that an essential worker contracted the virus within the course and scope of their employment unless the employer proves that the virus was contracted elsewhere. Nearly 6.8 million workers in 16 different industry sectors are classified as essential in the state.
“We are removing a burden for workers on the front lines, who risk their own health and safety to deliver critical services to our fellow Californians, so that they can access benefits, and be able to focus on their recovery,” Gov. Newsom said in a statement. “Workers’ compensation is a critical piece to reopening the state and it will help workers get the care they need to get healthy, and in turn, protect public health.”
For a worker to obtain benefits, they must be diagnosed with the virus or have it confirmed by a positive test within 14 days of performing a labor or service at their place of work after the stay-at-home order was issued March 19, 2020. The order also requires that claims not rejected or rebutted within 30 days of filing will be presumed to be compensable, and benefits available include full hospital, surgical, medical treatment, disability indemnity and death benefits.
However, employees must exhaust their paid sick leave benefits before temporary disability benefits will be available.
With the rebuttable presumption, it’s going to be “very difficult” for an employer to prove that a worker acquired COVID-19 outside of the workplace, and likely “very costly to even mount a defense,” said Jeff Adelson, co-managing shareholder of Newport Beach, California, law firm Adelson McLean APC. “Some people are going to say it could have been more inclusive, and could have been a conclusive presumption instead of a rebuttable presumption. I think the governor wanted to craft something that would be acceptable to the majority of people.”
The California Workers Compensation Insurance Ratings Bureau found in a report released in April that a conclusive presumption for essential workers that contract COVID-19 could cost the state’s workers compensation system $2.2 billion to $33.6 billion. But some insurers publicly stated that they would accept COVID-19 comp claims from essential workers. On April 20, California’s State Compensation Insurance Fund announced it would accept comp claims for essential workers diagnosed with the virus regardless of whether they can demonstrate they contracted the virus during the course of their work.
Although labor groups applauded the governor’s decision, the California Chamber of Commerce said in a statement that the executive order will “drive-up” workers compensation costs for already-struggling employers in the state.
“Imposing a legal presumption that any employee who contracts the coronavirus is covered by workers’ compensation benefits shifts the cost of this pandemic to employers,” said the chamber in a statement. “The private sector did not cause this crisis and it should not be the safety net used to pay for this crisis–that is the role of government.”
Based on California’s workers compensation fee schedule, the WCIRB estimated that for essential workers with mild COVID-19 claims the average costs will be around $1,500. For severe claims, costs are estimated at about $51,000 per claim, and in critical cases, about $127,000.
Governors in about a dozen states have issued executive orders expanding workers compensation coverage to first responders and health care workers. Kentucky’s governor, in mid-April, was the first to extend some workers comp benefits to grocery store, postal service and delivery workers via executive order. Illinois’ Workers Compensation Commission issued an emergency order creating a rebuttable presumption for COVID acquisition for much of the state’s workforce, but the measure was later repealed.
More insurance and workers compensation news on the coronavirus crisis here.
Insurers doing business in California have until April 9 to submit data regarding business interruption coverage provided under their existing commercial insurance policies related to COVID-19 under an order issued Thursday by Insurance Commissioner Ricardo Lara.