Governor Newsom Orders COVID-19 Compensation Presumption

On March 4, Governor Gavin Newsom proclaimed a State of Emergency exists for California due to the threat of COVID-19. On March 13, President Trump announced a national emergency in response to the coronavirus outbreak. Since the declaration of a national emergency, Governors and legislatures across the country have proposed or implemented changes to their states’ workers’ compensation systems. California’s legislature is considering several bills that would create a presumption that certain workers who contract COVID-19 are entitled to workers’ compensation benefits. However, none of these bills have reached the governor’s desk.

On May 6, 2020, Governor Newsom signed Executive Order N-62-20 putting in place a rebuttal presumption that workers who contract COVID-19 while working outside of their home during the Stay at Home order are entitled to workers’ compensation benefits. The governor wrote, “We are removing a burden for workers on the frontline, 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. 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.”

The presumption applies if an employee tests positive for or is diagnosed with COVID-19 within 14 days of performing labor or services at the employee’s place of employment at the employer’s direction. The exposure at work must occur on or after March 19, 2020, the date the Stay at Home order issued in California, and the diagnosis must be made within 14 days of the work. The place of employment cannot be the employee’s home or residence. The presumption applies if there is a diagnosis of COVID-19 made by a physician and it is confirmed by further testing within 30 days of the date of the diagnosis. A positive antibody test may confirm the diagnosis, if a COVID-19 test could not be undertaken by the employee while still ill. The physician must hold a physician or surgical license issued by the California Medical Board which does not include pharmacists, chiropractors or acupuncturists. The presumption will apply to diagnoses that are made within 60 days of the order.

The presumption is not conclusive and can be rebutted or controverted by other evidence, i.e., evidence that the employee was exposed at home or from a non-work related source. However, the employer has 30 days, instead of the typical 90 days under Labor Code Section 5402, to deny the claim after receipt of the DWC-1 Claim Form. If the employer fails to deny the claim within 30 days of receipt of the Claim Form, the illness will be presumed compensable, unless rebutted by evidence only discovered subsequent to the 30 day period to investigate. If the claim is presumed compensable or is accepted as an industrial injury, the ill employee is eligible for all workers’ compensation benefits including medical treatment, hospitalization, disability indemnity, and death benefits though permanent disability is still subject to apportionment under Labor Code Sections 4663 and 4664.

If an employee has paid sick leave benefits available “in response to COVID-19,” those benefits must be exhausted before any temporary disability benefits or Labor Code Section 4850 benefits are payable. If the employee does not have sick leave benefits, she or he must be recertified for temporary disability benefits every 15 days from diagnosis for the first 45 days. Temporary disability is due from the date of injury, there is no waiting period. After 45 days of disability, recertification must be made every 45 days until the employee reaches maximum medical improvement. If an employee was diagnosed with COVID-19 prior to May 6, 2020, they must obtain a certification within 15 days of the executive order documenting the period of disability in order to receive benefits.

The executive order also includes a waiver of the payment of the death benefit to the Death Without Dependents Unit under Labor Code Section 4706.5. Typically, when an employee dies as a result of a compensable work-related injury, the dependents are entitled to a death benefit. If no dependents survive the employee, the full death benefit is payable to the Death Without Dependents Unit which is waived under the executive order for a death caused by COVID-19.

Some business stakeholders are considering a challenge to the order on constitutional grounds. Among the issues that may be put to the courts is the question whether Governor Newsom circumvented the power of the legislature to legislate or did he properly exercise his broad authority as governor to act for the health and safety of the state. Additionally, questions are likely to arise about the meaning of the Executive Order, including what is meant by the obligation of the employee to utilize sick leave benefits available in response to COVID-19. Does this mean that unemployment benefits, whether or not supplemented by the federal government, are not reimbursable by the workers’ compensation carrier or self-insured employer?

An executive order does not preclude the legislature from enacting legislation to provide broader protections to workers who contract COVID-19 at work. There are currently four bills which have been proposed to address a COVID-19 presumption, including Senate Bill 1159 which creates a rebuttable presumption for frontline workers; Senate Bill 893 which creates a rebuttable presumption for hospital employees who contract respiratory diseases; Assembly Bill 664 which creates a conclusive presumption of occupational disease for firefighters, law enforcement and nurses who contract COVID-19; and Assembly Bill 196 which creates a conclusive presumption that COVID-19 is an occupational disease for essential workers identified in Newsom’s stay-at-home order.

Haight Brown & Bonesteel LLP continues to monitor legislative changes being made to or considered for the California workers’ compensation system due to the COVID-19 pandemic [click here for our prior alert, “California Considers COVID-19 Presumption”]. We will keep our clients and colleagues aware of these changes as they come to our attention. We look forward to working with you to manage your workers’ compensation issues arising out of this crisis.

This document is intended to provide you with information about workers’ compensation law related developments. The contents of this document are not intended to provide specific legal advice. If you have questions about the contents of this alert, please contact the authors. This communication may be considered advertising in some jurisdictions.

May 15, 2020