May 7, 2020

California Governor Gavin Newsom signed an executive order yesterday extending workers compensation benefits to workers if they test positive for COVID-19. The executive order, N-62-20, creates a rebuttable presumption of compensability for workers contracting COVID-19 if they are diagnosed within 14 days after a day they performed labor outside of the home at their place of employment at the employer’s direction. We secured a copy of the order late last night and it appears that our initial take was slightly off. Unfortunately, the order is broader than we thought, applying to ALL WORKERS, not just essential workers (which is what we thought based on early reports).

This is a very broad application of workers compensation coverage, and seems likely to result in coverage for cases where the illness was not contracted in the workplace. It is one thing to presume that a doctor, nurse, or EMT has contracted COVID at work, but a stretch to automatically assume that a construction worker, restaurant worker, or office professional was exposed at work as opposed to the many other possible areas of exposure that we all face. Moreover, although the inclusion of a rebuttable presumption is welcome, it is not clear how that will work in the real world. How would an employer prove that an employee contracted COVID outside the workplace when the virus is so widespread?

As our friends at APCIA have pointed out, this could threaten the financial stability of the workers compensation system. The Workers Compensation Insurance Rating Bureau has issued its “Cost Evaluation of Potential Conclusive COVID-19 Presumption in California,” which estimated the cost of similar proposals to be somewhere between $2.2 and $33.6 billion per year.

The order is effective for cases contracted between the March 19, 2020 and July 5, 2020.

We note that the California legislature is considering legislation (Assembly Bill 664 and Senate Bill 1159) that would similarly impose a presumption regarding employees contracting COVID at work. The prospects for the legislation are unclear in light of the Governor’s order, but we will be following the activity in Sacramento, as well as the other states where similar legislation is pending.