California Governor Gavin Newsom recently signed Senate Bill (SB) 1159, which adds COVID-19-related illness or death to the list of injuries covered under the state’s workers’ compensation program and creates new employer reporting responsibilities. The law codifies and extends Executive Order N-62-20, which was issued on May 6, 2020 and created a rebuttable presumption that employees with a COVID-19-related illness on or before July 5, 2020 contracted the virus at work and were eligible for workers’ compensation. The new law is retroactive to July 6, 2020 and expires on January 1, 2023.

Disputable Presumption for COVID-19 Cases During Workplace “Outbreaks”

Workers’ compensation generally provides benefits for employees who are injured or become ill in the course of their employment. Given the wide reach of COVID-19, however, it may be difficult to identify where the employee was exposed to the coronavirus for the purposes of showing that their exposure was caused by and arose out of their employment. In California, however, SB 1159 creates a “disputable presumption” that a COVID-19-related illness arose out of and in the course of employment, and is thus compensable, for employees who test positive during a COVID-19 “outbreak” at the employee’s “specific place of employment,” and whose employer has five or more employees. The new law specifies that workers’ compensation awarded for COVID-19 claims includes “full hospital, surgical, medical treatment, disability indemnity, and death benefits.”

Under SB 1159 all of the following circumstances must exist for the presumption to apply:

  1. The employee tests positive within 14 days after a day that the employee performed labor or services at the employee’s place of employment at the employer’s direction;
  2. The day on which the employee performed labor or services at the employee’s place of employment at the employer’s direction was on or after July 6, 2020. The date of injury is the last date the employee performed labor or services at the employee’s place of employment at the employer’s direction prior to the positive test; and
  3. The employee’s positive test occurred during an outbreak at the employee’s specific place of employment.

A COVID-19 “outbreak” occurs if, within 14 calendar days, one of the following occurs: (1) four employees test positive for COVID-19 (if the employer has 100 employees or fewer at a specific place of employment); (2) 4% of the number of employees who reported to the specific place of employment test positive for COVID-19 (if the employer has more than 100 employees at a specific place of employment); or (3) a specific place of employment is ordered to close by a local public health department, the State Department of Public Health, or Cal/OSHA due to risk of infection with COVID-19.  A “specific place of employment” is defined as “the building, store, facility, or agricultural field where an employee performs work at the employer’s direction.”

The law also provides a disputable presumption for firefighters, peace officers, fire and rescue coordinators, and certain kinds of health care and health facility workers that come in contact with COVID-19 patients (“First Responders and Health Care Workers”), that test positive for or are diagnosed with COVID-19 within 14 days of working onsite for an employer on or after July 6, 2020.

According to FAQs regarding SB 1159 released by the California Department of Industrial Relations, Division of Workers’ Compensation (“DWC”), the presumption is applicable only for a COVID-19 diagnosis based on a positive “PCR test,” which detects the presence of the virus.  Antibody testing may not be relied on for a confirmed diagnosis under the statute.

Notably for employers, the “presumption is disputable and may be controverted by other evidence,” such as: (1) measures in place to reduce potential transmission of COVID-19 in the employee’s place of employment; (2) the employee’s non-occupational risks of contracting COVID-19; and (3) any other evidence normally used to dispute a claim. Further, if an employee has any available COVID-19-related paid sick leave benefits (e.g., FFCRA’s Emergency Paid Sick Leave or California’s supplemental paid sick leave under AB 1867), those benefits must be used and exhausted before receiving any temporary disability benefits.

The DWC’s FAQs explain that employers will have up to 45 days to investigate and make a decision whether to accept or deny a workers’ compensation claim. If the employer fails to reject the claim within 45 days, the employee’s injury or illness is presumed compensable, and the employer can then rebut that presumption only with evidence it discovered after the 45-day period. Employers have only 30 days to investigate and accept or deny claims brought by First Responders and Health Care Workers. If an employer rejects the claim, the claimant has the right to have the issue decided by a workers’ compensation judge.

New Reporting Requirements

SB 1159 also creates new reporting requirements for employers. When an employer “knows or reasonably should know that an employee has tested positive for COVID-19” the employer must report to its claims administrator the following information in writing within three business days:

  1. That an employee has tested positive (note that personally identifiable information about the employee should only be provided if the employee asserts the infection is work-related or has filed a claim form under Labor Code 5401);
  2. The date the employee tested positive (i.e., the date the specimen was collected for testing);
  3. The address(es) of the employee’s specific place(s) of employment during the 14-day period preceding the date of the employee’s positive test; and
  4. 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.

Retroactively, if an employer is aware that an employee tested positive between July 6, 2020 and September 17, 2020, the employer must report the information in items #1-3 above to its claims administrator within 30 business days of the date SB 1159 took effect (i.e., by October 29, 2020) and report the highest number of employees who reported to work at each of the employee’s specific places of employment on any work date between July 6, 2020 and September 17, 2020. This information will be used by the claims administrator to determine whether a COVID-19 outbreak has occurred.

California employers with employees working remotely at least part-time during the pandemic should note that SB 1159 specifies that “place of employment” does not include an employee’s home or residence (unless the employee provides home health care services). Employers, therefore, would not need to report employees who test positive for COVID-19 but had only worked from home prior to the statute’s effective date. However, the statute likely requires reporting the confirmed case of a remote employee who tested positive prior to the statute’s effective date if that employee also worked at onsite anytime between July 6 and the effective date.

Employers who fail to report the above information, or who intentionally submit false or misleading information, are subject to a $10,000 penalty assessed by the California Labor Commissioner.

Steps To Take Now

To satisfy the requirements under the new law, California employers should develop a protocol for requesting and collecting specific information about positive COVID-19 cases in the workplace from July 6 onward. Employers may consider designating a person who is responsible for reporting that information to the claims administrator in order to ensure that the law’s reporting requirements are met. Further, employers should plan for how they will collect evidence to dispute the presumption that an employee’s COVID-19 diagnosis arose out of and in the course of employment. For example, if employers are aware of a positive test that could be connected to the workplace, they should immediately begin collecting information about the circumstances of the employee’s exposure to COVID-19 (including any evidence that the exposure occurred outside of work).

Given the challenges posed by this new law, employers should take all reasonable steps to maintain a safe workplace, such as implementing health screenings and rigorous sanitation protocols to reduce the risk of viral transmission in the workplace. Where feasible, employers would also be well-advised to encourage employees to work remotely and to refrain from entering the worksite without permission.