Newly signed legislation makes it easier and faster for employees to obtain workers compensation benefits for contracting COVID-19. The statutes, which went into effect on Governor Gavin Newsom’s signing of SB 1159 on September 17, 2020, impose important new obligations on employers.

The legislation provides that a “disputable presumption” will arise in certain circumstances that employees who suffer illness or death due to COVID-19 contracted Coronavirus on the job and that the injury is compensable through workers compensation. Of all aspects of SB 1159, it is the codified presumption that has received the most attention.

However, SB 1159 places on employers’ backs more than the presumption that COVID-related claims are compensable. Here, while I unpack the presumption, I also explain other less publicized requirements imposed by SB 1159 as they also call for employers’ immediate attention.

Presumption that COVID-19 is a Compensable Workers Compensation Injury

SB 1159 establishes a presumption that illness or death resulting from COVID-19 arose out of and in the course of employment. Employers may dispute the presumption with evidence, for example, of the measures in place to reduce potential transmission of Coronavirus in the workplace, evidence of the claimant’s risks of exposure outside of work, admissions by the claimant and otherwise.

The legislation also subjects employers to tight deadlines to reject COVID-19-related claims or suffer a further presumption in employees’ favor. If the date of injury is July 5, 2020 or earlier, the employer has only 30 days to reject the claim. If the date of injury is July 6, 2020 or later, the employer has 45 days to deny the claim. In the workers compensation context, these deadlines are short fuses.

Where the claimant is a front line worker — such as a firefighter, peace officer, medical professional and others — the employer has 30 days to reject the claim, regardless of the date of injury.

Where an employer fails to reject a COVID-19-related claim on time, a presumption arises that the injury is compensable. The presumption may be rebutted, but only with evidence that the employer discovered subsequent to the deadline for rejecting the claim.

These deadlines place employers under immediate pressure, upon submission of a COVID-19-related claim, to investigate and determine whether there exists evidence upon which to reject the claim and attempt to avoid the presumption against the employer.

The Covered Employees

The presumptions summarized above are available to claimants (1) who test positive during an “outbreak” (as defined) at the claimant’s specific place of work (e.g., building, store, facility or agricultural field where the employee worked); and (2) whose employer has five or more employees. In addition, all of the following circumstances must also apply:

— The employee tests positive for COVID-19 within 14 days after a day the employee worked at the employee’s place of work;

— The day the employee worked at the place of work was on or after July 6, 2020; and,

— The employee tested positive during an “outbreak” at the employee’s specific place of work.

What is an “Outbreak” under SB 1159

Under the new legislation, an “outbreak” exists if, within 14 days, one of the following occurs at a specific place of employment:

— If the employer has 100 employees or fewer at the place of employment, at least four employees test positive;

— If the employer has more than 100 employees at a specific place of employment, four percent of the number of employees who reported to the specific place of employment test positive; or,

— One of the government agencies named by SB 1159 orders a specific place of employment to close.

Mandatory Reporting of COVID-Infected Employees – and $10,000 Penalty!

Under the new legislation, whenever an employer “knows or reasonably should know that an employee has tested positive for COVID-19,” the employer must within three business days report specified information to their workers compensation claims administrator about the Coronavirus-infected employee. The new statute requires that the employer send the report by email or fax.

The following information must be reported:

— The fact that an employee has tested positive. Information identifying the employee is not to be reported, unless the employee “asserts the infection is work related” or has filed a workers compensation claim;

— The date the employee tested positive, which is the date the specimen was collected;

— The address of each building, store, facility or agricultural field where the employee worked within 14 days prior to the date the employee tested positive; and,

— The highest number of employees who worked at each location where the infected employee worked in the 45 days before the last day the employee worked there.

Claims administrators are to use the information reported to determine if an outbreak has occurred at a specific place of employment.

Employers are subject to a $10,000 civil penalty where they fail to report required information or intentionally submit false or misleading information. The penalty also may be imposed on any “person acting on behalf of an employer” breaching the reporting requirement. The Labor Commissioner is empowered to issue citations and impose the penalty.

Employers may challenge a citation and penalty through an expedited “informal hearing” before a Labor Commissioner hearing officer. Where employers are dissatisfied with the hearing officer’s ruling, they may seek relief by way of a writ of mandate from the Superior Court. Importantly, however, where the employer is unsuccessful in the writ proceeding, the employer will be liable to the Labor Commissioner for attorney’s fees and costs, as well as the penalty affirmed by the Commissioner’s hearing officer. Challenging a hearing officer’s ruling in court, thus, risks the employer digging itself into a deeper financial hole.

Given the potential exposure, it is imperative that employers promptly become familiar with the reporting requirement and put in place systems ensuring they comply.

Requirement to Report Employees Infected before SB 1159 was Signed

The provisions described above require reporting of employees who test positive going forward, that is, after the new legislation went into effect. SB 1159 also requires that employers now report employees who tested positive for the virus before SB 1159 went into effect, specifically, those who tested positive any time from July 6, 2020 through the legislation going into effect. Reports on such earlier infected employees must be submitted to claims administrators within 30 days of SB 1159 becoming effective. There is some difference in the information to be reported on the earlier infected employees.

SB 1159 will be Repealed as of January 1, 2023

SB 1159 enacts new Labor Code sections 3212.86, 3212.87 and 3212.88. The statutes remain in effect until January 1, 2023, when they are repealed by their terms.

Consider these Actions

Recommended actions to consider include the following:

  1. Employers should determine whether they know of any employees who tested positive in the relevant period before SB 1159 became effective and timely report as required to their claims administrator within approximately the next three weeks.
  2. As for reporting employees who test positive going forward, employers must become familiar now with the reporting requirement and implement procedures that will ensure they make the required reports on time to their claims administrator.
  3. Employers may find it prudent to work out with their claims administrator a specific procedure for making the reports.
  4. Where employees test positive, employers should act quickly to investigate and capture evidence that may be useful in disputing the presumption that the employee contracted the virus on the job.
  5. Particularly in light of the new statutory presumptions and tight deadlines for rejecting COVID-19-related claims, SB 1159 is one more compelling reason for employers to remain vigilant in adhering to generally accepted Coronavirus prevention protocols.