A frequent question asked at our webinars is what liability employers might face from claims that employees contracted COVID-19 at work. Governor Newsom provided clarity on that question today.

Newsom issued Executive Order N-62-20, creating a rebuttable presumption that an employee’s COVID-19-related illness arose out of the course of employment for workers’ compensation purposes if the employee tests positive or is diagnosed “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.” The presumption does not apply if the employee worked from home.

To qualify, the employee must either (1) test positive for COVID-19 within 14 days after performing work; or (2) be diagnosed with COVID-19 by a licensed physician within 14 days after performing work and have that diagnosis confirmed by further testing within 30 days of the diagnosis. Additionally, the date of injury must occur between March 19, 2020, and July 5, 2020.

For current employees, the practical reality of this Executive Order is that any test-confirmed COVID-19 illness will be presumptively compensable by workers’ compensation.

The Executive Order provides that the presumption “is disputable and may be controverted by other evidence.” However, if a claim is not rejected within 30 days of filing, the presumption can only be rebutted by evidence discovered subsequent to the 30-day period.

Employees claiming COVID-19-related illness are eligible for all workers’ compensation benefits, including “full hospital, surgical, medical treatment, disability indemnity, and death benefits.” There is no waiting period for temporary disability benefits, but an employee entitled to COVID-19 paid sick leave must exhaust that paid leave first.

Governor Newsom’s messaging on reopening California has emphasized a need to created an “Expanded Workforce Safety Net.”  This new Executive Order is a significant step in that direction.

As the end of summer is nearing, and there is no clear date for businesses and activities to fully reopen across the United States and California, more and more attention has been given to what protections businesses have from COVID-19 related lawsuits.  Many businesses find it a necessity to reopen during this time of uncertainty in order to simply avoid going out of business – they must do something to pay their rent, insurance, and other financial obligations.  With the press of reopening, businesses are rightfully concerned that they will be named a defendant by an employee or a customer who contracts COVID-19 and claims that the virus was contracted while working at or visiting the business establishment.  Here are five issues California businesses must understand regarding the legislative environment of COVID-19 liability, and the potential to have employees or customers waive liability related to contracting COVID-19.

1. Legal liability shield on the Federal level

As part of the ongoing negotiations for additional economic relief between Congress and the White House, Republicans have been arguing for a liability shield that would protect businesses from COVID-19 related lawsuits from employees as long as the employer uses “reasonable efforts” to comply with regulations and protect employees.  However, as of August 2020, there has been no agreement between Republicans and Democrats on this issue, and it remains a contentious issue in the ongoing negotiations for further relief bills.

2. California legislation creating presumption that employee contracted COVID-19 at work

In direct opposition to proposals on the federal level to protect employers, California has implemented and is looking to continue presumptions that an employee contracted COVID-19 at work if they are infected.  On May 6, 2020, Governor Newsom issued Executive Order N-62-20, creating a rebuttable presumption that an employee’s COVID-19-related illness arose out of the course of employment for workers’ compensation purposes if the employee tests positive or is diagnosed “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.” The presumption does not apply if the employee worked from home.  We previously wrote about this Executive Order here.

That presumption expired in July, but the California legislature is currently drafting legislation that would implement a similar presumption that was set forth in the Governor’s Executive Order.

3. Liability waivers

In response to lack of a federal liability shield and California’s potential extension of a presumption that an employee contracted COVID-19 at work, many employers are seeking some type of potential protection and have asked if a liability waiver by employees is a viable option.  Private parties may enter into agreements to limit liability for either party’s negligence, and these agreements are generally enforceable.  These liability release agreements can include provisions whereby a party covenants not to sue, acknowledges an assumption of risk, and provides for indemnification against the company should litigation ensue.  While these liability waivers are enforceable in the commercial setting (such as customers coming into a restaurant or retail location), in the employment context their enforceability may be more limited.

For example, the California Labor Code section 2800 requires employers to indemnify employees for losses caused by the employers’ “want of due care,” and prohibits any waiver of this right.

4. Limits of liability waivers in California

California law places many limits on claims employees can prospectively release, and therefore employers considering such waivers of liability with employees should use caution and seek legal advice before doing so.  For example, California law is clear that workers compensation claims cannot be released as a matter of law.

In addition, failure to comply with mandatory safety requirements and safety guidelines could also impact the enforceability of liability waivers.  If a company does not follow the guidelines, it could be argued that the actions were grossly negligent actions, which cannot be subject to be released or waived.  Also, California Civil Code section 1668 states that it is against public policy for a party to attempt to contract around their obligations to comply with the law.

Generally, California law does not favor waivers and will be strictly construed against the party drafting them.

5. Liability waivers for customers

As mentioned above, a contract waiving liability for injuries caused by ordinary negligence is enforceable under California law if it does not violate public policy.  Outside of the employment context, liability waivers are likely to be more enforceable, but companies must remember that California law does not favor waivers and a court will scrutinize any contract that seeks to waive liability, and no case law has yet addressed whether some unique aspect of COVID-19 would remove it from the general category of risks for which liability can be waived.  In addition, companies must review the public perception of having customers and clients entering into liability waivers.  However, the longer the virus is present and absent any federal law granting businesses a liability shield, liability waivers may become more common.

September 30, 2020 is the deadline for Governor Newsom to sign into law all bills passed by the Legislature this year.  The Governor has not waited until the deadline to begin signing a few employment related bills into law already.  Yesterday, the Governor signed AB 685 and SB 1159 into law.  AB 685 requires employers to notify workers of potential exposure to COVID-19 and SB 1159 creates a presumption that a covered worker who contracted COVID-19 contracted the virus at work and it is work related illness for workers compensation purposes.

This Friday’s Five is a quick overview of about AB 685 and SB 1159, and information about my firm’s webinar reviewing key California employment laws signed by the Governor (and other employment law updates).  My Firm’s webinar will take place on Friday October 2, 2020 at 10 a.m. PDT (registration is here and more information below).

1. AB 685 – Notice to employees of potential COVID-19 exposure

AB 685 take effect on January 1, 2021 and will expire in two years on January 1, 2022.

If an employer receives a notice of potential exposure to COVID-19, the employer must within one day provide written notice to all employees and subcontracted employee who were on the premises at the same worksite within the “infectious period.”  The notice must contain information about what COVID-19 related benefits the employee is entitled to under federal, state, and local laws, and the employer’s disinfection and safety plan.  Employers are required to keep a copy of all notices provided to employees for three years.

2. AB 685 – Local Health Department notice requirements

Under the new law, ff the employer is notified of a number of COVID-19 cases that meet the definition of a COVID-19 outbreak as defined by the State Department of Public Health, the employer has 48 hours to notify the local public health agency.

3. SB 1159 – Workers’ Compensation COVID-19 Presumption

SB 1159 takes effect immediately (September 17, 2020) and expires on January 1, 2023. SB 1159 creates a rebuttable presumption that an employee contracted COVID-19 at work if they have tested positive or is diagnosed with COVID-19 within 14 days after a day that the employee worked at the employee’s place of employment.  The bill does set forth that the “place of employment” does not include an employee’s residence if they are working at home.

4. SB 1159 – Workers Comp Presumption – Covered Workers

SB 1159 sets forth specific types of workers that the law covers (such as active firefighting members, Department of Forestry and Fire Protection, peace officers, and fire and rescue service coordinators).  For other employees, the law applies if there is an “outbreak at the employee’s specific place of employment.”  An outbreak exists if:

  • For employers with 100 or fewer employees at a specific place of employment if 4 employees test positive for COVID-19
  • For employers with more than 100 employees at a specific place of employment if 4 percent of the number of employees who reported to the specific place of employment tested positive for COVID-19
  • If the specific place of employment is ordered closed by a local health department, State Department of Public Health, the Division of Occupational Safety and Health, or a school superintendent.

5.  Register for our webinar discussing the new employment facing California employers into 2021.

My firm is conducting a webinar on October 2, 2020  at 10 a.m. to review the critical new laws signed by the Governor (including more details about AB 685 and SB 1159), recap other COVID-19 employment legal requirements in place on the Federal, state, and local levels, and provide some other reminders about minimum wage increase and sexual harassment training requirements in 2021.

This webinar is essential for company executives and human resources personnel in learning what the employment landscape and employer obligations are for the remainder of 2020 and into 2021.  Reserve your seat early as the webinar has a limited number of registrants, and this event is likely to hit our maximum capacity (clients of the Firm will receive priority for attendance).

Click here to register.