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.

In this video, I discuss five key new laws facing California employers:

  • California’s Supplemental Paid Sick Leave, which took effect in September 2020 (read more about AB 1867 here)
  • AB 685 requiring employers to provide notice of suspected or confirmed COVID-19 in the workplace, effective on January 1, 2021 (read more about AB 685 here)
  • SB 1159 – workers’ compensation presumption regarding COVID-19 in the workplace, which took effect on September 17, 2020,
  • SB 1383’s expansion of California Family Leave Rights Act (CFRA) leave to employers with 5 or more employees, effective January 1, 2021, and
  • SB 973’s requirement for employers to report pay data to the state of California starting in March 2021.

Governor Newsom had a September 30, 2020 deadline to approve or veto any new laws for 2021.  Today, our team from Zaller Law hosted a webinar covering the major employment laws approved by the Governor and what these new laws mean for employers.  We will be hosting another webinar soon discussing some of the laws in more detail, so be sure to subscribe for notifications.  This Friday’s Five covers five of the new laws with the most impact on employers for the remainder of 2020 and into 2021:

1. AB 1867 – California Supplemental Paid Sick Leave

My previous article on AB 1867 is here. On Wednesday, September 9, 2020, Governor Newsom signed AB 1867 into law providing supplemental paid leave for California employees and codified provisions of Executive Order N-51-20 that had already provided paid sick leave for “food sector workers.”  California employers must take time to review the new law to ensure compliance, even if they were covered under the prior Executive Order. The new law created obligations for employers to provide COVID-19 Supplemental Paid Sick Leave to non-food sector employees starting no later than September 19, 2020.

2. SB 1159 – Workers’ Compensation: COVID-19

  • Effective immediately! (Automatically repealed January 1, 2023)
  • Codifies Governor’s May 6, 2020, Executive Order N-62-20.
  • Applicable to employees who test positive during an “outbreak” at the employee’s “specific place of employment.”
  • Applicable to employers with five or more employees
  • Applies to all dates of injury on or after July 6, 2020
  • Employee may be awarded: Full hospital, surgical, and medical treatment; disability indemnity (only after exhausting any COVID-specific paid sick leave); and death benefits

Key Terms:

  • “Specific place of employment”: Building, store, facility, or agricultural field where an employee performs work at the employer’s direction. Does not include employee’s home.
  • “Outbreak”: Measured over 14 days at a specific place of employment
    • If 100 or fewer employees, four employees test positive .
    • If more than 100 employees, four percent of employees test positive.
    • If a public health department or OSHA orders SPE closed due to risk of infection with COVID-19.
  • “Test”: PCR Test or viral culture test of same or higher sensitivity/specificity. Does not include serological (antibody) test.

Presumption:

  • Employee’s COVID-19 illness or death is presumed to arise out of and in the course of the employment if employee tests positive within 14 days of performing labor or services at the place of employment.
  • Key limitation: during an outbreak.
  • Can be rebutted with evidence of employer safety measures and employee’s nonoccupational risks.

Employer Reporting Requirements:

  • Employer must report positive tests to claims administrator by email or fax within three business days, including:
  • Date of positive test (collection date)
  • Address of employee’s specific place of employment
  • Highest number of employees at SPE in 45-day preceding last day worked
  • Do not identify employee unless employee asserts work-related infection
  • Duty to report arises if employer knew or should have known of positive tests
  • Civil penalty up to $10,000 or failing to report information or intentionally submitting false or misleading information
  • Employers have until October 19 to report any positive tests occurring between July 6, 2020, and September 16, 2020

3. SB 1383 – California Family Leave Rights Act (CFRA) Expansion

  • Effective January 1, 2021
  • SB 1383 significantly expands CFRA, by extending its applicability to employers with 5 or more employees, compared to 50 or more employees currently.
  • The new law expands the family members whom an employee can take leave to include care of grandparents, grandchildren, siblings, domestic partners with a serious health condition, in addition to existing leave to care for a parent or spouse.
  • This law will have a monumental impact on small employers and will impact large employers who are already subject to CFRA.

Major Changes In The New CFRA Provisions Include:

  1. Changes the threshold requirement to employers with 5 or more employees across the entire State.
  2. Expands the definition of family member to include care for an adult child over 18 years of age, the child of a domestic partner and a grandparent, grandchild and sibling.
  3. Requires an employer of both parents of a child to grant up to 12 weeks of leave for each parent for birth, adoption, or foster care placement of a child.
  4. Eliminates the “key employee” provision under the current CFRA provisions.

Eligibility for CFRA Leave:

Employee must have worked for the employer for at least 12 months and worked at least 1,250 hours in the 12-month period prior to taking CFRA leave.

Amount of Leave:

Up to 12 weeks of unpaid leave in each 12-month period. Leave can be used in increments. This 12-week leave is in addition to other leaves mandated under California law, like Pregnancy Disability Leave, Workers Compensation, and California Paid Leave.

What The New CFRA Leave Requires:

  • The unpaid leave can be taken because of the employee’s own serious health condition, or to care for specified family members medical conditions or to care for a child.
  • The employee shall continue to receive health insurance benefits at the same level as if the employee had been continuously employed during the CFRA leave.
  • Employers must reinstate an employee on leave to the same job or comparable job to the extent that the employee would have remained in that position if they had been continuously employed during the CFRA leave.

Impacts Larger Employers Covered Under the Current Law:

  • Additional covered family members and expanded reasons for leave.
  • Threshold requirements of employing 50 or more employees within a 75-mile radius is stricken, so that larger employers with small worksites will be required to grant CFRA leave.
  • In some cases, CFRA may no longer be concurrent with leave taken under the FMLA, so there is the potential the employee qualifies for leave under both state and federal law.

4. AB 1947 – Employment Violation Complaints

  • Existing law prohibits discrimination or retaliation against employees who complains about labor code violations or other violations of law.
  • AB 1947 amends existing law to provide a longer time for employees to report complaints to DLSE extended from 6 months to one year.
  • Allows employee to recover attorney’s fees in court action alleging retaliation.

5. SB 973 – Employers Annual Report Pay Data

  • On or before March 31, 2021, and on or before March 31 each subsequent year, private employers with 100 or more employees and who are required to file an annual Employer Information Report (EEO-1) under federal law, must submit pay data report to the Department of Fair Employment and Housing (DFEH).
  • Reinstates by CA collection of “Component 2”-type pay data by race and gender that was halted on the federal level in the EEO-1.
  • Information required to be reported includes:
    1. number of employees by race, ethnicity, and sex across 10 categories of jobs,
    2. the number of employees by race, ethnicity, and sex whose annual earning fall within each of the pay bands used by the US Bureau of Labor Statistics in the Occupational Employment Statistics survey.

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, 2023.

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.