COVID-19 Presumptions

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As discussed in "Sullivan on Comp" Section 5.17 Presumption of Injury –– Public Employee in General and Section 5.18 Presumption of Injury –– Public Employee's Covered Condition, the Labor Code enumerates several presumptions in favor of certain employees. The purpose of these statutes "is to favor a special class of employees whose service is vital to the public interest and whose strenuous work makes them especially vulnerable."

During the COVID-19 outbreak, employees deemed to be essential may continue working while nonessential workers are required to stay home. California's executive and legislative branches have created COVID-19 presumptions for certain workers who have been significantly affected by the outbreak.

California Gov. Gavin Newsom signed an executive order for a temporary presumption for a broad range of workers. On the last day of the 2020 California legislative session, the California Legislature passed Senate Bill 1159 that codified the governor's presumption and also established new presumptions. Originally, the presumptions were set to expire on Jan. 1, 2023, but they were extended until Jan. 1, 2024 by Assembly Bill 1751, which was passed in 2022, when the Legislature also passed SB 1127. It enhances penalties for unreasonably denying a claim covered by a statutory presumption.

Although the following sections discuss general rules regarding how COVID-19 could be deemed compensable, in most cases, whether a COVID-19 claim is compensable probably will be decided by a presumption.

Executive Order N-62-20

On May 6, 2020, Gov. Newsom issued an executive order creating a temporary workers' compensation presumption for employees diagnosed with COVID-19. The governor explained that the executive order was signed to "remov[e] a burden for workers on the front lines, who risk their own health and safety to deliver critical services to our fellow Californians so that they can access benefits, and be able to focus on their recovery."

The presumption is retroactive to the date of the stay-at-home order and will remain in effect for 60 days after its effective date. So the presumption is effective for employees working from March 19, 2020 through July 5, 2020.

Under the executive order, any illness related to COVID-19 is presumed to arise out of and in the course of the employment for purposes of awarding workers’ compensation benefits if:

1. The employee tested positive for or was diagnosed with COVID-19 within 14 days after a day that he or she 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 March 19, 2020.
3. The employee’s place of employment was not the employee’s home or residence. And,
4. The diagnosis was done by a physician who holds a physician and surgeon license issued by the California Medical Board, and that diagnosis is confirmed by further testing within 30 days.

So, the presumption covers any employees who must work outside of their homes during the stay-at-home order at the employer’s direction. All essential workers who were required to report to work are covered, but the presumption also covers any nonessential workers who performed "labor or services at the employee’s place of employment at the employer’s direction." The presumption would not cover employees who went to their place of employment without their employer's direction.

The diagnosis must be confirmed by a test. There are two types of tests generally available: (1) a viral test, which determines if a person has a current infection; and (2) an antibody test, which determines if a person had a previous infection. The executive order doesn't limit the type of test that may be used to confirm the diagnosis. So, an employee who recovered from COVID-19 potentially could bring a claim for any benefits related to the infection using an antibody test provided that the positive test was obtained within 30 days of the initial diagnosis.

The presumption is rebuttable and may be controverted by "other evidence." So, under the executive order, an employer could rebut the presumption with any evidence that the employee contracted COVID-19 outside of the employment.

The executive order requires that a decision denying a claim for an presumptively compensable illness related to COVID-19 be made within 30 days after the date the claim form is filed. This shortens the time period for denial of a COVID-19 claim from the normal 90 days provided under Labor Code § 5402 (see "Sullivan on Comp" Section 5.16 Presumption of Injury –– 90-Day Rule). Until the employer makes a decision, an employee will be eligible for as much as $10,000 in medical treatment for illness related to COVID-19.

The order also says that if a claim is not denied within this time period, it is presumed compensable, unless rebutted by evidence discovered only subsequent to the 30-day period. That probably would preclude an employer rebutting the presumption with evidence that could have been obtained with the exercise of reasonable diligence within the 30-day period.

An employer that denied a claim prior to the executive order is not automatically required to reverse its decision. The employer may reconsider and accept the claim based on the order or stand by the denial.

An accepted claim for the illness related to COVID-19 is eligible for all benefits applicable under the workers’ compensation laws of this state, including full hospital, surgical, medical treatment, disability indemnity and death benefits. The executive order covers only regular workers' compensation benefits. It does not authorize reimbursement for the personal protective equipment or temporary housing proposed by other bills being considered in the Legislature.

The executive order states that illness related to COVID-19 "shall be subject to those laws including Labor Code sections 4663 and 4664, except as otherwise provided in this Order." Those statutes relate to apportionment of permanent disability, and, therefore, permanent disability related to COVID-19 is apportionable to other causes (see "Sullivan on Comp" Section 10.34 Apportionment –– Pre-Existing Disease or Condition).

The order also provides that if an employee has paid sick leave benefits specifically available in response to COVID-19, they should be used and exhausted before any temporary disability benefits or benefits under LC 4850 are due and payable. So if an employer specifically provided sick leave benefits in response to COVID-19, such as under the Families First Coronavirus Response Act or Executive Order N-51-20, such benefits must be exhausted before temporary disability or § 4850 benefits are payable. An employee is not required to use his or her normal sick leave benefits. If an employee does not have such sick leave benefits, he or she must be provided temporary disability benefits or § 4850 benefits, if applicable, from the date of disability. The executive order eliminates the three-day waiting period for temporary disability benefits under § 4652 (see "Sullivan on Comp" Section 9.16 Waiting Period).

Nevertheless, to qualify for temporary disability benefits or benefits under LC 4850, an employee must satisfy either of these requirements:

• If the employee tests positive or is diagnosed on or after May 6, 2020, he or she must be certified for temporary disability within the first 15 days after the initial diagnosis, and must be recertified for temporary disability every 15 days thereafter, for the first 45 days following diagnosis. Or,
• If the employee tested positive or was diagnosed prior to May 6, 2020, the employee must obtain a certification, within 15 days of the date of the order, documenting the period for which he or she was temporarily disabled and unable to work, and must be recertified for temporary disability every 15 days thereafter, for the first 45 days following diagnosis.

So being diagnosed with COVID-19 does not automatically entitle an employee to temporary disability benefits. The worker still must be certified for temporary disability by a physician licensed by the California Medical Board. The certifying physician may be a designated workers’ compensation physician in an applicable medical provider network or health-care organization, a predesignated workers’ compensation physician or a physician in the employee’s group health plan. If the employee does not have a designated workers’ compensation physician or group health plan, he or she should be certified by a physician of the employee’s choosing who holds a physician and surgeon license. For further discussion on liability for temporary disability, see "Sullivan on Comp" Chapter 9: Temporary Disability.

Finally, the executive order states that the Department of Industrial Relations (DIR) must waive collection on any death benefit payment due pursuant to LC 4706.5 arising out of claims covered by the order. That statute generally directs that if an employee dies without leaving any person entitled to a dependency death benefit, the employer is required to pay death benefits to the DIR (see "Sullivan on Comp" Section 12.24 Payment to State –– No Dependent).

The administrative director is given authority to adopt, amend or repeal any regulations deemed necessary to implement the order. Any regulations promulgated by the AD will be exempt from the Administrative Procedures Act. But the director must submit the regulations to the Office of Administrative Law for publication in the California Regulatory Notice Register.

Th DIR answers questions regarding the executive order at: https://www.dir.ca.gov/dwc/Covid-19/FAQs.html. The executive order is available at: https://www.gov.ca.gov/wp-content/uploads/2020/05/5.6.20-EO-N-62-20-text.pdf.

Senate Bill 1159

On Aug. 31, 2020, the last day of the 2020 California legislative session, the California Legislature passed Senate Bill 1159 (SB 1159), which establishes a rebuttable presumption that illness or death resulting from COVID-19 arose out of and in the course of employment for specified employees. SB 1159 was passed as an urgency statute, meaning it took effect immediately upon signing.

SB 1159 adds three new Labor Code sections that establish COVID-19 presumptions. Labor Code § 3212.86 codifies Gov. Newsom's Executive Order (N-62-20) for employees working from March 19, 2020 through July 5, 2020. In addition, two new statutes create presumptions for COVID-19 injuries on or after July 6, 2020 –– § 3212.87 applies to front-line workers (peace officers, firefighters, health-care providers, home care workers and IHSS workers), and § 3212.88 applies to employees who contract COVID-19 due to a workplace outbreak. Significantly, SB 1159 also establishes reporting requirements for employers and claims administrators to review possible claims retroactively and assess whether those employees are entitled to the presumption.

The presumptions remain in effect until Jan. 1, 2023, and as of that date would be repealed. The text of SB 1159 is available on the California Legislative Information website.

Labor Code § 3212.86 –– Codification of Executive Order

LC 3212.86 generally codifies Gov. Newsom's Executive Order (N-62-20), although there are some minor differences. It provides that an illness or death related to COVID-19 is presumptively compensable if all of these are established:

1. The employee performed labor or services at the employee’s place of employment at the employer’s direction between March 19, 2020 and July 5, 2020.
2. The employee tested positive for or was diagnosed with COVID-19 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.
3. The place of employment was not the employee’s residence.
4. If the employee was diagnosed with COVID-19, the diagnosis was done by a licensed physician and surgeon holding an M.D. or D.O. degree or state licensed physician assistant or nurse practitioner, acting under the review or supervision of a physician/surgeon pursuant to standardized procedures or protocols within their lawfully authorized scope of practice, and that diagnosis is confirmed by testing or by a COVID-19 serologic test within 30 days of the date of the diagnosis.

Unlike the executive order, § 3212.86 allows COVID-19 to be diagnosed not only by a licensed physician and surgeon, but also by a properly supervised state licensed physician assistant or nurse practitioner.

The presumption may be rebutted by "other evidence" without limitation. An employer must deny liability for a claim of an illness related to COVID-19 within 30 days after the date the claim form is filed. Otherwise, the illness will be presumed compensable and the presumption will be rebuttable only by evidence discovered subsequent to the 30-day period.

The employee may be awarded all regular workers' compensation benefits under § 3212.86, including full hospital, surgical, medical treatment, disability indemnity and death benefits. If an employee has paid sick leave benefits specifically available in response to COVID-19, they must be used and exhausted before any temporary disability benefits or benefits under LC 4800, LC 4800.5 or LC 4850 are due and payable. If an employee does not have those sick leave benefits, temporary disability benefits or § 4800, § 4800.5 or § 4850 benefits must be paid from the date of disability.

To qualify for temporary disability or § 4800, § 4800.5 or § 4850 benefits, the employee must be certified for temporary disability within the first 15 days after the initial diagnosis, and must be recertified every 15 days for the first 45 days following the diagnosis.

Labor Code § 3212.87 –– Presumption for Front-line Workers

LC 3212.87 establishes a COVID-19 presumption for front-line workers. Specifically, it covers:

1. active firefighting members, whether volunteers, partly paid or fully paid, of all of these departments:
   1. a fire department of a city, county, city and county, district or other public or municipal corporation or political subdivision;
   2. a fire department of the University of California and the California State University;
   3. the Department of Forestry and Fire Protection (Cal Fire);
   4. a county forestry or firefighting department or unit;
2. active firefighting members of a fire department that serves a U.S. Department of Defense installation and who are certified by the U.S. Department of Defense as meeting its standards for firefighters;
3. active firefighting members of a fire department that serves a National Aeronautics and Space Administration (NASA) installation and who adhere to specified training standards;
4. active firefighting members of a fire department that provides fire protection to a commercial airport regulated by the Federal Aviation Administration (FAA) and are trained and certified by the State Fire Marshal as meeting the specified standards;
5. specified peace officers who are primarily engaged in active law enforcement activities;
6. fire and rescue services coordinators who work for the Office of Emergency Services (OES);
7. an employee who provides direct patient care, or a custodial employee in contact with COVID-19 patients, who works at a health facility;
8. an authorized registered nurse, emergency medical technician-I, emergency medical technician-II or emergency medical technician-paramedic;
9. an employee who provides direct patient care for a home health agency under Health and Safety Code § 1727;
10. employees of health facilities, other than those described in No. 7, if the employer cannot establish that the employee did not have contact with a health facility patient within the last 14 days who tested positive for COVID-19;
11. a provider of in-home supportive services, when he/she provides the services outside his/her own home or residence.

In order to receive the presumption under § 3212.87, such employees must establish that:

1. They performed labor or services at their place of employment at the employer’s direction on or after July 6, 2020.
2. They tested positive for COVID-19 within 14 days after a day that they performed labor or services at their place of employment at the employer’s direction.
3. Their place of employment is not their home or residence.

The statute defines “test” or “testing” to mean a PCR (polymerase chain reaction) test approved for use or approved for emergency use by the U.S Food and Drug Administration (FDA) to detect the presence of viral RNA or any other viral culture test approved for use or approved for emergency use by the FDA to detect the presence of viral RNA that has the same or higher sensitivity and specificity as the PCR test. It specifies that the terms do not include serologic testing, also known as antibody testing.

The presumption extends to such employees following termination of service for a period of 14 days, commencing with the last date actually worked. If these conditions are met, the injury or death related to COVID-19 is presumed to arise out of and in the course of the employment. This presumption is disputable and may be controverted by "other evidence."

LC 3212.87 does not specify evidence that may be used to rebut the presumption. As discussed below, LC 3212.88 states, "Evidence relevant to controverting the presumption may include, but is not limited to, evidence of measures in place to reduce potential transmission of COVID-19 in the employee’s place of employment and evidence of an employee’s nonoccupational risks of COVID-19 infection." Because there is no limitation on the rebuttal evidence that might be used or considered, there is no reason why the same evidence can't be used to rebut the presumption under § 3212.87.

LC 3212.87 also requires liability for a claim of illness related to COVID-19 to be denied within 30 days after the date the claim form is filed pursuant to LC 5401. If it is not denied within the 30-day period, the illness is presumed compensable, and this presumption is rebuttable only by evidence discovered subsequent to the 30-day period.

If the presumption applies, an employee will be entitled to regular workers' compensation benefits including full hospital, surgical, medical treatment, disability indemnity and death benefits. LC 3212.87 does not cover expenses related to a self-quarantine or mandatory quarantine for employees who do not test positive.

LC 3212.87 requires that if an employee has paid sick leave benefits specifically available in response to COVID-19, those benefits must be used and exhausted before any temporary disability benefits or benefits under § 4800, § 4800.5 or § 4850 are due and payable. LC 3212.87 requires an employee to exhaust special COVID-19 time-off benefits provided by federal law before the workers' compensation benefits attach. If an employee does not have those sick leave benefits, he or she must be provided temporary disability benefits or other benefits, if applicable, from the date of disability without application of the normal waiting period for such benefits. Unlike for injuries related to COVID-19 before July 6, 2020, there is no requirement for employees to be certified for temporary disability every 15 days for the first 45 days following the COVID-19 diagnosis.

Labor Code § 3212.88 –– Presumption for Outbreak at Place of Employment

LC 3212.88 establishes a COVID-19 presumption for employees who are not covered by § 3212.87. It applies to employees who test positive during an outbreak at their place of employment if the employer has five or more employees. To qualify for this presumption, these must be established:

1. The employee tested positive for COVID-19 within 14 days after a day that he/she performed labor or services at his/her place of employment at the employer’s direction.
2. The employee performed labor or services at his/her place of employment at the employer’s direction on or after July 6, 2020.
3. The employee’s positive test occurred during a period of an outbreak at his/her specific place of employment (that is, the building, store, facility or agricultural field where he/she performs work at the employer’s direction).
4. The specific place of employment was not the employee's home or residence, unless he/she provides home health care services to another individual at his/her home or residence.

The statute specifies that serologic testing, also known as antibody testing, is not included in determining whether an employee tested positive.

LC 3212.88 specifies that an “outbreak” exists if within 14 calendar days, one of these occurs at a specific place of employment:

1. Four employees test positive for COVID-19 at a specific place of employment with 100 employees or fewer.
2. Four percent of the number of employees test positive for COVID-19 where more than 100 employees reported to the specific place of employment.
3. The place of employment is ordered to close due to a risk of infection with COVID-19 by a local public health department, the State Department of Public Health, the Division of Occupational Safety and Health or a school superintendent.

The statute clarifies that if an employee performs in multiple places of employment within 14 days of his or her positive test, the positive test must be counted for the purpose of determining the existence of an outbreak at each of those places of employment, and if an outbreak exists at any one of them, that is the employee’s “specific place of employment.”

If these conditions are met, the injury or death related to COVID-19 is presumed to arise out of and in the course of the employment. This presumption will be extended to any covered employee following termination of service for a period of 14 days, commencing with the last date actually worked in the specified capacity at the employee’s place of employment.

This presumption is disputable and may be controverted by "other evidence." LC 3212.88 doesn't limit the evidence that may be used to rebut the presumption. Moreover, it states, "Evidence relevant to controverting the presumption may include, but is not limited to, evidence of measures in place to reduce potential transmission of COVID-19 in the employee’s place of employment and evidence of an employee’s nonoccupational risks of COVID-19 infection."

An employee covered by § 3212.88 is entitled to benefits including full hospital, surgical, medical treatment, disability indemnity and death benefits. If an employee has paid sick leave benefits specifically available in response to COVID-19, they must be used and exhausted before any temporary disability benefits, benefits under § 4800, § 4800.5 or § 4850 or Education Code § 44977, § 44984, § 45192, § 45196, § 87780, § 87787, § 88192 or § 88196 are due and payable. If an employee does not have those sick leave benefits, the employee must be provided the appropriate benefits from the date of disability. The waiting period for temporary disability benefits will not apply.

Unlike LC 3212.87, which requires liability for a claim of illness related to COVID-19 to be denied within 30 days, § 3212.88 requires liability for a claim of such illness to be rejected within 45 days after the date the claim form is filed. If the claim is not denied within the 45-day period, the claim is presumed compensable and the presumption is rebuttable only by evidence discovered subsequent to the 45-day period.

Employer Reporting Requirements

Significantly, § 3212.88 establishes additional reporting requirements for employers. When an employer knows or reasonably should know that an employee has tested positive for COVID-19, it must report to its claims administrator in writing via electronic mail or facsimile within three business days all of these:

1. An employee has tested positive. (For the initial report, the employer must not provide any personally identifiable information regarding the employee who tested positive for COVID-19 unless he/she asserts that the infection is work related or has filed a claim form pursuant to § 5401.)
2. An employee tested positive on a specified date, which is the date the specimen was collected for testing.
3. During the 14-day period preceding the date of an employee's positive test, specify the address or addresses of employment where he/she worked.
4. In the 45-day period preceding the last day the employee worked at each specific place of employment, provide the highest number of employees who reported to work at his/her specific place of employment.

The statute also requires an employer to review past cases and report those to the claims administrator. It requires any employer who is aware of an employee testing positive on or after July 6, 2020, and prior to the effective date of the statute, to report the required information to the claims administrator in writing via electronic mail or facsimile within 30 business days of the effective date of the statute.

Penalties for False or Misleading Reporting

LC 3212.88 directs that an employer or other person acting on behalf of an employer who intentionally submits false or misleading information or who fails to submit the required information is subject to a civil penalty of as much as $10,000 to be assessed by the Labor commissioner. The commissioner may issue a citation following an inspection or investigation.

LC 3212.88 also establishes procedures to contest the civil penalty citation. If a person desires to contest a citation or the proposed assessment of a civil penalty, she or he must notify the office of the Labor commissioner of their request for an informal hearing within 15 business days after service of the citation. The commissioner or the deputy or agent must hold a hearing within 30 days.

At the conclusion of the hearing, the citation or proposed assessment of a civil penalty must be affirmed, modified or dismissed. The Labor commissioner's decision must be served on all parties within 15 days after the hearing by regular first-class mail. Any amount found to be owed by the Labor commissioner as a result of a hearing is due and payable 45 days after notice of the findings and written findings and order have been mailed to the party assessed.

A writ of mandate may be taken from Labor commissioner's decision to the appropriate superior court. The appealing party must agree to pay any judgment and costs ultimately rendered by the court against the party for the assessment. The writ of mandate must be filed within 45 days of service of the notice of findings, findings and relevant order. If the party filing a writ of mandate is unsuccessful in challenging the decision of the hearing officer, the Labor commissioner will recover costs and attorney fees.

In lieu of contesting a citation, an employer or person may pay the amount specified for the violation within 15 business days after issuance of the citation.

Claims Administration Requirements

The claims administrator must use information reported by the employer to determine if an outbreak has occurred for the purpose of administering a claim. The claims administrator must use the information to retroactively determine if an outbreak has occurred from July 6, 2020, to the effective date of the statute for the purpose of applying the presumption. A claim is not part of an outbreak if it occurs during a continuous 14-day period in which the requisite number of positive tests have not been met.

To calculate the number of employees at a specific place of employment, the claims administrator must utilize the data reported for the first employee who is part of the outbreak. A claim is not part of an outbreak if it occurs during a continuous 14-day period in which the requisite number of positive tests have not been met. The claims administrator must continually evaluate each claim to determine whether the requisite number of positive tests have occurred during the surrounding 14-day periods.

Study on Impact of COVID-19 Claims

In addition to the presumptions, SB 1159 adds Labor Code § 77.8, which requires the Commission on Health and Safety and Workers’ Compensation to conduct a study of the impact of COVID-19 claims on the workers’ compensation system. The study must review the overall impact on indemnity benefits, medical benefits and death benefits, including differences in the effects across different occupational groups. The study also must include the effect of § 3212.87 and § 3212.88. A preliminary report or a final report must be delivered to the Legislature and the governor by Dec. 31, 2021, and the final report must be delivered to the same parties no later than April 30, 2022.

Analysis of SB 1159

It is no surprise that the Legislature passed a bill creating a presumption of compensability for COVID-19 for certain workers. Since the COVID-19 outbreak, the government has tried to balance keeping the economy open with the need to save lives. The obvious purpose of SB 1159 is to protect employees the Legislature believed were disproportionately affected by the coronavirus.

As noted in the Assembly Floor Analysis for SB 1159, to have a valid claim for an infectious disease, in general, employees must prove that their exposure at work was greater than the exposure of the average nonworker. The Legislature recognized that the pandemic nature of COVID-19 challenged how infectious diseases historically have been handled in the workers' compensation system.

The Assembly Floor Analysis explains, "As a result of the Governor's 'shelter-in' order, anyone who was not an 'essential employee' was by definition NOT exposed more than the general population, and any 'essential employee' was exposed more than the general population, because these employees were out in the community due to work obligations." It adds, "The purpose of the bill is to provide presumptive workers' compensation benefits to those who are 'subjectively' infected at work, but who may have difficulty proving this fact."

The Senate Floor Analysis explains, "While COVID-19 is present in all California communities, the burden of fighting the disease has fallen disproportionately to a small group of workers in both the private and public sectors. These workers keep California's lights on, water running, food stocked, and treat our ill and injured." It adds, "Therefore, it intuitively makes sense that extending a presumption to these workers would further the cause of justice: by reducing the barriers to accessing the workers’ compensation system, essential workers suffering from COVID-19 will receive the healthcare they need when they need it without delay." The Assembly Floor Analysis and Senate Floor Analysis are available from the California Legislative Information website.

Neither employees nor employers, however, are likely to be completely satisfied with SB 1159. Employees will be unsatisfied that the legislation establishes only rebuttable, rather than conclusive presumptions of compensability. Despite the fact that the Legislature recognized that "essential workers" were subject to a greater risk of exposure than the general public, SB 1159 does not cover all essential workers. It establishes a presumption only for specified public safety officers and health-care workers, and allows other "essential workers" to receive a presumption only if there is an "outbreak" at their place of employment under the same conditions as all other workers.

Moreover, SB 1159 expressly covers only regular workers' compensation benefits. It doesn't provide reimbursement for personal protective equipment self-procured by employees or cover costs related to either an employer- or government-mandated quarantine. The Assembly Bill Analysis recognized that many employees, who might have been exposed to COVID-19, may be asked to quarantine by employers who do not wish to risk further exposure to other employees. It recognized that many of these employees ultimately do not test positive for COVID-19 but missed time from work. Nevertheless, it stated, "Any benefit of this sort would be outside of normal workers' compensation benefits, as these not-infected employees never had an industrial disease or condition. The bill does not address this scenario, as it requires either a positive test or physician diagnosis to trigger benefits."

Employer groups objected to the bill, claiming that it will cause many employees, who are not infected at work, to be covered by workers' compensation benefits. Although SB 1159 does not limit the evidence that may be used to rebut the presumptions, the Assembly Bill Analysis states that "the employer would have to 'prove' that the employee affirmatively did NOT become infected on the job." Although the Legislature believed that specifying two types of evidence that could rebut the presumption (that is, safety measures adopted by the employer and evidence of an employee’s nonoccupational risks of COVID-19 infection) would address employer concerns, employers know that in practice, it is virtually impossible to rebut the presumptions as written, because you can't prove a negative.

Most significant, as noted in the Senate Floor Analysis, employers objected to LC 3212.88 as "administratively burdensome, unrelated to actual risk in the workplace, and unworkable for employers." The reporting requirements, particularly those requiring employers to report positive COVID-19 cases retroactive to July 6, 2020, will be problematic. The Legislature essentially has asked employers to report information that they might not have collected at the time and threatened that civil penalties may apply for noncompliance.

Furthermore, the Legislature's instruction that claims administrators must use the information reported by employers "to determine if an outbreak has occurred for the purpose of administering a claim" is ambiguous. The statute does not explain how they must begin administering a claim if they determine that an outbreak occurred. Moreover, the statute requires claims administrators to use information from July 6, 2020 to the effective date of the statute "for the purpose of applying the presumption under this section." But it's not clear if the Legislature intends to equate a claims administrator's notice with the presumption that applies to notice of an injury.

In Honeywell v. WCAB (2005) 35 Cal. 4th 24, the California Supreme Court held that an employer must provide a claim form when it "knows" of an injury or claim, not when it is reasonably certain. It also held that when an employer knows of an injury, the employer bears the burden of informing the worker of his or her possible compensation rights, and of providing a claim form. So, if a claims administrator is aware that the presumption applies, it seems that at the very least, it should provide the employee with a claim form. Whether a claims administrator has any other obligations until the claim form is filed is unclear.

Ultimately, we can expect litigation in the upcoming years regarding the types of evidence that may be used to rebut the presumptions established as well as the duties of an employer and claims administrator when they have notice that an employee has tested positive for COVID-19.

Senate Bill 1127

SB 1127, which was passed in 2022, made several changes affecting injuries or illnesses covered by a statutory presumption. The only change relevant to the COVID-19 presumptions is the adoption of LC 5414.3, which provides increased penalties for unreasonably rejecting claims covered by a statutory presumption.

LC 5414.3(a) states, "Notwithstanding Section 5814, when liability has been unreasonably rejected for claims of injury or illness as defined in Sections 3212 to 3213.2, inclusive, the amount of the penalty shall be five times the amount of the benefits unreasonably delayed due to the rejection of liability, but in no case shall the penalty exceed fifty thousand dollars ($50,000)." Because this penalty is inclusive of the injuries or illnesses defined in LC 3212 to LC 3213.2, it applies to the presumptions for illnesses or deaths related to COVID-19, which are in LC 3212.86 - LC 3212.88.

Although the statute requires the WCAB to determine whether the rejection of liability is reasonable, if the appeals board determines that an employer unreasonably denied a claim, the statute does not give it discretion regarding the amount of the penalty. Unlike LC 5814(a), which gives the board discretion to issue a penalty "up to 25 percent" of the amount unreasonably delayed, up to $10,000, LC 5414.3 states that if liability has been unreasonably rejected for a claim covered by a statutory presumption as defined in LC 3212 - LC 3213.2, the penalty "shall" be five times the amount of the benefits unreasonably delayed, up to $50,000.

Generally, the employer always has a duty to proactively investigate each claim, and denial of a claim without genuine doubt as to liability can result in a penalty (see "Sullivan on Comp" Section 13.14 LC 5814 — Genuine Doubt and Section 13.20 Unreasonable Delay –– Duty to Investigate). The penalty amount of $50,000, however, is much steeper here. In addition, per LC 5414.3(b), employers found to have violated LC 5414.3 "shall be reported to the audit unit within the Division of Workers’ Compensation." So, they could be subject to additional penalties imposed by the Audit Unit. (See "Sullivan on Comp" Section 13.50 Audit Penalty et seq.)

LC 5414.3(c) states, "This section shall apply to all injuries, without regard to whether the injury occurs before, on, or after the operative date of this section." So, although the statute does not go into effect until Jan. 1, 2023, the penalty provisions will apply to all dates of injury. Although employers might challenge the constitutionality of retroactive application of these penalty provisions, previous challenges to retroactive changes that adversely have affected injured workers have been upheld as an exercise of the Legislature's plenary power of the workers' compensation system under the California Constitution. (See "Sullivan on Comp" Section 1.9 California Constitution.) So it's unlikely that constitutional challenges to the penalty provisions will be successful.

The Senate Floor Analysis addressed SB 1127's penalty provision and noted, "Combined with the shortened window for investigation under this bill, employers could face more incentive to accept claims without investigation." So the Legislature recognized that the changes could result in more claims being accepted without a proper investigation. In passing SB 1127, the Legislature clearly wanted employers to accept more claims covered by a statutory presumption.

Accordingly, SB 1127 forces employers to rethink how they approach injuries or illnesses covered by the statutory presumptions under LC 3212 - LC 3213.2. They must be confident that they have a genuine factual, legal or medical basis for denying a claim before doing so. Otherwise, the cost of the denial potentially could exceed the cost of accepting the claim.

Because the changes apply retroactively, parties might want to revisit any previously denied claims. Employers, however, don't have much of an incentive to accept claims covered by the statutory presumptions under LC 3212 - LC 3213.2 that already have been denied. LC 5414.3 does not have a provision like LC 5814(b), which would allow employers to self-impose a 10 percent penalty prior to an employee claiming a penalty under that section in order to avoid larger penalties. So it's likely we will see litigation at the board to establish the parameters of what constitutes an unreasonable denial under LC 5414.3.

See Also

• When Is COVID-19 Work Related?
• COVID-19 Presumptions — FAQs
• The Basic Rule — Increased Risk and the General Public

References

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