News & Press

Governor Newsom issues Executive Order creating workers' comp presumption for COVID-19 claims

Today Governor Newsom issued Executive Order N 62-20 creating a workers' comp presumption for COVID-19 claims

AGC has been engaged in discussions with the Governor’s office about our concerns over the Executive Order creating a workers’ compensation presumption for COVID-19 illness contracted at the workplace by essential workers for several weeks now. As you know, we sent an Alert early in the process to AGC members requesting that you contact the Governor and your legislators about the negative impact a workers’ compensation presumption would have on overall costs. Thank you to those who supported this effort.

AGC contractors have the right to be outraged at the Governor’s Executive Order to allow COVID-19 cases to be presumptively determined to be work related in our industry.  We continue to have significant concerns over the order’s impact on our industry and the health of the state’s business climate.  Our ongoing advocacy, however, did result in some substantive concessions from the language currently being pushed by the Legislature, and in the early discussions on this order. While our preference would be to have no presumption, if there is to be one, it needed to have limits.  The presumption could have been conclusive and open ended, but instead it is rebuttable and of limited duration. Lastly, it includes limitations to reduce costs by ensuring that sick leave benefits are credited against the workers compensation benefit.

We will now have to take this battle to the legislature where they are considering far more draconian expansions of California’s workers’ compensation laws and applications.

The Executive Order: The Order creates a rebuttable presumption on all employers for any employee that contracts COVID-19 regardless of their employer or industry. The presumption would apply to any worker who reported to work outside of the home at the direction of their employer and received a positive test or a diagnosis from a California licensed physician with a diagnosis for COVID-19 within 14 days of the worker's last day working outside the home.  Note that if the claim is based on a physician's diagnosis it would require a subsequent positive test within 30 days to continue to the claim.

  • The Executive Order presumption rules will be in place from March 19 to July 5.
  • Diagnosed workers would receive all workers' comp medical and indemnity benefits. Rules on apportionment would remain unchanged as would the UR/IMR process. It would not include things like housing and living expenses (these are included in some of the proposed legislation).
  • The Executive Order reduces the timeframe to make a compensability decision from 90 days to 30 days. It also permits denials after this timeframe based on new information.
  • Injured workers would only be eligible for TD benefits after the worker uses all available state and federal sick leave benefits.
  • There would be no death benefit.

Context: California’s workers’ compensation law is liberally construed in favor of the injured worker and has been from the very beginning in the early 1900's. If an illness can be proved to be caused by the work environment it is compensable. The largest workers’ compensation carrier in California has publicly stated that it would accept COVID-19 cases as being work related illnesses with the full benefits that the workers’ compensation system has to offer.

There is active talk of litigation by our members and California Business community partners challenging the Governor's authority to issue such an order. We are actively reviewing what that outcome might look like and what situation that puts the contracting community in if successful. If the Executive Order were overturned by the courts, it would throw the issue back into the hands of a Super Majority Democratic Legislature and Assembly Member Lorena Gonzalez who already has legislation pending that goes far beyond the order. Keep in mind, she was the successful author of AB 5 on independent contractors.  It should be acknowledged that the Governor made clear his intent to reach a middle ground considering workers interests with the potential cost impact his order would have on employers.

AGC is a member driven association, however, we need to point out the facts. Having contractors come out of this pandemic completely unscathed while the Governor has considered construction an essential service is not in the cards.

Impact on Rates: A recent Workers’ Compensation Insurance Rating Bureau study on a more expansive version of a presumption legislation indicated that it would cost the system roughly $11.5 billion. There has been no such cost impact done on the Executive Order. The order does attempt to contain costs by placing limits, however, its actual costs may still be significant. It is also uncertain if claims will affect individual policy experience modification rates. We will have more information on this later.

Going forward: Contractors should diligently follow adopted safety protocols and PPE to minimize exposure. The more documentation employers have on safety protocols in the workplace, the stronger an employer’s case will be to rebut those cases that you believe were not contracted at the workplace. Construction by nature has virtually no exposure to the general public at the workplace. This reality coupled with our safety and health protocols and personal distancing protocols should limit legitimate claims relative to other industries. Details to come later as we learn more.