Workers’ compensation insurance was created at the beginning of the 20th century as a ‘grand bargain’ to provide guaranteed, no-fault benefits to employees who are injured, fall ill or die on the job in exchange for forfeiting their rights to sue their employer for additional sums.
As workplaces reopen while the Covid-19 pandemic continues to infect individuals throughout the country, employees, employers and state governments are considering whether and how to apply workers’ compensation insurance to a widespread and difficult-to-trace virus.
This article will discuss varying approaches state governments have taken to apply the workers’ compensation system in the context of the Covid-19 pandemic. It will also address key employment considerations in light of difficulties that will necessarily arise in determining how and where employees may contract the virus.
NO-FAULT BENEFITS
Under the workers’ compensation regime, employees receive guaranteed, no-fault benefits for employment-related injuries, illnesses and deaths but forfeit their right to sue their employer. Workers’ compensation provides cash and medical benefits to employees who are injured or become ill in the course of their employment and provides cash benefits to the survivors of workers killed on the job. In exchange, employers receive protection from lawsuits but must provide benefits regardless of fault.
Many states have statutory and/or common-law exceptions to this principle, allowing employees to bring civil lawsuits for workplace injuries and illnesses under certain circumstances, such as lawsuits for intentional injuries, gross negligence in fatal accidents or fraudulent concealment.
As a result, employers frequently buy employers’ liability insurance to provide coverage for employee injuries that is in excess of what is covered by workers’ compensation, as well as other employee claims that may not be covered by workers’ compensation, including the defense costs associated with any employee lawsuits.
WORKERS’ COMPENSATION AS APPLIED TO DISEASES AND VIRUSES
Generally, when determining whether workers’ compensation will cover a particular disease, the critical questions are whether:
- ‘the employee can show that the employment exposed the worker to a greater risk of contracting the disease than the public generally’
- ‘the employment significantly contributed to, or was a significant causal factor in, the disease’s development’ (Stephen Brunette, Cause of action to recover workers’ compensation benefits for occupational disease, 15 Causes of Action 61, originally published in 1988, updated May 2020).
In every state, the injury or illness that triggers workers’ compensation benefits must be work-related and arise out of and in the course and scope of employment – the general test for which is whether the employee was exposed to harm while engaged in some activity for the benefit of the employer.
An employee’s injury or illness may be presumed to be work-related if, based on factual medical evidence, the injury is of a type that was caused in the workplace. Some jurisdictions reject this presumption for ‘ordinary diseases of life’, such that maladies like the common cold or flu are excluded from coverage.
In summary, occupational disease and illness must generally be incurred as a characteristic directly pertaining to the employee’s trade, occupation or industry in order for workers’ compensation coverage to apply. But in the wake of the Covid-19 pandemic a number of states have amended their workers’ compensation laws to provide that Covid-19 infections in certain employees are presumed to be work-related and covered by workers’ compensation.
COVID-19-RELATED PROPOSALS
Generally speaking, workers’ compensation coverage is no-fault, which means that absent applicable legislation at the state level, an infected employee may have a compensable claim if she or he can show that she or he contracted Covid-19 after an exposure peculiar to the workplace, and that she or he was not exposed to the virus outside the workplace.
But due to the contagiousness and prevalence of Covid-19, as well as the various modes of transmission – including by asymptomatic carriers – it will be difficult if not impossible for both employees and employers to identify from where an employee contracted the virus.
As a result, as states have begun to reopen, employers and insurers may take the position that employees contracted Covid-19 outside the workplace. This has led a number of states to adopt measures to address the impact of Covid-19 in the workplace by modifying the current workers’ compensation framework and extending coverage to certain types of employees.
First, several states have made it easier for first responders and medical professionals who are infected with Covid-19 to obtain workers’ compensation coverage. For example, Minnesota in April adopted legislation providing that first responders, childcare workers, healthcare providers and corrections workers who contract Covid-19 are presumed to have an occupational disease arising out of and in the course of employment.
Second, other states have expanded the rebuttable presumption to apply to a much larger set of employees, such as those working in grocery stores, pharmacies or other businesses that remained open during the Covid-19-related ‘stay-at-home’ orders.
In June, for example, Illinois adopted a rebuttable presumption of compensable injury for ‘first responders or front-line workers’, who are defined as ‘all individuals employed as police, fire personnel, emergency medical technicians or paramedics; all individuals employed and considered as first responders; all workers for healthcare providers, including nursing homes and rehabilitation facilities and home care workers; corrections officers; and any individuals employed by essential businesses and operations.’
The employer may rebut the presumption by, for example, showing that: (i) the employee worked from his or her home or was on leave for a period of 14 or more consecutive days immediately prior to the infection; (ii) the employer complied to the fullest extent practicable with applicable health and safety practices and guidance; or (iii) the employee was exposed to Covid-19 by an alternate source.
California Governor Gavin Newsom issued an executive order on May 6, 2020 adopting an even broader rebuttable presumption. Under that executive order, any Covid-19-related illness of any employee will be presumed to arise out of and in the course of employment for purposes of workers’ compensation benefits, provided 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 employer’s place of employment (other than the employee’s home or residence) and at the employer’s direction. The employer may present evidence to rebut this presumption.
The executive order expired after 60 days, on July 5. California enacted subsequent legislation on September 17 that creates a rebuttable presumption for first responders, as well as for employees who contract Covid-19 after an outbreak at their place of employment.
Third, some states have proposed a conclusive presumption of workers’ compensation coverage for a wide range of workers who contract Covid-19. To date, no state has adopted a conclusive presumption but, under such proposals, workers’ compensation coverage would be available for at least certain essential workers, even if the employees were exposed to Covid-19 outside the workplace.
Other states have taken different approaches. For example, the New York Workers’ Compensation Board issued guidance on June 7 explaining that workers ‘can demonstrate the significantly elevated risk in their workplace by demonstrating the nature and extent of their work in an environment where exposure to Covid-19 was prevalent.’
The guidance identified healthcare workers, first responders, transportation workers, corrections officers and food service workers as workers more likely to be able to establish a workers’ compensation claim because those employees generally work closely with the public in locations where Covid-19 exposure may be documented. The guidance also identified retail workers as individuals who may have claims if they directly interact with the public while working.
In addition, Arkansas has suspended the preclusion of benefits for ‘ordinary diseases of life’ to which the general public is exposed for front-line healthcare workers and first responders. These employees may therefore be covered by workers’ compensation for time lost due to Covid-19, but to qualify for benefits these workers must still prove a causal connection between their employment and contraction of the virus.
EMPLOYEE AND EMPLOYER CONSIDERATIONS
Employees who become infected with Covid-19 may submit workers’ compensation claims or file private lawsuits against their employers depending on the employees’ individual circumstances and the applicable regulations in their jurisdiction.
For example, a grocery store worker who cannot prove she was infected on the job and lives in a state that has enacted a rebuttable presumption of compensable injury or occupational disease may very well file a workers’ compensation claim, in light of the likelihood of coverage and significant risks of a private lawsuit against her employer.
On the other hand, a grocery store worker whose employer did not adopt the recommended safety protocols and who has a strong case that she contracted the virus from a co-worker with whom she had direct contact may choose to forego a workers’ compensation claim in favor of a private lawsuit that would provide greater remedies were the employee to prevail.
For this reason, many employers may choose not to oppose workers’ compensation claims submitted by employees who contract Covid-19 – even where it would be difficult for the employees to establish that their contraction of the virus was work-related – in order to gain protection from lawsuits seeking damages beyond the payments provided as workers’ compensation.
Even if employers were to prevail in those lawsuits, the costs of litigating them to conclusion (or settlement) may exceed the amounts of workers’ compensation coverage. Moreover, although employers’ liability insurance may cover these lawsuits, the policies generally limit the amount of such coverage to pre-agreed per claim and/or aggregate liability caps.
RAPIDLY EVOLVING AREA
The application of workers’ compensation insurance to the Covid-19 pandemic is a rapidly evolving area as businesses continue to reopen throughout the country and states consider new approaches to potential coverage. Employees and employers should carefully consider the currently applicable state requirements and local regulatory actions before deciding whether to pursue, or contest, a workers’ compensation claim based on the transmission of the Covid-19 virus.
Ann-Elizabeth Ostrager is a partner, Roderick Gilman Jr is a special counsel and Julia Long and Jacob Singer are associates with Sullivan & Cromwell
