As California businesses slowly begin to resume operations, Gov. Gavin Newsom has issued a new Executive Order expanding workers’ compensation benefits to all industries for 60 days – a move that business groups say includes an unverifiable presumption that workers diagnosed with COVID-19 contracted it on the job.
The order will extend the benefits – originally given to first responders and health care workers – to anyone working outside the home during the stay-at-home order. The presumption will be that workers developed the virus at work, which employers will have the opportunity to rebut, according to a news release from the governor’s office.
But a blanket assumption that someone got COVID-19 on the job is unreasonable, John Kabateck, California state director with the National Federation of Independent Business (NFIB) said in an email response to the Northern California Record.
"Small-business owners desperately don’t want to appear insensitive to the governor’s extending workers’ compensation benefits to essential workers, but they can’t help but wonder at what cost it will be to them. Right now, they have no legal protection against either employees or customers claiming, without having to prove, they contracted COVID-19 while at their place of business,” Kabateck said.
"Workers’ compensation, it must always be pointed out to people unfamiliar with the issue, has nothing to do with an employee’s salary or benefits. It’s an insurance policy the law requires every employer to have to pay for the medical care, rehabilitation, and lost wages of workers injured on the job. So, it’s a cost of doing business—and not a small one.
"When NFIB last polled its members on the 75 issues of concern to them, the cost of workers’ compensation insurance premiums ranked 13th, a five-point jump in worry from its previous ranking of 18th. Nearly 20 percent rated it as a critical concern,” Kabateck added.
The executive order is key to California’s Phase 2 reopening plan, Newsom said in the news release.
“Workers’ compensation is a critical piece to reopening the state and it will help workers get the care they need to get healthy, and in turn, protect public health,” Newsom said.
Right after the executive order announcement, California Business Roundtable president Rob Lapsley issued a statement that lauded the efforts of frontline workers but also called on the governor to acknowledge the business community’s need for relief from litigation costs during the health crisis.
“Over the past five weeks, the statewide business community has clearly communicated united opposition to the governor regarding any potential changes especially regarding a rebuttable presumption to the workers’ compensation system by executive order.
“With today’s executive order, Governor Newsom has bypassed the Legislature and increased costs on employers precisely at the same time businesses are trying to rehire employees to restart the economy. This will ultimately impact communities of color who are the foundation of small business employees and business owners in California,” Lapsley said.
More costs could ultimately mean fewer businesses.
“It doesn’t take an MBA to know [workers’ comp] premium increases are unavoidable,” Kabateck said.
“Add to this expected increases in the unemployment insurance taxes employers also have to pay, the Assembly Bill 5-enforced prohibition against rekindling relationships with independent contractors, menacing compliance headaches with state’s new and future data privacy laws, increased potential for lawsuits from many angles, and the better question to ask than 'When will California reopen?' is 'Why would any small-business owner want to reopen.'”