By Lisa Aguiar and Mike Sullivan

What a burden!

California Senate Bill 1159 establishes a rebuttable presumption that illness or death resulting from COVID-19 is compensable for front-line workers and employees who contract the virus from a workplace outbreak. This “presumption bill” beleaguers California’s employers, most significantly for its reporting obligation to third-party administrators.

When an employer knows or should know of a positive COVID-19 test within its workforce, it must inform its TPA. Then it must report the number of employees at each “specific place of employment.” The obligation is retroactive. The TPA must determine when and where there has been an outbreak, and include that information in any filed claims.

The complexities of the reporting requirements are described in Navigating COVID-19: A Legal Guide for California Employers,” our regularly updated e-book.

Thanks to SB 1159, TPAs are scrambling to create portals for reporting, and employers are trying to figure out how they can possibly provide all the required information.

The legislation rubs salt in the wound by demanding these reports even if no claim is ever filed against the employer, and if one is, whether the outbreak presumption applies.

And now comes Assembly Bill 685, which places the additional burden of expanded notification to employees and others when there is a COVID-19 case. It requires employers to report the circumstances to local health organizations … in addition to their OSHA reporting requirements.

Our clients want to bypass the reporting process. If an employer decides in advance to accept every case, [do you mean “claim”?] it has been suggested, no reporting is necessary. After all, the point of reporting is to determine whether there is an outbreak, and if so, whether there’s a presumption of compensability. If every claim is accepted, the thinking goes, no presumption could apply. Or, an employer might decide simply to accept that there’s a presumption in every time. Again, no reporting would be necessary.

We analyzed this prospective strategy in terms of its legality and, apart from the application of the presumption, the penalties for employing it. We determined that: (1) this is not a strategy permitted by the statute, and (2) the penalties for failing to report as required are severe.

Labor Code 3212.88(j) states: “An employer or other person acting on behalf of the employer who intentionally submits false or misleading information or fails to submit information when reporting … is subject to a civil penalty in the amount of up to … $10,000 to be assessed by the Labor Commissioner.”

LC 3212.88(i) states: “When an employer knows or reasonably should know that an employee has tested positive for COVID-19, the employer shall report to their claims administrator in writing via electronic mail or facsimile within three business days all of the following:

 

  1. An employee has tested positive.  For purposes of this reporting, the employer shall not provide any personally identifiable information regarding the employee who tested positive for COVID-19 unless the employee asserts the infection is work related or has filed a claim for pursuant to Section 5401.
  2. The date that the employee tests positive, which is the date the specimen was collected for testing.
  3. The specific address or addresses of the employee’s specific place of employment during the 14-day period preceding the date of the employee’s positive test.
  4. The highest number of employees who reported to work at the employee’s specific place of employment in the 45-day period preceding the last day the employee worked at each specific place of employment.”

 

The reporting obligation is not conditional; that is, it is required regardless of whether a claim is filed, whether any presumptions apply, or whether there’s a finding of compensability. The reporting is a precursor to filing any claim or concluding that a presumption exists. Although it’s logical that no reporting is required if all claims are accepted or accepted as presumptively compensable, the law does not bless this approach.

An employer could be liable for both intentionally submitting false or misleading information, and for failing to submit required information. The $10,000 penalty probably would be interpreted to apply to every instance of submitting intentionally false and misleading information or failing to submit the required information.

The process for the Labor commissioner to issue a citation and the employer to contest it is formidable. The commissioner issues the citation (including the penalty), the employer elects to pay or appeal it. If appealed, there’s a hearing. The employer may file a writ of mandate if it disagrees with the hearing results. 

So, the financial risk is serious, depending on the number of COVID-19 cases that might occur.

Our advice: Bite the bullet. Report as required.