When things are going well, insurance coverage, workers’ compensation and OSHA compliance may not be front-burner issues for companies. But in the COVID-19 environment, such “rainy day” topics are top of mind concerns of company leaders and their legal counsel.
While the information included here is focused on North Carolina businesses, many of the topics included may be applicable to companies operating in other states.
Workers’ Compensation and COVID-19: What Businesses Need to Know
The first question many company leaders are asking is “Is COVID-19 covered under Worker’s Compensation?” Gemma Saluta says the answer isn’t always clear-cut.
“It depends on whether COVID-19 is seen as an occupational disease or an ordinary disease of life, like the flu or common cold,” she said. If COVID-19 is seen as directly related to the workplace, then employees could qualify for Workers’ Compensation. Saluta said this distinction can depend on the occupation—for example, workers in professions with a higher exposure risk, such as healthcare or first responders, are more likely to qualify for Workers’ Comp coverage.
Also, many states have a “presumption” rule that COVID-19 is an occupational disease—
Alabama, Alaska, California, Illinois, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New York, North Dakota, Ohio, Pennsylvania, Utah, Vermont, Washington and Wisconsin. The specifics of such rules can vary from state to state. For example, California created a presumption rule for all employees who test positive 14 days after any on-location work, regardless of industry.
Saluta said it remains unclear if the future costs Workers’ Compensation will rise as a result of the COVID-19 pandemic. Obviously, if a large number of infections end up being covered, the costs to employers will go up. But historically, Workers’ Comp claims go down during economic recessions for a variety of reasons, and the same may happen now. But in the short term, Saluta said the costs of existing claims—and premiums for next year—are likely to increase.
Employers also are asking if Workers’ Comp claims apply in a work-from-home setting. Saluta said the key question is, “Does the injury arise out of work?” If the answer is yes, then the illness or injury is likely to be covered in a work-from-home environment.
“Take detailed notes of any injury, including what the employee was doing and where,” Saluta said.
As more businesses reopen, many employers also are concerned about Workers’ Comp issues in on-location work. Saluta said that if employers use questionnaires to collect COVID-19 information for Workers’ Comp issues, they should refrain from asking about underlying conditions. There currently is no clear guidance or safe harbor when considering questionnaires, so employers should tread carefully, including having employees sign any questionnaire. Employers also may want employees to acknowledge receipt of any new COVID-19 policies and safety provisions.
Employers likewise may check employee temperatures (at least as long as COVID-19 remains a serious health threat), but they should be aware of privacy issues and keep this information confidential as a medical record. Companies may require doctor’s notes certifying that an employee is fit to return to work, but understand that such a requirement may not be practical due to the current stress on the medical system.
OSHA’s Updated COVID-19 Guidance
One question many employers are wondering is if heightened concerns about COVID-19 will lead to increased OSHA inspections. But Mason Freeman said that isn’t likely to be the case in most industries.
“OSHA is prioritizing inspections based on high and very high workplace levels for COVID-19 exposure, such as nursing homes and healthcare facilities,” he said. “Most workers will be considered to be in lower or medium exposure risk levels.”
However, he said workplaces should be prepared for OSHA spot checks for social distancing and personal protective equipment (PPE) compliance. “Make sure you’ve written safety policies that take all this into account,” Freeman said.
He also said OSHA is receiving a significant uptick in employee whistleblower complaints related to COVID-19. In these cases, OSHA typically sends a letter asking the employer to address the concerns in a timely fashion.
“It’s important to take these seriously,” Freeman said. COVID-19 violations will be classified as “Serious,” Freeman said, meaning significant penalties may be levied on violators. Failing to respond to OSHA could trigger an inspection not just of the complaint, but of the entire facility.
If an inspection does happen, Freeman said employers should try to narrow the scope of the investigation to the specific complaint. Willful violations are often used as evidence to support significant damages in civil cases.
But given the vast scope of the COVID-19 problem, Freeman said a good-faith effort to comply with safety regulations and address potential concerns can go a long way with OSHA regulators.
COVID-19 Business Insurance Issues
While policies differ by insurance companies and type of business insured, business interruption coverage is commonly sold with commercial property insurance and is designed to protect against the suspension of business operations. Cal Adams, who has nearly four decades of insurance experience, said there is one important thing companies can do now:
“If you’ve suffered a loss of income because of COVID-19, put your insurance companies on notice immediately. There is no downside whatsoever and it won’t cause your premiums to increase. Do this regardless of what your risk manager or broker tells you.” The insurance company is almost certain to deny this initial claim, he said, so companies also should have an experienced insurance attorney carefully review their policy.
Adams also said companies should save all records that document their losses. This documentation is particularly important because policy holders bear the burden of showing that their suspension of operations was caused by “a physical loss or damage.” Some policies may specifically include or exclude pandemic coverage, so companies should check their business interruption policy carefully.
“Make sure you are documenting in real time,” Rachel Keen, the leader of Womble Bond Dickinson’s Insurance Sector Team and a member of the firm’ COVID-19 Task Force, said. “A year from now, you’re not going to be able to recall every email or phone call.”
Other insurance considerations include:
- Contingent business interruption coverage, which insures against supply chain disruption.
- Civil authority coverage, which insures against the disruption of business by government order.
Looking forward, Jonathan Reich said the COVID-19 pandemic is likely to have a significant impact on both insurance law and the insurance industry.
“Historically, after major disasters, lawmakers have changed insurance law or created new insurance vehicles,” Reich said. Such changes in the wake of the COVID-19 pandemic are being considered in a number of state legislatures, with multiple states working to provide retroactive coverage and alter existing policies to provide business interruption coverage. Already, courts are considering a number of lawsuits, including class actions, related to COVID-19 insurance coverage.
No matter where a company is in the reopening process, or what happens in the courts and state legislatures, the time to prepare for COVID-19 related legal issues, including Workers’ Compensation claims, OSHA compliance and insurance coverage, is now. By understanding a company’s obligations and preparing accordingly, business leaders can best position their operations and their employees to weather the current storm.
For information on state-level business closure and reopening orders, please click here.