Gov. Gavin Newsom signed a controversial executive order Wednesday triggering applause from labor and fears from employers that it will bury them in sky-high workers’ compensation costs.
“We want to keep workers healthy and we want to keep them safe,” Newsom said Wednesday at his daily briefing. “The worst thing we can do is have a worker spread (disease) because he or she can’t afford not to go to work.”
Newsom’s order allows employees across California’s economy to apply for worker’s compensation if they contract the coronavirus with a presumption that it’s work-related — unless employers can prove otherwise.
Order’s Cost to Employers: $2.2 Billion to $33.6 Billion
The presumption is retroactive to March 19 and covers the next 60 days. Employees — including nurses, janitors, first responders, supermarket workers, and farmworkers — are eligible if they tested positive for the coronavirus within 14 days after being at work. They must use up other state and federal benefits to be eligible.
In a nutshell, the governor’s order reverses the workers’ comp system with a new legal presumption that the infection was job-related unless employers can show otherwise. According to the state’s Workers Compensation Insurance Rating Bureau, this change could cost employers anywhere from $2.2 billion to $33.6 billion a year. The mid-range estimate is $11 billion.
Many farming and business groups vigorously opposed the order, saying it would drive up operating costs when many businesses are seeing large drops in revenue because of the pandemic-related lockdown.
“Just as in the rest of society, the effects of the pandemic have reverberated throughout rural California,” California Farm Bureau Federation Jamie Johansson said Wednesday. “There’s no aspect of farming, ranching, or agricultural business that has been spared.”
The order “will unnecessarily and significantly drive up costs for California employers through increased workers’ compensation insurance rates at a time when they are struggling to keep Californians employed,” the California Chamber of Commerce said in a statement. “The private sector did not cause this crisis and it should not be the safety net used to pay for this crisis — that is the role of government.”
American Property Casualty Insurance Association President David A. Sampson said the order potentially “jeopardizes the stability of the workers’ compensation system.”
The chamber also noted that many employees are covered under the federal Pandemic Unemployment Assistance Program.
Labor Groups Praise the Executive Order
But Art Pulaski, executive secretary-treasurer of the California Labor Federation, praised Newsom’s action.
“California continues to set the national standard for worker protection during this crisis,” Pulaski said in a statement. “Gov. Newsom’s order today adds a vital layer of protection to essential workers putting their lives at risk to provide for our families during this pandemic.”
April Verrett, an SEIU executive board member, also said that the governor did the right thing.
“The last thing an ill worker or the family of a fallen worker needs is to spend months in court to secure the health care and other benefits they need to keep food on the table during the hardest time in their lives,” Verrett said.
Victoria Hassid, chief deputy director at the California Department of Industrial Relations that oversees the program, said the state will provide more details in coming days.
(Associated Press contributed to this article.)