The Big Question: Can Employers Require Workers to Vaccinate?

COVID-19 vaccine

As the COVID-19 pandemic rages on and more employers bring staff back to the workplace, many businesses are considering implementing mandatory vaccination policies for seasonal flus as well as the coronavirus.

A safe and widely accessible vaccine would allow businesses to open their workplaces again and start returning to a semblance of normalcy. But employers are caught in the difficult position of having to protect their workers and customers from infection in their facilities as well as respecting the wishes of individual employees who may object to being required to be vaccinated. 

The issue spans Equal Opportunity Employment Commission regulations and guidance, as well as OSHA workplace safety rules and guidance. With that in mind, employers mulling mandatory vaccination policies need to consider:

  • How to decide if such a policy right for the company,
  • How they will enforce the policy,
  • The legal risks of enforcing the policy, and
  • Employer responsibilities in administering the policy.

Proceed with caution

A number of law firms have written blogs and alerts on the subject of mandatory vaccinations, and the overriding consensus recommendation is to proceed with caution.

In 2009 pandemic guidance issued during the H1N1 influenza outbreak, the EEOC stated that both the Americans with Disabilities Act and Title VII bar an employer from compelling its workers to be vaccinated for influenza regardless of their medical condition or religious beliefs — even during a pandemic.

The guidance stated that under the ADA, an employee with underlying medical conditions should be entitled to an exemption from mandatory vaccination (if one was requested) for medical reasons. And Title VII would protect an employee who objects due to religious beliefs against undergoing vaccination.

In these cases, the employer could be required to provide accommodation for these individuals (such as working from home).

Additionally, the employer would have to enter into an interactive process with the worker to determine whether a reasonable accommodation would enable them to perform essential job functions without compromising workplace safety. This could include:

  • The use of personal protective equipment,
  • Moving their workstation to a more secluded area,
  • Temporary reassignment,
  • Working from home, or
  • Taking a leave of absence.

One issue that employment law attorneys say may not have any legal standing is if an employee objects to inoculation based on being an “anti-vaxxer,” or someone who objects to vaccines believing that they are dangerous. In this case, depending on which state your business is located, you may or may not be able to compel an anti-vaxxer to get a vaccine shot.

Protecting your firm

To mount a successful defense of a vaccination policy if sued, you would need to be able to show that the policy is job-related and consistent with business necessity. And that the rationale is based on facts, tied to each employee’s job description and that you enforce the policy consistently without prejudice or favoritism.

Also, you must ensure that any employee who requests accommodation due to their health status or religious beliefs does not suffer any adverse consequences. In other words, you cannot punish someone that is covered by the ADA or Title VII for refusing a vaccine.

Also, you will need to project and safeguard your employees’ medical information, under the law.

The takeaway

A number of employment law experts say that once a vaccine is widely available, most employers will likely have the right to require that workers get it, as long as they heed the advice above about the ADA and Title VII. Until then, you may want to consider following the 2009 guidance.

If you do implement a policy requiring vaccination, consider:

  • Fully covering vaccine costs if they are not fully covered by your employees’ health insurance.
  • Allowing employees to opt out entirely if they have medical or religious objections.
  • In the event of a medical or religious objection, you must engage in an interactive process to determine whether the individual’s objections can be accommodated.
  • Including safeguards for keeping your employees’ medical information confidential.
  • Not abandoning your other efforts to keep your workplace safe, such as the use of social distancing, regular cleaning and disinfecting, and the use of personal protective equipment.

Alert: New Law Creates COVID-19 Workers’ Comp Framework

outdoor workers

Governor Newsom has signed legislation that creates a new framework for COVID-19-related workers’ compensation claims.

SB 1159, which takes effect immediately, partly replaces an executive order that Newsom made on March 18 and which expired on July 5. That order required all employees working outside the home who contracted COVID-19 be eligible for workers’ compensation benefits.

The new law also creates a rebuttable presumption that all cases of COVID-19 among front-line workers be considered work-related for workers’ compensation purposes. Finally, the law creates a rebuttable presumption that a workers’ COVID-19 diagnosis is work-related when there was an outbreak in their workplace during the prior 14 days.

The new law is retroactive to July 6, the day after Newsom’s executive order expired, and is set to expire Jan. 1, 2023.

SB 1159’s presumption that an illness or death resulting from COVID-19 has arisen out of and in the course and scope of employment, can be disputed by the employer if they have:

  • Proof of measures they put in place to reduce the potential transmission of COVID-19 in the workplace,
  • Evidence of the employee’s non-occupational risks of contracting COVID-19,
  • Proof of statements made by the employee, or
  • Any other evidence normally used to dispute a work-related injury.

Employers with fewer than five employees are exempt under the statute.

The law also requires new reporting provisions to allow workers’ compensation claims adjusters to track cases to know when the presumption applies and requires a faster review of claims to accept or deny compensability than is typical.

SB 1159’s three parts

The first part codifies Newsom’s prior executive order that provided a rebuttable presumption of work-relatedness to all employees working outside of the home that contracted COVID-19.

The second provides a rebuttable presumption that front-line workers (like firefighters, law enforcement officers, health care workers, home care workers, and IHSS workers) who contract COVID-19, contracted it in the workplace.

The third creates a rebuttable presumption that worker’s COVID-19 diagnosis is work-related within 14 days of a company outbreak. Under SB 1159, an outbreak is defined as when four employees test positive at a specific place of employment with 100 or fewer employees and, for larger places of employment, when 4% of the employees test positive.

It’s also deemed a workplace outbreak if the employer had to shut down due to a coronavirus outbreak.

Reporting requirements

Under the new law, when an employer “knows or reasonably should know that an employee has tested positive for COVID-19,” they must report to the insurer the following information within three business days, via e-mail or fax:

  • The date the employee tested positive.
  • The address or addresses of the employee’s specific place(s) of employment during the 14-day period preceding the date of their positive test.
  • 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 Rossi Law Group has the following recommendations for employers in California:

  • Keep track of all locations each employee works at, the number of employees on each day at each location, as well as a log of those that test positive (including the date the specimen was collected).
  • If you are aware of any staff who have tested positive between July 6 and Sept. 17, you have 30 days after Sept. 17 to report the positive test to the administrator and include the same information as in the bullet points above.
  • You must also report to the administrator positive COVID-19 results for employees that are not filing claims. In that case, you must omit personal identifying information of the employee.
  • Provide any factual information to the administrator that could help rebut any claim of work-relatedness.

The law also has some teeth: Anyone who submits false or misleading information shall be subjected to a civil fine up to $10,000.

One last thing…

The governor also signed into law AB 685, which requires employers to report an outbreak to local public health officials. Employers must also report known cases to employees who may have been exposed to COVID-19 within one business day.

COVID-19 Claims Growing Among California Workers

workers' compensation claims

The number of COVID-19 workers’ compensation claims in California has seen a steady climb, reaching a total of 31,612 from when the pandemic started until the end of July, according to the latest figures from the Division of Workers’ Compensation.

In July, 9,515 California workers filed COVID-19 workers’ compensation claims, as well as 74 coronavirus-related worker deaths ― bringing the total to 140 fatalities. The total claims account for 10% of all claims filed between January and July, despite the first claims being filed only in March.

These numbers are fluid and are certain to grow as more claims are filed after the fact, as there are often time lags in claims filings.

For example:

May claims ― As of July 6, there were 3,889 claims, but as of Aug. 10 the number had risen to 4,606.

June claims ― As of July 6, there were 4,438 COVID-19 workers’ comp claims. But as of Aug. 10, that figure for June claims had more than doubled to 10,528. 

Based on these claims development stats, the California Workers’ Compensation Institute projects there could ultimately be 29,354 COVID-19 claims with July injury dates and 56,082 COVID-19 claims with January through July injury dates.

Who is filing claims?

The top five sectors reporting COVID-19 workers’ compensation claims during the first seven months of the year are:

  • Health care workers (40% of all claims)
  • Public safety/government workers (6%)
  • Retail workers (8%)
  • Manufacturing (7%)
  • Transportation (5%).

Handling workers’ comp claims

In early May, Governor Gavin Newsom signed an executive order extending workers’ compensation benefits to California employees who contract COVID-19 while working outside of their homes during the state’s stay-at-home order.

To qualify for the presumption, all of the following conditions must be met:

  • The worker must test positive for or be diagnosed with COVID-19 within 14 days after a day they worked at your jobsite at your direction.
  • The day they worked at your jobsite was on or after March 19.
  • Your jobsite is not their home or residence.
  • If your worker is diagnosed with COVID-19, the diagnosis was done by a medical doctor and confirmed by a positive test for COVID-19 within 30 days of the date of the diagnosis.

Even when an employee is presumed to have become ill from COVID-19 at work, the employer may dispute that conclusion. In such a case, however, you bear the burden of proving that the injury or illness did not occur at work.

The executive order does not apply to COVID-19-related claims, regardless of date of injury, that were accepted by the claims administrator as compensable prior to May 6.

All of the typical workers’ compensation benefits apply:

Medical care ― Reasonable and necessary medical treatment paid for by your employer to help you recover from an injury or illness caused by work.

Temporary disability benefits ― Payments if you lose wages because your injury prevents you from doing your usual job while recovering.

Permanent disability benefits ― Payments if you don’t recover completely.

Supplemental job displacement benefits ― Vouchers to help pay for retraining or skill enhancement if you don’t recover completely and don’t return to work for your employer.

Death benefits – Payments to your spouse, children or other dependents if you die from a job injury or illness.

The takeaway

If you have an employee who is working on site and who tests positive for COVID-19, you should let them know about their rights to file for workers’ compensation if they miss work and/or need treatment.

The state’s insurance commissioner has approved new rules that bar insurers from using any COVID-19 claims against your experience modifier (X-Mod), so it won’t hurt your workers’ compensation experience if a worker files a claim.

Dealing with Violent Customers Who Refuse to Wear Masks

wearing a mask at work

As many states and municipalities have issued mandatory mask orders for businesses that are open to the public, operators like retailers and restaurants have been thrust into the front lines of reducing the spread of the virus by requiring customers to wear masks when on their premises.

This has led to confrontations that sometimes result in violence — and even in the deaths of some workers.

Due to the volatility of some of these confrontations, the Centers for Disease Control and Prevention has issued a guide for limiting workplace violence associated with COVID-19. The guidance recommends:

  • Offering customers options to minimize their contact with others and promote social distancing. These can include curbside pick-up; personal shoppers; home delivery for groceries, food and other services; and alternative shopping hours.
  • Posting signs that let customers know about policies for wearing masks, social distancing, and the maximum number of people allowed in a business facility.
  • Advertising COVID-19-related policies on your website.
  • Providing employee training on threat recognition, conflict resolution, non-violent response, and on any other relevant topics related to workplace violence response.
  • Putting in place steps to assess and respond to workplace violence. Response will depend on the severity of the violence and on the size and structure of the business. Possible responses may include reporting to a manager or supervisor on-duty, calling security or calling 911.
  • Remaining aware of and supporting employees and customers if a threatening or violent situation occurs.
  • Assigning two workers to work as a team to encourage COVID-19 prevention policies to be followed, if staffing permits.
  • Installing security systems (e.g., panic buttons, cameras, alarms) and training employees on how to use them.
  • Identifying a safe area for employees to go to if they feel they are in danger (e.g., a room that locks from the inside, has a second exit route, and has a phone or silent alarm).

Training on warning signs and response

Employee training on workplace violence typically covers definitions and types of violence, risk factors and warning signs for violence, prevention strategies, and ways to respond to threatening, potentially violent, or violent situations.

Warning signs — As part of training, employees often learn verbal and non-verbal cues that may be warning signs of possible violence. Verbal cues can include speaking loudly or swearing.

Non-verbal cues can include clenched fists, heavy breathing, a fixed stare and pacing. The more cues shown, the greater the risk of violence.

Response — During training, employees also learn how to appropriately respond to potentially violent or violent situations.

Responses range from paying attention to a person and maintaining non-threatening eye contact, to using supportive body language and avoiding threatening gestures, such as finger-pointing or crossed arms.

Consider implementing a “tap-out” system that allows an employee to make a signal for a supervisor or other employee to step in and the at-risk staff member to walk away.

Employee responsibilities guidelines

  1. Attend all employer-provided training on how to recognize, avoid and respond to potentially violent situations.
  2. Report perceived threats or acts of violence to your manager or supervisor, following any existing policies that may be in place.
  3. Remain aware of and support co-workers and customers if a threatening or violent situation occurs.
  4. Do not argue with a customer if they make threats or become violent. If needed, go to a safe area, (ideally, a room that locks from the inside, has a second exit route, and has a phone or silent alarm).
  5. Do not attempt to force anyone who appears upset or violent to follow COVID-19 prevention policies or other polices or practices related to COVID-19 (such as limits on the number of household or food products that can be bought).

Courts Rule COVID-19 Business Interruption Claims Invalid

business interruption

As second court has ruled that an insurer does not have to pay business interruption claims by businesses that saw their revenues run dry due to the COVID-19 pandemic, which will further make it difficult for business to successfully file such claims.

In the most recent case, a Superior Court judge in the District of Colombia in August ruled that an insurer is not obligated to pay business interruption claims of the owner of several restaurants after the mayor ordered all restaurants to close in response to the coronavirus. The judge ruled that in order for the business interruption claims to be valid there must have been physical loss or damage and that the plaintiffs failed to prove any they suffered any such losses.

The ruling comes on the heels of a Michigan state court decision in July that also sided with Michigan Insurance Company in a case brought by the owner of two restaurants whose $650,000 business interruption claim the insurer had denied.

These two cases are closely following the wording of typical business property policies that also include business interruption coverage caused by physical damage.

In the D.C. case, there were several plaintiffs: Lead plaintiff Rose 1 LLC, which is owned by chef Aaron Silverman, and which operates a number of upscale restaurants including Rose’s Luxury, Elaine’s One, Pineapple and Pearl’s and Little Pearl. Other plaintiffs included Buttercream Bakeshop, Karma Modern Indian, El Cucho, Bar Charley, La Vie and Beuchert’s Saloon.

Mayor Muriel Bowser had issued orders on banning indoor dining, for residents to shelter at home and for all non-essential businesses to close. The restaurants filed claims on their commercial property policy with Eire Insurance Company, which included coverage for loss of income and/or rental income from a partial or total interruption of business that results directly from loss or damage to the insured property.

The restaurants after the claim was rejected, arguing that the loss of use of their restaurants was a direct physical loss because the closures were the direct result of the mayor’s orders.

The plaintiffs argued that the losses were physical because the coronavirus is “material” and “tangible.” But, the judge pointed out that the plaintiffs failed to show that the virus was present in their properties and that the mayor’s orders did not materially or tangibly affect the restaurants.

Business interruption cover

Business law attorneys say business around the country have filed hundreds of coronavirus-related business interruption lawsuits after seeing their claims rejected. The issue mainly comes down to policy wording.

Most business property policies also cover business interruption claims, but policies usually specify that there must be physical damage to property. The policies are typically tapped to losses resulting from damage to a business caused by a natural catastrophe. Additionally, most business interruption portions of policies explicitly exclude pandemic.

Most policies require there to be some type of direct physical loss or damage to either your premises or some part of your supply chain in order to trigger business interruption coverage. Without that trigger, insurers would likely argue that a virus in your facility is not physical loss or damage.

But these are early days in the litigation front as more cases are decided and appealed, we should have a clearer picture of COVID-19 business interruption coverage.

More Employers Ask Workers to Sign COVID-19 Waivers, but They May Not Be Legal

sign waiver

As lawsuits against employers continue rising amid the coronavirus pandemic, some businesses are requiring workers to sign waivers absolving them of liability and responsibility should they contract the virus.

Eight percent of executives surveyed by law firm Blank Rome said they would require that their workers sign waivers of liability before returning to the workplace.

While employers are trying to protect themselves from a liability that didn’t even exist a year ago, some human resources legal experts have expressed concerns that they may not be necessary ― and may be unenforceable.

The moves come as employers are wrestling with numerous risks that the pandemic has wrought, and with the U.S. Senate having proposed legislation that would limit the liability of employers for workers who become sick during the pandemic. A number of states have also enacted laws or emergency regulations that make it harder for employees to sue employers for negligence over COVID-19.

COVID-19-spurred employee lawsuits have mostly centered on employers not providing the proper protections for workers, discrimination or for being laid off for refusing to come to work.

Legal experts caution that employers cannot require workers to waive rights they may have, such as access to workers’ compensation benefits or the right to file a complaint with OSHA.

They also say that some employers may consider waivers as a green light to not take precautions against COVID-19, but in such cases the waivers would likely not be legal.

If a worker claims they caught COVID-19 at work and the facts back that up, they would likely have access to workers’ compensation benefits (some states even require it). But if the employer was negligent, the employee could have further legal avenues to pursue besides workers’ compensation, rights that cannot legally be waived, lawyers say.

So even if an employee were to sign a document waiving their right to file a complaint if they feel their employer is being negligent, they may still have recourse.

Requiring workers to sign waivers could present a number of legal issues, according to the law website <i>nolo.com</i>, including:

  • Courts in some states are reluctant to enforce liability waivers in the workplace because of the superior bargaining power of employers over their staff.
  • Workplace morale could suffer if your employees think you are placing your own economic interests above workplace safety.
  • Any waiver employees sign would not protect your firm from lawsuits filed by their families should they contract COVID-19 if staff are infected at work.
  • A waiver might be unnecessary in states that have passed laws granting immunity to employers for claims made by workers infected with the virus.

Another option

While employees who refuse to sign a waiver of their company’s liability may have grounds to challenge their employer, some liability lawyers say that employers instead of a waiver can ask their staff to sign a social contract that requires:

  • The employer to follow Centers for Disease Control and Prevention guidelines and take all necessary precautions to prevent the spread of COVID-19 at work, and
  • The workers to comply with their employer’s requirements on mandates on wearing masks, social distancing and not coming to work if they have symptoms or of they think they have been exposed to someone with COVID-19.

This type of agreement won’t protect an employer from a lawsuit, but it does spell out that they are following authorities’ recommendation for protecting employees.

While employees who refuse to sign a waiver of their company’s liability could have grounds to sue, those who sign this type of acknowledgement of new workplace rules and government guidance are less likely to be successful if they are fired for not signing. This is because the acknowledgement is not forcing them to give up any of their rights and is rather for their and their co-workers’ protection.

These social contracts also would provide workers with a list of their responsibilities when working during the COVID-19 pandemic, and outline what their employer is doing to protect them.

Raft of Bills Would Add New COVID-19 Rules for Employers

workplace safety

The California Legislature is working on a number of new measures to protect workers in the state during the COVID-19 pandemic.

The measures take aim at “holes” in the system that may leave employees who contract the coronavirus on the job without workers’ compensation benefits, footing higher utility bills because of working at home and needing sick leave time available to them should they contract the disease.

Gov. Gavin Newsom said he would work closely with legislators to help the measures become law.

Below we look at the legislative moves that have gained the most traction and are supported by the governor.

Workers’ compensation

There are two bills (one in the Assembly and the other in the State Senate) that would make it easier for employees to be paid workers’ compensation if they contract COVID-19 (presumably on the job).

Assemblywoman Lorena Gonzalez (D-San Diego) has introduced AB 196, which would create a presumption that essential workers who contract COVID-19 were infected while on the job and that the employer would not be able to contest the claim.

Meanwhile, Sen. Jerry Hill (D-San Mateo) has introduced SB 1159, which would require workers’ compensation coverage for COVID-19-related illness or death for employees who contract the virus. The infected employee would not have to prove they had contracted the coronavirus on the job, and would require the employer, if contesting the claim, to prove that it hadn’t been.

The law essentially codifies an executive order made by Newsom in May, but it does not cover new worker claims made on or after July 5.

Both bills are a work in progress and may eventually be merged into one. Hill is talking to labor and business groups about his measure, and which industries would be covered and whether the provisions would be retroactive.

Job-protected leave

Assemblyman Ash Kalra (D-San Jose) has introduced AB 3216, which would prohibit employers from refusing a request for up to 12 weeks of job-protected leave so that a worker can care for a child whose school has been forced to close due to a health emergency declared by a local, state or federal authority.

Easing meal and rest break rules

AB 1492 would allow employees more flexibility in when they can take meal and rest breaks when working from home. The measure by Assemblywoman Tasha Boerner Horvath (D-Encinitas) would also require employers to pay staff who skip those breaks for an extra hour of work.

Employers would also be required to pay for additional equipment and a portion of the workers’ internet and utility bills when working from home. This is because it has been reported that many people who have been forced to work from home are seeing higher usage bills.

Reporting workplace outbreaks

AB 685, authored by Eloise Reyes (D-Colton), would require employers to notify their employees, the Division of Occupational Safety and Health, and the State Department of Public Health of any employee exposure to COVID-19. The notification must be made within 24 hours of when “the employer knew of or should have reasonably have known of the workplace outbreak.”

If the employer fails to notify or notify within 24 hours, they can be subjected to a misdemeanor infraction carrying a $10,000 fine.

Insurers Don’t Have to Pay for Testing Returning Workers: HHS

covid-19 testing

New guidance from the Trump administration absolves insurers of the responsibility of paying for COVID-19 tests that are required for workers who are returning to the job.

The guidance, released by the departments of Health and Human Services, Labor and Treasury, means that employers will likely either have to foot the bill themselves as they screen workers during the pandemic or pass those costs on to their workers. But in states that require employers to test workers, passing testing costs on to staff is usually not an option.

There had been some confusion about who would pay for the tests after the Families First Coronavirus Response Act required insurers to cover COVID-19 tests without patient cost-sharing. The new guidance has added a new caveat to that rule: that insurers cannot require health plan enrollees to pay for the test if it is deemed “medically appropriate” by a health care provider.

“Testing conducted to screen for general workplace health and safety (such as employee “return to work” programs), for public health surveillance for SARS-CoV-2, or for any other purpose not primarily intended for individualized diagnosis or treatment of COVID-19 or another health condition, is beyond the scope of section 6001 of the [Families First Coronavirus Response Act],” the guidance states.

Resistance from advocacy groups

The guidance was met with resistance from employer and consumer groups, with the advocacy group Families USA arguing that the nation’s workers should not be saddled with additional costs during these economically uncertain times.

Employers can require employees to be tested before returning to work, but the Pacific Business Group on Health said it would be highly unusual for a large employer to require testing for employees without paying for the tests in full.

Democrats have asked the administration to withdraw the guidance, but the White House has said it won’t and that it would like to see Congress come up with a solution in its next economic stimulus package for the coronavirus pandemic.

The HHS has said that states should use the $10.25 billion that lawmakers appropriated for testing to help pay for tests of returning workers.

Insurance companies may opt to pay for such tests anyway, as a precautionary measure. America’s Health Insurance Plans, however, is calling on more government support to cover the costs, which it says could be between $6 billion and $25 billion annually.

Commercial Property Insurance Rates Rise as Risks Grow

commercial insurance rates

Commercial property insurance rates are on the rise across the country as insurers continue wrestling with the toll of increasing natural disasters, rising social unrest around the world (including the U.S.) and the COVID-19 pandemic.

Additionally, insurance companies have become more stringent in their underwriting by restricting some coverages and excluding risks that may have been covered in the past.

The rate increases and stricter underwriting are not a function of the COVID-19 pandemic, as rates have been on the rise over the last two years as other risks and claims payouts have grown, but the outbreak has added more pressure to rates.

According to a report in the trade publication Business Insurance, brokers are reporting average property insurance rate increases of 20% for policies that renewed on July 1, 2020. But rate increases are even higher for commercial enterprises that have certain types of occupancies, large and complex sets of risks, a history of losses or natural catastrophe exposure (hurricanes, tornadoes and wildfires, for example), the report states.

As mentioned, insurers have also taken various steps to restrict coverage, including:

  • More strike, riot and civil commotion exclusions (this coverage was common in most commercial property policies).
  • More stringent communicable disease exclusions for business interruption coverage (while most business interruption coverage on property policies excluded pandemic risks, a small portion of policies did not).
  • Reduced coverage for business interruption claims that don’t include physical damage to the business.
  • Reduced limits.
  • Higher deductibles.

Civil disturbance coverage

The recent riots and protests that erupted across the country also caused widespread insured damage as many stores and businesses were looted, set on fire or vandalized.

Coverage of riots and civil disturbances is a standard part of most property policies, and insurance experts estimate the insured damages could surpass $10 billion as the rioting was not just limited to one city.

There had never previously been a civil disturbance event of this magnitude in the U.S. and insurers had not priced the likelihood of it happening across the nation at one time.

Globally, insurers have started introducing exclusions and raising rates after large-scale protests and civil unrest mushroomed in Hong Kong and Chile last year, causing widespread economic damage and disruption

The scale of damage in the U.S. from our own civil unrest has pushed a handful insurers to start restricting or removing coverage for strikes, riots and civil commotion. The change is not industrywide.

Policy and rate changes for this coverage are also based on geography, as the risks of civil disturbances are greater in cities than in suburbs and smaller municipalities and towns.

Businesses can also take steps to mitigate risks, such as installing video cameras for security, as well as burglar alarms and other measures to reduce their premiums.

COVID-19

Terms and conditions are also being tightened due to the COVID-19 outbreak, after a number of insurers were sued for not paying business interruption claims on the grounds that there must be physical damage to the property.

As a result, many insurers introduced more explicit wording to make their infectious disease exclusion “bulletproof,” as one broker told Business Insurance.

Catastrophe exposure

In addition, insurance companies are looking at how much exposure they have to natural catastrophes, and are hence scaling back coverage or pulling out of some markets. They are looking at markets that have exposure to:

  • Hurricanes,
  • Earthquakes,
  • Wildfires,
  • Floods,
  • Storms

For example, in California a number of commercial and personal property insurers are restricting the number of policies they will write in areas that are at risk from wildfire. Some are also requiring that property owners create buffer areas around their buildings to reduce the chances of them catching fire during an event.

The takeaway

As a business property insured, you will want to do all you can to make your organization as insurable as possible in order to enjoy the best rates. That means taking measures to mitigate risks and following insurers’ recommendations.

That could include installing security cameras and alarms, as well as sprinklers and other fire prevention systems. If your business is exposed to a regular natural catastrophe, you should also take steps to reduce the chances of your property being damage or destroyed.

New Emergency Workers’ Compensation Rules Take Effect

Workers' Compensation Policy

The Department of Insurance has approved emergency workers’ compensation rules dealing with COVID-19 and California employers.

The rules were recommended by the Workers’ Compensation Insurance Rating Bureau to bring fairness for employers’ experience rating during the COVID-19 pandemic amid shelter-at-home orders and for dealing with claims of workers who contract COVID-19 on the job. The following new rules took effect July 1:

1. Classification changes for staff working from home

As a result of the California stay-at-home order, many employers have altered employees’ duties so they can be accomplished from home, and often those duties are clerical-like in nature.

Under the rule, an employee can be assigned payroll classification code 8810 if:

  • Their duties meet the definition of a “clerical office employee” while working from home, and
  • Their payroll for the balance of the policy period is not assignable to a standard classification that specifically excludes clerical office employees.

There are a number of other classifications that already include clerical operations in their definitions, and those classifications would not be eligible for a change.

If you are reclassifying any employees to 8810, make sure to document all changes and maintain records of those changes. This rule is effective for as long as the statewide state-at-home order by Gov. Gavin Newsom is in effect, and 60 days after the order is lifted.

2. Non-working, paid staff

Salaries paid to workers who are at home not working, yet still collecting a paycheck, will be excluded from payroll for workers’ comp premium calculation purposes when the payments are less than or equal to the employee’s regular rate of pay.

Again, make sure you document these payroll disbursements and maintain records to show they were not working, so that they are not chargeable to your workers’ comp policy.

3. COVID-19-related claims

All claims directly arising from a diagnosis of COVID-19 shall not be reflected in the computation of any employer’s experience modification.

The Rating Bureau said in proposing this change that the since the occurrence of COVID-19 workers’ compensation claims are unlikely to be a strong predictor of future claim costs incurred by an employer, their inclusion in X-Mod calculation would not meet the intended goal of experience rating.

The takeaway

Now that these rules have taken effect, if you are having employees work from home you need to assess if the duties they are performing are largely clerical in nature and discuss with your carrier or us whether you should change the code to reflect their new duties and reduced risk of occupational injury or illness.

You will need to document those changes and keep careful records, as the change would likely affect your premium.

Additionally, under a second Newsom order, it will automatically be presumed that any employee who is working on-site and contracts COVID-19 caught the virus in the scope of their work.

Those claims will be eligible for workers’ compensation benefits under the order. But under the Insurance Department’s decision, any COVID-19 workers’ compensation claims will not affect an employer’s experience and X-Mod.