California Legislature Passes SB 1159

Below is an overview of California’s Senate Bill 1159 which was just passed and signed into law. This will absolutely have an impact on Workers’ Compensation claims and rates in California. 

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California’s Legislature has passed Senate Bill 1159, creating presumptions of workers’ compensation compensability that last until January 1, 2023, and apply retroactively to July 6, 2020. Click here to view the bill text. We do expect California Governor Gavin Newsom will sign it into law. SB 1159 was opposed by a broad coalition of industries, trade groups, and municipalities. Here is what you need to know about the new law and what you can expect.

SB 1159 contains five sections. Sections 1, 2 and 5 can be reviewed in brief. Section 1 authorizes a year-long study of COVID-19 impacts on the workers’ compensation system. Section 2 codifies into law provisions of an Executive Order (EO) Governor Newsom issued covering dates of employment from March 19, 2020, to July 5, 2020, and clarifies that claims made during that period will continue to be handled under the same rule set until January 1, 2023. Section 5 states that SB 1159 is enacted as an “urgency statute,” thus allowing it to take effect immediately and retrospectively. Sections 3 and 4 are more complex and are summarized below.

Section 3 applies a disputable presumption of workplace compensability until January 1, 2023, for anyone infected with COVID-19 who works as a firefighter, peace officer, or in a broadly-defined set of health care professions (see pages 6-7 of SB 1159). This section (and Section 4 described below) applies to pending matters, but cannot be used to re-open previously settled claims. To qualify for the presumption, workers must receive a positive “PCR” test (not an antibody test) for COVID-19, within 14 days of working at a place of employment on or after July 6, 2020, and within 14 days of their termination from employment. 

Although disputable, Section 3 contains no explanation for how such a dispute can be supported, and a claims administrator must determine compensability within 30 days (compared to the normal 90 days). All usual workers’ compensation benefits are due, except that paid sick leave benefits created specifically in response to COVID-19 (e.g., through the CARES Act or certain state laws) must be exhausted before temporary disability is paid, and the state waives any right to collect death benefits for workers who die without dependents.

Section 4 applies to all other businesses in California that have more than five employees. Statutory duration, benefits owed, testing, and the disputable nature of the presumption are the same as Section 3, but there are key differences:

• The presumption arises only if there is an “outbreak,” which is defined as four or more positive tests in a “specific place of employment” where the employer has 100 employees or fewer, otherwise the outbreak trigger is 4% of employees, all within 14 days of the worker being in that “specific place of employment.” (See page 13.)
• “Specific place of employment” is defined to encourage separation of work units by building, facility, agricultural field, etc. (see page 13). This helps employers who diligently and consistently divide work crews because the “outbreak” presumption will not carry across carefully divided work units. Note: We consider this to be a critical section for employer attention as careful, consistent practices can control virus spread, lower the likelihood of a workplace shut down, and minimize the risk of the application of outbreak presumptions.
• Guidance is provided that evidence to rebut the presumption can include showing: (i) there were “measures in place to reduce potential transmission”; and (ii) the employee had “nonoccupational risks” of infection (see page 10). Note: This section encourages safety at work and knowledge of employee activities outside work.
• Compensability decisions must be made within 45 days.
• There are complex employer reporting rules, requiring continuous reporting of positive test results to the claims administrator so the presence of an “outbreak” can be determined. Employers are required to retroactively report positive tests back to July 6, 2020, to determine if any presumption existed between then and the time the law passed. (See pages 10-12.) Note: These reporting requirements are new, burdensome, and enforceable through imposition of civil penalties. We strongly encourage employers and their advisors to carefully review these provisions.

SB 1159 makes significant changes to California workers’ compensation system. We have been tracking this legislation from day one, offering changes and suggestions that improved the final result, understanding that such influence from the industry perspective is limited by political realities.