On May 6, 2020, Governor Gavin Newsom signed an executive order N-62-20 extending workers’ compensation benefits to employees who contract COVID-19 while working outside of their homes during California’s stay-at-home order. The order is retroactive to March 19, 2020 and extends through July 5, 2020.
For nonprofits and for-profit businesses alike, this executive order has caused considerable confusion around which Covid-19-related claims will and will not be covered by workers compensation insurance. How can an employer determine if an employee contracted Covid-19 from a customer or employee peer or a family member? If an employee tests positive, how can an employer know when the employee contracted the virus and if the transmission occurred while working outside of the home?
Workers Compensation issues are especially challenging for nonprofits organizations because a large portion of their employee workforce consists of volunteers who may or may not be covered by the organization’s workers compensation policy.
In this article, we’ll try to demystify how workers compensation works, explain how claims effect your organization, and offer resources to help you comply with this newest executive order while keeping your employees and volunteers safe.
What is Workers Compensation?
Workers’ compensation is legally required for any California business – for profit or nonprofit – that has at least one paid employee. Specifically, workers compensation insurance pays for occupational injury and illness that an employee suffers while functioning as an employee and is often a small organization’s single most expensive line of insurance coverage. How much a business pays for its workers compensation depends on its “experience rating”.
Experience rating is an evaluation method in which an organization’s workers compensation policy premium is adjusted up or down to reflect previous loss (or claims) experience. Essentially, the experience rating assumes that the number of claims made against your workers compensation policy is a predictor of future claims. In order for insurance companies to remain financially solvent, insurers must charge sufficient premiums to pay anticipated claims. Therefore, if your organization has a few workers compensation claims and, thus, a higher experience rating, your policy premiums will be increased in anticipation of more claims.
How does will a workers compensation claim affect my nonprofit?
The higher the payroll and the fewer dollars paid out for workers compensation’s claims, the lower the policy’s experience modification – and premiums – will be. The lower the payroll and the greater dollars paid out for claims, the higher the policy’s experience modification – and premiums – will be.
Generally, workers’ compensation claims can have less of an effect on large organizations than they do on smaller organizations. The reason for this is that larger organizations have higher payrolls and pay proportionately less of that payroll in claims. Larger companies also tend to have a well-enforced safety programs and policies and designated employees who oversee safety and claims management.
Conversely, smaller nonprofits often have far fewer paid employees and much smaller payrolls while relying heavily on volunteers. Therefore, a single workers compensation claim can dramatically impact an organization’s experience modification. Reliance on volunteers adds an added risk as some workers compensation claims protect volunteers and some don’t. When a volunteer is hurt while working in service to the nonprofit and volunteers are not sufficiently covered in the workers compensation policies, lawsuits have been filed. (Example: a volunteer is helping to serve at an outdoor fundraising event and trips and breaks his/her leg.) What many nonprofits fail to understand is that insurers are legally allowed to sue any parties considered at-fault for a claim to recoup expenses – without the permission of the injured party. Meaning that, yes, your volunteers don’t want to sue your nonprofit, but the insurance company that is paying his/her medical bills can do it anyway if the insurance company considers your organization responsible for the accident.
Protecting your nonprofit, employees and volunteers.
- If your board of directors hasn’t reviewed your organization’s workers compensation policy lately, agenda a review for your next board meeting.
Invite your insurance agent or broker to participate in this discussion. At the very least, designate someone to thoroughly review the policy with your agent or broker prior to the board meeting and prepare a report for board discussion. Does your policy cover volunteers, too? In which capacities? At events? While working in your offices only? While driving their own cars to pick up supplies for your programs? What about volunteers who are fulfilling office roles remotely?
- Review and change relevant policies to minimize safety risks, as well as potential claims or lawsuits.
Remember to review all policies that protect both employees and volunteers. Will your workers compensation policy cover employees and volunteers who are suddenly working at home? Does your organization have a telecommuting policy in place that requires employees (and volunteers) to have a designate safe workspaces in their home with proper egress in case of fire and no tripping hazards? (Spokes has one to share!) Do you need to limit who is allowed to drive his/her personal vehicles in service to the organization? Do you have clear protocols outlined in your employee handbook about when and how to report an accident that may result in injury?
- Make sure your organization is up-to-date with all federal, state and local guidelines for Covid-19 safety procedures – and carefully and consistently adhering to them! Here are a few websites with helpful resources and links.
- San Luis Obispo Chamber of Commerce, https://slochamber.org
- When an Covid-19-related workers compensation claim is brought to your attention, use this helpful “Covid Presumption Flowchart” published by the Cal Chamber’s HR Watchdog program and the Law Offices of Mullen & Filippi to determine if the illness or injury falls within the guidelines of Executive Order N-62-20 and how to proceed.
The Covid-19 pandemic is forcing all business to carefully re-examine the way they work. It’s a challenging and sometimes painful process, however, it presents us all with an opportunity to ensure that we are doing our good work responsibly, efficiently and effectively.
As always, please contact Spokes if you have any questions or need additional guidance around the recommendations made in this article. We are also including a couple of helpful links to additional information that may be of interest to you: