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Returning to Work: COVID-19, Workers' Compensation, and Employee/Consultant Waivers

For further information, please visit the White & Case Coronavirus Resource Center.

As states allow businesses to reopen and employers begin returning to the workplace, questions arise regarding the potential liability of employers if employees and consultants contract COVID-19 in the workplace—which might occur regardless of the steps that employers take to safeguard against such exposure. Provided that the employers have complied with their obligations to provide a safe workplace, state workers' compensation laws may protect some employers from liability to employees if COVID-19 is covered under the applicable state workers' compensation statute. Other employers may consider the use of waivers to limit their liability with respect to COVID-19 exposure by their employees and consultants. In addition, some states have enacted or are considering the enactment of legislation to shield employers from liability arising out of COVID-19.

 

Workers' Compensation

State workers' compensation statutes generally provide employees with compensation and/or medical benefits if, directly resulting from their employment, they suffer an injury or "occupational disease" that is covered under the state's workers' compensation statutes. If an injury is compensable pursuant to a state's workers' compensation laws, workers' compensation is generally the employee's sole remedy against the employer and an employee's right to workers' compensation generally cannot be waived.  There are two primary issues regarding whether a state's workers' compensation laws will protect employers with respect to COVID-19 exposure: first, does the state worker's compensation statute cover illnesses such as COVID-19 altogether; and second, can the employees demonstrate that they contracted COVID-19 at work. In this regard, state laws vary regarding the compensability of injuries and the burden of proof required for injuries to be compensable. 

Many states categorically exclude "ordinary diseases of life" to which the general public is exposed or to which the worker would have been equally exposed outside of his or her employment. These states include: Arkansas (but see discussion of executive order below); Colorado; Florida; Georgia; Idaho; Indiana; Iowa; Kansas; Michigan; Minnesota; Montana; Nebraska; Nevada; New Mexico; North Carolina; North Dakota; Ohio; Oklahoma; Oregon; South Carolina; Tennessee; Texas; and West Virginia. Such state laws would therefore exclude COVID-19 from workers' compensation coverage, absent executive or legislative action.

Other states' workers' compensation statutes may exclude coverage for COVID-19 because the definitions of "injury" and/or "occupational disease" provide that the disease must arise out of risks peculiar to a particular occupation or risks in excess of the ordinary hazards of employment. These states include: Connecticut; Delaware; Louisiana; New Hampshire; New Jersey; New York; Pennsylvania; Rhode Island; South Dakota; Vermont; Virginia; Washington; and Wyoming. For example, New York's workers' compensation statute excludes diseases caused by ordinary contact with fellow employees from its definition of occupational diseases. However, even in these states, employees working in occupations that involve working closely with the public or where the risk of COVID-19 exposure is heightened, such as health care workers or first responders, are more likely to be covered under these workers' compensation statutes if they contract COVID-19 based solely on how the terms "injury" and/or "occupational disease" are defined. As an example, New York notes that certain occupations and public-facing workers (i.e., retail, health care workers, first responders, food service workers) may have compensable claims.

Even if COVID-19 exposure is potentially covered under a particular state's workers' compensation laws, employees will be required to prove that their contraction of COVID-19 arose out of and in the course of their employment. Due to the uncertainty regarding the transmission of COVID-19, it may be difficult for employees to prove that they contracted COVID-19 at work. 

The landscape of coverage under state workers' compensation laws has and continues to change in response to COVID-19, as many states have issued executive orders, enacted legislation, or instituted changes in administrative policy or rules to expand or clarify coverage of COVID-19 in some respect under the state workers' compensation laws. These states include Alaska, Arkansas, California, Connecticut, Illinois, Kentucky, Michigan, Minnesota, Missouri, New Hampshire, New Mexico, North Dakota, Utah, Vermont, Washington, Wisconsin, and Wyoming. Similar legislation regarding COVID-19 is currently pending in other states, including California; Louisiana; Massachusetts; Michigan; New Jersey; New York; North Carolina; Ohio; Pennsylvania; Rhode Island; and South Carolina.

Some of these states have expanded coverage to include COVID-19 where it otherwise might not have been covered under then-existing law. For example, Arkansas issued an executive order classifying COVID-19 as an "occupational disease" and as an exception from the prohibition on compensation for ordinary diseases of life under its workers' compensation statute. Wyoming, which ordinarily excludes claims involving any illness or communicable disease, unless the risk of contracting the illness or disease is increased by the nature of the employment, enacted legislation to provide that, for the period beginning January 1, 2020 through December 31, 2020, if any employee is infected with COVID-19, "the nature of employment for which coverage is provided . . . shall be presumed to increase the risk of contracting COVID-19”. Similarly, Connecticut issued an executive order creating a rebuttable presumption that an employee contracted COVID-19 as an occupational disease if the employee submits a claim for workers' compensation, provided certain criteria are met, including that the employee missed a day or more of work between March 10, 2020 and May 20, 2020 due to a diagnosis of COVID-19, the employee worked outside of the home at least one day during the 14 days prior to the injury and had not been directed or offered to work from home, the employee's employer was deemed essential (if the employee's "injury" occurred more than 14 days after March 23, 2020) and the employee's contraction of COVID-19 was confirmed by a positive laboratory test.

Other states have made it easier for employees to prove that COVID-19 exposure occurred at the workplace to ensure coverage by the worker's compensation laws. For example, California had issued an executive order that created a presumption that workers who attended a physical workplace and contracted COVID-19 between March 19, 2020 and July 5, 2020 had contracted COVID-19 at work, so long as the worker tested positive or was diagnosed with COVID-19 within 14 days after a day the worker performed services at the worker's place of employment.

Other states, including Alaska, Connecticut, Florida, Illinois, Kentucky, Michigan, Minnesota, New Hampshire, North Dakota, Utah, Vermont, Washington and Wisconsin, have issued executive orders or directives, passed laws or instituted administrative policy changes or rules creating similar presumptions of compensability but just for first responders, health care workers, and/or other workers considered essential.

 

Waivers

In states where COVID-19 is not covered by workers' compensation or where consultants are not covered by the workers' compensation laws (assuming that the consultants are properly classified), employers may consider seeking to limit their exposure to liability by having their employees and consultants sign advance releases or waivers of liability. In recent months, there have been newspaper articles noting that such waivers have been used in contexts outside of employment. For example, the New York Stock Exchange (NYSE) requires floor traders, who are not employees of the NYSE, to sign a liability waiver that prevents them from suing the NYSE if they contract COVID-19. Disney World requires guests to assume any risk related to COVID-19 and to waive any claims relating to exposure to COVID-19. The President Trump campaign also required attendees of a campaign rally held on June 20, 2020 in Tulsa, Oklahoma to sign waivers releasing the campaign from any potential liability relating to COVID-19 exposure at the event.

The enforceability of such waivers, and similar waivers executed by employees and consultants regarding exposure in the workplace, will vary by state, with some states prohibiting such waivers altogether. Courts may view such waivers unfavorably, particularly in the employment context where courts might perceive unequal bargaining power between the parties. In any case, such waivers will not protect employers from liability for, among other things, gross negligence or willful or intentional misconduct including in connection with the employer's obligations to provide and maintain a safe workplace.  Such waiver agreements entered into with employees also will not protect employers from Occupational Safety and Health Administration (OSHA) complaints of hazardous conditions at the workplace. Therefore, any use of waivers cannot replace the need to maintain a safe workplace and to comply with the evolving laws, guidance and/or regulations from the Centers for Disease Control and Prevention (CDC), OSHA, the Equal Employment Opportunity Commission (EEOC), or similar state and local laws, as well as state orders and guidance, regarding workplace conditions in response to COVID-19. For further information on such guidance and requirements, please see Employment Law Considerations for Returning to the Workplace in a COVID-19 World.

Employers should also consider how the use of waivers might affect employee morale or be perceived by the public. Employees may perceive these waivers as prioritizing the employer's interests over the health and safety of employees. 

Employers also should be aware of laws in their jurisdiction that might prohibit the use of employee COVID-19 waivers. For example, the California Labor Code provides that employers must indemnify employees for losses caused by the employers' "want of due care,” and further provides that employees cannot waive this right to indemnification. In addition, New York is currently considering legislation that would void agreements with employees that exempt an employer from liability due to the employer's negligence in relation to COVID-19.

 

State Laws Limiting Employer Liability

As states have allowed businesses to reopen, some states have enacted legislation granting some form of immunity to employers for claims made by employees who contract COVID-19. As an example, Iowa recently enacted a law that includes a safe harbor shielding any person or entity from civil liability for any injuries sustained from exposure or potential exposure to COVID-19 so long as the person's "act or omission alleged to violate a duty of care was in substantial compliance or was consistent with any federal or state statute, regulation, order, or public health guidance related to COVID-19 that was applicable to the person or activity at issue.” Iowa's law also limits the liability of those who own or control premises so that such persons will not be liable for civil damages for COVID-19-related injuries, unless such person who possesses or is in control of the premises either "recklessly disregards a substantial and unnecessary risk,” acts with actual malice, or intentionally exposes the individual to COVID-19. Other states that have enacted legislation or issued executive orders granting some level of immunity to employers include Arkansas, Alabama, Georgia, Kansas, Louisiana, Massachusetts, Mississippi, North Carolina, Oklahoma, Utah and Wyoming. Several other states are considering similar legislation to protect employers.

Generally, these state laws provide employers with immunity from civil liability claims relating to exposure or infection of COVID-19, so long as the employer is acting in good faith to comply with federal, state, or local legislation and guidance. The laws vary with respect to the scope of the employers covered by such immunity, with some covering all employers broadly and others limiting coverage to only certain industries, such as health care providers and volunteer organizations.

 

Proposed Federal Legislation Limiting Employer Liability

Senate Republicans have proposed a bill that would shield individuals and entities from liability in COVID-19 exposure actions unless the plaintiff in a particular case can prove "by clear and convincing evidence" that the defendant person or entity has not made reasonable efforts to comply with applicable laws and guidance, that the defendant person or entity has engaged in "gross negligence or willful misconduct" and that the plaintiff's "injury" was in fact caused by his or her exposure to the COVID-19.  The proposal also provides that federal district courts, which are often viewed as more favorable to defendants, will have concurrent original jurisdiction for COVID-19-related claims. Should this proposed legislation become law, individuals and businesses would have more wide-sweeping protection against liability in actions related to COVID-19 exposure.

 

Conclusion

In situations where COVID-19 is not compensable under a state's workers' compensation laws and neither the federal government nor the state has enacted legislation to protect employers from liability, employers might consider the use of employee waivers to limit their liability. However, regardless of the protection available through applicable laws or waivers, employers are required to maintain a safe workplace and comply with all of the various and changing guidance and regulations applicable to their particular workplace.

 

Find out more about business response to the Coronavirus outbreak:
Coronavirus: Managing business impact and legal risks

 

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