Client Alerts & Publications

Essential Employees Who Contract COVID-19 May Be Entitled to Workers’ Compensation Benefits: What New Jersey Employers Need to Know

Published Date:

10/21/2020

New Jersey employers make note: A recently enacted amendment to the New Jersey Workers’ Compensation Act entitles “essential employees”—including construction and many other types of private sector workers—who contract COVID-19 to the presumption that their illness is work-related. Significantly, this amendment is retroactive to March 9, 2020, the date of the initial pandemic state of emergency declaration in New Jersey.

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On September 14, 2020, New Jersey Governor Phil Murphy signed into law A-3999/S-2380, which amends the New Jersey Workers’ Compensation Act (NJWCA), N.J.S.A. 34:15-1 et seq. The law provides that if an “essential employee” working outside the home contracts SARS-CoV-2, the virus that causes the COVID-19 disease, s/he is entitled to a prima facie presumption (i.e., correct unless proven otherwise) that the illness was work-related and is thus fully compensable under the employer’s workers’ compensation policy. This powerful presumption, which was hotly contested by many industries, is not without limitation. Employers may attempt to disprove an employee’s case under a preponderance of evidence standard by establishing that the employee was not exposed to the virus at work.

The law was enacted in direct response to the perceived heightened risk that essential workers face while working at their places of employment during the ongoing public health emergency. Importantly, the law applies retroactively to March 9, 2020, the date Governor Murphy first declared a state of emergency based on the coronavirus outbreak in New Jersey.

Who is included in the definition of an “essential employee”?

The law delineates four categories of public and private sector workers to be considered as “essential.” See S2380, § 1.

The first group includes public safety workers or first responders, such as “any fire, police or other emergency responders.” 

The second group includes those who provide “medical and other healthcare services, emergency transportation, social services, and other care services, including services provided in health care facilities, residential facilities, or homes.”

The third grouping includes a vast array of workers who interact directly in close “physical proximity” with members of the public and are considered “essential to the public’s health, safety, and welfare, including transportation services, hotel and other residential services, financial services, and the production, preparation, storage, sale, and distribution of essential goods such as food, beverages, medicine, fuel, and supplies.” 

Finally, the fourth group serves as a catch-all category and includes “any other employee deemed an essential employee by the public authority declaring the state of emergency.”

Notably, as it relates to the catch-all provision, Executive Orders 103, 104, 107, and 110, all signed back in March 2020, provide over thirty specific types of jobs that are considered essential, including those who work in the construction industry. The legislation also specifically states that employees of government or other public agencies who are afforded the ability to work from home, but still elect to work at their place of employment are not covered by the statute.

What is a “rebuttable presumption”?

A rebuttable presumption is essentially a rule of evidence. Under the common law, a presumption is a legal inference or assumption that a fact exists because of the known or proven existence of some other fact or group of facts. If a party is entitled to a presumption, the burden of production or persuasion shifts to the opposing party who then may attempt to “rebut” or overcome the presumption. One of the most well-known rebuttable presumptions is in the criminal context where a defendant is presumed innocent until proven guilty.

As it pertains to the presumption created under S-2380, it is now presumed that contracting COVID-19 is work-related if an employee falls into one of the four rather broad categories discussed above. As a result, an employee covered by the employer’s workers’ compensation policy who meets the statutory definition is entitled to a prima facie case of compensability if he or she contracts the virus. Once the employee shows that he or she meets the statutory definition, the presumption applies and the burden of proof shifts to the employer to disprove the employee’s case.

How can an employer rebut the presumption?

When faced with an essential employee who has contracted COVID-19, the employer can rebut the presumption upon demonstration by “a preponderance of the evidence” (i.e., greater than a 50% chance) that the worker “was not exposed” to the virus during the course and scope of employment. See S-2380, § 2. To do so, the employer will need to offer evidence, which could include but is not limited to proof that the employee contracted COVID-19 from an outside source such as a hospital or other medical facility, a family member or personal contact who tested positive, from attendance at a large gathering where other cases emerged or out-of-state travel to known hotspots, and/or other demonstrable proof that there was no exposure to the virus at the place of employment (e.g., no confirmed COVID-19 cases in the workplace). It is vital to note that rebutting this presumption necessarily implicates a host of privacy-related issues, including probable dependence on typically confidential health information.

If the employer produces such evidence showing that the employee more likely than not contracted the virus outside the scope of employment, he or she is not entitled to the presumption under the law. If the employer is unable to overcome the presumption, however, the employee is entitled to claim workers’ compensation benefits. Such benefits generally include medical care, temporary disability benefits, permanent disability benefits, and dependency benefits to dependents of an essential worker who died as a result of contracting COVID-19.

How will this law impact my business?

Notably, many workers’ compensation claims related to COVID-19 were already filed prior to S-2380 becoming law. The most significant aspect of S-2380 is that it substantially expands the definition of “essential employees” to include individuals working in numerous private sector jobs. It is this expanded definition, combined with the burden of proof being shifted to the employer, that has given rise to the expectation across many industries that the law will cause even more of an uptick in such claims. There has also been speculation that insurance premiums will skyrocket across the board, although the law prohibits premium increases from being directly related to an employer’s number of ill employees and specifically states that losses associated with such claims must not be included in calculating an insured’s experience modifier rate. See S-2380, § 3.

Despite these ominous predictions, while the new law certainly is helpful to employees in overcoming the first hurdle that they contracted COVID-19 at work, with regard to claiming permanent disability benefits, employees must also leap a second hurdle by proving some type of permanent work-related impairment that substantially restricts bodily function or lessens their ability to work or perform nonwork-related tasks. Indeed, since the bill was first introduced, insurance carriers and employers alike have argued that the specific “carve-out” related to COVID-19 is redundant because the NJWCA already allows for employees to claim benefits if they can show they contracted a disease in the workplace that resulted in impairment. 

The well-settled standard for impairment remains the same under Perez v. Pantasote, 95 N.J. 105 (1984), where the New Jersey Supreme Court found that a claimant must introduce objective evidence of impairment in order to receive a permanent benefits award pursuant to the NJCWA. Thus, while the new law provides essential employees with a presumption that their COVID-19 illness is work-related, it does not afford a presumption of impairment. For essential employees that recover from the virus, proving impairment may be quite problematic, especially as general lingering or reoccurring health issues emerging after recovery have not yet been shown to meet the objective standard of present permanent partial or total impairment under Perez.

Final Thoughts

Although the law has mostly been interpreted as employee-friendly, the law’s introduction of the presumption may also benefit employers in the long run. Since the onset of the pandemic, employees have filed several lawsuits against their employers for claims related to COVID-19 exposure in the workplace, including actions for wrongful death and negligence as well as breach of contract, especially in cases of a unionized workforce. Employers may now be able to successfully argue that the presumption allows for insulation against ordinary civil liability arising from these types of claims related to COVID-19 because they will be able to invoke the workers’ compensation bar under N.J.S.A. 34:15-8 in such actions.

In sum, employers should be aware that any pending civil actions where the plaintiff is alleging coronavirus-related injury or death in the workplace have the potential to be impacted by the law and that any essential employees who filed workers’ compensation claims related to COVID-19 after March 9, 2020 will be entitled to the presumption.

 

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