Californian business groups are urging Governor Gavin Newsom not to force employers to automatically pay coronavirus-related compensation to “essential” employees working outside the home who contract Covid-19.
The California Chamber of Commerce, which represents one quarter of the state’s private sector jobs, and other lobbyists want the Democratic governor to reject a push from labour to alter the “workers’ compensation” system to bar businesses from contesting Covid-19 claims from employees.
The California Labor Federation, which represents 2.1m workers, says businesses should not be able to contest claims from workers who are exempt from the stay-at-home order because they are providing essential services while the state remains in lockdown to tackle coronavirus.
The battle reflects a debate across the US over how to strike a balance between letting parts of the economy operate and ensuring the health of the public and essential workers.
In most states including California workers can claim compensation when they become sick or injured at work. But companies, which take out insurance to pay the claims, can contest them. Labour groups want Mr Newsom to mandate a “conclusive presumption” that essential workers with Covid-19 caught it at work, a determination that would spark automatic compensation.
Art Pulaski, head of the Labor Federation, last month wrote to Mr Newsom to lobby him to provide more financial security for the workers on the front lines of the Covid-19 crisis who were “putting their lives at risk just doing their jobs”.
“If they are infected with Covid-19, the workers’ compensation system must quickly provide medical and indemnity benefits,” Mr Pulaski wrote. “Workers should not have to fight denials and delays while fighting for their lives.”
While some states have taken such action for healthcare and emergency responders, business groups argue that Mr Newsom would be imposing an intolerable financial burden on firms that are struggling to just stay afloat.
“They cannot be expected to shoulder a new employer-financed social safety net, with expensive new mandates . . . when small businesses are shuttering,” Allan Zaremberg, head of the California chamber, wrote to Mr Newsom.
Businesses became more concerned this week when the Workers’ Compensation Insurance Rating Bureau of California, a group that estimates costs, said “conclusive presumption” could cost $2.4bn to $36bn.
Lobbyists are expecting Mr Newsom to issue an order soon. His office did not respond to requests for comment.
The debate has arisen in many states as unions push to ensure essential workers are not put in financial jeopardy. Labour says the change would protect workers with Covid-19 from facing the administrative and legal costs of dealing with employers who contest claims as they fight the deadly virus.
Mitch Steiger of the California Labor Federation said employers in the state often contested claims, which meant that workers would face a heavy burden even though the chances that they got the disease at work was very high.
“The vast majority of these workers contracting Covid-19 are getting it through occupational exposure,” he said.
But California businesses respond that they should have the right to contest claims as they themselves struggle.
“The major issue for us is the conclusive presumption,” said Nathan Ahle, president of the Fresno Chamber of Commerce. “There is no ability for an employer to dispute that exposure to Covid-19 happened on the job, particularly when testing and contact tracing are not at the level that they need to be.”
While several states have introduced some form of “conclusive presumption” measure, most applied it to healthcare workers and first responders. But California lobby groups believe that Mr Newsom may follow in the steps of Illinois, which included everything from grocery store to laundry shop workers.
The Illinois Workers Compensation Commission this month said any essential worker with Covid-19 would automatically be deemed to have gotten it at work, although a court this week temporarily blocked the move.
The US Chamber of Commerce has also weighed in on California. In a letter to Mr Newsom, it urged the governor not to extend conclusive presumption to all the industries that he defined as “essential” in his stay-at-home order. It also urged him to limit any order for the duration of the lockdown period.
“When the day comes that businesses are free to resume operations and individuals are free to socialise and operate more or less as usual, the risk of exposure . . . will still be present, but it will be essentially impossible to determine whether a future exposure is truly occupational,” said Glenn Spencer, a senior chamber executive.
Insurance firms are also worried about California and the other moves across the country. Evan Greenberg, chief executive of Chubb, recently said he was “sure” the insurer would suffer losses related to workers’ compensation.
Alan Schnitzer, chief executive of Travelers, said his company was watching the situation across the country “closely” as some states “expanded the scope of workers comp by creating presumptions of compensability”.
Mr Schnitzer said it was unclear how the situation would evolve, but that “If it were to move against us, we would expect that there would be an impact on margins”. Robert Berkley, chief executive of W R Berkley, said he did not believe the risk was “overwhelming” for his company, but could hurt others.
“I do think it could be very challenging for some people if governors and other politicians choose to broaden this in a very wide manner,” Mr Berkley said.
Follow Demetri Sevastopulo on Twitter: @dimi