Can the Gov. Do That? Changing Workers’ Comp with a Signature

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

In 2004 I played a key role in changes to the workers compensation system in California by carrying an initiative that was ultimately embraced by Gov. Arnold Schwarzenegger and used to convince the legislature to make important changes to the system that was threatening the viability of the business community. If the legislature had not acted, the initiative would have moved forward. 

There was a lot of work involved getting to the final result in changing the workers’ comp system including building support, signature gathering for the initiative and long and late negotiations on the final bill among legislators, staff and the governor’s office.  In contrast, Governor Gavin Newsom changed the workers comp rules with a signature on an Executive Order.

Given all the typical effort and back-and-forth in changing complex law such as workers’ compensation you have to wonder if the governor can or should be able to alter the rules of the game simply with an Executive Order. 

Emergency powers granted the governor during the time of crisis are great. Yet, how omnipotent are his powers? The California Business Roundtable pointed out in a statement after the workers’ compensation Executive Order was issued that the governor of Illinois made a similar decree and was sued successfully by the business community in that state. 

While there have been conversations within the business community about challenging the governor’s Executive Order in court, as of this time no lawsuit has been filed. 

In 2004, other states were openly recruiting California businesses. Ads were run in business journals keyed to the expense of paying workers comp in California as compared to other places. Businesses in California were struggling and listening to the sales pitches from elsewhere. In 2020, businesses face a fight to survive because of the pandemic and every additional burden on business strains businesses ability to recover. 

The governor’s order places a temporary “rebuttable presumption” on any worker who tested positive for COVID-19 within 14 days of preforming labor at a place of work. This means the law assumes that the worker contracted COVID-19 while on the job – and it is up to the employer under strict guidelines to prove otherwise. The timeframe for infection is retroactive to March 19 and ends 60 days after the date the order was issued on May 6. 

In effect, the change shifts the burden of proof from the employee to the employer to prove the disease was not picked up at work. Labor supporters of the Executive Order defend the governor’s position, arguing that workers who held positions in essential businesses are constantly put at risk and it should be assumed that they got the virus because they had to go to work in an effort to help the society function.

The business community warned that if workers who contract coronavirus automatically qualify for workers’ compensation benefits, the total costs could run as high as $33 billion on California employers.

In a statement, the California Chamber of Commerce argued that, “The Executive Order issued today will unnecessarily and significantly drive up costs for California employers through increased workers’ compensation insurance rates at a time when they are struggling to keep Californians employed.”

The Chamber argued that the governor’s order was not necessary since a Federal government pandemic assistance program covers an employee who is experiencing symptoms of coronavirus and cannot go to work.

The agriculture industry also objected to the temporary change in the workers’ compensation standard. The Agricultural Council of California, California Farm Bureau Federation, the California Fresh Fruit Association and the Western Growers combined to issue a statement: “This executive order will add more financial weight at a very difficult time. Instead, if the goal is to restart California’s economy, then the added economic burden of medical claims related to COVID-19 should be borne by the government, not the essential industries providing a public good during a global pandemic.”

The push-and-pull between labor and business over the proper guidelines for workers compensation is an age-old battle. The focus today should be on how the state can get up and running as soon as possible, a goal that helps both labor and business. The aim should be a reasonable solution that protects workers but that does not burden one side or the other delaying what everyone needs, an economically healthy California.

Back to the opening question.  Lawmaking through the legislative process and the initiative process are both laborious efforts with checks built into the systems. Should a change to law that has compassionate advocates on both sides and results in major consequences be simply upended by a signature?

 

 

 

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