Written by: Aaron Cohen
Fortunately, for the California cannabis industry, they have been deemed essential throughout this pandemic. However, throughout this time, an unanswered question has remained. Who is at fault in the event someone contracts COVID-19 while working at a facility or visiting a dispensary (even if it’s curbside pickup). Can a business be found at fault? Are they liable?
On May 6th, Governor Newsom helped answer that question, for employees at least. He enacted an executive order effectively stating California employees now working outside of their homes who contract COVID-19 will have the presumption that it was done so at work, which would entitle them to Workers Compensation benefits. Prior to this executive order, the workers compensation system placed the onus on the employee to prove that an injury was work-related. This burden of proof may seem unjust, however the intention of this was to filter out unqualified or fraudulent workers compensation claims.
Here’s what this executive order accomplishes:
This provides a strong remedy in mitigating the potential for litigation from employees against their employers (though not bulletproof, as I discuss below). Further, this order provides some much-needed relief to the cannabis industry’s “essential employees” risking their health by working outside their homes. For employees, contracting COVID-19 could mean huge financial burdens by way of medical bills and lost income without support from their employers by way of Workers Compensation. With this executive order, it allows workers to be eligible for benefits as long as they satisfy these four criteria:
- A COVID-19 diagnoses must be received on or after March 19th, 2020
- Employee must be diagnosed within 14 days of working at their place of employment
- They cannot work from home – their employment must be outside the home
- A licensed California physician performed the diagnosis, which was then later confirmed by a test within 30 days.
Now for the potential downside of this executive order:
The insurance industry has voiced concern that this executive order could lead to a potential increase in medical expenses paid out by workers compensation carriers, which would result in a significant financial strain on the industry. Prior to the enactment of this executive order, numerous organizations within the insurance industry delivered this letter on April 26th, voicing their concerns as to what a potential executive order (such as this) could mean for their industry’s viability.
They made the case that workers compensation benefits were intended to extend a “cure and relief” for the effects of industrial illness and/or injury. They argue that a cure or relief should not apply to an employee testing positive for COVID-19, but still asymptomatic. In their words,
“The undersigned organizations both appreciate and share your concern for our employees, and we agree that workers’ compensation benefits should be extended as appropriate for COVID-19 infections that are work-related. However, our comments above establish that the proposals under consideration are very likely to force significant numbers of non-industrial COVID-19 infections into an already-strained workers’ compensation system.”
All of this raises the question, will this executive order open the floodgates for asymptomatic individuals to claim benefits under workers compensation, putting an unanticipated strain on the system. The estimated costs of this executive order in covering essential workers alone could be between $2.2 – $33.6 billion per year as estimated by the WCIRB (it’s a broad range, I know), which would inevitably result in significant increase in workers compensation costs for cannabis industry employers.
Further, the potential for increasing workers compensation costs are not the only danger cannabis businesses are facing. Though this executive order does help mitigate employees seeking damages from employers, employees still may be eligible for reparations from their employer in the event the employer is found guilty of “serious and willful misconduct”. This most likely wouldn’t be triggered by a dispensary keeping their doors open; but not providing the proper protective gear, actively enforcing sanitary guidelines, or implementing social distancing guidelines could be seen as such. An employer acting negligent in not providing the proper precautionary measures for their employee to work in a safe environment can be seen as such.
It’s imperative that cannabis businesses throughout the supply chain adhere to requirements as set by the federal, state, local government as well as OSHA (federal and Cal-OSHA) at a minimum.
We’re recommending that cannabis businesses consult with their attorney and risk advisor to ensure their precautionary measures (or lack thereof) are not construed as “serious and willful misconduct”.
Please note this article is the opinion of Aaron Cohen and should not be interpreted as a legal guidance.
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