The coronavirus and its immediate aftermath have upturned American life as we know it, and businesses leaders across the country have questions about how to keep their employees safe and minimize risk to their companies as the country begins to reopen. In this blog post, we’ll discuss how worker’s compensation policies may be affected by the increased risk of communicable disease in the workplace due to the spread of COVID-19.
Workers’ Compensation Basics
Regulated by each state, workers’ compensation insurance pays medical bills and lost wages for employees who suffer work-related injuries or illnesses. In Texas only, after providing certain prescribed notices, an employer can elect not to provide workers' compensation insurance and become what is routinely described as a "non-subscriber." As discussed below, there are numerous inherent risks associated with being a non-subscriber. In all U.S. states except Texas, businesses are required to purchase workers’ compensation insurance, which provides several types of benefits:
Medical benefits for treatment of work-related illness or injury
Funeral expenses and death benefits for employees killed on the job
Workers’ Compensation and COVID-19
Contracting the coronavirus (or any viral infection) at work is not typically considered to be a compensable occupational illness. To be covered under a traditional workers’ compensation insurance policy, loss to the employee must arise within the scope and duty of that person’s job. An example of an occupation that may obtain workers’ compensation coverage for a communicable disease is a nurse at a hospital. Due to the nature of their job, nurses work in high-risk environments, and they are expected to be around viral infections on a day to day basis. That type of exposure could be considered covered under workers' compensation. On the other hand, if you employ restaurant workers, being exposed to customers or co-workers with a potential viral infection would not fall within the normal scope of duty for their job, so losses resulting from employees contracting COVID-19 in that work environment would probably not fall under workers’ compensation insurance policies.
According to Aon, “When contemplating casualty claims exposures for the COVID-19 outbreak–and specifically U.S. workers’ compensation and liability coverages–there are several questions organizations should consider regarding their potential to be directly impacted by this health crisis. These questions include:
Do we have employees located in or traveling to areas where there have been documented and diagnosed cases of COVID-19?
Does our business or industry (e.g. healthcare) increase the probability of employee exposure to infected individuals?
Do our employees work in close proximity with vendors or other strategic partners who may have employees who are at greater potential to contract the disease?”
If the answer to any of these questions is “yes,” it’s important that your company implement plans and establish best practices to manage and mitigate the impact of potential claims on your business. Each potential workers’ compensation claim involving COVID-19 should be individually reviewed on a case-by-case basis by all relevant parties, including business leaders and key decision makers, Third Party Administrators (TPAs), insurance representatives, and approved legal counsel.
New State Legislation
According to the National Council on Compensation Insurance, Inc. (NCCI), “States have responded to COVID-19 by issuing directives and proposing legislation impacting workers’ compensation. Some states have enacted legislation and issued executive orders that expand workers compensation coverage for certain workers, while other states are considering similar initiatives.” You can find a complete list of all regulatory and legislative activity surrounding COVID-19 here.
Navigating the complexities of commercial insurance in the age of the coronavirus is challenging for any business leader. For decades, SWBC Insurance Services has provided clients with a rare combination of respected insurance knowledge, unwavering dedication, and a commitment to world-class service. Our experts can give you expert guidance in these trying times. If you would like to receive a no-cost evaluation of your insurance portfolio, click here to request a consultation or give us a call at 210-525-1242.
This material is provided for information only. It is not intended as legal or tax advice. You should consult your legal counsel or tax advisor for advice specific to your business situation.