This is the second in a series of 3 articles.
Many restaurants have begun delivery service as a response to Stay at Home. Often, deliveries are made by employees in their own vehicles, or in rental cars. If this describes your current operations, please consult your policy to determine if it includes Non-Owned and Hired Auto coverage. Without these coverages your General Liability insurance will NOT extend to damages from an auto accident. Your employees auto insurance only protects them (and in most cases not for business use), not you, in the event of an accident.
Should you keep your work comp policy in force if you currently have no payroll? In a word – Yes. Over time and experience you probably have acquired a good carrier and a good rate. There are ways of preserving this good rate despite the shutdown. You can keep your policy and avoid premium payments by converting your billing to monthly payroll reporting. Many companies have their own proprietary name for payroll reporting – PrecisePay, GoPay, etc. – but all do the same thing, they allow you to declare zero payroll and pay zero premium after the end of each month. Why is this better than just reducing your payroll estimate? This should preserve your policy rating, and eliminates overpaying or underpaying, which generates an always irritating audit bill after the term. One caveat, this pay plan involves preparing and sending the payroll report each month. Just because you have no payroll to report does not mean you can skip the report.
Can my employees file a work comp claim if they say they contracted Coronavirus at work? Yes. In fact, Governor Newsom in May issued an Executive Order creating special handling for COVID-19 as a communicable disease. Traditionally, the burden of proof falls on the employee to show the disease arose out of employment or in the course of employment. However, because of this Executive Order, anyone working outside of their homes in California from March 19, 2020 to July 5, 2020 who is diagnosed with COVID-19, will be presumed to have contracted the illness at work. More specifically, any COVID-19 related illness of an employee is presumed to arise out of the course of employment if the following applies:
• The employee has tested positive or been diagnosed within 14 days after performing labor or services at the employees place of employment.
• The labor or services must have been performed at the employers direction on or after March 19th, and the date of injury must occur on or prior to July 5, 2020 (60 days after issuance of the executive order).
• There must be either a positive test or diagnosis by a medical professional who holds a physician or surgeon license issued by the California Medical Board. The Executive Order also alters how benefits are paid.
• An employee must first exhaust all state and federal sick leave specific to COVID-19 before temporary disability benefits are paid.
• The insurance carrier or third party administrator has a 30-day deadline to review all pertinent information for making a compensability determination.
• The Executive Order creates a “rebuttable presumption” meaning a claim can be rebutted by evidence that the employee developed his or her illness due to exposure outside of work, such as in the community or home.
Lastly, disgruntled employees have long turned to work comp to satisfy a grievance against the employer. The No Fault nature of work comp gives the employee the benefit of the doubt in most cases. Usually, employers have work comp insurance to protect them. However, employees, whether active or not, can also file discrimination or harassment claims. Most companies do not have insurance for this type of claim. A good friend of mine recently let a problem employee go. The employee immediately filed a discrimination claim. My friend consulted his attorney, who estimated legal defense would cost $100,000. My friend decided to let the claim play out in the legal system. How much could it cost? To his horror, $250,000.
Consult your insurance policy for your contract language. Examples used here may not appear in your policy. Evaluate your risks regularly. Get prices for any of these contracts described here. Only then can you decide if the insurance is worth it.
George O'Hara
gohara@colony-west.com
(714) 476-3934
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