Temporary Disability Benefits Due To Covid-19 Stay-At-Home Orders

The COVID-19 pandemic has had significant financial consequences for many employers and employees. Due to the overall need to protect the public at large from the spread of COVID-19, the state of California and many local governments have issued stay-at-home orders, closing nonessential businesses or allowing them to remain open only if their employees could telecommute. Many businesses were forced to shut down during the stay-at-home orders, and many employees found themselves out of work.

This created problems for employers who were accommodating injured workers before the COVID-19 pandemic. An employer generally is able to avoid paying temporary disability benefits by offering modified work to an employee who is injured at work. But if an employer is forced to close due to COVID-19, it has no work to offer. So, many employers disputed whether they were required to pay temporary disability benefits when they were accommodating modified duty prior to the COVID-19 pandemic.

In the aptly titled decision, Corona v. California Walls, Inc, dba Crown Industrial Operators, 2020 Cal. Wrk. Comp. P.D. LEXIS 256, the WCAB held that temporary disability benefits must be paid in that situation.

FACTS OF THE CASE

In Corona, the applicant sustained an accepted injury to his knees Feb. 19, 2020. He was placed on modified duty, and the employer accommodated his work restrictions.

On March 16, 2020, the employer sent all employees home due to state and local emergency orders related to COVID-19. The applicant did not work from March 17, 2020, through May 10, 2020, and did not receive any state or federal benefits related to COVID-19 during that period. The parties disputed whether the applicant was entitled to temporary disability benefits.

THE WCAB'S DECISION

The WCAB upheld an order finding that the applicant was entitled to temporary disability indemnity during the time when the employer was required to shut down. The WCAB recognized that it was dealing with an “unprecedented circumstance,” because the COVID-19 stay-at-home orders “placed all employees out of work, including applicant.” Nevertheless, citing several writ-denied cases, the WCAB found that to avoid liability for temporary disability benefits, the employer must meet the burden of proving that a temporarily partially disabled employee was terminated for good cause

The WCAB found that “applicant’s termination from employment was not for cause, or due to his own misconduct, but was due to COVID-[19] shelter-in-place orders.” So, it found that the employer did not meet its burden to show that it was released from paying the applicant temporary disability benefits during the period in question.

The fact that it was impossible, the WCAB added, for the employer to offer modified duties to the applicant because of the COVID-19 orders was inconsequential. It cited its en banc decision of Dennis v. State of California — Department of Corrections and Rehabilitation Inmate Claims (2020) 85 CCC 389, which held that an employer’s inability to offer regular, modified or alternative work does not release it from the obligation to provide a supplemental job displacement benefits voucher. It stated that “an employer’s inability to accommodate a temporarily disabled employee’s work restrictions does not release it from its obligation to pay temporary disability benefits.” So, the WCAB concluded, “applicant is entitled to temporary disability benefits regardless of whether defendant is able to provide modified work."

ANALYSIS OF THE DECISION

Corona doesn't back away from earlier decisions holding that an employer may avoid liability for temporary disability benefits if an employee on modified duty is terminated for cause. But the WCAB did not believe that the applicant was terminated for cause or due to his own misconduct.

Although workers’ compensation is generally a no-fault system, the WCAB believes that there must be an element of fault on the applicant’s part before temporary disability benefits may be denied during a period of temporary partial disability. When the inability to accommodate work restrictions is the fault of neither the applicant nor the employer, the WCAB believes that the employer must bear the risk. So, although COVID-19 affects both employers and employees, the WCAB believes that employers must provide temporary disability benefits to injured workers, even if they cannot operate due to stay-at-home orders.

Employers might argue that paying temporary disability benefits to injured workers in this situation elevates their rights beyond those of noninjured workers. Because Corona is not binding, employers may continue in good faith to dispute liability for temporary disability benefits under similar circumstances

Nevertheless, unless and until an appellate court decides this issue, Corona is probably indicative of how these cases will be decided at the WCAB level moving forward. The Corona decision was issued Sept. 25, 2020, and the employer has until Nov. 9, 2020, to appeal.