October 14, 2020

COVID-19 Risk Review - New Wrinkles in Risk to Consider

Manufacturers are poised to lead the recovery and renewal of the American economy. Everyone has a vested interest in getting back to full capacity as fast as possible, but don’t overlook the importance of doing it safely.

As employees return to work after a months-long hiatus and new employees are hired to fill vacated positions, risk managers’ and supervisors’ primary focus should be exactly what it was before we were blindsided by the COVID-19 pandemic – safety. Only now, there are new wrinkles to consider in safety and liability.

Employee Safety

Employees returning to work after being away for an extended period of time still know how to perform their job, but it may take time to safely readapt to their work environments. Employers have implemented many changes in the workplace to protect employees in this COVID-19 environment. A range of masking solutions and face shields, plastic divider partitions, social distancing and other safety measures will no doubt take a bit of time to get used to, particularly in a production environment. Emphasizing safety practices and precautions in the re-entry process will be critical to maintaining employee wellbeing and favorable insurance pricing.

Some employers may find that their past employees are not coming back to work. They may have found other employment that allowed them to work through the pandemic shutdown and choose to remain in their new position. Or, they may not feel safe to return to work at all. To ramp up operations, employers may need to hire workers who are new to a position or the industry. New employees must be given an intensive course in safety, as well as training on the equipment and processes they will be operating or exposed to in their new position.

Setting and fulfilling expectations for a safe working environment remain paramount for both new and rehired employees in this COVID environment, but now contains a new wrinkle. Training and retraining on job performance must be supplemented by a new chapter in your safety manual and continuous messaging – proper virus hygiene and onsite monitoring of employee health. This adjustment may be more difficult for some industries than others. For example, office employees can be asked to remain in their offices or cubicles for the majority of the day, refrain from the use of meeting rooms and conduct business over the phone and web. Required changes may not be quite as simple on the manufacturing shop floor, however. Social distancing may be hard or even impossible. Continual cleaning of machines and work areas may pose a challenge as well.

Guidelines for worksite safety and wellness management can be found online. At a minimum, employers should include the following in their safety and wellness routine:

  • Conduct daily temperature checks prior to entering the premises
  • Provide information about COVID-19 testing sites, if available
  • Provide all necessary Personal Protective Equipment (PPE) to employees
  • Set up hand sanitizing stations throughout the premises
  • Implement required quarantine and time away from work standards per CDC guidelines after a positive test
  • Conduct a contact tracing process to prevent one case from infecting a whole department

Employer Liability

COVID Take-Home Infections. How the courts view an employer’s responsibility after a COVID-related illness or death is still a question mark. Can it be proven that the employee contracted the virus at work versus the family BBQ they attended the weekend prior? Can an employer be held liable even if all appropriate precautions have been taken? Some states, California and Illinois for instance, are enacting COVID-19 presumption laws where it can be presumed that an infected employee contracted the virus while at work, if they work in certain industries. In these cases, the employer would bear responsibility.

Reuters reports that roughly 7 to 9% of COVID-19 deaths in the U.S. are believed to be “take-home infections” where someone contracted the disease at work and then infects family members at home. Companies with COVID-19 outbreaks among workers could be vulnerable to lawsuits that could cost billions of dollars. The National Association of Manufacturers (NAM) has been monitoring this issue. As NAM explained back in July, a number of COVID-19 liability lawsuits are likely to be brought forward over the next two to five years, and the flood of COVID-19 litigation isn’t expected to begin until spring 2022. They prevailed on Senate leaders to include key liability protections in draft COVID-19 relief legislation.

Employment Practices Liability. Employers may find that some of their employees, for various reasons, choose not to return to work. Some may be genuinely concerned with the risk of contracting COVID-19 by being in close proximity to other workers, while others may not be ready to give up their accelerated unemployment benefits and time off of work. In the latter circumstance, the employer may be forced to terminate the employment of these individuals. The possibility exists that these employees may take exception to their termination and seek legal counsel on the grounds of unfair termination. Not only is it important to work closely with your HR professionals but also with your attorney to ensure you are not exposing yourself to risk by ending these employment relationships. This may also be a good time to revisit your Employment Practices Liability coverage and discuss your coverage and limits with your broker. If you do not carry coverage at all, it should certainly be considered, now more than ever.

COVID-19 and Workers’ Compensation Presumption Law

Workers’ compensation is designed to benefit both employees and employers by providing reliable insurance coverage with predictable, timely payments and reduced legal costs. Generally, workers’ compensation does not cover routine community-spread illnesses like a cold or the flu because they usually cannot be directly tied to the workplace. 

The COVID-19 pandemic presents a unique circumstance where many jobs that are not typically considered hazardous have suddenly become very dangerous for the workers. Lawmakers in some states have implemented or proposed amendments to their state workers’ compensation statutes, or have issued other authority to make it easier for workers to receive workers’ compensation benefits, by providing a presumption of coverage for essential workers who test positive for or are impacted by exposure to COVID-19.

According to the National Conference of State Legislatures, in total, 14 states have taken action to extend workers’ compensation coverage to include COVID-19 as a work-related illness. Six states have enacted legislation creating a presumption of coverage for various types of workers. Alaska, Minnesota, Utah and Wisconsin limit the coverage to first responders and health care workers. Illinois covers all essential workers, and Wyoming covers all workers. Four states have used executive branch authority to implement presumption policies for first responders and health care workers in response to COVID-19. Another four states have taken executive action to provide coverage to other essential workers such as grocery store employees.

Major employers nationwide may be facing a wave of lawsuits filed by workers claiming they contracted COVID-19 as a result of their employer’s negligence — a trend that's sparking debate over whether Congress should grant businesses liability protections during the pandemic. For now, this remains an unsettled matter at the national level.

Final Thoughts

Managing business risks in this COVID-affected environment requires heightened attention to employee safety buttressed with various state accommodations and tailored insurance solutions. Training, retraining and communication will be the key to establishing a safe working environment and safety-minded employees. This in turn will be a key consideration of underwriters working to set your rates for insurance risk mitigation. Truly this is a win-win approach.

As business insurance premiums increase and coverage becomes harder to obtain, we know you may be exploring ways to control costs. We caution you – there are some areas in your commercial insurance and risk management program that you don’t want to skimp on. We offer some guidance on these cost issues and invite you to get in touch should you have questions or concerns.

Your Team

CBIZ Insurance Services partners with clients in an advisory role to identify exposures and develop a risk profile acceptable to your business operations and your bottom line. Should you have questions about any aspect of COVID-related risk management practices – whether employee safety, plant and equipment protection, liability issues or cyber protection – don’t hesitate to reach out to Patrick Buck (pbuck@cbiz.com or 301-784-2375) or your CBIZ advisor.

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