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In-depth review of workers’ compensation law protecting essential workers

A new law, sponsored by Senate President Steve Sweeney, D-3, creates a rebuttal presumption that certain essential employees who contract COVID-19, contracted it in the course of employment.

What is the impact on insurance agencies and their employees:

The law only applies to “essential employees.” That term is defined as:

  1. a public safety worker or first responder, including any fire, police or other emergency responders;
  2. an employee involved in providing medical and other health care services, emergency transportation, social services, and other care services, including services provided in health care facilities, residential facilities, or homes;
  3. an employee who performs functions, which involve physical proximity to members of the public and are essential to the public’s health, safety, and welfare, including transportation services, hotel and other residential services, financial services, and the production, preparation, storage, sale, and distribution of essential goods such as food, beverages, medicine, fuel, and supplies for conducting essential business and work at home; or
  4. any other employee deemed an essential employee by the public authority declaring the state of emergency.

Agency employees would not fall into the first two definitions listed above. So the question is, are they covered by the third or fourth definition?

During the statewide shutdown, insurance agencies were not deemed essential retail, which is why agencies had to close to the public. So, insurance producers are not considered—by the state—to be essential during a state of emergency (the fourth definition).

Do insurance producers fit into the third (and most ambiguous) definition of essential workers? In order to do so, two factors need to be present:

First, the employees must perform functions that involve physical proximity to the public, aka the “proximity” test.

Second, they must be essential to the public’s health, safety and welfare aka the “public health” test.

So, the answer is: Most likely, no.

First, if agencies really did close to the public during the statewide shutdown, then they would fail to meet the proximity test. Even if the agency’s employees were in the office they would not be working in close proximity to members of the public, since the agency was closed to the public.

Regarding the public health test, it does (specifically) list financial services as an industry that would be essential to the public’s health, safety, and welfare. Insurance agencies would be considered a part of the financial services industry. However, insurance agencies were not considered an essential financial services business for the purposes of Gov. Phil Murphy’s executive order, so there is little reason to expect agencies to be considered essential.

What this means to agents: This new law should not have any impact on insurance agencies. PIANJ will continue to monitor how this law is being interpreted, and update its members if needed.

Impact on your clients (generally):

The law only applies to “essential employees.” That term is defined as:

  1. a public safety worker or first responder, including any fire, police or other emergency responders;
  2. an employee involved in providing medical and other health care services, emergency transportation, social services, and other care services, including services provided in health care facilities, residential facilities, or homes;
  3. an employee who performs functions which involve physical proximity to members of the public and are essential to the public’s health, safety, and welfare, including transportation services, hotel and other residential services, financial services, and the production, preparation, storage, sale, and distribution of essential goods such as food, beverages, medicine, fuel, and supplies for conducting essential business and work at home; or
  4. any other employee deemed an essential employee by the public authority declaring the state of emergency.

If you have clients in health care, the public safety field, or were deemed an essential business by Gov. Murphy’s Executive Order 123, their employees will almost certainly be considered essential under this law. This means that if any of those employees contracted COVID-19 during the state of emergency, the presumption will be that they contracted the virus at work.

For all other business, the question will be: Did the employee work in close physical proximity to members of the public? For any business that transitioned to a remote-work model, the answer to this question will likely be “no,” and the law will not impact them.

The law does not extend the rebuttable presumption to those employees working remotely. However, if the answer to this question is “yes,” then the employer must next ask whether the employee was essential to the public’s health, safety, and welfare. For those employers in transportation services, hotel and other residential services, financial services, and the production, preparation, storage, sale, and distribution of essential goods (such as food, beverages, medicine, fuel, and supplies for conducting essential business and work at home); the answer will likely be “yes.” For any other industry the answer will likely be “no.”

Regardless of the above analysis, it is important to note that this new law is limited in scope in two ways. First, it only applies to those essential employees who contract COVID-19 during the declared state of emergency. While that is still on-going, if and when it ends, employees will lose the rebuttable presumption. Second, the law makes clear that any worker’s compensation claims due to this law will not be considered in calculating an employer’s experience modification factor. So the long-term effect of this new law should be minimal.

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