A Cumulative Problem

By: Mark Webb

California’s Labor Code is voluminous. While the word “disability” appears many times in the workers’ compensation parts of the Labor Code, defining “disability” for purposes of permanent disability benefits is not a simple process, as one might expect.


First, there must be an “injury” which arises out of and in the course of employment. That injury may be either “specific” or “cumulative.” For purposes of affixing the responsibility for an employer to pay benefits for a cumulative injury, the Labor Code also sets forth that the date of injury is when the employee first suffered disability and either knew, or in the exercise of reasonable diligence should have known, that such disability was caused by his present or prior employment.


It is significant to note that per the Workers’ Compensation Insurance Rating Bureau (Bureau), –  prior to the COVID-19 pandemic – roughly 40 percent of cumulative trauma claims (CT) were filed after the termination of employment. That remains the case.


During the pandemic, the WCIRB observed that CT claims increased in general, but more in classifications of employment with the highest job losses. A similar phenomenon, particularly in the construction sector, was observed during the Great Recession period from 2012 through 2016.


It would appear that for workers in segments of the economy suffering layoffs, disability is first suffered shortly after notice of termination of employment.  Or, in the alternative, it would appear that “reasonable diligence” regarding causation of a disability has perhaps a different meaning under such circumstances than one would expect with the application of plain English.


A worker may go years acknowledging the aches and pains associated with a physically demanding job and never think of filing a workers’ compensation claim. More to the point, never thinking they are disabled. And yet, once that job is terminated by the employer, that same worker is somehow convinced such physical ailments were in fact disabling and that disability was caused by present or prior employment.


I do not think that is what the Labor Code has in mind.


From 2019 to 2020, during the height of the pandemic and the closing of the economy, the hospitality sector experienced the highest job loss of any major employment sector. CT claims in the hospitality sector increased by 70 percent.


The Legislature did not sit idly by while this was happening – at least as it related to hospitality sector job losses. In 2021, Senate Bill 93 (Budget Committee) was chaptered as part of the Budget – meaning it became effective immediately upon signature on April 16, 2021. The bill added section 2810.8 to the Labor Code. Per the Department of Industrial Relations, “Labor Code section 2810.8 provides recall rights for employees in the hospitality industry and in building services who were separated from employment as a result of the COVID pandemic.”


SB 93 raises an interesting question of how the recall rights mandate may or may not interact with post-termination CT claims for workers in the hospitality sector who lost their job as a result of COVID.  It may raise a number of interesting questions regarding a number of employment laws. In the siloed world of workers’ compensation, however, such questions may not get asked, let alone answered.


Post-termination CT claims will figure prominently in any discussions in Sacramento this year regarding changes to the system. While a very important issue, it should be remembered that its prominence is disproportionate to the savings ending or limiting such claims will ultimately generate. Many employers will say it is worth the price.


Note: The opinions expressed herein may or may not be those of Workers’ Comp Executive. Mark Webb is a former Arizona insurance regulator, insurance company chief compliance officer, and is an expert in corporate governance, risk and compliance. He is the owner of Prop 23 Advisors.