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New Law Requiring Additional COVID Sick Leave Now In Effect

Senate Bill 95’s supplemental COVID paid sick leave requirement goes into effect as of March 19, 2021. The new law mandates that employers provide employees with supplemental paid sick leave for COVID-related leave in addition to other paid time off obligations under existing federal, state, or local statutes.

The obligation to provide paid COVID related sick leave is also retroactive to January 1, 2021. Upon an oral or written request by an employee, the employer is obligated to reimburse an employee who took leave between January 1, 2021, and March 29, 2021, that would have otherwise qualified under SB 95.

Under Labor Code 248.2 all employers with 26 or more employees must allow all employees who are unable to work or telework due to COVID use of the new supplemental paid sick leave. The employee qualifies for leave if the employee:

A. Is subject to a quarantine or isolation period related to COVID.
B. Has been advised by a health care provider to self-quarantine due to concerns related to COVID.
C. Is attending an appointment to receive a vaccine for protection against contracting COVID.
D. Is experiencing symptoms related to a COVID vaccine that prevent the employee from being able to work or telework.
E. Is experiencing symptoms of COVID and seeking a medical diagnosis.
F. Is caring for a family member who is subject t ho a quarantine or isolation period related to COVID; or who has been advised to self-quarantine by a health care provider.
G. Is caring for a child whose school or place of care is closed or otherwise unavailable for reasons related to COVID on the premises.

Full-time qualified employees are eligible for up to 80 hours of supplemental paid sick leave. Non-full-time employees with normal weekly schedules receive the total number of hours they are normally scheduled to work over two weeks. Employees who work a variable number of hours, whose tenure is six months or more, receive 14 times the average number of hours they worked each day in the six months preceding their leave date.

In addition, as with all other paid sick leave requirements mandated by law in California, there are posting requirements and a requirement that the leave hours be available on paystubs or other written notices to employees received on payday.

SB 95 is nuanced and specific with regard to the qualifications, exemptions, and obligations.

The firm of Roxborough Pomerance Nye & Adreani LLP has invited employers to contact members of the firm about this new law if necessary If your company has any questions about the new paid sick leave requirements, please contact Nicholas Roxborough at (818) 992-9999, ext. 222, Drew Pomerance at ext. 212, Michael Adreani, at ext. 234, Marina Vitek, at ext. 236, or Trevor Witt, at ext. 224.

Santa Clarita Employer Pleads Guilty to $1.8M SBA COVID Fraud

A Santa Clarita Valley man pleaded guilty to perpetrating a scheme to fraudulently obtain approximately $1.8 million in COVID-19 relief guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) program and the Paycheck Protection Program (PPP).

According to court documents, Hassan Kanyike, 29, of Santa Clarita, admitted that he submitted six fraudulent PPP loan applications and two fraudulent EIDL applications.

The applications sought funds to purportedly pay the salaries of employees whom he claimed worked for two of his businesses. Kanyike successfully obtained approximately $1 million through four PPP loans, and another $300,000 through two EIDL loans.

In support of the fraudulent PPP loan applications, Kanyike submitted fake federal tax filings and payroll reports.

For example, in one loan application, Kanyike falsely claimed the business had 26 employees and an average monthly payroll of $168,000, and he submitted a fabricated IRS tax form claiming Falcon Motors had paid $2,022,300 in payroll in 2019.

But Kanyike admitted during his plea that the company had substantially fewer employees and substantially lower payroll. Kanyike further admitted that he obtained additional Employer Identification Numbers from the IRS in April and May 2020, so that he could apply for multiple loans for the same used-car business. Kanyike then used a substantial portion of the PPP loan proceeds for his own personal benefit.

Kanyike was arrested in December 2020 at Los Angeles International Airport just before he was about to board a flight to Dubai. At the time of his arrest, Kanyike had transferred approximately $762,000 to Uganda, his country of citizenship, from one of the business accounts that had received the loan proceeds, in violation of the terms of the PPP and EIDL program.

Kanyike pleaded guilty to one count of wire fraud before United States District Judge Virginia A. Phillips. He is scheduled to be sentenced on August 23 and faces a maximum penalty of 20 years in prison.

As part of his guilty plea, Kanyike is required to pay approximately $1.3 million in restitution.

Homeland Security Investigations and Treasury Inspector General for Tax Administration investigated the case.

2017 Insurance Start-up Expands Rapidly in Comp Market

Despite the softening of rates and the challenges of the coronavirus pandemic, the Insurance Journal reports that one Midwest-based workers’ compensation insurance provider that opened its doors just over three years ago reports that it not only has experienced significant growth during that time, it simultaneously has managed to maintain a loss ratio that is one of the lowest in the industry.

Since its launch in October 2017, Omaha National, based in Omaha, Nebraska, has gone from $0 to $100 million of in-force premium and grown from a six-person operation to one with more than 150 employees.

That brisk pace of growth is expected to continue, says Reagan Pufall, president and CEO of the managing general agent (MGA) / insurance carrier. The company will move into a new office building this summer “because we’ve run out of room where we are,” he said. “Five years from now, we expect to be well over $400 million in-force premium.”

Omaha National launched as an MGA with California as its initial target market. It is now offering coverage in 14 states and will continue to expand into other states, including New York this year, Pufall said. It also established Omaha National Insurance Co., which currently “acts as a reinsurer for a portion of the risk that we write. So even as an MGA, we are already on the risk, which is what we like.”

However, “the intention has always been to become a direct writer. And we’re now approaching the time when it looks like we will be able to initiate that transition to becoming a carrier,” he said.

A complementary division of the company is its payroll service. “It’s an optional part of what we offer. Any company that is insured by us, if they choose, they can also make use of us as their payroll service,” Pufall said.

Small- to mid-size companies operating in industries where employees work with their hands are Omaha National’s core customers – landscapers, framers, electricians, plumbers, parcel delivery services, for example. “We like to say that we insure the companies that build America,” Pufall said.

The falling rates in the workers’ compensation line are a challenge as they are for any insurer, Pufall said. “But we designed this company to prosper throughout the market cycle, in hard markets and soft markets. None of what we’re encountering or anything we see in the future causes us substantial concern. Of course, we will look forward to the day when the market cycle changes, and the rates are rising again. But until then, we’re doing just fine, even during this soft market.”

California Unemployment Rate Drops to 8.5%

Driven by the reopening of restaurants and the tourism industry, California unemployment dropped to 8.5% in February, the Golden State’s lowest mark of the pandemic.

With the state loosening business restrictions incrementally since the holiday spike of Covid-19 cases dwindled, the hospitality and leisure industry added over 100,000 jobs last month. In total, California employers hired 141,000 new employees, nearly erasing the deficit accrued in December and January under Governor Gavin Newsom’s most recent lockdown order.

California registered the third largest jobless rate decrease in February of any state, but its estimated 8.5% mark remains well above the nationwide figure of 6.2%.

State officials celebrated Friday’s U.S. Department of Labor release, calling it a “milestone” in what has thus far been a slow economic recovery for the nation’s most populous and richest state.

The state’s improvement was led by the hospitality and leisure industry, which resumed offering indoor dining in some parts of the state last month and combined to add 102,000 jobs. The hiring surge was a positive sign for the hard-hit industry that is still down nearly 700,000 jobs compared to February 2020.  

Overall, seven of California’s 11 industries added jobs including other services (14,100), education and health services (13,000), manufacturing (8,900), trade, transportation and utilities (8,200) and professional and business services (5,400). Meanwhile, the agriculture industry added nearly 3,000 jobs, tallying gains for the seventh straight month.

February’s performance will likely be repeated or enhanced in March and April, assuming Covid-19 cases continue to drop, says Jeffrey Clemens, economics professor at University of California, San Diego.

The hospitality industry’s February hiring-spree was certainly encouraging, but Clemens emphasized the enormity of the job losses suffered in California over the last year.

The jobs market is climbing out of a deep hole,” Clemens added, referencing the fact California is still down 1.6 million total jobs.  

Statewide unemployment may have sunk a half-point in February, but nearly a dozen of the state’s 58 counties still have double-digit unemployment.

Los Angeles County’s rate fell to 10.9% from 12.7% the previous month, but it remains the only urban county in the double digits. The rest of the list consists of mostly rural, agricultural-producing counties like Kern (10.8%), Imperial (15.9%) and Monterey (10.9%).  

CWCI Says COVID Comp Claims Subsiding to Lowest Level

The wave of COVID-19 claims that hit the California workers’ compensation system at the end of 2020 has subsided for the time being as the number of claims reported to the state Division of Workers’ Compensation for February fell to the lowest level in a year, an analysis by the California Workers’ Compensation Institute Shows.

The CWCI report shows the projected ultimate claim count for February came in at 4,533 cases, down nearly 90% from the record 43,158 claims projected for December.

The figures from CWCI’s COVID-19/Non-COVID-19 Interactive Application show that after surging to an all-time high in December, the monthly COVID-19 claim count fell by more than 50% in January, a decrease that coincided with the steep drop in new coronavirus cases in the state.

“Claim counts from December through February are still incomplete as additional claims for those months are still being reported, but the COVID-19 claim totals reported as of March 8 show that the DWC has recorded 40,188 claims with December injury dates and 19,493 claims with January injury dates, but just 2,747 COVID-19 claims with February injury dates,” the CWCI report states.

The addition of the February figure pushed the number of virus claims reported to the DWC since the pandemic began to 135,566, including 751 death claims, and COVID-19 clams have accounted for just 9% of all claims reported thus far for February, though they have accounted for 18.8% of all claims since the first claims were reported in January of 2020, according to the CWCI.

The latest results are from the March 11 update to CWCI’s COVID-19/Non-COVID-19 Interactive Claim App, which integrates data from CWCI, DWC, and the Bureau of Labor and Statistics to provide current and historical data on California work injury claims.

The app includes COVID-19 data dating back to January 2020, as well as from the most recent 12 months, and is available to the public.

DWC Adjusts Hospital Outpatient and ASC OMFS Fees

The Division of Workers’ Compensation (DWC) has posted an order adjusting the Hospital Outpatient Departments and Ambulatory Surgical Centers section of the Official Medical Fee Schedule (OMFS) to conform to changes in the Medicare payment system as required by Labor Code section 5307.1.

The Hospital Outpatient Departments and Ambulatory Surgical Centers fee schedule update order adopts the following Centers for Medicare & Medicaid Services (CMS) Medicare changes:

April 2021 Quarterly Update

– – The CMS Medicare Hospital Outpatient Prospective Payment System (OPPS) April 2021 Addendum A quarterly update
– – The CMS Medicare OPPS April 2021 Addendum B quarterly update
– – The CMS Ambulatory Surgical Center Payment System, April 2021 ASC Approved HCPCS Code and Payment Rates – Column A entitled “HCPCS Code” of “Apr 2021 ASC AA” and Column A entitled “HCPCS Code” of “Apr 2021 ASC EE”
– – Certain sections of the CMS Medicare OPPS April 2021 Integrated Outpatient Code Editor (I/OCE), IOCE Quarterly Data Files V212.R0

The order adopting the OMFS adjustments is effective for services rendered on or after April 1, 2021 and is posted on the DWC website.

Amended DEU Regs Include 5% Commutation Increase

The Division of Workers’ Compensation has posted proposed changes to Disability Evaluation Unit (DEU) regulations to the online forum where members of the public may review and comment on the proposal. Comments will be accepted on the forum until 5 p.m. on April 7, 2021.

The proposed changes update commutation tables and delete references to services no longer provided by the DEU. Other proposed changes include updating two forms used for requesting consultative ratings and reconsideration of summary ratings.

The Labor Code provides for the determination and payment of permanent disability benefits and mandates life pensions for certain cases. Injured workers are allowed to petition the Workers’ Compensation Appeals Board (WCAB) for a commutation of future weekly permanent disability and life pension benefits in order to receive a lump sum amount.

The proposed changes update the commutation tables to reflect updated life tables which offer a more accurate present value of lifetime benefits. As life expectancy has increased, it is estimated that this update will provide a general 5% increase of commutations for life pensions and permanent total disability.

The Commutation Instructions provide examples to illustrate various methods of commuting permanent disability and life pension benefits. The most common commutation is for attorney fees when settling cases at the WCAB.

The DEU will continue to provide formal rating determinations, summary rating determinations and consultative rating determinations, but will no longer provide informal rating determinations.

The new proposed forms are:

– – Summary Rating by the Administrative Director – DWC-AD Form 103.
– – Request for Consultative Rating – DWC-AD Form 104 (DEU).

The forum can be found online on the DWC forums page under “current forums.”

Landscaper Faces Fraud Charges for Faked Symptoms

23 year old Angel Maces, who lives in San Jacinto, was arraigned for felony insurance fraud after allegedly misrepresenting symptoms following a work-related injury, in order to receive over $42,000 in fraudulently obtained workers’ compensation benefits.

On September 7, 2018, Maces, while working for a Temecula landscaping company, was laying artificial turf at a private residence in the City of Duarte, when a piece of turf slipped and struck his knee.

Maces filed a workers’ compensation claim with his employer’s insurance company that same day and immediately began receiving benefits.

On April 28, 2020, the California Department of Insurance began an investigation after his employer’s insurance company suspected fraud.

The investigation found Maces misrepresented the seriousness of his knee injury and his physical limitations in order to not return to work and collect $42,888 in workers’ compensation benefits.

Surveillance during the investigation showed Maces conducting activities that contradicted the physical limitations he described to his doctor and his employer.

On multiple occasions Maces was seen not using a cane or crutches, even though he claimed he had to use them 100 percent of the time because of the injury.

Maces self-surrendered and was arraigned on February 26, 2021.

The Riverside County District Attorney’s Office is prosecuting this case.

Retailers Face Class Actions for Unpaid Worker Screenings

Last month, Walmart Inc. was hit with class allegations in California that it ran afoul of federal and state labor law by failing to pay workers for time spent on mandatory pre-shift COVID-19 screenings.

And this week, Arizona Walmart workers hit the retail giant with a $5 million proposed class action Monday, alleging Walmart required employees to arrive at their shifts early to undergo COVID-19 screenings but flouted the law by failing to fully compensate them for their time.

Workers filed the putative class action in Arizona federal court, claiming the Arkansas-based retail behemoth required them to arrive at their shifts 10 to 15 minutes early to undergo mandatory COVID-19 screening but didn’t compensate them for all that time.

Plaintiff attorneys say the screenings involved standing in line with co-workers to get temperature readings and answering questions about health conditions, recent travel and potential exposures to anyone with the virus. After passing the screening, workers were given masks and gloves. Only then were they allowed to clock in for the day, they allege.

Walmart, however, maintains that it has compensated its hourly retail associates for pre-shift time spent undergoing COVID-19 screenings. A Walmart spokesperson told Law360 on Monday that its workers have received compensation for the “extra time” they spent being screened for symptoms of the virus.

“All hourly associates have extra COVID screening time systematically added to their daily shifts and paychecks. This is in addition to our manual process for adding extra time if there ever is a reason this additional time is not sufficient. We will respond as appropriate with the court once we have been served with the complaint,” the Walmart spokesperson said.

Walmart workers aren’t the only ones seeking compensation for virus screenings.

Earlier this month, Apple was found to owe a class of California retail store workers for time they spent working off the clock undergoing bag checks. The amount of damages will be determined in a jury trial.

This March, a New Jersey federal judge ruled that Amazon warehouse workers seeking compensation for time spent in obligatory security screenings could amend their complaint to include a claim for compensation of pre-shift time spent undergoing COVID-19 screenings. The amended complaint alleges the tech giant should pay workers for the time they spend getting their temperatures taken and answering a COVID-19 questionnaire prior to their shifts.

That same month, workers sued a California tennis company seeking compensation for time they spent undergoing mandatory temperature checks as a precaution during the pandemic.

The Merchant of Tennis Inc., which operates retail tennis stores in the U.S., has been allegedly underpaying workers at its facility in San Bernardino, California, the overtime wages to which they’re entitled and made the workers undergo temperature checks while they were off the clock, according to the complaint filed earlier this month by one of its employees.

And back in June, Converse reached a $1.87 million settlement to resolve claims that it failed to pay workers for time they spent clearing post-shift security checks.

Demands for “Hero Pay” Rapidly Increasing Across Sectors

Grocery employees in dozens of cities from San Francisco to Santa Ana have successfully lobbied their council members to pass ordinances requiring employers to temporarily give hazard or “hero” pay, typically $3 to $5 an hour. Both proponents and opponents of the hazard pay movement expect more cities to adopt the policy. Similar ordinances may soon come up to a vote in cities from Fresno to Pasadena.

The movement is growing, labor leaders said, covering more workers affected by the pandemic. Coachella has already passed an ordinance giving hazard pay to farmworkers, the first in the nation to do so.

Companies boosted grocery workers’ pay at the peak of the pandemic last year. But most – with the exception of companies such as Save Mart and Trader Joe’s – had ended the practice by June, according to a report from the Brookings Institution.

Long Beach was the first to pass an ordinance, giving workers at large grocery stores an extra $4 per hour for at least 120 days. In response, the California Grocers Association filed a federal lawsuit saying such ordinances are unconstitutional, and Kroger closed two grocery stores in the city.

Though Sacramento has been the site of protests calling for higher wages and better safety conditions for workers, neither the county Board of Supervisors nor City Council has proposed hazard pay ordinances. But the policy has spread to nearly a dozen cities in Southern California and several more in Northern California.

Fresno so far is the only city in Central California to consider hazard pay, but Fresno City Council President Luis Chavez said he has gotten calls from officials in surrounding cities. Chavez has proposed extra pay of $3 an hour for 120 days for the city’s grocery workers.

Many businesses have come out against hazard pay, saying the policy will only lead to more closures and layoffs.

For unionized grocery workers, it should be collective bargaining agreements, not city ordinances, that decide their wages, said Ron Fong, president and CEO of the California Grocers Association.

Other workers are pushing for hazard pay as well.

Coachella in February approved “hero” pay for farmworkers and workers at grocery stores, pharmacy stores and restaurants. Only those who employ 300 or more workers nationally and more than five employees in the city would need to provide hazard pay.

Large fast-food chain restaurants have stayed open during the pandemic, with employees going to work every day, said Megan Beaman-Jacinto, a Coachella councilwoman and workers’ rights attorney. She also pushed to include farmworkers, saying they have often been excluded from the protections provided by labor laws.

Healthcare workers are also pushing for extra pay, through a bill introduced by Assemblyman Al Muratsuchi, D-Torrance.

Assembly Bill 650 would require private health care companies to provide a $10,000 bonus to a non-executive employee who is working during the pandemic and staying in the industry through 2022. Part-time employees would get up to $6,000.

SEIU Local 2015, which represents 400,000 long-term caregivers, is also calling for hazard pay as part of its campaign promoting mass vaccination and calling on local officials to improve working condition for the union’s members.

Workers could also get some help from the coronavirus relief package that President Joe Biden signed March 11. A provision in the bill allows states to give “premium pay” of up to $13 per hour on top of their typical wages to employees deemed essential. The money would come out of the $26 billion the law allocates to California state government.