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August 2020

Employer Immunity In California and Texas From Civil Actions For COVID-19 Injury Or Death

Employers in California and Texas are generally immune from lawsuits for civil damages by an employee injured on the job. COVID-19 presents a new risk for employers in the nation's two most populous states, one that appears larger and more daunting than perhaps any other in modern times.

Nevertheless, a careful analysis of the law reveals that immunity from civil damages for injury or death remains the operative rule in virtually all cases where an employee contracts COVID-19 at work and the workers' compensation scheme provides the exclusive avenue for recovery.

In California, workers' compensation insurance is mandated for all employers by the California Workers' Compensation Act.[1] California employers must comply with workers' compensation laws and either purchase workers' compensation insurance or self-insure by meeting certain statutory requirements.[2]

Workers' compensation is the sole and exclusive remedy for an employee or their survivors against the employer for injuries or wrongful death civil claims arising out of and in the course of the employment.[3] The preclusive effect of the workers' compensation system is referred to as the exclusivity rule.

There are limited exceptions to the exclusivity rule, but California case law and the narrow focus of these exceptions should preclude their application, including civil damages exposure, in all but the most obscure and extreme set of facts.

The theory underlying the workers' compensation framework is a presumed compensation bargain, by which the employer's workers' compensation insurer assumes financial liability for personal injury or death without regard to fault in exchange for limits on the financial recovery.[4]

This no-fault system should apply to California claimants who contract COVID-19 at work and ultimately play out as expected, i.e., no civil cases against employers. Tragic as every loss is, workers' compensation provides secure and prompt financial relief to workers and their families.

In Texas, the workers' compensation system allows employers to choose whether or not to maintain workers' compensation insurance.[5] Texas also allows employers to either purchase coverage or self-insure for workers' compensation purposes.[6]

By either means, Texas employers who choose to carry workers' compensation coverage avail themselves of the rights and protections afforded by the Texas Workers' Compensation Act, namely that employees are precluded from filing civil cases and must pursue their claims through an administrative agency for benefits under the act.[7] In contrast, employers that opt to forego workers' compensation coverage waive the rights and protections afforded under the act.

Texas law provides two exceptions to the exclusivity rule: intentional conduct and gross negligence. Courts have narrowly applied these exceptions in only the most egregious circumstances. Thus, Texas employers who carry workers' compensation coverage should be insulated from civil liability from COVID-19 injuries to employees, like their counterparts in California.

Employer Immunity Against Workers' Claims

In California, when an employee's on-the-job injury or death is covered by the workers' compensation statute, the right to recover compensation is the sole and exclusive remedy against the employer.[8] The California Workers' Compensation Act provides an employee's exclusive remedy against their employer for injuries arising out of and in the course of employment.[9]

Numerous courts have applied this workers' compensation exclusivity rule to dismiss civil actions filed by injured workers in California. For example, in King v. CompPartners Inc. in 2018, the California Supreme Court properly sustained a demurrer without leave to amend because the workers' compensation law provided the exclusive remedy for an employee's injuries and preempted the plaintiffs' tort claims.[10]

In 2015, a California court of appeal affirmed a defendant employer's summary judgment motion in Melendrez v. Ameron International Corp. where workers' compensation was the exclusive remedy available to survivors under California Labor Code Section 3602 because it was undisputed that the workplace exposure substantially contributed to the worker's mesothelioma.[11]

Likewise, a California superior court's judgment was reversed in Wright v. Beverly Fabrics in 2002, with a direction to enter an order granting the employer's motion for nonsuit because the plaintiff's damages were barred by the workers' compensation exclusive remedy rule and the plaintiff was acting in the course of employment at the time of the injury and the injury arose out of the employment.[12]

The same general rule applies in Texas. The Texas Workers' Compensation Act establishes that workers' compensation benefits are the exclusive remedy of an employee covered by workers' compensation insurance coverage against the employer or an agent or employee of the employer for a work-related injury sustained by the employee.[13]

Texas courts have rejected workers' claims seeking civil damages against employers for workplace injuries. In 2018 in Trahan v. Premcor Refining Group Inc., summary judgment of an employee's claims was affirmed by a Texas court of appeals by a showing of evidence of the employer's right to control the employee's work at its refinery, and a workers' compensation insurance policy that covered the benefits actually received by the employee for the injury.[14]

In Kershner v. Samsung Austin Semiconductor LLC in 2016, a Texas court of appeals affirmed judgment in favor of an employer on the basis it properly asserted the exclusive-remedy defense against claims by the subcontractor's employee when the employee agreed to be bound by workers' compensation coverage, thus barring the claims since workers' compensation benefits were the exclusive remedy.[15]

California and Texas employers who comply with basic workers' compensation requirements in their states can properly invoke this long line of precedent when faced with claims that an employee became ill or died by contracting COVID-19 at work. California has gone so far as to affirm employees' rights to pursue workers' compensation benefits if they experience a COVID-19 injury.[16]

California Exceptions to the Exclusivity Rule

California recognizes five limited statutory exceptions to otherwise covered workers' compensation claims that allow an employee to sue the employer for tort damages in civil court. Two[17] are of potential interest: (1) where the employee's injury is aggravated by the employer's fraudulent concealment of the existence of the injury and its connection with the employment; and (2) where the employer fails to secure payment of compensation, i.e., an uninsured employer.[18]

The fraudulent concealment exception typically arises in situations involving exposure to asbestos, mold or toxic chemicals. California courts have determined it is a very limited exception that requires an employer's actual knowledge of an employment-related injury and an employee's lack of that knowledge.

California Labor Code Section 3602(b)(2) does not impose liability on an employer for injuries resulting from either the failure to provide a safe work environment or from failure to warn of unsafe premises.[19] The exception requires evidence to support a finding the employer knew about the injuries before being told by an employee insofar that an employer's prior knowledge of its unsafe work environment and the potential risks to its employees, even if it could be proven, would be insufficient to establish liability.[20]

The three required elements for fraudulent concealment are: (1) the employer must have concealed the existence of the injury from the claimant; (2) the employer must have concealed the connection between the injury and the employment; and (3) the injury must have been aggravated following the concealment.[21]

Because of these unique and highly unlikely fact-specific circumstances, the fraudulent concealment exception is unlikely to apply in most all cases. As for the second exception, employers that simply fail to purchase workers' compensation insurance are exposed to civil damages claims.

In the case of the employer who unlawfully fails to obtain such insurance, the Legislature specifically determined that such immunity was not warranted under California Labor Code Section 3706.[22]

Texas Exceptions to the Exclusivity Rule

Texas law provides two exceptions to the workers' compensation exclusivity rule: (1) for intentional conduct and (2) for gross negligence.[23] Despite their similarity, each exception merits careful analysis.

Intentional Conduct Exception

In the case of intentional conduct, an employer may be liable for exemplary (punitive) damages. Triggering this exception is a very high burden. To meet the burden for intentional conduct, the claimant must establish that the injury was intentional and the actor had the specific intent to inflict the injury.[24]

To show specific intent, the person must act either with the purpose of producing or with the knowledge that the consequence is substantially certain to result from the conduct.[25] Knowledge of a general or nonspecific consequence does not suffice.[26] Texas courts have developed a substantial certainty analysis as a result.[27]

A court measures substantial certainty by what the actor knew.[28] The evidence must show that the actor knew, not should have known, that the consequences of their actions were substantially certain to occur.[29] In 1989, in Rodriguez v. Naylor Industries Inc., the Texas Supreme Court found substantial certainty existed when an employer, fully knowing that truck tires were faulty, ordered an employee to drive a 250-mile journey resulting in a blowout, loss of control and substantial injury to the employee.[30]

It is important to note, however, that substantial certainty is not established when the identity of the potential victims is vague, the time frame involved is expansive, and the causal chain connecting conduct and harm is relatively attenuated.[31] Knowingly permitting a hazardous work environment, willfully failing to furnish a safe workplace, ordering extremely dangerous jobs, and violating safety statues do not constitute substantial certainty either because they do not deliberately inflict harm and only create the potential for harm.[32]

Put simply, if the actor knows that the consequences from their act are certain or substantially certain to result in a particular harm and still goes ahead, then the actor is treated by the law as if the actor had in fact desired to produce the result, ergo specific intent. An appreciation of risk, without more, does not demonstrate knowledge of a substantial certainty of the consequences of one's acts.

Thus, the intentional failure to provide a safe workplace does not constitute an intentional injury for a claimant to escape workers' compensation limitations to obtain exemplary damages.[33]

Gross Negligence Exception

The difference between intentional conduct and gross negligence is in the mind of the actor and the specific intent to inflict injury.[34] Texas has a unique definition of gross negligence, which combines the two recognized tests for gross negligence in American jurisprudence: "entire want of care" and "conscious indifference."[35]

Gross negligence consists of both an objective component and a subjective component.[36] Under the objective component, the claimant must show the act or omission, when viewed objectively from the employer's standpoint at the time it occurred, involved an extreme degree of risk, considering the probability and magnitude of the potential harm to others.[37]

Texas courts require an extreme degree of risk to be more than a mere possibility of injury or even high probability of minor harm.[38] Under the subjective component, the claimant must also show by clear and convincing evidence, a heightened standard, that the employer had actual, subjective awareness of the risk but proceeded with conscious indifference.[39]

Although some plaintiffs have attempted to pursue civil relief against their employers for COVID-19 injuries under the gross negligence exception, the exception is not easily triggered and remains a highly formidable barrier.

Looking Ahead

Under well-established legal precedent in both California and Texas, the workers' compensation system should provide the exclusive remedy for an employee's on-the-job injury or death due to COVID-19, and employer immunity from civil court actions should remain the rule. Notwithstanding, employers are currently responding to a wave of new COVID-19 civil lawsuits that seek to upend this long-standing construct.

California and Texas employers would be wise to confirm that their workers' compensation coverage is properly in place, or verify they satisfy state requirements if attempting to self-insure under applicable workers' compensation provisions. Most importantly, employers should double down on their efforts to comply with local, state and federal orders designed to prevent the spread of COVID-19 and provide a safe workplace.

This article has been published by Law360 as "Workers' Comp Will Cover Most Virus Claims In Calif., Texas" on August 13, 2020. To access, please click here

[1] Cal. Lab. Code § 3200 et seq.

[2] Cal. Lab. Code § 3700.

[3] Cal. Lab. Code § 3602; Melendrez v. Ameron Int'l Corp. , (2015) 240 Cal.App.4th 632, 638.

[4] Melendrez, supra, 240 Cal.App.4th at 638.

[5] Tex. Lab. Code § 406.002(a).

[6] Tex. Lab. Code § 406.003(coverage options); § 407.061(self-insurance requirements).

[7] Tex. Lab. Code §§ 406.031(a), 406.002(b).

[8] Cal. Lab. Code § 3602; Melendrez, 240 Cal.App.4th at 638.

[9] Wright v. State of California , (2015) 233 Cal.App.4th 1218, 1229.

[10] King v. Comp. Partners, Inc. , (2018) 5 Cal.5th 1039, 1039.

[11] Melendrez, 240 Cal.App.4th at 634.

[12] Wright v. Beverly Fabrics , (2002) 95 Cal.App.4th 346, 357.

[13] Tex. Lab. Code § 408.001(a); see also Port Elevator-Brownsville, LLC v. Casados , 358 S.W.3d 238, 241 (Tex. 2012).

[14] Trahan v. Premcor Ref. Grp. Inc. , 2018 Tex. App. LEXIS 6493 (Tex. App.—Beaumont Aug. 16, 2018).

[15] Kershner v. Samsung Austin Semiconductor, LLC , 2016 Tex. App. LEXIS 7801 (Tex. App.—Austin July 22, 2016).

[16] Cal. Exec. Order N-62-20.

[17] The remaining three are when the employee's injury or death was proximately caused by the employer's: (1) willful physical assault (2) defective product manufactured by the employer later provided for the employee's use by a third person; and (3) defective product manufactured by the employer's removal of or failure to install a point of operation guard on a power press. Cal. Lab. Code §3602(b)(1); Cal. Lab. Code §4558.

[18] Cal. Lab. Code § 3706.

[19] Cal. Lab. Code § 3602(b)(2).

[20] Hughes Aircraft Co. v. Superior Court , (1996) 44 Cal.App.4th 1790, 1795, 1797.

[21] Jensen v. Amgen , (2003) 105 Cal.App.4th 1322, 1324.

[22] Graphic Arts Mutual Ins. Co. v. Time Travel Internat., Inc. , (2005) 126 Cal.App.4th 405, 408.

[23] Tex. Lab. Code § 408.001(b); See also Port Elevator-Brownsville, 358 S.W.3d at 241.

[24] Mo-Vac Serv. Co., Inc. v. Escobedo , 63 Tex. Sup. Ct. J. 1312 (June 12, 2020).

[25] Id.

[26] Id.

[27] Id.

[28] Id.

[29] Id.

[30] Rodriguez v. Naylor Indus., Inc. , 763 S.W.2d 411, 412 (Tex. 1989).

[31] Mo-Vac Serv. Co., Inc. , 63 Tex. Sup. Ct. J. 1312.

[32] Id.

[33] Reed Tool Co. v. Copelin , 689 S.W.2d 404, 405 (Tex. 1985).

[34] Mo-Vac Serv. Co., Inc. , 63 Tex. Sup. Ct. J. 1312.

[35] Wal-Mart Stores v. Alexander , 868 S.W.2d 322, 325 (Tex. 1993).

[36] U-Haul Int'l, Inc. v. Waldrip , 380 S.W.3d 118, 137 (Tex. 2012).

[37] Id.

[38] Tex. Civ. Prac. & Rem. Code § 41.001(11)(A); U-Haul, at 137.

[39] Tex. Civ. Prac. & Rem. Code § 41.001(11)(B); U-Haul, at 137.

Employment Law

Brent T. Buyse

Employment Law