Editor's note: The following report first appeared in the Law.com publication Insurance Coverage Law Center.

Employment claims arising out of the outbreak of COVID-19 may be covered by workers' compensation insurance, employers' liability coverage (typically contained in the workers' compensation insurance policy) or employment practices liability insurance. It all depends on the allegations.

Some employees will seek the protection of the workers' compensation system, while others will attempt to evade the bar on tort claims typically contained in workers' compensation statutes. Of course, there is workers' compensation insurance for workers' compensation claims.  For those employees who seek to avoid the workers' compensation statutory bar, and sue their employers directly for bodily injury, the employers' liability section of the workers' compensation insurance policy applies.

Finally, some employers may face employment practices claims relating to how they have handled layoffs, office closures, requests for disability accommodations, sick pay and vacation time, or other aspects of the employment relationship. Employment practices liability insurance will often cover such lawsuits.

Workers Compensation Coverage

Workers' compensation laws vary from state to state, providing coverage for injuries or diseases that arise out of and in the course of a person's employment. Some states have expanded workers' compensation eligibility for COVID-19 claims, especially for first responders and healthcare workers.

The Occupational Safety and Health Administration (OSHA)  issued Enforcement Guidance for Recording Cases of Coronavirus Disease 2019 (COVID-19), on April 10, 2020, in which it reiterated that COVID-19 is a recordable "occupational disease" if the employee contracted the disease in the scope of employment and the disease resulted from the conditions of employment. An occupational disease will typically be considered work-related if an event or exposure in the work environment either caused or contributed to the resulting condition, and for OSHA's purposes at least, work-relatedness is generally presumed for injuries and illnesses resulting from events or exposures occurring in the work environment.

Employees who work in the healthcare industry or in an environment that greatly increases the chances of exposure to the virus, based on the nature of the work, will have the strongest case for workers' compensation benefits. Although the current situation is unprecedented, perhaps the most relevant cases are those considering whether diseases like hepatitis and tuberculosis are work-related.

In Harman v. Republic Aviation Corp., 82 N.E.2d 785, 787 (N.Y. 1948), the New York Court of Appeals found that tuberculosis was not "the natural and unavoidable result of the conditions of the employment" of the claimant, a foreman's assistant in a tool and rig shop who contracted his illness from a coworker. The court held that contracting tuberculosis in a well-aired factory is "not at all similar to that of a diver who contracts bends, a miner stricken with silicosis, a hospital nurse infected by some communicable disease," or even "a telephone operator disabled from tuberculosis as a result of using the same telephone as an ill fellow telephone operator." Id. The telephone operator was subject to "continuous mouth, nose and throat contact with a close-fitting, cup-shaped, potentially germ-infested mouth-piece" and this hazardous condition was peculiar to the work of all telephone operators.  Id.

In Esposito v. N. Y. S. Willowbrook State Sch., 38 A.D.2d 985, 985 (N.Y. App. Div. 3rd Dep't 1972), an employee worked as a food service worker at a mental health institution and was diagnosed with acute infectious hepatitis. Because there was no proof that the employee was exposed to any patient suffering from infectious hepatitis, even though a hospital director's letter stated the disease was endemic at the institution, the court held that "an award cannot be sustained in the absence of proof that the employee was exposed to the disease in the course of employment."  Id.

In Hansen v. Gordon, 602 A.2d 560, 566 (Conn. 1992), the Connecticut Supreme Court affirmed an award of benefits from the workers' compensation commissioner to a dental hygienist who contracted hepatitis type B virus (HBV). The commissioner had found "on the basis of all the medical testimony, that dental hygienists are at a particular risk of contracting HBV because of their contact with blood and other secretions."  Id. at 564. The court concluded, "[a]lthough HBV is contagious, and can be transmitted through means outside the work place, for dental hygienists it is a disease so distinctly associated with their profession that the necessary causal connection is present."  Id.

In City of Phila. v. Workers' Comp. Appeal Bd. (Sites), 889 A.2d 129, 140 (Pa. Commw. Ct. 2005), the Commonwealth Court of Pennsylvania affirmed an award of compensation benefits to an employee who contracted hepatitis C. The court noted that the workers' compensation judge credited the testimony of a medical expert, "who expressly and unequivocally opined that the claimant contracted hepatitis C from his occupational exposure to blood and bodily fluids while working as a firefighter and First Responder."  Id.

In addition to healthcare workers and first responders, the outbreak is providing unique risks to other workers deemed "essential" to the ongoing functioning of society—such as meatpackers, grocery store workers and liquor store clerks. Workers' compensation courts will need to decide whether COVID-19 is an occupational disease in all sorts of contexts, and common law courts will need to decide whether the workers' compensation bar on tort suits applies. There is not much guidance in the case law from other pandemics, so this is an area to watch.

Employers' Liability Coverage

Written as "Part 2" of workers' compensation insurance, employers' liability coverage provides protection in situations where an employee has the right to bring a tort action, where the employee or injury is not subject to workers' compensation as an exclusive remedy.

For instance, an employee's claim alleging unsafe working conditions concerning COVID-19 would likely be covered by an employers' liability policy. See, e.g., Russell v. Kimes Steel, No. 14-C-18, 2016 W.V. Cir. LEXIS 26, at *34 (W. Va. Cir. Ct. May 23, 2016) (employers' liability policy covered employee's allegations that his employer required him to perform job duties without required safety equipment and subjected him to an unsafe working condition which caused him to suffer injuries to his hand and amputation of his finger).

Employment Practices Liability Insurance

Employment practices liability insurance provides coverage for suits concerning employment practices, such as discrimination, harassment, retaliation, wrongful termination, and workplace torts. Some examples may be complaints by health care workers under the Americans with Disabilities Act for a hospital's refusal to provide reasonable accommodations, retaliation based on employees' complaints of unsafe working conditions, and complaints of discrimination regarding an employer's implementation of special workplace policies, such as documenting workers' temperatures.

Employment practices liability insurance policies are "claims-made" policies, so carriers may attempt to add exclusions at renewal, before claims arising from the outbreak are asserted. Particularly vigilant policyholders may want to consider giving the carrier notice that the COVID-19 pandemic constitutes circumstances likely to result in claims. Regardless, it is important to provide carriers with prompt notice of any employee demands or claims, even before they rise to the level of a lawsuit.

There are various sources of insurance coverage when an employee brings a claim related to COVID-19. Each type of insurance performs a different and important function in mitigating the risks faced by employers as a result of the pandemic.

Timothy P. Law and Esther Y. Kim practice insurance recovery litigation in the Philadelphia office of Reed Smith, LLP, representing corporations, universities and non-profits in disputes with their insurance companies.