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What effect does a business closure have on SEB?

COVID-19 may impact individuals who were presently working on light or modified duty at the time of the temporary or permanent business closure. If an employer had yet to return an employee to such a modified position prior to the business closure, we do not believe the employer could take advantage of a modified wage earning capacity that would exist but for the Coronavirus health and/or economic impacts. Under La. R.S. 23:1221(3), and our vocational rehabilitation system encompassed primarily in La. R.S. 23:1126, once the employee demonstrates that he or she is incapable of earning 90% of the pre-accident wage, the burden then shifts to the employer to demonstrate wage earning capacity. If the actual employer, as a result of the Coronavirus, cannot bring the employee back into a modified position and the employer has not completed the vocational rehabilitation process through testing and a labor market survey which identifies suitable job availability within the employee's or employer's reasonable geographic region, the employer would be forced to continue temporary total disability (TTD) benefits at the full compensation rate. This obligation would continue until the employer can offer a modified position or demonstrate wage earning capacity with other employers.

We believe, however, that the result could be different in instances when the employee is actually in a light duty position at the time of the Coronavirus induced closure. Absent a compensable injury or occupational disease (which we will cover subsequently), we do not believe that an employer would owe workers' compensation benefits to individual workers not stricken with the virus and unable to attend work and earn wages as a result of a government ordered shutdown. An interruption or reduction in an employee's salary or wages, by itself, does not constitute a compensable injury and, therefore, does not trigger an employers' obligation to pay compensation benefits. We have recently researched the caselaw, particularly with respect to the unusual situation stemming from Hurricane Katrina, and we found no applicable cases dealing with that time period nor any other major disaster or public emergency.

With particular reference to the previously injured employees now on light duty, the SEB section of the Louisiana Workers' Compensation Act states that “for injury resulting in the employee's inability to earn wages equal to 90% or more of wages at time of injury," supplemental earnings benefits will be owed. The wording of the statute demands that the inability to earn wages at the 90% level originate as a result of the accident. In the current situation, the inability to earn wages at the 90% level is the result of the government mandated business closures and/or the COVID-19 economic impact on businesses. We can certainly expect that there will be attorneys who will argue that when an injured worker is not able to do his full duties at the time of a particular closure and when, as a result of such closures, employers cannot provide employment at the 90% level, then such affected employees would be entitled to SEB.

There are several arguments on both sides, but a counter to this expected argument would be that all employees, due to government imposed shutdowns or economics, are in the same boat of being restricted from working. Providing SEB benefits to some employees would provide them with greater rights than other employees who are now out of work for the same Coronavirus reasons. All of this, of course, is completely new ground as employers, employees, and the court systems have never dealt with anything like this before. Essentially, we believe that employers can reasonably take the position that workers' compensation is not owed to employees who had already returned to work at light duty at their previous pay. This is based on the assumption that the employees are unable to obtain a certain threshold of their pre-injury wages solely as a result of the COVID-19 pandemic and/or government mandated shutdowns. Employers could take the position that an employee’s inability to earn wages must be causally related to the compensable injury which was suffered and not causally related to the pandemic.