BuSINESS
SATURDAY, MARCH 7, 2020:: LATIMES.COM/BUSINESS
C
DOW25,864.78▼256.50 S&P5002,972.37 51.57▼▼NASDAQ8,575.62 162.98 GOLD$1,670.80 4.40▲ OIL$41.28 4.62▼EURO$1.1314▲ .0114 U.S. T-NOTE(10-yr.) .70% 0.22▼A prominent Senate Democrat is
calling on the biggest gig economy
companies to make it easier for on-de-
mand workers to take time off amid the
coronavirus outbreak, and several of
the companies have cautiously sig-
naled they are open to the notion.
Sen. Mark Warner (D-Va.) is asking
Uber, Lyft, Postmates, Grubhub, Door-
Dash and Instacart to alleviate some of
the potential financial burden their
drivers and couriers may face if they be-
come ill with COVID-19 or choose to re-
duce their exposure by staying home.
In letters sent to each company on
Friday, Warner urged the companies to
consider opening a health fund that
workers could tap into to help cover
testing or treatment. He also suggested
offering workers the weekly average
pay regardless of how much they work
to lessen the incentive to keep working
for those who are ill or may have been
exposed.
In the letter, Warner said gig and
contingent workers may be among the
most vulnerable workers because they
are potentially unable to follow recom-
mendations from the Centers for Dis-
ease Control and Prevention to stay
home when sick, work remotely or get
medical treatment “without experienc-
ing some kind of financial hardship.”The health
insurance
industry,
several states
and the fed-
eral govern-
ment have
been falling
over them-
selves to
assure Americans that they
should have no fear about
getting tested for the novel
coronavirus — tests will be
administered for free, they
say, without deductibles or
co-pays.
Problem solved, right?
Well, not really.
The assurances made by
insurers such as Cigna and
Aetna, states including
Washington, New York and
California, and the Trump
administration’s co-
ronavirus task force are
“more limited in scope than
they appear,” observes
Nicholas Bagley, a health
law expert at the University
of Michigan. They offer no
guarantees at all to the
estimated 100 million
Americans who receive their
coverage through self-in-
sured employers — more
than 60% of all those cov-
ered by employer plans.
The reason is that states
are preempted from regu-
lating self-insured employer
plans. That’s an artifact of
ERISA, the Employee Re-
tirement Income Security
Act of 1974. ERISA preem-
pts state regulation of em-
ployee benefit plans.
The law left regulation of
health insurance to the
states, but self-insured
employers aren’t considered
insurers under the law, so
they’re exempt from state
oversight. Issuing orders to
self-insured employers
about COVID-19 would
require an act of Congress.
Typically, self-insured
employers hire name insur-
ance companies to adminis-
ter their plans, but they pay
the costs themselves and
have the right to set benefit
and cost-sharing terms as
they wish. Big employers
generally are required by
the Affordable Care Act to
offer insurance to their
employees, but the act gives
them considerable latitude
to design their plans.
As of now, Bagley writes,
“the federal government
simply does not have the
legal power to require em-
ployers to cover coronavirus
testing without cost-shar-
ing.”
MICHAEL HILTZIK
U.S. credit markets suf-
fered their worst day in a
decade as fears intensified
that the spreading
coronavirus will hurt corpo-
rate income and some com-
panies’ ability to repay debt.
Bonds of American Air-
lines Group Inc. dropped to
near distressed levels as
companies worldwide can-
celed business travel and a
growing list of conferences
and sporting events were
called off. Debt of rental-car
companies and cruise lines
came under increasing pres-
sure. And energy company
bonds and loans fell further
into distress as crude oil
prices slumped.
The sell-off triggered a
surge in a derivatives index
that investors use to hedge
against losses, pushing it up
by the most since at least
2011, prices compiled by
Bloomberg show. The cred-
it-market meltdown was the
culmination of a week in
which investors withdrew
the most cash in at least 10
years from U.S. funds that
buy corporate bonds and
loans.
“This is what the start of
a recession after a long bull
market feels like,” said John
McClain, a portfolio man-
ager at Diamond Hill Capi-
tal Management. “This is
the first day of seeing some
panic in the market.”
Although stocks have
sold off over the last two
weeks in dramatic fashion,
the drop in credit had largely
been orderly until now, mar-
ket participants say. They’re
bidding securities even
lower to get trades done,
making transaction costs
that much higher. For some,
it’s the first time they’ve ex-
perienced such volatility in
their careers.
Most of the selling pres-
sure is hitting the more liq-
uid names such as General
Electric Co. in investment
grade and Charter Commu-
nications Inc. in high yield.Health
fears
clobber
credit
markets
Investors head for the
exits amid doubts
about company bonds.
By Molly Smith
and Claire Boston[SeeBonds,C3]Another reversal
U.S. stocks end a wild
week on a down note. CUBER, LYFT, Postmates and others are facing pressure to financially assist their drivers and couriers if they
fall ill with COVID-19 or stay home to reduce their exposure to it. Above, a pickup lot at LAX.Irfan KhanLos Angeles TimesGig firms urged to help
sick workers stay home
Senator asks Uber, others to ease the burden for a vulnerable group
SEN. Mark Warner wrote letters calling on the companies to consider
opening a health fund to help cover testing or treatment for workers.Steve HelberAssociated PressBy Johana Bhuiyan[SeeGig,C6]Fre e
testing
for the
virus?
Uh, no
[SeeHiltzik,C5]Walt Disney Co.’s sur-
prise appointment of Bob
Chapek as its chief executive
answered the lingering mys-
tery of who would run the
company after Bob Iger’s 15-
year reign.
For investors, though, it
raised additional questions
for the company.
All eyes remain on Kevin
Mayer, who has his hands
full at Disney running its
crucial streaming business.
Many thought Mayer, who is
chairman of Disney’s direct-
to-consumer and interna-
tional segment, would have
been a logical choice for the
CEO job, given his role lead-
ing what Iger has deemed
the company’s top priority.
The unit, so far at least, has
also been highly successful.
Disney+ hit 28.6 million
subscribers last month, sur-
passing industry expecta-
tions.
Some analysts have
speculated about whether
Mayer will remain with the
company. Barclays manag-
ing director Kannan
Venkateshwar said in a re-
cent note to clients that
Mayer’s future was “[o]ne of
the concerns expressed by
investors.” Iger tried to quell
those worries in a meeting
with Wall Street analysts
last week. Iger “indicated
that [Mayer] had been con-
sidered for the CEO job” but
“was confident Mayer would
be fine,” Venkateshwar
wrote.
Indeed, Disney insiders
and people who know Mayer
said it is unlikely he will de-
part, given the high-profile
nature of his current job. For
a media executive, there ar-
en’t many positions in enter-tainment, media or tech that
are more interesting than
that of leading Disney’s
charge into subscription vi-
deo. And Mayer, 57, could be
in a good position to eventu-
ally succeed Chapek.
“Kevin Mayer still gets to
lead the most important
part of the company, so I
could see him and Chapek
working well together,” said
Andrew Choi, senior re-
search analyst at Parnassus
Investments, a San Fran-
cisco firm that holds more
than $800 million in Disney
stock.
Disney declined to make
Mayer and other executives
available to comment.
Major decisions loom.
The company must figure
out who will take over parks,
experiences and products in
Chapek’s stead, at a time
when the coronavirus epi-
demic is sowing panic, shut-
ting down theme parks and
curtailing tourism.This exec still holds keys to the Disney kingdom
KEVIN MAYER, head of Disney’s direct-to-consumer and international seg-
ment, could still be in a good position to eventually succeed new CEO Bob Chapek.Jesse GrantGetty ImagesBypassed for CEO job,
head of streaming unit
remains crucial player.
By Ryan Faughnder
[SeeDisney,C4]