The second version is more formally correct, as the conversation took place in the past. The version using the present tense is typical of everyday speech, the present tense is used to show that the information given is still current.

If you're asking another person to cover for you now, use the first one: 'Jose says he can do it, but if you can, I'll tell him it's ok' But if the situation is settled, use the second one: 'Don't worry, it's ok. Jose said he can do it' ('can' because the situation isn't over' Use the past if it has now changed: 'Can you cover for me? Jose said he could do it but now he can't... ' :)

If you contacted José (using past tense) about a specific situation happening only one time (covering for you till Friday night, at least), it would be appropriate to use past tense to report José's reply.

I contacted José, who said (that)....

You use the present tense to speak about something that happens repeatedly, as a routine. "José says" would be used to express something José says often.

e.g.: Whenever I sneeze, José says "salud".