“What more do we have to consider now?”, ask the workers’ compensation defense attorneys. Just at the point where defense attorneys and employers are becoming comfortable with balancing the vocational rehabilitation provisions of the Labor Code with the disability protection provisions of the Fair Employment and Housing Act (FEHA) (see Government Code Section 12993), the Supreme Court of the State of California and Moorepark (see City of Moorepark v. Superior Court of Ventura County (Dillon) (1998) 18 Cal.4th 1143, 77 Cal. Rptr. 2d. 445, 959 P.2d. 752) has found that an employee’s remedy for discrimination due to industrially‑caused disability is no longer the exclusive providence of the Workers’ Compensation Appeals Board (WCAB) under Labor Code § 132(a). However, as a result of Moorepark, we will be faced with increased filings under Labor Code § 132(a) since the injured worker can proceed before the WCAB as well as under FEHA and the common law and civil court, provided the facts of the case support the causes of action supporting the concurrent remedies.
Where do these three remedies intersect?
Labor Code § 132(a) prohibits an employer from discriminating in any way against an employee because of that employee’s involvement in an industrial injury claim. Where the discriminatory action under Labor Code § 132(a) is due to disability, apparent disability, or a history of disability, then concurrent remedies under FEHA and the ADA are available to the injured employee. Assuming the disability discrimination alleged is either actual or constructive termination, then the common law remedy against wrongful termination is also available. With these elements in mind, one can appreciate the admonition the Supreme Court gave us in Moorepark that not every adverse employment action that might give rise to a 132(a) action will necessary be a violation of FEHA or the ADA or support a common law wrongful termination tort action.
For purposes of this discussion, we will assume an employee sustained an admitted industrial injury which resulted in substantial disability and that the employee was terminated from employment allegedly because of that disability. Upon consulting an attorney after receipt of the notice of termination, the following pleadings are filed in the designated form:
(1) Workers’ Compensation Appeals Board:
(a) An Application For Adjudication of Claim requesting a determination of the underlying workers’ compensation issues – indemnity and medical benefits;
(b) An Application For Increased Compensation by Reason of The Employer’s Violation of Labor Code § 132(a) to obtain back wages and benefits, reinstatement of employment, and a 50% increase in indemnity up to a maximum of $10,000.00 plus up to $250.00 in costs.
(2) Department of Fair Employment and Housing (DFEH):
An administrative complaint that the employee was discriminated against (terminated from employment) because of disability which the employer failed to accommodate. In this filing, which will be the basis for a civil suit, the employee is seeking damages for back wages and loss of benefits, future wage loss, punitive damages, and attorney’s fees or, in the alternative, reinstatement of employment.
Ideally, what should you do to defend these claims?
More than ever, the key to successful handling of these claims is communication, starting at the employer level. It is essential that the person acting as the workers’ compensation liaison and the and the risk manager or human resource person dealing with employment law issues communicate regularly and completely so that each is aware of all the claims of potential litigation threatened by an employee or for which the company is at risk. This shared information should be communicated to the workers’ compensation adjuster and the legal representatives in all forums. Assuming the situation under discussion, it is essential that a coordinated response be devised. This will undoubtedly require a strategy meeting, at least a telephone conference, with all the players on the employer’s side.
Since the DFEH rarely conducts any administrative hearings, but typically issues a right to sue letter, it is likely that the FEHA complaint will result in a civil lawsuit being filed in fairly short order after release of the right to sue letter. Although there is now insurance available to cover employer acts, few employers have secured that coverage. As a result, the employer can anticipate major litigation costs in defending the civil lawsuit. Therefore, it is in the best interests of the employer to develop its defense as early and as cheaply as possible and to make sure that its defense in the various forums is consistent.
With the 132(a) on file at the WCAB, the Board would have jurisdiction of the issues. Utilizing that forum, the employer could quickly obtain a deposition of the claimant, solidifying his testimony and producing early information on the discrimination and termination claim. That deposition can be the basis for whatever internal investigation the company may wish to develop. It can also provide a foundation for further civil discovery once the right to sue letter is obtained and the civil suit is at issue. By the time the civil lawsuit is filed, the employer could be well on its way to evaluating its potential liability and determining an overall strategy in the handling of these claims. Perhaps, at this point, it would be helpful for a further strategy meeting to agree upon whether amicable resolution will be sought, the level of such resolution, or alternative measures such as private or court ordered mediation.
Assuming the underlying workers’ compensation case is ready for disposition, consideration ought to be given to a global resolution of all issues in all forums. If that is of interest to the employer, a meeting with plaintiff’s representatives should be arranged to determine whether or not a settlement can be negotiated. All interested parties on the defense side of the matter should attend or at least be available by telephone. If reinstatement of the employee is the decided upon strategy, then the underlying workers’ compensation case should be resolved by stipulation with a settlement agreement drafted on the 132(a) issue, a dismissal entered in the civil suit with a general release of the employer from liability. If reinstatement of the employee is not agreed upon, then the underlying workers’ compensation case, including the 132(a) issues, ought to be resolved by Compromise and Release. That settlement would be in addition to and separate from the dismissal and general release obtained by the employer on the civil issues.
Settling all aspects of the litigation at one time for one large lump sum gives an employee more incentive to resolve all claims globally. Piecemeal settlements always seem to require more money for each component in order to obtain the interest and consent of the claimant and usually result in higher legal fees, as well. With any global resolution, care must be taken that the workers’ compensation issues have sufficient monies assigned to them to warrant approval of the settlement by the WCAB.
What are the handicaps of not coordinating the defense?
Failure to coordinate the defense of the underlying workers’ compensation claim, the 132(a), and the FEHA claims result in inconsistent handling of these various elements. It is not uncommon to find an agreement which is of benefit in controlling the workers’ compensation issues, but which results in increased liability of the employer in the FEHA action. For example, stipulation to an early permanent and stationary date may be of value in the workers’ compensation case, but may result in a potentially longer period of salary loss in the discrimination suit. Even the manner in which the settlement documents (a stipulation or Compromise and Release) are drafted may not be of assistance to the employer in the control or resolution of the FEHA action. For example, a statement in a workers’ compensation settlement that the injured worker is not a qualified injured worker, may result in an advantage in workers’ compensation by precluding vocational rehabilitation. But such a stipulation may mean the employer must return the injured employee to work. Statements made in settlement documents may be taken as admissions in the other forum. Awareness that there are other issues to be considered will result in more careful drafting of documents and in a closer assessment of the overall impact of particular language.
Failure to take advantage of the early discovery potential afforded in the workers’ compensation arena can also be the result of poor communication and coordination. Likewise, as noted earlier, piecemeal settlements generally result in a higher overall monetary expenditure than would a combined settlement.
What if the cases are not amenable to settlement?
Assuming resolution of the 132(a) action and the FEHA claim is impossible, consideration should be given to bringing the 132(a) claim to trial as early as possible. It is felt that trial of a discrimination or termination action is more likely to be favorable to the employer since it is heard by a judge rather than a jury of the employee’s peers. A favorable finding by the Workers’ Compensation Judge may be determinative of the issues in the civil arena under the doctrine of res judicata.
The Moorepark case has generated issues which are of great importance to employers. These issues for the employers require coordinated handling in all forums to minimize the overall liability of the employer.