Labor Code132A Update (9-3-2007)

Labor Code §132A Impacts Workers' Compensation Bottom Line

Labor Code §132a prohibits employers from discriminating in any way against employees who suffer workplace injuries, file workers’ compensation claims, or who intend to file workers’ compensation claims. An injured employee who is successful in a discrimination claim can receive 50% of the total compensation received up to a maximum of $10,000, plus lost wages and benefits.

Many employers and employees have come to believe that employees who have active workers’ compensation claims are insulated from discipline and cannot be terminated. Some employers have seen employees who know they are on their last chance file claims simply to protect themselves from discipline that they see as inevitable. However, developments in this area of law in recent years have given employers the ability to apply their existing rules and policies to injured employees.

In the early cases arising under Labor Code §132a, employers were at a serious disadvantage because the courts interpreted the law to mean that almost any adverse action against an injured employee violated the law. All that an injured employee had to show was that the employer “engaged in conduct detrimental to the worker” in order to prevail. In order to defend itself, the employer had to prove that its action was necessary and directly related to business realities. Under this interpretation, injured workers were insulated from any discipline or adverse employment action for practical purposes because this law presented a much lower standard than other areas of discrimination law, where a worker must show that an employer’s action is motivated by a discriminatory intent.

But recent developments in this area of law have benefited employers. First, the California Supreme Court ruled in Department of Rehabilitation v. WCAB that an employee can only prove a discrimination claim if the employer’s action was taken because of the workers’ compensation claim, making Labor Code §132a claims function more like other areas of discrimination law. In the case considered by the Court, the employer required an injured employee to use accrued sick leave and vacation time for his time away from the office for treatment of his injury, or to take the time unpaid. The policy had been applied consistently, regardless of whether an employee had a work related injury or not. The Court ruled that because the policy had been consistently applied to employees who had absences there was no indication that the employer applied the policy because of the industrial injury and ruled against the employee. After this case, courts have consistently allowed employers to consistently apply their disciplinary policies to employees with work-related injuries.

Examples include an employer who was permitted to terminate an employee pursuant to a rule in a union contract requiring employees to provide medical documentation for absences. When the employee failed to provide the necessary documentation the employer lawfully terminated the employee based on the established and consistently applied policy. In another case, Robinson v. WCAB, an employee was terminated for failing to return from workers’ compensation leave after being released to return to work. Once again, because the policy had been consistently applied to those with industrial injuries and those with non-work related injuries, the employee could not show that there was discrimination because of an industrial injury.

Further, the WCAB ruled that Labor Code §132a claims regarding the termination of medical benefits are preempted by the federal Employee Retirement Income Security Act (ERISA) as long as the termination of benefits was done consistent with the eligibility terms of the medical plan. In that case, an employee had medical benefits through an ERISA plan that made him ineligible if he was off work for a period of 90 days. He had an industrial injury, was on leave for more than 90 days, and his coverage was terminated pursuant to the plan description. ERISA, which applies to most employer-provided medical plans, preempted Labor Code §132a and the employee’s claim was dismissed. Thus, most employers do not have to carry employees on their medical plans indefinitely while the employee is on a workers’ compensation leave.

COUNSEL TO MANAGEMENT:

As with all areas of discrimination law, employers must consistently apply disciplinary rules, and must be sure to carefully document the facts that support disciplinary decisions. Keep in mind that in discrimination cases, courts and administrative agencies will look to what the employer did to other employees who committed the same violation to see if there is discrimination. Where an industrially injured employee is treated more severely than an employee who committed the same violation but did not file a workers’ compensation claim, the employer will likely be liable.

Employees with workers’ compensation claims who are terminated or disciplined, or who lose their benefits, will often file Labor Code §132a claims, which are a favorite of employee-side attorneys. Employers must be prepared to demonstrate the neutral and consistent application of their rules and policies in order to defend against such claims. Of course, supervisors and management should avoid public statements that suggest hostility towards the injured worker, such as statements that the employer is suspicions that the injured worker is faking.

Finally, employers should review their benefit plans with the providers or administrators of those plans. If a plan is covered by ERISA, the employer may be able to terminate coverage pursuant to the eligibility terms of the plan without having any problems with workers’ compensation law. This can be a way to cut down one of the biggest costs of workers’ compensation claims – carrying employees on employer provided medical plans when the employees are on seemingly endless workers’ compensation leave.

The goal of this article is to provide employers with current labor and employment law information. The contents should neither be interpreted as, nor construed as legal advice or opinion. The reader should consult with Saqui & Raimondo at (831) 443-7100 in Salinas, or (916) 782-8555 in Sacramento for individual responses to questions or concerns regarding any given situation.