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Lawsuit Prevention for Employers

When it comes to workplace injuries, most employers take special pride in being “all over it.”  They maintain the equivalent of a rapid response team to ensure prompt medical attention, and deploy their workers’ comp insurer in order to get the injured worker back on the job as soon as possible.  This approach is seen as advancing the interests of both the carrier, which seeks to minimize its monetary obligation for comp benefits, and the employer, whose interest is in keeping the dust down on next year’s comp insurance premiums.  It’s a win-win situation, right?

W-R-O-N-G.  Employers who adopt this approach are at risk of  ignoring an angry, rogue elephant in the living room.  By this, I refer to the many legal obligations California imposes on employers which, if violated, provide sanctions that are much more threatening than anything found in the Workers’ Compensation Act.  This is because workers who suffer a compensable workplace injury often simultaneously qualify as “individuals with a disability,” under the California Fair Employment and Housing Act (“FEHA), based on the same medical symptoms resulting from the workplace injury.  The FEHA is a completely independent body of law, and is unrelated to the Workers’ Compensation Act.

Due to the extremely broad definition of the term “disability” under the FEHA, almost any “permanent” injury (whether or not it is work-related) that restricts an important life activity (such as “working”) will qualify an injured worker as “disabled.”

If so, the worker is entitled to the full protection of the disability discrimination provisions of the FEHA. This protection is similar to that provided by the federal Americans with Disabilities Act (“ADA”), but is far more demanding of employers than its federal counterpart.

Employers that focus on their workers’ comp obligations without coordinating their legal analysis and resulting activities to address employee rights created by the FEHA are courting catastrophe. The irony of this common “oversight” is that violation of the FEHA subjects employers to liability exposure far in excess of the penalties they face for even the most serious violation of workers’ comp laws.  This includes punitive damages, emotional distress damages and attorneys’ fees.  The latter, alone, can readily approach or exceed seven figures through a jury trial, exclusive of appeals. Taken together, they are potentially-devastating, and dwarf an employer’s exposure for any conceivable comp violation.

So, why do employers so-commonly ignore this enormous dilemma? Based on the author’s three decades of wrestling with this question, consider the following typical case study.   Employers are often highly-motivated to work closely with their comp carrier to properly address workplace injuries and to promptly resolve resulting claims. What is lost on many employers, however, is that the carrier’s adjusters are responsible only for resolving  comp claims that are covered under the carrier’s policy, and to do so in the most efficient and cost-effective way possible. Because such policies normally expressly exclude from coverage any ensuing claims in state court for disabilities discrimination, adjusters typically devote zero attention to these issues, if they are aware of them at all.

Unfortunately, employers are often completely oblivious of the potential of disability-related issues maturing into lawsuits.   Moreover, their natural tendency to rely on the comp carrier’s adjuster as the resident “expert” on the workplace injury at hand often contributes to the problem.  Because the adjuster’s job description precludes consideration of any non-comp-related issues, the result is a massive “blind spot” on the employer’s radar screen. What’s worse, the employer often feels pressure to adopt measures that are designed to minimize the cost of the comp claim and the resultant premium increases. Together, these factors congeal into a toxic stew which combines aggressive action to facilitate the injured worker’s return to light duty while completely ignoring the potentially catastrophic effect such measures can have on the employer’s ability to defend against a future, but presently unperceived, disabilities discrimination lawsuit.

For these reasons, it is vital that the employer’s response to any serious work-related injury carefully consider all laws that might apply to the situation, for the reason that compliance with the comp laws alone may encourage, if not actually constitute, a violation of the far more dangerous disability requirements of the FEHA.

This largely “unseen” danger was addressed at length in the 2012 case of Cuiellette v. City of Los Angeles.  There, the employee, a sheriff’s deputy, suffered a work-related injury and was placed on disability leave.  Thereafter, his workers’ comp claim was resolved with a finding of 100 percent, permanent disability.

Subsequently, and to the employer’s surprise, the injured deputy submitted a request to return to work on a light-duty basis.  The former, relying on the permanent and total disability rating rendered in the comp case, rejected the request based on its understanding that the employee had been formally adjudicated as permanently unfit to perform any work at all. This resulted from the city’s mistaken assumption that the finding of disability earlier made by the Workers’ Compensation Appeals Board represented a final determination on the disability issue for all purposes.  The fatal omission from the city’s analysis was that, while the finding of permanent and total disability properly applied the Workers’ Compensation Act, the only law that was under consideration in the comp case, this finding had no application whatsoever to other laws that the employer may have been obligated to comply with, such as the FEHA.

The deputy sued the city, alleging physical disability discrimination in violation of the FEHA (based on the same injury adjudicated in the comp case), and was awarded $1.5 million in damages by a jury.

The defendant city appealed the award.    The Court of Appeals upheld the $1.5 million jury award.  In doing so, it emphasized the many obligations, completely independent of the workers’ comp laws, imposed by FEHA. For example, the Court explained that the legal test for a finding of permanent disability under the Workers’ Comp Act is completely different and unrelated to the FEHA standard for determining whether a worker is a qualified individual with a disability, and if so, whether he/she is able to perform the essential functions of the job, with or without accommodation.

The Court stressed that employers are required to comply with both laws, independently, and that compliance with the comp laws offers no protection to employers who are alleged to have violated the FEHA.

To further illustrate the independent nature of these obligations, the Court referred to the fact that the FEHA, unlike the Workers’ Compensation Act, requires employers to engage in a mandatory “good faith interactive process” with disabled employees to determine their ability to perform the essential functions of their job, and what reasonable accommodations might enhance their ability to do so.  In addition, the interactive process must be utilized to determine if the employee can perform the essential functions of any open and vacant position.  Nothing resembling these requirements exists in the Workers’ Compensation Act, which the city belatedly discovered to its multi-million dollar detriment.

Precisely because the monetary exposure employer’s face for such violations typically dwarfs that presented by workers comp laws, it is imperative that the legal requirements of FEHA be carefully incorporated in the employer’s legal analysis from the moment it is notified of a workplace injury.  Only then can the employer’s compliance with legal obligations under all applicable laws be coordinated, a vital prerequisite if employers hope to avoid the potentially-devastating vulnerability they otherwise confront.


Jay G. Putnam is a Petaluma labor lawyer who has specialized in representing California employers for over three decades. His practice is devoted to preventing lawsuits against his clients, without sacrificing workplace authority or management prerogatives.

While no one can guarantee a future free of lawsuits, Putnam has compiled a remarkable record of success: Not one employer-client has been sued in 36 years with his system of precautions in place.

For those clients who have arrived with pending lawsuits, Putnam has established an excellent track record of success as well. 

You are invited to visit Mr. Putnam’s website, where you will find in-depth discussion of the most common mistakes made by California employers, and how to avoid them.

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