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Spring 2012

LAWSUIT PREVENTION FOR EMPLOYERS

Refusal to Reinstate Injured Worker with a 100 Percent Permanent Disability Rating Cost Employer $ 1.5 Million Verdict in Recent Disabilities Discrimination Case

Most California employers are aware that it is dangerous to fire an employee who has recently experienced a work-related injury, and that doing so could result in a claim of discrimination due to the injury. For this reason, employers will often accept an employee back to work when he/she is released to return after an injury. However, in the event an injured worker is never released to return, many employers would likely reject a request for reinstatement. However, this is a big mistake, as belatedly discovered by the employer in the recent case of Cuiellett v. City of Los Angeles.

Hidden Danger

The Cuiellett case illustrates that many employers, when addressing a workplace injury, are unaware that they have substantial legal obligations in addition to those found in the California Workers’ Compensation Act, the violation of which may subject the employer to far greater liability exposure than that presented by the comp laws. These are the disability discrimination provisions of California’s Fair Employment and Housing Act (“FEHA”). This law is similar to the federal Americans with Disabilities Act (“ADA”), but is far more demanding of employers than its federal counterpart. It is vital that compliance efforts relating to these laws be coordinated, for the reason that compliance with the comp laws alone may actually encourage a violation of the far more dangerous disability requirements.

Due to the extremely broad definition of the term “disability” under California law, almost any “permanent” injury restricting an important life activity (such as “work”) will qualify an injured worker as “disabled.” However, it is not uncommon for employers, in the event of an injury, to focus exclusively on the comp issues, and to completely ignore even obvious disability-related issues.  This may be due to the employer’s mistaken belief that these are the only laws applicable to a workplace injury, or the equally mistaken (and catastrophic) belief that a future disability discrimination lawsuit will be covered under the workers’ comp policy, since it arose out of the same injury. It probably won’t be.

The Juggling Act

The Cuiellett case illustrates that even scrupulous compliance with its worker’s comp obligations will not shield an employer from liability for violating FEHA’s disability discrimination provisions. In that case, the allegation of disabilities discrimination resulted from the same injury which yielded the workers’ comp claim, and ultimately resulted in a $1.5 million jury verdict against the employer.

In Cuiellett, the plaintiff was employed as an officer for the city of Los Angeles prior to his injury. He filed a comp claim, which ultimately resulted in a permanent disability rating of 100 per cent. When the employee later requested to return to work on a light-duty basis, the employer relied on the workers’ comp permanent and total disability rating to reject the request, based on its understandable conclusion that this precluded the employee from performing any work at all. The employee sued, alleging physical disability discrimination.

The Cuiellette Court upheld the $1.5 million jury award on appeal, and emphasized the substantial obligations, independent of the comp laws, imposed by FEHA. For example, the Court explained that the legal standard for a permanent disability rating under the Workers’ Comp Act is different and unrelated to the FEHA/ADA standard for determining whether a disabled employee is able to perform the essential functions of the job, with or without accommodation. The Court further stressed that employers are required to comply with both laws, and that an employer’s compliance with the comp laws is completely unrelated (and irrelevant) to compliance with FEHA.

To further illustrate the independent nature of these obligations, and the distinctions between them, the Court referred to the fact that the FEHA, unlike the Workers’ Compensation Act, provides for a mandatory interactive process which must be conducted by employers to determine if a disabled employee is able to perform the essential functions of his/her job, with or without reasonable accommodation. If not, 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 Because the FEHA defines the terms “essential functions of the job” and “reasonable accommodation” very broadly, any request for an accommodation, and certainly reinstatement, requires extreme care to avoid the same fate experienced by the City of Los Angeles.

The Medicine

Employers often work closely with their insurance adjusters in responding to comp claims. These adjusters are understandably focused on resolving the claims covered by the comp policy in the most efficient and cost-effective way possible, and typically devote zero attention to disabilities issues, which are treatedas being unrelated. As a result, employers may be encouraged by adjusters to take actions which are ostensibly intended to reduce the cost of a comp claim, but which simultaneously increase (unbeknownst to the employer) the company’s exposure to a far more dangerous claim of disabilities discrimination.

Precisely because the monetary exposure employers face for violation of the disabilities laws typically dwarfs that presented by comp claims, ordinary prudence would, at minimum, require addressing both sets of laws in a coordinated way from the moment the employer is notified of a workplace injury. This requires the employer to seek immediate expert legal advice, for the reason that disabilities issues are often not readily apparent, as in the Cuiellette case. This will illuminate what, if any, disabilities issues
require prompt attention, and the priority with which they must be addressed.

Lastly, the employer’s ability to successfully defend a disabilities discrimination (or any other) lawsuit will often depend on the written policies that are in effect at the time the dispute arose. The most important of these are policies relating to disabilities, as well those addressing the seemingly unrelated subject of mandatory arbitration. A properly-drafted arbitration policy will prevent a jury from passing judgment (and second-guessing) on the employer’s workplace conduct. This usually ends badly for employers, as it did for the City of Los Angeles, because juries are typically not comprised of business owners or supervisors, and are demonstrably unsympathetic to employers. The handbook should also include policies addressing the subject of disabilities, including the “interactive process.”

The employee handbook and arbitration policy should be updated annually, to be certain that they include the latest provisions required by law on these subjects. Waiting until a lawsuit is threatened to update or draft these documents is too late, as only policies in effect at the time of the events in question will be considered.

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