California: Changes to FEHA Pose New Liability Risks in Workers’ Compensation Cases

By Elizabeth Ashley Stonhaus, Schmit Law Offices

Employers face increasing liability in the wake of California’s 2013 amendments to its disability discrimination regulations, since the provisions have contributed to a growing overlap between liability under the Fair Employment and Housing Act (FEHA) and the California Workers’ Compensation Act.

By expanding the definition of “disability” under the FEHA and even going so far as naming one step in the workers’ compensation claim procedure a trigger for the FEHA’s required “interactive process,” the amendments have dramatically widened the door for industrially injured workers looking for additional protection under the FEHA.

More industrially injured employees qualify as “disabled” under the state law than ever before, creating a variety of uniquely intertwined liability issues for employers. In order to manage this growing risk of liability, employers and their attorneys should be aware of these amendments and their interaction with workers’ compensation law.

An Insulated Practice Area

While the overlap between these two areas of law is not new, historically, California workers’ compensation attorneys have ignored liability exposures under disability regulations like those of the Americans with Disabilities Act (ADA) or the FEHA because they viewed workers’ compensation law as relatively insular from other practice areas.

Two factors have contributed heavily to this perception. First, the administrative nature of the workers’ compensation’s system differs significantly from the civil judicial process used to adjudicate ADA and FEHA cases. Second, up until 1998, individuals with workers’ compensation discrimination claims were limited exclusively to workers’ compensation remedies. The California Supreme Court’s decision in City of Moorpark v. Superior Court, 18 Cal.4th 1143 (1998), changed this, however, by providing that individuals may pursue remedies for disability discrimination under both the workers’ compensation system and under the FEHA.

Since Moorpark, the overlap between these two areas of law has continued to grow. In 2000, the legislature passed the Prudence K. Poppink Act,[fn1] which expanded the definition of “disability” under the FEHA beyond that of the ADA, providing more industrially injured workers with protections under the FEHA. Consequently, California courts have seen more hybrid workers’ compensation/FEHA cases over the years. In 2007, the California Supreme Court issued a crucial decision for FEHA disability discrimination litigation in Green v. State,[fn2] when it established which party bears the burden of proof in such cases. Like many hybrid cases, Green began as a workers’ compensation action. Today, California’s 2013 amendments to the FEHA have, once again, expanded the definition of disability, qualifying even more industrial injuries for FEHA protection.

FEHA’s Expanded Definition of “Disability”

California’s Fair Employment and Housing Commission’s 2013 amendments broadened the definition of “disability” under the FEHA in a number of ways. For example, the definition now includes a “perceived disability,” where a person is regarded as, perceived as, or treated as having a disability.[fn3] The amended regulations also include “perceived potential disability,” which could be established if a person is regarded, perceived, or treated by the employer as having had a physical disability that has no present disabling effect, but it may become a physical disability.[fn4] A third example of the expanded definition is the inclusion of a “special education disability,” a recognized health impairment or disorder that requires or has required in the past special education or related services.[fn5]

These broad definitions have significant implications for even the most basic workers’ compensation cases, since many industrial injuries will easily fit their criteria. The mere filing of a workers’ compensation claim for an injury, arguably, puts the employer on notice of a potential disability. In combination with this filing, if the employer so much as observes that symptoms of the injurious condition persist, the employee could make the case that he is disabled because he is “perceived as” having a disability. A “special education disability” can just as easily arise in a workers’ compensation case, as well. For example, if a worker suffers from a brain injury incurred while on the job and, consequently, has significant difficulties with speaking, reading, writing, or reasoning, and requires special education, he will qualify as a “special education disability” under the FEHA.

Minimizing Liability

The first step to minimizing liability in hybrid workers’ compensation/FEHA cases is for employers and their attorneys to be aware of what is required under both sets of regulations. There are two main employment events that can trigger employer liability in the disability discrimination context: failure to accommodate and discriminatory termination.

Accommodation

Under the FEHA, an employer is required to provide “reasonable accommodation” for the known physical or mental disability of an employee or applicant.[fn6] An employer first begins to satisfy this requirement when it engages in an “interactive process” with the worker to determine how the employer can accommodate the worker’s disability.[fn7]

By comparison, under the workers’ compensation system, employers are not explicitly required to accommodate their industrially injured employees. Notwithstanding this, a combination of Labor Code provisions, workers’ compensation case law, and the FEHA, arguably creates an implied duty for employers to accommodate industrially injured employees. For example, Labor Code Section 132a prohibits employers from discriminating against employees with a workers’ compensation claim. Specifically, case law tells us that pursuant to Section 132a, employers are prohibited from providing “light duty” to some injured workers and not to others without a business necessity.[fn8] It follows that because the FEHA requires employers provide “reasonable accommodation” to disabled workers, an employer that complies with the FEHA and provides accommodation to its non-industrially injured workers, must also provide accommodation to its industrially injured employees to avoid treating its injured workers differently. Thus, there is arguably an implied duty to accommodate industrially injured workers, as well as non-industrially injured employees in order to avoid discriminating against them.

Further underscoring the growing overlap between workers’ compensation law and the FEHA is another 2013 amendment to the FEHA, which provides that an employer’s obligation to engage in the “interactive process” is triggered when an employee with a disability exhausts leave under the California Workers’ Compensation Act.[fn9] Employers should be aware of this trigger as yet another area of potential overlap in exposure.

Linking Workers’ Compensation with the FMLA

There are many types of “reasonable accommodation” under the FEHA, but one in particular presents yet another potential area of overlap with workers’ compensation law. Extended medical leave has been held to constitute “reasonable accommodation” under the FEHA.[fn10] Interestingly, this type of accommodation under the FEHA can prove significant in a workers’ compensation case, as well.

By way of background, the federal Family Medical Leave Act provides 12 weeks medical leave to an employee for a “serious health condition.”[fn11] If an industrial injury qualifies as a “serious health condition” under the Family Medical Leave Act (FMLA), an employer, who provides proper notice, may start the clock on an employee’s FMLA leave at the same time the employee takes workers’ compensation medical leave.[fn12] Thus, FMLA may run concurrently with a workers’ compensation medical leave. Since an employee’s FMLA leave is limited to 12 weeks and a workers’ compensation leave can last much longer, an employee may max out his FMLA leave while he is out for a workers’ compensation injury. For those employees who have exhausted their FMLA leave and are not authorized to take additional workers’ compensation medical leave, but they still want or need to take additional medical leave, the FEHA’s requirement of “reasonable accommodation” may come into play. Since extended medical leave can constitute “reasonable accommodation,” an employer may have a duty to provide extended medical leave to an industrially injured employee even if the employee has exhausted his statutory medical leave.

Termination

Under the FEHA an employer is prohibited from discriminating against a disabled employee, including terminating the employee on the basis of his or her disability.[fn13] Similarly, under the workers’ compensation system, an employer is prohibited from discriminating against industrially injured employees, which includes failing to reinstate an employee or terminating an employee on the basis of his workers’ compensation claim.[fn14]

Before terminating an applicant who may be “disabled” under the FEHA, an employer should first determine whether it has engaged in the good faith “interactive process” and whether it actually attempted to accommodate the injured worker. If the employer has satisfied both of these steps, an employer may next look to exceptions to the “reasonable accommodation” requirement or the implied duty to accommodate.

Under the FEHA, a number of exceptions can apply, including, the accommodation would result in “undue hardship” on the employer; the position requires a bona fide occupational qualification; the employee is unable to perform job without endangering health or safety of himself or others; or the employee is unable to perform essential job functions even with accommodation.[fn15]

Under the workers’ compensation system, employers are similarly not required to accommodate employees and may even lawfully terminate an injured worker if the employers’ conduct is necessitated by “business realities.”[fn16] Several examples of business realities include, at the time reinstatement is sought, the employer reasonably believed the worker is unable to perform the duties of the position without undue risk of re-injury; no positions are available; or the employer reasonably believes that the worker is permanently disabled from performing the job, or will be disabled for such a long time that termination is necessary in light of demonstrated business realities.[fn17]

If any of these exceptions apply, an employer may not be required to accommodate the injured worker and may lawfully terminate the individual. Employers should, of course, consult their legal counsel before taking such action.

The Applicant’s Strategy

A side by side comparison of the remedies available in a Section 132a claim and those available under the FEHA provides clear incentive for industrially injured employees to pursue an additional FEHA claim. A successful Section 132a claim can result in a misdemeanor for the employer, an increase in workers’ compensation benefits, limited to $10,000, reinstatement, and lost wages. By contrast, in a FEHA claim, a prevailing employee can receive lost earnings, unlimited compensatory damages, punitive damages, injunctive orders, and attorney fees. Notably, in a case where an employee brings both claims, there is no double recovery.

The fact that the potential remedies available under a FEHA claims are overwhelmingly greater, begs the question, why would applicants file both claims, when they could recover more under a FEHA claim? There are a several reasons applicants would file both, one being the employer pays for the discovery in a workers’ compensation case, regardless of whether the employer was at fault. Thus, an applicant could obtain this free discovery and later file a FEHA claim with that discovery. Another reason could be that when an applicant files only a workers’ compensation claim, the employer may not consider its obligations under the FEHA and could inadvertently violate FEHA standards, not realizing that the employee has a FEHA claim in mind for the future. Applicant attorneys may also have an incentive to encourage a civil FEHA case, since they can obtain referral fees from their employment law counterparts.

Recommendations

In light of the growing overlap of these two areas of law, it is recommended that employers always inform their workers’ compensation attorneys and civil employment law attorneys if an industrially injured worker also has civil FEHA case. This is important to avoid double recovery, to encourage the attorneys to share discovery product, and also to minimize further liability.

Employers are also advised to always to engage in a good faith “interactive process” whenever there is a chance that the injury could qualify as a FEHA “disability.” Since the accommodation requirement under the FEHA is more explicit, employers who comply with the FEHA’s requirement of “reasonable accommodation” will likely minimize their exposure under both sets of regulations.

Additionally, employers should allocate resources to ensure that they treat their industrially injured and non-industrially injured employees equally. Policies that treat injured employees differently open employers up to liability under both Section 132a and the FEHA.

Likewise, it is important that employers remain consistent with their policies. They should remain consistent not only with how they treat some injured workers compared to other injured workers, but also consistent in their approach to injured workers in general. For example, if an employer decides to provide extended medical leave above and beyond the statutorily required medical leave, it should develop a clear and consistent policy as to when this extension applies and stick with it.

Finally, the importance of documentation cannot be overstated. Employers should document all events, communications, and impressions that could be used to determine whether or not an employee is “disabled” under the FEHA. Employers should also document any attempts to engage in a good faith “interactive process” with the employee and any subsequent communications with the employee regarding accommodation.

While California’s 2013 amendments to the FEHA have expanded liability exposure, those employers that make themselves aware of overlapping disability regulations and arm themselves with consistent policies will be able to minimize their risk of liability.

© Copyright 2013 Schmit Law Offices. All rights reserved. Reprinted with permission.

Footnotes:

Attention Lexis Online Subscribers: Citations link to lexis.com. Bracketed citations link to Lexis Advance.

1. Cal. Gov. Code § 12926(k)(1)(B)(i) [12926].

2. 42 Cal.4th 254 (2007) [42 Cal.4th 254].

3. Cal. Code Regs. Tit. 2, § 7293.6(d)(5) [7293.6].

4. Section 7293.6(d)(6) [7293.6].

5. Section 7293.6(d)(3) [7293.6].

6. Cal. Gov. Code, § 12940(m) [12940].

7. Section 7293.6(j) [7293.6].

8. Barns v. Workers’ Comp. Appeals Bd., 216 Cal.App.3d 524, 532-533 (1989) [216 Cal.App.3d 524].

9. Section 7294.0(b) [7294.0].

10. See Hanson v. Lucky Stores, Inc., 74 Cal.App.4th 215 (1999) [74 Cal.App.4th 215] and Nadaf-Rahrov v. Neiman Marcus Group, Inc., 166 Cal.App.4th 952 (2008) [166 Cal.App.4th 952].

11. 29 USCA § 2601 [2601].

12. 29 C.F.R. § 825.702(d)(2) [825.702]; Section § 7297.0(o) [7297.0].

13. Cal. Gov. Code § 12940(a) [12940].

14. Cal. Lab. Code 132a [132a]; Barns, 216 Cal.App.3d 524 [216 Cal.App.3d 524]; Crown Appliance v. Workers’ Comp. Appeals Bd., 115 Cal.App.4th 620 (2004) [115 Cal.App.4th 620].

15. Cal. Gov. Code § 12940(m) [12940]; Cal. Code Reg., tit. 2, § 7286.7(a) [7286.7]; Code Reg., tit. 2, § 7286.7(b) [7286.7]; Cal. Gov. Code § 12940(a)(1),(2) [12940].

16. Barns, 216 Cal.App.3d 524 [216 Cal.App.3d 524].

17. Barns, 216 Cal.App.3d 524, 534-535 [216 Cal.App.3d 524].

For more information about LexisNexis products and solutions connect with us through our corporate site