California: Do Collective Bargaining Agreements Preempt Labor Code Section 132a?

Undercurrents and Future Currents: Bargaining Outside the Law in Labor Code Section 132a

By Brad Wixen, Esq.

In the case of Salazar v. Leprino Foods, 2016 Cal. Wrk. Comp. P.D. LEXIS --, the facts are straightforward. The employer was found after trial to have wrongfully discriminated against an applicant who had filed a workers’ compensation claim alleging violation of Labor Code Section 132a [LC 132a]. Based thereon, the applicant was ordered reinstated, given an increase in compensation in the amount of $10,000, and provided increased pension amounts owed as a result of the reinstatement.

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The problem was the issue of reinstating the applicant’s pension amounts. The defendants contended that the court had no authority to order the Western Conference of Teamsters Pension Plan (WCTPP) to issue or accept payments of the increased pension amount as that violated the collective bargaining agreement, which only permitted the defendant to pay contributions directly to the applicant.

When the order was appealed by way of a Petition for Reconsideration, the WCJ began his Report and Recommendation by noting the difficulty he had with obtaining the defendants’ compliance with his original order. Since the time the original order was issued, the matter had been on calendar four times, at which time assurances were provided by the parties that matter was resolved, followed by several new orders demanding that the defendants comply with the original finding. Accordingly, the judge intimated that the Petition for Reconsideration to one of the later orders was actually late pursuant to Labor Code Section 5903 [LC 5903]. The new orders were not an excuse to extend the deadline of compliance. So, the judge recommended that sanctions be imposed. Accordingly, whatever issues were alleged in the petition need not be addressed as to the merits.

Nonetheless, the judge did provide some further discussion. He cited Labor Code Section 5300 [LC 5300] as the source of WCAB’s authority to order payments under Labor Code Section 132a. In the final paragraph of his recommendation, the judge added an interesting caveat: “If payment of the $10,000.00 supplemental benefit places Petitioners into some type of breach of the collective bargaining agreement with the Teamsters, which is not of Applicant’s doing [sic]. Petitioners triggered the entire chain of events by discharging Applicant from employ without benefit of a ‘good faith’ personnel action.…Petitioners cannot now hide behind a claim of contractual breach with an unrelated third party to avoid a duty they have been court-ordered to comply with for more than one year.”

The reader should take note that at no time did the judge feel compelled to address the issue raised by the defendants, mainly whether Labor Code Section 132a is preempted by a collective bargaining agreement. Further, the judge’s discussion regarding the fact that the petitioners’ bad faith action triggered the chain of events harkens back to the common law doctrine of “clean hands.” Practitioners in workers’ compensation would be well served to remember that the WCAB is a court of equity in which common law can be asserted. “The Workers’ Compensation Appeals Board has broad equitable powers with respect to matters within its jurisdiction, and Lab. Code, § 132a, makes clear that the Legislature intended the board to exercise its equitable powers with respect to matters of reinstatement.” Dyer v. Workers’ Comp. Appeals Bd. (1994) 22 Cal App 4th 1376, 28 Cal. Rptr. 2d 30, 59 Cal. Comp. Cases 96 [59 CCC 96]. Quite simply, the doctrine of clean hands is: “he who comes into equity must come with clean hands.” See Johnson v. Yellow Cab Transit Company, 321 U.S. 383, 387, 64 S. Ct. 622, 88 L. Ed. 814 [321 US 383] (1944). In simple English, the court has discretion to deny a remedy sought solely due to one’s unclean actions. So, based on a combination of power invested by the legislature, the common-law doctrine of unclean hands, and an arguably late petition, the judge recommended denial of the petition and awarding sanctions.

When the matter was addressed by the WCAB, they took a similar approach to the judge, mainly not addressing the theoretical basis of appeal, i.e., the question of preemption. Instead, the WCAB outlined its powers under Labor Code Section 5300 and entered into an interesting discussion about some unusual characteristics of Labor Code Section 132a. The WCAB noted that the workers’ compensation “bargain” separating industrial injuries from other civil tort claims was a method of accomplishing substantial justice in all cases expeditiously, inexpensively, and without encumbrance of any character consistent with Cal. Const., Art. XIV § 4 [Art. XIV § 4]. In general, the applicant bargains away the right to come out “whole” in return for being able to enter the workers’ compensation system free of the necessity to prove negligence, etc. In fact, the applicant often comes out less than whole such as when he receives two thirds of his average weekly earnings in lieu of disability. But, the WCAB described Labor Code Section 132a as being a different animal altogether. Under Labor Code Section 132a, it was argued that reinstatement and reimbursement of full lost wages and a statutory increase means that the intention of the legislature was to make Labor Code Section 132a stand out in terms of vesting the court with further powers than otherwise provided in workers’ compensation, becoming whole and then some.

Turning to the issue of preemption, rather than addressing the issue head on, the WCAB insisted that there need not be a contradiction between the collective bargaining agreement and Labor Code Section 132a. Because the judge’s orders is for “damages” instead of “increased pension benefits” and because the judge allowed the order to be “calculated and adjusted by reference to lost pension benefits,” the issue of preemption (nor of any sanctions) apparently need not be addressed. In simple English, the WCAB asked the parties to attempt to adjust and adjudicate the issue without highlighting contradictions that need not be found.

Where does all of this leave the issue of preemption? The clever reader will surely realize that neither the judge nor the WCAB wanted to get into a lengthy discourse on that issue. For the interested reader, there is actually case law leaning both ways. The seminal case of Judson Steele v. Workers’ Comp. Appeals Bd. (1978) 22 Cal. 3d 658, 43 Cal. Comp. Cases 1205 [43 CCC 1205], stands for the proposition that, “…A union may no more bargain away its members’ statutory rights against discrimination under the workers’ compensation laws than it may bargain away its members’ statutory rights against, for example, sexual or racial discrimination.” Thus, there are a line of cases elucidating that Labor Code Section 132a can preempt a conflicting collective bargaining agreement unless it is preempted by federal law, as with ERISA. Roadway Express, Inc. v. Workers’ Comp. Appeals Bd. (McCormick) (2006) 71 Cal. Comp. Cases 864 [71 CCC 864] (writ den.). See also Dalgety Foods,Inc. v. Workers’ Comp. Appeals. Bd. (Avina) (1983) 48 Cal. Comp. Cases 25 [48 CCC 25] (writ den.). On the other hand, there are several cases holding that claims under section 132a are preempted by federal law, such as the Employee Retirement Income Security Act of 1974 (Pacific Bell v. Workers' Comp. Appeals Bd. (Grigsby) (1987) 186 Cal. App. 3d 1603, 51 Cal. Comp. Cases 529 [51 CCC 529]; Navarro v. A & A Farming and Western Growers Insurance Company (2002) 67 Cal. Comp. Cases 145 [67 CCC 145] (Appeals Board en banc decision), and the Federal Railway Labor Act. See McFadden v. Workers’ Comp. Appeals Bd. (2005) 70 Cal. Comp. Cases 1180 [70 CCC 1180] (writ den.), see also Hanna, California Law of Employee Injuries and Workers’ Compensation 2d §§ 1.04, 1.10, 1.11[1], 21.01[3] [1.04, 1.10, 1.11, 21.01]. The key issue seems to be whether interpretation of a provision is required by the court in which case preemption may be found.

Underlying all of this are future currents in workers’ compensation with the trend towards separate contractual rights being contracted outside of the Labor Code. (See Opt-Out Lessons From Lone Star State, by Thomas A. Robinson,). Private parties do have the right to contract in ways that substantively alter how claims are adjudicated. Just how far does that go, and where does jurisdiction by the WCAB end? These are questions for the future no doubt.

The wise practitioner will take from all of this new lessons as to the novelty of Labor Code Section 132a, and the availability of equitable arguments, including harmonious resolution, as ways of avoiding difficult disputes. He or she will also take note of the importance of such preemption issues in the future.

Read the Salazar noteworthy panel decision.

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