California: Panel Confirms That Not All Actions Taken by an Employer Will Constitute “Personnel Actions”

In Ferrell v. County of Riverside, 2016 Cal. Wrk. Comp. P.D. LEXIS --, a WCAB panel affirmed the WCJ’s findings that the applicant suffered injury AOE/COE to her psyche while employed as a community improvement specialist from 7/12/2011 to 11/22/2011, and that the defendant failed to prove that her claim was barred by the “good faith personnel action” defense in Labor Code § 3208.3(h) [LC 3208.3].

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The WCAB panel, citing Larch v. Contra Costa County (1998) 63 Cal. Comp. Cases 831 [63 CCC 831] (Significant Panel Decision), reasoned that the term “personnel action” was not intended to cover all actions by any level of personnel in an employment situation or all happenings in the workplace. “Personnel action” is conduct by management including, but not limited to, transfers, demotions, layoffs, and certain disciplinary actions. In determining whether a psychiatric injury is substantially caused by lawful, nondiscriminatory, good faith personnel actions, a distinction must be drawn between general stressful working conditions that cause psychiatric injury and “personnel action” specifically directed toward the individual that involves his or her employment status.

The WCAB panel further reasoned that, despite the contrary view adopted by the panel in Schultz v. W.C.A.B. (1998) 63 Cal. Comp. Cases 222 [63 CCC 222] (writ denied), without such a distinction the phrase “personnel action” would encompass everything in an employment environment that stems from good faith management and would be too broad of an interpretation that would preclude from consideration almost all employment events. Here, the WCJ correctly found that the elimination of one department due to budgetary concerns and the transfer of several employees, including the applicant, to a different department with all the consequences of a new probationary period and a need to share limited resources were general working conditions and not “personnel actions” within the meaning of Labor Code § 3208.3(h).

Commentary:

It is difficult to believe that the “good faith personnel action” defense has been around for over 20 years now. Despite its longevity, what constitutes a “personnel action” continues to be a significant source of litigation. Understandably, in the years initially following the passage of Labor Code Section 3208.3, parties struggled with this question. Defendants argued that since an employee was hired, everything that occurred subsequent to his or her hiring was effectively caused by a “personnel action”. Applicants, on the other hand, argued that only an employee’s termination should qualify as a “personnel action”.

Fortunately, over the years, the issue has been clarified by numerous WCAB panel decisions. The most recent of these panel decisions, Ferrell, does a very nice job of synthesizing the current state of what actually does constitute a “personnel action”. As pointed out by the Ferrell panel, a distinction between stressful working conditions and a good faith nondiscriminatory “personnel action” directed specifically towards an individual’s employment status is necessary. According to Ferrell, the action has to be directed toward the employee’s employment status, and not just a general management decision that affects the employee’s employment conditions. Accordingly, management decisions affecting workload or even management decisions involving the criticism of an applicant’s work performance will not necessarily constitute personnel actions.

In conclusion, Ferrell significantly restricts the application of the good faith nondiscriminatory personnel action defense. Practitioners, particularly on the defense side of the case, should carefully consider Ferrell prior to making the strategic decision as to whether or not to rely on this defense in denying liability in a case. There may be other defenses available that will yield better results.

Read the Ferrell noteworthy panel decision.

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