Where Workers’ Compensation Meets the FEHA

Morgan C. Smith and Jeremy Pasternak

You’re an employer who has an employee injured on the job and that person can no longer perform the basic functions of their job due to permanent injury. Under workers’ compensation you can simply state you no longer have a job for that employee and the employee is entitled to retraining benefits through workers’ compensation, right? The answer may well be right under workers’ compensation, but wrong under the ADA (Americans with Disabilities Act) and its California analog, FEHA (Fair Employment and Housing Act).1

With the recent changes in workers’ compensation law2 in California, many attorneys who handle these cases are seeking ways to expand the protection of employees injured at work, who have seen their benefits drastically cut. Vocational Rehabilitation benefits and entitlement to retraining for workers who can no longer perform their old jobs due to permanent injures in particular have been the subject of a great deal of change: These benefits were restricted again in the recent workers’ compensation law changes, and it might prove fertile ground for attorneys seeking alternate methods for protecting their clients under the ADA and/or FEHA.

This article will discuss the history of the Vocational Rehabilitation benefit under workers’ compensation, as well as the current interplay between the requirements of workers’ compensation and FEHA. The basic premise of this article is that employers must be very careful in claiming they have no work for an injured person, since under FEHA they have a legal duty to make reasonable accommodations to that injured employee. If they fail in this duty, they can be held liable for all tort damages (including lost wages and benefits, general damages, and punitive damages) as well as attorneys’ fees and costs.

FEHA is not preempted by the Workers’ Compensation Act. ( City of Moorpark v. Superior Court (1998) 18 Cal.4th 1143, 1156.) This means that even though the injury occurred on the job, the client can still proceed with a disability discrimination claim or a failure-to-accommodate case. The injured worker is not limited to the remedies provided under Workers’ Compensation, or to its $10,000.00 statutory damages for retaliation under Labor Code § 132a.

In California, if a person is injured at work, the treating doctor has basically two choices if the injury interferes with the employee’s ability to perform their job in a normal fashion: (1) they can immediately place the worker on “Temporary Disability” if the injury clearly prevents the return to any work at the time; or (2) place the worker on “modified work,” where the worker is only allowed to work within the physical restrictions placed by the doctor.

If the worker is declared temporarily disabled, they will be entitled to temporary disability checks, which are weekly low-level subsistence payments. (See Lab. Code § 4650.) If however, the doctor states that the person is available to perform work, but with physical restrictions, then a dialogue, or “dance,” begins between the employee and the employer. The employer must determine if it has work consistent with the physical restrictions imposed by the doctor. To guide employers, Labor Code § 4658.1 identifies three distinct categories of returning to work as follows:

(a) “Regular work” means the employee’s usual occupation or the position in which the employee was engaged at the time of injury and that offers wages and compensation equivalent to those paid to the employee at the time of injury, and located within a reasonable commuting distance of the employee’s residence at the time of injury.

(b) “Modified work” means regular work modified so that the employee has the ability to perform all the functions of the job and that offers wages and compensation that are at least 85 percent of those paid to the employee at the time of injury, and located within a reasonable commuting distance of the employee’s residence at the time of injury.

(c) “Alternative work” means work that the employee has the ability to perform, that offers wages and compensation that are at least 85 percent of those paid to the employee at the time of injury, and that is located within reasonable commuting distance of the employee’s residence at the time of injury.

If the employer, has “regular,” “modified” or “alternative work” available that meets the doctor’s physical restrictions, then the employee is no longer entitled to receive any temporary disability payments, and the employee returns to employment. However, the employer must actually have and offeremployment that exists within the limitations imposed by the doctor to end the temporary disability payments. A common occurrence experienced by an injured worker is the employer offering modified work, but then demanding that the injured worker perform regular, full-duty work once the employee arrives to work. The unsophisticated worker may attempt full-duty work fearing retaliation or termination for objecting to tasks clearly outside the doctor’s restrictions.

Once the treating doctor finds that the injured employee will not get any better or worse (i.e., that recovery has plateaued), the injured worker is declared permanent and stationary. At this point, the issue of ability to work becomes the forefront of the discussions. Under Labor Code § 4658(d) the employer has an obligation to determine if regular, modified, or alternate work within the employee’s permanent physical limitations is available. If the employer hassuch work, that will last for at least 12 months, then the permanent disability owed to the employee will be reduced by 15%. (See Lab. Code § 4658(d)(2).) However, if the employer states that it does not have such work, then the permanent disability benefit will increase by 15%. (See Lab. Code § 4658(d)(3)(A).) This same increase occurs if it terminates the employee within a 12-month period of time. (See Lab. Code § 4658(d)(3)(B).) If the employer does not offer work as defined, then the employee is entitled to workers’ compensation Vocational Rehabilitation training.

C. Vocational Rehabilitation

Under current law for injuries occurring after January 1, 2004, if an employer states that it does not have any regular, modified or alternative work, the injured worker is entitled to a “supplemental job displacement benefit”3 that helps pay for retraining. Under Labor Code § 4658.5, the injured employee can receive between $4,000 and $10,000 toward retraining. These benefits are low; they do not provide any real opportunity for retraining. With this insubstantial retraining benefit, many more employees’ attorneys will be investigating issues regarding whether the employer actually has modified work at the same pay rate that the employee was making before the injury. This is where the FEHA and the ADA come into play.

The workers’ compensation scheme and FEHA often use different terms to describe the same concepts. Workers’ compensation refers to “modified work.” FEHA refers to “reasonable accommodations.” What these are and how they must be provided are addressed more fully below. Simply put, however, the rule is that if an employer can “accommodate” an employee’s disability, without it being cost-prohibitive, the employer is required to do so. This includes providing mechanical or personnel assistance, modifying hours, or even modifying job duties. The employer cannot simply say, “Well, you can’t do the job.” First, a threshold question must be addressed: Is the employee “disabled”?

Generally, we think of “disability” as something that is “disabling,” that is, the person has a limited ability to function, and certainly can’t work. For instance, someone who is “on disability,” is, by definition, not working.

The FEHA definition is far broader than simply not being able to work. To suffer a “disability,” the plaintiff must have a “physiological disease, disorder, condition, cosmetic disfigurement, or anatomical loss” that affects a body system AND limits a major life activity. (See Govt. Code § 12926(k).) This last requirement isn’t as stringent as it sounds. Basically, it’s anything that interferes with your life or with something you like to do.4 The definition of “disability” under FEHA is akin to the ubiquitous deposition question in personal injury cases: “Is there anything you used to do that you no longer do the same as you did before?” FEHA broadly interprets the “limit

Once you have determined your client suffers from a “disability,” what next? The answer is to make sure the employer is on notice (in writing) of the condition and the employee’s need for some type of assistance, time off, or job modification. These are called “reasonable accommodations.” Reasonable accommodations can come in a variety of forms, such as “[m]aking existing facilities used by employees readily accessible to and usable by individuals with disabilities.” Other accommodations would include “[j]ob restructuring, reassignment to a vacant position, part-time or modified work schedules, acquisition or modification of equipment or devices….” (Cal.Code Regs., tit. 2, § 7293.9(a).)

An employee will prevail on a claim against an employer for failing to reasonably accommodate unless the employer can establish:

(1) reasonable accommodation was offered and refused;

(2) there was no vacant position within the employer’s organization for which the disabled employee was qualified and which the disabled employee was capable of performing with or without accommodation; or

(3) the employer did everything in its power to find a reasonable accommodation, but the informal, interactive process broke down because the employee failed to engage in discussions in good faith. ( Jensen v. Wells Fargo Bank (2000) 85 Cal.App.4th 245.)

The employee is not required to explicitly state that an “accommodation” is required. There are no “magic and required buzzwords.”

An employee’s request for a reasonable accommodation may use plain English and need not mention the ADA or use the phrase reasonable accommodation; both sides must communicate directly, exchange essential information, and neither side can delay or obstruct the process. ( Rowe v. City & County of San Francisco (N.D.Cal. 2002) 186 F.Supp.2d 1047.)7

An employer who knows of the disability of an employee has an affirmative duty to make known to the employee other suitable job opportunities with the employer. This duty includes determining whether the employee is interested in, and is qualified for, those positions, if the employer can do so without undue hardship or if the employer offers similar assistance or benefit to other disabled or non-disabled employees or has a policy of offering such assistance or benefit to any other employees. ( Prilliman v. United Air Lines, Inc. (1997) 62 Cal.Rptr.2d 142, 149-150)

An employer must do more than simply provide an opportunity for an employee to transfer to a vacant position. “It is not enough for a defendant to allow a plaintiff to apply for other positions as a competitive transfer.” ( Barnett v. U.S. Air, Inc. (9th Cir 2000 ) 228 F.3d 1105.)

The only basis on which an accommodation might be denied is if it constitutes an “undue hardship” to the employer. “‘Undue hardship’ means an action requiring significant difficulty or expense.” (Govt. Code § 12926(s).) The burden is on the employer to show undue hardship, and a failure by an employer-defendant to show that accommodations sought would constitute undue hardship leads to liability for failure to accommodate. ( Ackerman v. Western Elec. Co., Inc. (N.D.Cal.1986) 643 F.Supp. 836; see also Bagatti v. Department of Rehabilitation (2002) 97 Cal.App.4th 344.)

The basic process of providing accommodations is simple: the employer and the employee engage in an open exchange of information designed to collaboratively arrive at a reasonable accommodation. The employer must engage in a good faith interactive process to seek out accommodations. ( Barnett v. U.S. Air, Inc. (9thCir.2000) 228 F.3d 1105.) Another court has described the process this way:

[C]ourts should look for signs of failure to participate in good faith or failure by one of the parties to make reasonable efforts to help the other party determine what specific accommodations are necessary. A party that obstructs or delays the interactive process is not acting in good faith. A party that fails to communicate, by way of initiation or response, may also be acting in bad faith. In essence, courts should attempt to isolate the cause of the breakdown and then assign responsibility…. ( Beck v. University of Wisconsin Bd. of Regents(7th Cir., 1996) 75 F.3d 1130, 1135-1136.)

The requirement of having an open discussion is often where employers run afoul of the law, particularly in work-place injury cases when attempting to apply workers’ compensation rules in the FEHA context. In particular, under workers’ compensation the employer only has to offer modified duty for 90 days but under FEHA, it must be a permanent position, because of the very nature of the duty to provide accommodations. Though in some circumstances accommodations may only need to be temporary, FEHA itself assumes they may need to be permanent, in that it assumes a permanent disability. (See Govt. Code § 12926.1, cited above.)

Example from a real case: Employee, a truck driver for a bottling company, is injured on the job, resulting in a permanent knee injury. He can still drive, but can’t load or unload. In an attempt to find him “modified duty” under the workers’ compensation rules, he is allowed to drive only those loads which are unloaded by the recipient, and is given various clerical and clean-up duties to make up whatever time is left over. He then gets a letter, stating:

You have utilized your full 90 days of transitional duty effective Friday, January 5th. Your last transitional day of work will be Monday, January 22, 2001. Should you be released to full duty, you may return to work the next day. If you have any questions regarding your workers’ compensation benefits, please contact me.

This was as close to a per se case of failure to accommodate as you’re likely to see. It is a clear case of the employer confusing the workers’ compensation system and the FEHA requirements. Because the injury was on the job, the matter was being handled by the workers’ compensation department. The employer’s workers compensation department did everything it was supposed to do – as far as it knew. What it didn’t know was just how badly it was botching the matter in terms of FEHA disability requirements to reasonably accommodate the disabled employee. The workers’ compensation department didn’t realize there was a duty to 1) accommodate beyond 90 days in the first place, 2) discuss means of providing accommodations, and 3) provide any accommodations if possible.

In failure-to-accommodate cases, the employee may claim all tort damages (special, general, and punitive), and may further make a claim for reimbursement of attorneys’ fees and costs, pursuant to California Government Code § 12965b.

These damages can be substantial. The employee is now out of work, and has an injury that may make it difficult to get another job. The lost wages, health-care benefits, retirement benefits, and anything else formerly obtained through the job are continuing to accrue. As the time off work continues, so do the emotional distress damages. As the case is litigated, the attorneys’ fees and costs likewise increase.

California case law interpreting the language of § 12965(b) requires that a “prevailing plaintiff ‘should ordinarily recover an attorney’s fee unless special circumstances would render such an award unjust.'” ( Stevens v. Coldwell Banker Commercial Group, Inc.(1988) 199 Cal.App.3d 1394, 1405, quotingNewman v. Piggy Park Enterprises (1968) 390 U.S. 400, 402.) The courts have found that once the trial court finds a prevailing plaintiff meets the statutory criteria for a fee award, such an award is appropriate. (See City of Sacramento v. Drew (1989) 207 Cal.App.3d 1287, 1297 n.3 [holding that trial court’s “discretion” is limited to determining whether statutory criteria are met]; Hull v. Rossi(1993) 13 Cal.App.4th 1763 [abuse of discretion to deny fee award to prevailing party who has satisfied statutory criteria].)

If your client is off work, and a return to work is not possible without accommodation, get the client to write some letters, notes, or emails, letting the employer know that the client wants to come back to work. Although no “magic buzzwords” need be used, the letter needs to put the employer on notice that there is a disability, and that the employee is willing to work. If the employer fails to respond (or responds as in the example above), you will have solidified your argument that the fault is with the employer, not your client.

If a workers’ compensation case is pending, be sure to track that case. Your goals and those of the workers’ compensation lawyer are probably at odds in handling a FEHA case. The workers’ compensation lawyer wants the employee to be as injured as possible, so as to increase the workers’ compensation permanent disability award. The FEHA or ADA lawyer is trying to define your client in a middle ground, where the injured worker is sufficiently injured to be “permanently disabled,” but still able-bodied enough to return to the workplace, albeit in a modified capacity.

Inform your client at the outset of the potential conflicts, and confirm that the facts and testimony will actually support your case. You don’t want to find out in reading a workers’ compensation deposition that your client is of the opinion that they can never work again under any circumstances, or that there is no way they could ever do their former job even in a modified capacity.

Even if you are not handling the workers’ compensation case, you should be involved with preparing your client for the workers’ compensation deposition, and, if possible, attending it. It also means communicating with the client’s physicians, who may believe they’re doing the client a favor by stressing the seriousness of the injuries for the workers’ compensation case, but not realizing that they are hurting the FEHA case at the same time.

Both workers’ compensation and FEHA provide remedies for those who have been injured on the job, and are unable to return to their former work. However, they likely provide alternative remedies, rather than complimentary remedies. An attorney handling such a case should be aware of both claims and have a frank discussion with the client as to which claims make the most sense under the facts of the specific case. The choice is simply whether the injured worker believes and has a desire to return to the same employer where the injury occurred, already has a claim for failure to accommodate, or whether they seek to obtain whatever benefit they can from workers’ compensation and undergo retraining in another field.

1 Insofar as this article is directed to California practitioners, it will address primarily FEHA, as opposed to ADA. Although both protect California employees, FEHA provides greater protections, both in terms of employer responsibilities and in terms of damages, than ADA does.

2 This article only addresses the state of the law for injuries occurring after July of this year. Prior injuries are treated differently, but the main issues of the interplay between workers’ compensation and the ADA remain the same.

3 Prior to 2004, injured employees were entitled to Vocational Rehabilitation Training benefits, which paid up to $16,000 for retraining to anyone who could not perform their job or modified work.

4 This is one of the significant ways FEHA differs from the ADA. Under the ADA, mitigating measures can defeat a definition of disability. For example, in one U.S. Supreme Court case, airline pilots who were excluded from jobs because they did not meet certain vision standards; glasses made the problems moot. They sued under the ADA, claiming disability discrimination. Because their use of glasses effectively negated their vision problems, the Court found they did not meet the definition of “disability.” (See Sutton v. United Airlines (1999) 527 U.S. 471.) This could not be the result under FEHA.

The second major difference between FEHA and the ADA is that the ADA requires there be a “substantial” limitation on a major life activity. FEHA does not require a finding of a “substantial” limitation. ( Colmenares v. Braemar Country Club, Inc. (2003) 29 Cal.4th 1019, 1024-25.) In fact, the “limitation” need not be qualitative; all that is required is that it make performance of the activity difficult. ( Id.)

5 ADA not does not include working as a major life activity.

6 Employers can also be held liable for discriminating against employees whom they mistakenly believe to be disabled. However, these “perceived disability” cases are beyond the scope of this article.

7 Although the citation here is to the ADA, it is still useful law, as FEHA is intended to be read more broadly and expansively of employee rights than the ADA. (See Govt. Code § 12926.1(a).)