LC § 132a Discrimination: A Sixty-Second Seminar in Workers’ Compensation Claims Handling

In workers’ compensation, it is common knowledge that discrimination in any manner against an injured employee in retaliation for filing an industrial claim is illegal. It is also illegal for an employer to discriminate against a co-worker who testifies or makes known their intent to testify on behalf of an injured worker. The penalties for violating Labor Code § 132a discrimination laws are steep and include, among other things, full reinstatement of employment; retroactive restoration of seniority, company benefits, and medical insurance; payment of lost wages; and reimbursement of all out-of-pocket expenses that otherwise would have been covered by insurance. In addition, the law allows a 50% increase of all work comp benefits (capped at $10,000) as a monetary penalty for discrimination.

Employers are often dismayed when they discover that the law prohibits insurance policies for alleged acts of discrimination. All sums awarded under a LC § 132a judgment must be paid out of the employer’s own funds. In addition, insurance is usually unavailable to cover legal fees or defense costs in a discrimination action (although a handful of insurance companies do offer “defense-only” coverage under a special policy endorsement).

There are two important issues to consider when evaluating claims under LC § 132a:

1. Employment Relationship: In order for a discrimination action to exist under LC § 132a, the worker must be employed by the company at the time of the alleged discriminatory act. This means an employer is not liable under LC § 132a for any alleged discriminatory action that takes place after the date of resignation or termination. Case law contains several examples of former injured workers seeking a discrimination penalty after a company manager gave a poor job performance recommendation to a prospective new employer. They asserted the poor recommendation was in retaliation for filing an industrial injury claim. As these alleged discriminatory acts all occurred after employment terminated, LC § 132a penalties could not be entertained by the board, regardless of any other facts of the case. The penalty petitions were all dismissed.
2. Disability: Earlier in this blog we discussed how full restitution of lost wages was one of the penalties that could be assessed against an employer guilty of LC § 132a discrimination. However, few employers are aware that liability for full back wages under LC § 132a does not include any period of time where the worker was temporarily totally disabled,  regardless of whether TD was paid. This provision makes sense when you think about it, because when an employee is medically unable to work, lost wages cannot be attributed to discrimination. Instead, lost wages are attributable only to a medical disability that prevented the employee from working, and that would have occurred regardless of the discriminatory act.

We hope that today’s blog has been helpful to employers. Of course, please feel free to reach out to us here at F+B whenever assistance is needed in dealing with LC § 132a issues.