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Workers' Compensation Information
Briefing

March 2003

Keenan and Associates - Briefing

Post Termination/Layoff Claims
Psychiatric Claims & Good Faith Personnel Action

Labor Code §3600 - Conditions of Compensation for Employer Liability (Post Termination/Layoff claims)

Labor Code §3208.3 - Threshold of compensability for psychiatric injury (including Good Faith Personnel Action)

The past week, thousands of California teachers with the least seniority were faced with receiving lay-off notices. State law requires that teachers be notified five months before a layoff. Because many teachers start working in mid-August, districts must send out notices by March 15 if there is a chance a teacher will be let go.

Additionally, for every potential teacher layoff, there are hundreds of custodians, cafeteria workers, administrators, instructional coaches, bus drivers & clerical workers who are also at risk. Although teachers require notice by March 15^th, others only require 30 days notice of a potential lay-off.

Districts have stressed that notice of lay-off may not mean eventual lay-off. District employees who receive a lay-off notice may have concerns of the potential job loss and the challenges of securing employment outside the district. Given their potential loss of income, school districts may encounter an increase of un-witnessed, questionable or frivolous claims being filed over the next 12-18 months.

The Labor Code provides some limited defenses, with exceptions, for both physical and psychiatric (stress) claims filed post notice of a potential lay-off. Listed below are highlights of the two aforementioned labor code sections and exceptions to these codes.

Labor Code §3600

This section refers to the employers' liability of reporting claims for injuries sustained by his or her employees "arising out of and in the course of the employment" (AOE/COE). Subsection (a)(1 through 9) refers to general defenses.

Subsection 10 (A), (B,), (C) & (D) refers to the exceptions of filing a post termination/layoff notice as follows:

Subsection (10) - Except for psychiatric injuries, governed by subdivision (e) of Section 3208.3, where the claim for compensation is filed after notice of termination or layoff, including voluntary layoff, and the claim for an injury occurring prior to the time of notice of termination or layoff, NO compensation shall be paid UNLESS the employee demonstrates by a preponderance of the evidence that one or more of the following conditions apply:

(10)(A) The employer has notice of the injury prior to the notice of termination or lay-off (e.g. Delinquent report from the field supervisor to the district office. Late filing from the district office to Keenan & Associates Claims Department)

(10)(B) The employee's medical records, existing prior to the notice of termination or layoff, contain evidence of the injury (e.g. - employee seeks medical treatment prior to the notice and the physician has indicated in those records that symptoms were industrially caused yet the employee failed to report the claim timely to his/her employer)

(10)(C) The date of injury, as specified in Section 5411, is subsequent to the date of the notice of termination or layoff, but prior to the effective date of termination or layoff. This section refers to "specific injuries" that occur during the "window period" of when a notice is given to an employee and the last day of their employ.

L.C. §5411 states as follows; The date of injury, except in cases of occupational disease or cumulative injury, is that date during the employment on which occurred the alleged incident or exposure, for the consequences of which compensation is

claimed. (e.g. lay-off notice is given on 3/15. Employee is informed that last day of employment is set for 6/30/03.

Date of injury is 4/01/03. The employee could potentially have this claim accepted if no evidence is provided by employer that supports the injury was not a result of AOE/COE)

L.C. §3600 (10)(D) The date of injury, as specified in Section 5412, is subsequent to the date of the notice of termination or layoff.

The Date of Injury for a Cumulative Injury or Occupational disease is defined in the following labor code section;

L.C. §5412 states as follows; The date of injury in cases of occupational diseases or cumulative injuries is that date upon which the employee first suffered disability therefrom and either knew, or in the exercise of reasonable diligence should have known, that such disability was caused by his/her present or prior employment.

What is disability for purposes of Labor Code §5412? Per L.C. 5412, the date of injury for a Cumulative Trauma (CT) claim is dependent upon the issues of "disability" and imputed knowledge of that disability.

• Cumulative Trauma is defined as repetitive mentally or physically traumatic activities extending over a period of time, the combined effect of which causes any disability or need for medical treatment.

• Disability can be defined as: (a) Lost time from work or; (b) Medical Treatment.

• Liability for the injury is determined under Labor Code §5500.5. The liability period is either (a) the last year prior to (5412) date of injury OR (b) one year prior to date of last injurious exposure, whichever comes first, or the last date on which the employee was employed in an occupation exposing him or her to the hazards of the occupational disease or cumulative injury, whichever comes first. This applies not to the employment only but the employment must have been harmful or injurious.

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Labor Code §3208

This section pertains to the "Threshold of compensability for psychiatric injury." Important subsections are highlighted for review:

L.C. §3208.3 (d) " .No Compensation shall be paid pursuant to this division for a psychiatric injury related to a claim against an employer unless the employee has been employed by that employer for at least six months. The six months of employment need not be continuous.

(e) This subsection is similar to L.C. §3600(10) - citing exceptions to filing psychiatric injuries post lay-off/termination notice should the employee be able to: .demonstrate by a preponderance of the evidence that actual events of employment were predominant as to all causes combined of the psychiatric injury and one or more of the following conditions exist:

(e)(1) Sudden and extraordinary events of employment were the cause of the injury.

(e)(2) The employee has notice of the psychiatric injury prior to the notice of termination or layoff.

(e)(3) The employee's medical records existing prior to notice of termination or layoff contain evidence of treatment of the psychiatric injury.

(e)(4) Upon finding of sexual or racial harassment by any trier of fact, whether contractual, administrative, regulatory, or judicial.

(e)(5) Evidence that the date of injury as specified in §5411 or §5412, is subsequent to the date of the notice of termination or layoff, but prior to the effective date of the termination or layoff

Subsection (f) "For purposes of this section an employee provided notice pursuant Sections 44948.5, 44949, 44951, 44955.6, 72411, 87740, and 87743 of the Education Code shall be considered to have been provided a notice of termination or layoff only upon a district's final decision not to reemploy that person.

Subsection (g) the entire section is important to understand and follow when issuing lay-off notices in order to prevail in a "lay-off/post termination defense:

A notice of termination or layoff that is not followed within 60 day by that termination or layoff shall not be subject to the provisions of this subdivision, and this subdivision shall not apply until receipt of a later notice of termination or layoff. The issuance of frequent notices of termination or layoff to an employee shall be considered a bad faith personnel action."

Subsection (h) applies to the employer's "Good Faith Personnel Action" defense. In this scenario, the burden of proof shall rest with the party asserting the issue. Retention of all disciplinary actions is a must. In order to prevail utilizing this defense you must adhere to internal district policy and procedures consistently with all employees, to avoid any potential grievance action or discrimination issues.

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