California: A Game Changer for Workers’ Compensation and FEHA Claims?

FEHA Claim Barred by Decision in Workers’ Compensation Case

Typically, when an employee suffers an industrial injury, he is precluded from filing a civil cause of action against his employer as the workers’ compensation system is considered his “exclusive remedy”. However, there are instances where the employee can sue the employer in both workers’ compensation and civilly for discrimination under the California Fair Employment and Housing Act (FEHA).

In 1998, the California Supreme Court decided City of Moorpark v. Superior Court of Ventura County (Dillon) 18 Cal.4th 1143, 63 Cal. Comp. Cases 944. In City of Moorpark, the Supreme Court held that Labor Code section 132a does not provide an exclusive remedy and does not preclude an employee from pursuing FEHA and common law wrongful discharge remedies. In other words, the employee is free to file a section 132a petition before the Workers’ Compensation Appeals Board (WCAB) and concurrently file a lawsuit claiming that the employer violated the FEHA laws based on the very same alleged acts of discrimination.

Since the City of Moorpark case was decided, as the section 132a allegation and FEHA claims did not in any way pre-empt each other, it has generally been assumed that the Workers’ Compensation litigation and the superior court litigation under FEHA could proceed separately and independently from one another. This assumption may have been radically changed by the recent Fifth District Court of Appeal decision in Ly v. County of Fresno., 2017 Cal. App. LEXIS 882 (certified for publication).

The Court of Appeal in Ly held that where there is a claim of psychiatric injury based on the same alleged discrimination that serves as the basis for the FEHA claim, the findings before the WCAB may constitute “res judicata” and bar the plaintiff’s FEHA claims from proceeding. In cases involving both of these types of claims, there may be more of an incentive now, at least from the employer’s side of the case, to fully litigate the claim of psychiatric injury. If the employer proves that their actions constituted “lawful, nondiscriminatory, good faith personnel actions” (Labor Code section 3208.3(h)), that finding can now be used to prevent the FEHA case from going forward.

In fact, there may now be instances where the employee’s FEHA claims are stronger and/or more likely to prevail than the workers’ compensation claim. In these cases, the employee may want to defer action on the workers’ compensation claim. The strategy would be to delay the workers’ compensation case from proceeding until the FEHA case is resolved so as to not run the risk of losing the FEHA case as a consequence of losing the workers’ compensation case.

In conclusion, although the FEHA claims may not be barred based on the “exclusive remedy” doctrine, at least in the context of a claim of psychiatric injury in the workers’ compensation process that is being denied based on the “good faith personnel action defense”, if there is an adverse decision in the workers’ compensation case, these claims may now be barred by the doctrine of “res judicata”.

© Copyright 2017 LexisNexis. All rights reserved.

">