California: W.C.A.B. Rules on Labor Code § 3600.5(b) Exemption

California: W.C.A.B. Rules on Labor Code § 3600.5(b) Exemption

Attention Lexis Online Subscribers: The cites in this article link to lexis.com. The bracketed cites link to Lexis Advance.

The W.C.A.B. has once again entered the hot button world of professional sports with another en banc decision, this time addressing the issue that it punted upon in the recently issued McKinley v. Arizona Cardinals decision (punted as the issue was not ripe for decision in this matter). In the current case Carroll v. Cincinnati Bengals, et al., the W.C.A.B. addressed the application of Labor Code §3600.5(b) [LC 3600.5(b)] and whether an employer could establish itself as entitled to assert workers' compensation coverage in its home state rather than being required to provide benefits under the Labor Code in California. The W.C.A.B., in a four-to-one decision with Commissioner Sweeney dissenting, determined a professional sports team (although the issue was not limited to professional sports as will be discussed below) whose appearances in the state are on a sporadic, albeit scheduled basis, still constituted temporary employment within the state of California and if the other provisions of Labor Code §3600.5(b) [LC 3600.5(b)] could be met, the employer would be entitled to assert provision of benefits under the home state of the employer under the exemption provided in that section.

Wesley Carroll had a relatively short career in the National Football League (followed by a brief stint in the Canadian Football League) spanning July, 1991 to April 1993 He spent approximately two years with the New Orleans Saints playing five out of 32 games within the state of California. He also subsequently played with the Cincinnati Bengals for a year with one game out of 16 being played within the state of California. He never resided in California and currently resides in Florida. The decision does not indicate if he ever pursued a claim for workers' compensation benefits in either Ohio or Louisiana but approximately ten years after he had ended his professional sports career as a player was advised by former pro-player that he might be able to pursue a claim for workers' compensation benefits in the state of California since he had passed through the state on one or more occasions.

At the initial trial in this matter, the Workers' Compensation Judge (WCJ) rejected the defendant's 3600.5(b) [3600.5(b)] defense asserting that the employee was entitled to workers' compensation benefits based upon California jurisdiction based upon his appearance in a single game with the Bengals in 1994. On appeal, the W.C.A.B. had reversed the trial judge and remanded the matter for further development of the record specifically on the issue of the employer's defense that it was entitled to be exempted from providing benefits in California based on the reciprocity provisions under 3600.5(b) [3600.5(b)]. That section specifically provides where an employer of an out-of-state employee who is temporarily employed within the state California who sustains injury in CA can be exempted from the requirements to provide California worker's compensation benefits where specific criterion are met.

The W.C.A.B. agreed with the WCJs finding that the Cincinnati Bengals have met all of the criteria provided under Labor Code §3600.5(b) [LC 3600.5(b)] with the exception of whether the employee was "temporarily" employed with the state. The WCJ reasoned that the applicant's employment was scheduled by the NFL and therefore should not be considered as temporary. In his analysis, rejected by the W.C.A.B., the employment constituted regularly scheduled employment in California. However the W.C.A.B. held for purposes of Labor Code §3600.5(b) [LC 3600.5(b)] the transient appearance in California for the single game with the Bengals qualified as temporary and held as follows:

"Based upon our review of the relevant statutes and case law, we hold that an employee and his or her employer are exempted by Labor Code section 3600.5(b)2 from the provisions of the California workers' compensation law when the employee was hired outside of California and all of the following apply:

(1) The employee is temporarily within California doing work for the employer,
(2) The employer furnished coverage under the workers' compensation or similar laws of another state that covers the employee's employment while in California,
(3) The other state recognizes California's extraterritorial provisions, and
(4) The other state likewise exempts California employers and employees covered by California's workers' compensation laws from the application of its workers' compensation or similar law".

Commissioner Sweeney, in her dissent, certainly makes thoughtful but not particularly compelling arguments in favor of California jurisdiction. The principle argument appears to be that California benefits are better than those extended by other states and to deprive employees who pass through here even on an extremely limited basis (with Cincinnati Bengals, the applicant was employed within the state of California for approximately two days of the entire year, less than one-half of 1%). She expressed concern that the employee's claim in Ohio was likely barred by the statute of patience (perhaps an uncertain issue as there is no indication of any filing for benefits in Ohio) and that California had a more liberal statute involving cumulative trauma which may not exist in Ohio. She points to a number of cases finding California jurisdiction over short periods of employment however none appeared to involve Labor Code §3600.5(b) [LC 3600.5(b)]and none appeared to involve such limited employer as Carroll's (less than 1% of his time with the Bengals was spent in California.). She also points out that this interpretation is going to conflict with some the language in Labor Code § 5500.5 [LC 5500.5] by eliminating some employments from consideration as a part of the cumulative period under that section.

CONCLSIONS AND COMMENTS

This case addresses the issue as mentioned above that was deferred in the McKinley case until it was not ripe before the W.C.A.B. The question of why the W.C.A.B. would accept this case for en banc consideration given its prior decision in the same matter, is likely suggested by the approach taken by the trial judge. Having been instructed to more carefully consider 3600.5(b) [3600.5(b)]and having received evidence which even the trial judge conceded, demonstrated that the employer had met the criteria under 3600.5(b) [3600.5(b)]. The trial judge nonetheless looked for a reason to extend benefits and concluded the applicant's one-game appearance in a period of two days in the state of California constituted regular employment. It seemed fairly clear from the W.C.A.B.'s initial decision on reconsideration of this matter (which was widely circulated, particularly within the professional sports attorneys in California) that such employment was not going to be considered temporary. The W.C.A.B. much like the McKinley case decided that it needed to have put the issue to rest once and for all.

While the dissenting opinion will likely form the basis for applicant's appeal of this matter, there are quite a few flaws in that analysis. The dissent argues that other states should be exempted from the requirements for California worker's compensation coverage only when other states systems provide comparable benefits and protections. However such an approach could have been adopted by the legislature but was not. Commissioner Sweeney is seeking to impose a criterion that simply does not exist. Requiring other states to provide similar benefits and statutory schemes as California's in order for their employers to obtain the benefits of 3600.5(b) [3600.5(b)] would effectively emasculate the provisions since very few if any states have the liberality of benefits that are extended in California. Such an approach also assumes that on our state is capable to providing a comprehensive enough system for worker's compensation benefits and other states need to model their systems on ours, an approach which might be found objectionable in other state capitols around the country.

However, interestingly enough, the decision is emphatic in its application of the exemption language in Labor Code §3600.5(b) [LC 3600.5(b)]; cases where athletes are employed involves only states with reciprocal provisions in their statutory schemes. Only a few states have such reciprocal provisions (approximately seven that were identified by the Board). The overwhelming majority of states do not have such reciprocal provisions including most states with professional sports teams. This is an issue which is being addressed currently before the legislature in AB 1309 which would effectively push almost all of the visiting team cases for professional sports out of the state of California and back to their original jurisdictions. Until that statute either sinks or swims before the legislature, this decision will be helpful at least as to those states, such as Ohio, with reciprocal provisions.

There are still, however, other issues both under 3600.5(b) [3600.5(b)] and under 5500.5 [5500.5] (as noted by Commissioner Sweeney) which the Board will be addressing in further decisions. One of the questions still involves this issue of temporary employment versus regularly scheduled employment. Cincinnati is a team which is not scheduled to play within the state of California every year, however there are certainly teams that are. Teams in the National Football League Western Conferences of both the NFC and the AFC are scheduled to play within the state of California every single year. Teams in the AFC West will come to California twice each year, increasing their percentage, at least of games, to a respectable 15%. If they happen to be scheduled to play the San Francisco 49ers, that increases to three times out of 16. We may very well find that there is a different rule to be applied in terms of temporary employment for teams who are scheduled every year to come to the state of California.

The next issue that will have to be decided is what to do with the follow up with the non-exempt employers in the same cases under Labor Code § 5500.5 [LC 5500.5]. In this case, the Saint Louis Cardinals is the next employer down the line. Louisiana is not a state with a reciprocal provision and therefore the New Orleans Saints are not entitled to assert a 3600.5(b) [3600.5(b)] defense. It is unclear from the case whether they have the kind of issues that were raised in McKinley, but one suspects they may not as the provisions in player contracts may not have been typically included when Mr. Carroll was playing. Under Labor Code § 5500.5 [LC 5500.5] where the last employer in line is not within the jurisdiction of the W.C.A.B., liability moves back to the next insured employer. The question arises, whether the liability under 5500.5 [5500.5] will move backwards to the next employer on the basis the exempt employer is one over which there is no exemption. Will the Bengals, who are exempted from insurance but within the jurisdiction of the state of California (there after all would be liability for benefits absent the exemption) considered outside the Labor Code § 5500.5 [LC 5500.5] period? If so, liability could simply fall back on the New Orleans team which has no such defenses. This is an unsettled area of law and may be the next en banc decision of the W.C.A.B., perhaps of this same case as the issue will undoubtedly go back to the trial judge, who has certainly shown a willingness to find a basis for imposing liability.

Stay tuned for the next round (assuming the next round is not called off with the passage of AB 1309).

© Copyright 2013 Richard M. Jacobsmeyer. All rights reserved. Reprinted with permission.

For more information about LexisNexis products and solutions connect with us through our corporate site.

  • Tags: