California: Panel Clarifies Lauher Standard for a Prima Facie Claim of Unlawful Discrimination

Ever since the Supreme Court decision in Department of Rehabilitation v. Workers’ Comp. Appeals Bd. (Lauher) (2003) 30 Cal. 4th 1281 [68 Cal. Comp. Cases 831] many practitioners have grappled with the meaning of the phrase, “singled out for disadvantageous treatment because of the industrial nature of the injury,” in the context of a claim of unlawful discrimination under Labor Code section 132a. That phrase, says a unanimous panel, is simply an application of the standard adopted by Lauher. (See, Franco v. MV Transportation, Inc. (April 12, 2019) 2019 Cal. Wrk. Comp. P.D. LEXIS 120). Lauher held that to establish a prima facie case of unlawful discrimination under Labor Code section 132a, the injured worker must first show that they suffered some adverse result as a consequence of some action or inaction by the employer that was triggered by the industrial injury, and second, that they had a legal right to receive or retain the deprived benefit or status and the employer had a corresponding legal duty to provide or refrain from taking away that benefit or status. That is, the injured employee must show they were subjected to disadvantages not visited on other employees because of their industrial injury. (Lauher, supra, at p. 1301.)

The Franco panel’s review of the underlying facts in Lauher provides relevant context and illuminates why the import of the phrase, “singled out for disadvantageous treatment because of the industrial nature of the injury,” has been so misunderstood. Briefly, Lauher sustained an industrial injury, received temporary disability indemnity, and was later found to be permanent and stationary with residual impairment. Lauher returned to work. His workers’ compensation claim was resolved by a Stipulated Award that provided for permanent disability indemnity and further medical treatment. Lauher obtained medical treatment under the award, but he missed time from work to obtain that treatment, for which his employer required him to use sick leave or vacation time. Lauher claimed entitlement to temporary disability indemnity (TDI) for the time he spent attending those medical appointments. When his employer denied the claim, Lauher filed a petition arguing that his employer’s refusal to compensate him with TDI and to reimburse him for the use of sick leave and/or vacation time was discriminatory and a violation of Labor Code section 132a.

In rejecting Lauher’s 132a claim, the court explained that while Lauher did show detriment in having to use accumulated sick leave and vacation time to receive medical treatment for his industrial injury, he simply was not entitled to TDI because his condition had become permanent and stationary. And because Lauher had no legal entitlement to TDI, he was treated in the same way as non-industrially injured workers who also were required to use sick and vacation leave for medical treatment and time off due to a disability. In actuality then, Lauher was on the same legal footing as non-industrially injured employees, and because he could not demonstrate a legal entitlement to TDI, the Court commented that Lauher failed to show that “the employer had singled him out for disadvantageous treatment” because of his industrial injury. That comment, says the Franco panel, is an application of the broader standard adopted by Lauher.

In Franco, the injured worker claimed discrimination when he was discharged from his position as a bus driver for a period of four months without pay, pending a clarification from the Agreed Medical Examiner (AME) as to his ability to work even though he had been released by his treating physician to full duty and had been on the job for several months. Prior to returning to his job, Franco underwent an employer-required physical and retraining. He was able to perform his job duties without any problems. Several months after Franco’s return to work, the AME, whom Franco had not seen in over a year, issued a report in which he opined that Franco could not return to his usual and customary job as a bus driver. Based on that report, Franco’s employer placed him off work. Franco was not allowed to work for a period of four months and did not receive any pay during that four-month period.

Franco’s claim of discrimination under Labor Code section 132a was tried, and the WCJ found that although the employer’s action in not allowing Franco to continue to work for four months was detrimental to Franco and was related to his industrial claim, Franco failed to demonstrate that his employer singled him out for disadvantageous treatment because of his industrial injury. Relying in significant part on Gelson’s Markets, Inc. v. Workers’ Comp. Appeals Bd. (2009) 179 Cal. App. 4th 201 [74 Cal. Comp. Cases 1313], the WCJ rejected Franco’s claim and Franco sought reconsideration. (Note: The Franco panel notes that Gelson’s is distinguishable from Franco in significant ways. (Fn. 11.) In Gelson, the injured worker was seeking to return to work, whereas Franco had been returned to his job as a bus driver for four months prior to being placed off work.)

In its Opinion and Decision after Reconsideration, the panel states its view that the Lauher phrase, “singled out for disadvantageous treatment,” is simply an application of the broader standard adopted by the court. The panel’s application of the Lauher standard to Franco’s claim, however, was frustrated by numerous inadequacies in the evidentiary record that made it impossible to compare the way in which Franco was treated as compared to a non-industrially injured employee. For example, the record was unclear on whether Franco’s employer had any policy with respect to how industrially injured employees were treated if there was an AME report or other evidence that conflicted with a treating physician’s opinion concerning an employee’s ability to remain on the job. Importantly, the panel observed that the employer’s apparent lack of such a policy could be found to adversely affect industrially injured workers as a class in a way that does not equally affect non-industrially injured employees. Thus, it could be found that Franco was subject to disadvantages not visited on other employees because of his industrial injury. The panel rescinded the WCJ’s decision and returned the case to the trial level with specific guidance as to the multiple issues requiring further development.

Although the panel’s decision did not resolve Franco’s claim of discrimination under Labor Code section 132a, it is noteworthy because it sets the record straight that an injured worker may make a prima facie showing of unlawful discrimination even where they cannot demonstrate a singling out for disadvantageous treatment, so long as they show some adverse result as a consequence of some action or inaction by the employer that was triggered by the industrial injury, and that they had a legal right to receive or retain the deprived benefit or status and the employer had a corresponding legal duty to provide or refrain from taking away that benefit or status. In other words, the injured worker must show they were subject to disadvantages not visited on other employees because of the industrial injury.

Practitioners should check the subsequent history of any cases before citing to them.

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