Importance of Engaging in Interactive Process Emphasized by Recent Trial Court Verdicts

Importance of Engaging in Interactive Process Emphasized by Recent Trial Court Verdicts

A recent $1.5 million jury verdict in a Northern California Federal Court, applying the California Fair Employment and Housing Act to a Tennessee Corporation doing business in California, found that the Defendant retailer had failed to engage in the interactive process required by FEHA. The interactive process requires employers with 5 or more employees (including part-time employees) to meet with employees who have work restrictions (including those required as a result of an industrial injury) and determine whether or not the work restrictions can be accommodated.

The District Manager for the Defendant retailer brought a lawsuit after he was terminated from employment several months following returning to work after a leave of absence. The District Manager had been given restrictions by his physician regarding operation of a motor vehicle. The jury found that by failing to engage in the interactive process with the employee to explore ways in which his work restrictions could be accommodated constituted a violation of FEHA. The employee was awarded more than $100,000 in lost wages, and nearly $1.4 million for mental suffering. In addition to this significant verdict, the Defendant retailer was ordered to pay the employee's attorney fees, amounting to hundreds of thousands of dollars. The same Defendant retailer lost a similar case barely one month earlier involving disability discrimination and racial harassment with total damages in excess of $1.3 million, plus attorney fees.

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  • What this means for you

In each instance in which a work-related injury creates work restrictions, whether or not there is impairment under the AMA Guides, the insurer, TPA and defense attorney may share an obligation to notify the employer or self-insurer of the work restrictions so that the employer may determine whether those restrictions can be reasonably accommodated so that the employee may return to work. For permanent disability purposes, pursuant to Labor Code §4658(d) there is a small financial incentive, a 15% increase or decrease in the weekly rate, depending on whether the work restrictions can be accommodated. However, a snap decision that the employee's work restrictions cannot be accommodated which is not supported by the completion of the mandatory interactive process with the employee can expose the employer to significant monetary damages including punitive damages. Such an employer may in turn seek to impose liability on their workers' compensation carrier or its TPA or attorneys for failing to advise them regarding the importance of engaging in the interactive process.

  • Practice Tip

When notifying an employer of the employee's work restrictions, always ask for, and follow-up on, a written reply from the employer assuring that the interactive process has been considered and complied with before automatically assuming that the employee is entitled to a 15% PD increase.

© Copyright 2010 by Goldman, Magdalin & Krikes, LLP. All rights reserved. Reprinted with permission.