Tag Archives: fair employment and housing act

Risky Spots for EPL Suits by Employees

A new study of employment practices litigation (EPL) data by Hiscox found four states — California, Illinois, Alabama and Mississippi — along with the District of Columbia, to be the riskiest areas of the U.S. for employee lawsuits. Businesses in these five jurisdictions face a risk that is substantially higher than the national average for being sued by their employees.

According to the study, a U.S.-based business with at least 10 employees has a 12.5% chance each year of having an employment liability charge filed against it. California has the most frequent incidences of EPL charges in the country, with a 42% higher-than-average chance of being sued by an employee. Other high-risk jurisdictions include the District of Columbia (32% above the national average), Illinois (26%), Alabama (25%), Mississippi (19%), Arizona (19%) and Georgia (18%). Lower-risk states for EPL charges include West Virginia, Massachusetts, Michigan, Kentucky and Washington.

Bert Spunberg, a colleague at Hiscox who is a senior vice president and the practice leader for executive risk, says: “Federal level information on employee charges is generally available, but state specific information is more difficult to aggregate. Understanding employee litigation risk at a state level is a crucial step for an organization to establish the processes and protections to effectively manage their risk in this changing legal environment.”

State laws can have a significant impact on risk. For example, the employee-friendly nature of California law in the area of disability discrimination may contribute to the high charge frequency in the state. Discrimination cases filed at the state level in California are brought under the Fair Employment and Housing Act (FEHA). FEHA applies to a broader swath of businesses, covering any company with five employees, vs. a 15-employee minimum for cases brought under federal law as outlined in Title VII of the Civil Rights Act.

Mark Ogden, managing partner of Littler Mendelson, the largest employment and labor law firm in the world, says: “Not only are employment lawsuits more likely in those states, but the likelihood of catastrophic verdicts is also significantly higher. Unlike their federal counterparts, where compensatory and punitive damages combined are capped at $300,000, most state employment statutes impose no damages ceilings. Consequently, employers in high-risk states must ensure that their workforces are adequately trained regarding workplace discrimination, harassment and retaliation and that policies forbidding such conduct are strictly enforced.”

For more on the study, click here.

Workers' Compensation In California: No Longer Just Permanent And Stationary

Senate Bill 863 was passed on August 31, 2012 and signed into law by Governor Brown on September 1 for a January 1, 2013 effective date. This bill not only affects the workers’ compensation system in California but also has far reaching effects for employers under the California Fair Employment and Housing Act (FEHA) and the Americans with Disabilities Act of 1990 (ADA). With lengthy delays for treatment and outcomes, the old system wasn’t working.

In this author’s opinion, the most significant issues that employers face with the changes in SB 863 are with the supplemental job displacement vouchers, increases in permanent disability, and the independent review process.

The bill increases permanent disability and an independent medical review process (IMR), which may be problematic for an employer because claims that are not causally related or where there is no injury accepted can have a significant impact on the employer. In fact, an independent medical review can only be requested by an injured worker following a denial, modification, or delay of a treatment request through the utilization review (UR) process. The catch is that employers and insurance carriers cannot request review of treatment authorizations.

There is a right to appeal an independent medical review determination to the trial level Workers’ Compensation Appeals Board on the basis of fraud, conflict of interest, or mistake of fact. The reviewer’s underlying medical decision-making, however, cannot be overturned by a judge. The remedy, if an appeal is granted, is a referral to a different reviewer for another evaluation. In short order, the employer is stuck with the decision. Please note that this does not apply if the injury is in question!

What does this mean in terms of federal law for California?

To best answer this question one must understand the basis of these federal laws. Numerous states have anti-discrimination laws which can differ from federal law but are designed to encompass the spirit of the federal laws. These laws are provided in addition to the federal law in order to offer more desirable avenues for victims of harassment and discrimination. California is one state that has enacted such laws.

For the purpose of SB 863, we need to explore the California Fair Employment and Housing Act. This law prohibits discrimination based on race, color, religion, national origin, physical or mental disability, medical or related medical condition, marital status or sexual orientation. The act applies to all employers, labor organizations, employment agencies and any other entity or person who engages in or compels an act of discrimination. It also allows for the imposition of punitive damages when a corporate defendant’s officers, directors or managing agents engage in harassment or discrimination. In fact, the definition of disability under the California Fair Employment and Housing Act is more broad than Federal law as something that “limits” a major activity where the federal law states that it must “substantially limit” a major activity.

The enactment of SB 863 will pose an important question for employers; “where does workers’ compensation end and discrimination start?” As of January 1, 2013, California employers need to have the answer to that question because newly added Labor Code Sec. 4658.7 addresses that problem and ties into SB 863.

Under the current system, injured workers may be offered supplemental job displacement vouchers that can be used to pay for job retraining. Currently, the vouchers range from $4,000 to $10,000 and the permanent disability award is often determined a long time after the last date of temporary disability payable, so the use of the vouchers has been low. The amount is based on the permanent disability rating for the injured worker and does not have to be paid until a final determination of the permanent disability rating has been determined.

For injuries after January 1, 2013, under SB 863 the voucher amount will be fixed at $6,000 for all qualifying injured workers, and it is to be offered when the injured worker reaches permanent and stationary status and the treating doctor reports on work abilities and limitations resulting from the injury.

With Labor Code 4658.7, the trigger for a voucher will be when an employer does not offer regular, modified or alternative work within 60 days of receipt of a P&S report finding that the injury has caused permanent partial disability. Under state and federal law, employers must provide “reasonable accommodations” for disabled workers. This obligation includes a requirement to engage in a good faith “interactive process,” in which the parties discuss the employee’s limitations and explore possible accommodations.

A good case in point is the $1,571,500 lesson learned in Cuiellette v. City of Los Angeles (California Court of Appeal, Second Appellate District, 4/22/11). The significant point from this case is that if an employee seeks reassignment as a reasonable accommodation, the employer must consider if the employee can perform the essential duties of the position sought, rather than those of his current or prior position.

The only way for an employer to level the playing field and avoid potential landmines is with objective baseline testing such as the Electrodiagnostic Functional Assessment Soft Tissue Management baseline program, which provides employers the data necessary to only accept claims that arise out of the course and scope of employment.

Trucking Company Pays $450,000 to Settle Fresno Workplace Discrimination Case

California’s Department of Fair Employment and Housing (DFEH) settled a group action lawsuit on behalf of newspaper delivery drivers against Penske Logistics, LLC for $450,000. The DFEH alleged that Penske refused to hire the drivers because of their real or perceived disabilities. The case arose after Penske entered into a contract with the Fresno Bee to deliver newspapers. The Bee informed its newspaper delivery drivers that it had outsourced their jobs to Penske, and advised them that they could apply for employment with Penske if they so desired. When the drivers applied, Penske required them to disclose non job-related physical conditions, which is prohibited. Penske also rejected several drivers due to the conditions they disclosed.

The DFEH lawsuit alleged that Penske rejected 13 of the delivery applicants who had ably performed their jobs for the Fresno Bee for four or more years, after they received unsatisfactory scores on Penske’s Physical Capabilities Exam. According to the Department, the exam was neither job-related nor consistent with business necessity, which the Fair Employment and Housing Act (FEHA) requires. Prohibited disability-related questions included whether an applicant has heart disease, diabetes, or high blood pressure. The exam also required applicants to achieve a strength rating of “medium-heavy,” while the U.S. Department of Transportation standard Penske claimed to follow assigns a strength demand of “medium” to a wholesale newspaper delivery driver job. The Department alleged that because the 13 applicants did not achieve the artificially high strength demand Penske required, Penske refused to hire them, although they had safely and successfully performed the duties of a newspaper delivery driver for the Fresno Bee for years.

In addition to paying $450,000 to the 13 applicants, Penske agreed to stop subjecting applicants at any of its facilities in California to the Physical Capabilities Exam, to maintain and distribute a written policy prohibiting workplace discrimination on the basis of actual or perceived disability, to train its officers, managers, supervisors and Human Resources personnel in California on the policy, and to maintain and distribute written procedures by which current and prospective employees in California may report discrimination.

This is not the first time the DFEH has challenged a pre-employment test. In a class action against Loma Linda University Medical Center, the agency negotiated a settlement for $259,853.96 on behalf of ten job applicants, for subjecting candidates to a “nerve conduction test” to screen out those who have or may have carpal tunnel syndrome or repetitive motion injuries. The applicants who were required to take this test had passed all other employment tests and interviews. In some cases, job applicants had already attended orientation and were ready to start work. The hospital rescinded its employment offer to applicants with “failing” test results, even though there was no objective evidence demonstrating that they could not perform their essential job tasks. These two settlements suggest that the DFEH is paying increased attention to discrimination based on “actual or perceived disabilities,” and starting in 2013 will be able to file class lawsuits in civil court.

Prevention Strategies: The new disability discrimination regulations that will take effect on January 1, 2013 emphasize “accurate and current job qualification requirements.” DFEH is clearly starting to enforce this now. The enforcement agency is taking the position that not only was there disability related inquiries, but that rejection of the applicants was “regarded as disabled” discrimination. Accordingly, it is prudent to take a look at the current pre-employment testing protocols to be sure that they are within appropriate guidelines under FEHA (job related and consistent with business necessity) and that any post-conditional offer medical examinations only ask for appropriate job-related medical history.