As California worker's compensation caseloads decline due to the 2004 overhaul of the state's Worker's Compensation system, many applicants' attorneys are now filing disability discrimination claims for injured workers under California's Fair Employment and Housing Act ("FEHA"), according to a report by California Fair Employment and Housing Commission ("FEHC") Chairman, George Woolverton. ("Fewer Claims Prompt Workers' Comp Lawyers to Diversify" by Anne Marie Ruff, Los Angeles Daily Journal, Aug. 17, 2006.) It is estimated that 15 percent of all new complaints filed with the FEHC have arisen out of workers' compensation claims.
There are significant economic reasons for an injured worker to pursue remedies under both statutory schemes. One reason is that the potential recovery under the FEHA in a court action is so much greater than in a workers compensation proceeding. An injured employee's potential award in a workers compensation proceeding is determined according to an established schedule based on the disability, whereas a disabled employee who proves a FEHA violation can be awarded compensatory damages for emotional distress and possibly punitive damages in a civil jury trial.
Another reason is that under California's workers compensation system, applicants' attorneys fees are capped at 15 percent of the total award, whereas there is no such cap on attorneys fees awards under FEHA. It is not surprising that as a result of the 2004 workers compensation reforms (which reduced benefits for injured workers), applicants' attorneys have targeted the FEHA as a major growth area to expand their practices and potential monetary recovery.
This shift in legal tactics is likely to raise the financial stakes for all California employers. While workers' compensation claims are paid for by insurance carriers, disability discrimination claims arising under FEHA are not covered by workers compensation insurance policies. Thus, workers' compensation insurers can effectively defend against workers compensation claims, but have no obligation to defend the employer against disability discrimination claims or lawsuits filed under FEHA or the federal Americans With Disabilities Act ("ADA").
California employers may not realize that their obligations under these statutory schemes are quite different, and may unintentionally expose themselves to significant liability under the FEHA for failing to accommodate a disabled worker who has filed a workers compensation claim. Steps should be taken now to review your practices in order to avoid workers' compensation claims becoming civil lawsuits for compensatory and punitive damages under the FEHA.
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