Serious and Willful
Claims in California:
Basics Employment Lawyers Must Know
More
and more, traditional labor and employment attorneys are required to
understand the workers' compensation system and to handle their client's
serious and willful claims. These claims allege that the employer caused
the employee's injuries through its serious and willful misconduct. Serious
and willful claims often overlap with other more traditional employment
related issues that the attorney is already handling. Serious and willful
claims are frequently filed along with the workers' compensation claim,
even without any basis, and usually settle for nominal value. However, the
liability is uninsurable and must be paid from the employer's own funds.
This article addresses some of the basics of serious and willful claims.
Employer's Liability for Serious and Willful Misconduct: California Labor
Code Section 4553
California
Labor Code section 4553 provides that an employer who is found to have
caused an employee's injuries by its "serious and willful
misconduct" will be ordered to pay an amount equal to half (50%) of
the value of the amount of compensation paid to the injured worker. This
fifty percent penalty applies when the employee is injured by the serious and
willful misconduct of either:
- The employer or
his managing representative;
- If the employer is
a partnership, on the part of one of the partners or its managing
representative;
- If the employer is
a corporation, on the part of an executive or managing officer or
general superintendent.
Generally,
serious and willful misconduct cases are difficult to prove. The remedy
departs from the general no-fault principle of the workers' compensation
system and allows a penalty against the employer.
However,
this penalty can only be assessed "in the event of an exceptionally
high degree of employer fault, surpassing even gross negligence. Ferguson v. Workers" Comp. Appeals Bd.
(1995) 33 Cal.
App.4th 1613, 1622 citing Mercer-Frazer Co. v. Industrial Acc. Com.
(1953) 40 Cal.2d 102, 120. Serious and willful misconduct under section
4533 is an act deliberately done for the express purpose of injuring
another, or intentionally performed whether with knowledge that serious
injury is a probable result or with a positive, active, wanton, reckless
and absolute disregard of its possible damaging consequences. Mercer,
40 Cal.
2d. at 120. Serious and willful misconduct under
section 4533 has been said to be conduct of a quasi-criminal nature. Johns-Manville
Sales Corp. v. Worker Comp. Appeals Bd. (1979) 96 Cal.App.3d 923.
The
most difficult way to prove the willful misconduct is by trying to prove
that the employer's conduct was intentional. Most attorneys attempt to
prove the misconduct was willful by showing that the employer failed to act
even though it had knowledge that a serious injury would probably result or
by showing that the employer violated a safety regulation (discussed
below).
Serious and Willful Liability as a Result of Violation of Cal/OSHA
Safety Order
An
employee can also support a finding of serious and willful misconduct based
upon violation of Cal/OSHA regulations, also known as safety orders. All
Cal/OSHA safety orders are contained in Title 8, California Code of
Regulations, Division 1, Chapter 4 Industrial Safety Orders, sections 450
through 8618.
Labor
Code section 4553.1 provides that an employee can prove serious and willful
liability based upon a violation of a safety order if he/she can prove all
of the following:
1.
The specific manner in which the order was
violated.
2.
That the violation of the safety order
proximately caused the employee's injury or death.
3.
That the safety order, and its
applicability, were known to, and violated by, a particular named person,
who can either be the employer, a partner, or a managing representative
(e.g., a supervisor or a foreman).
This
third element can also be shown by establishing that the condition was
obvious, created a probability of serious injury, and the failure of the
employer or its representative to correct the condition constituted a
reckless disregard for the probable consequences.
Because
the definition of serious and willful misconduct as used by the Workers'
Compensation Appeals Board is very similar to that used by the Cal/OSHA
Appeals Board, the employee may seek to introduce evidence of a final
Cal/OSHA citation as proof of the elements of serious and willful
liability. Thus, any settlement of a Cal/OSHA serious and willful violation
must include a non-admissions clause.
Calculation of Fifty Percent Increase
As
stated, Labor Code section 4553 provides for a fifty percent increase in
benefits when a serious and willful violation is found. The employee will
also be entitled to costs and expenses not to exceed $250.
The
statute does not allow the judge discretion to adjust the amount of the
award. If there is liability, the employer must pay the full amount.
A
California appellate court has found that the fifty percent increase for
serious and willful violations is to be calculated on the entire award, not
just on the basis of the compensation indemnity, provided that the total
benefits do not exceed the amount necessary to fully compensate the worker.
Ferguson,
33 Cal.App.4th at 1617. Thus, the fifty percent
increase will be based on nonindemnity benefits
such as medical treatment payments and medical-legal fees. It may also
include vocational rehabilitation costs although this precise issue has not
been resolved by the Workers' Compensation Appeals Board.
The
court in Ferguson
based its holding on the language of section 4533 which provides that
"the amount of the compensation otherwise recoverable" shall be
increased by half. The court found that the term "compensation"
has been given an expansive meaning by statute, including every benefit or
payment conferred upon employees.
The
court noted that the increased compensation might also constitute a
"penalty." However, the court found that the increased award does
not amount to punitive damages because it does not necessarily provide the
injured worker more than would compensate him or her. This is because
workers' compensation benefits generally do not fully compensate the
employee for his or her injuries. Thus, section 4533 only provides
"full or more nearly full compensation." Id. at 1622. The court in Ferguson held
that the amount of the increase for a serious and willful violation cannot
be allowed to provide the injured worker more than is necessary to fully
compensate the worker. Id.
at 1623-1625.
Conclusion
The
workers' compensation system operates under rules substantially different
from those used to settle other types of claims. While many attorneys
specialize in handling only workers' compensation claims, employment law
attorneys should have a basic understanding of a businessperson's
responsibilities under California's
workers' compensation law in order to best advise their clients.
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