A recent case (Sompo Japan Insurance Company of America v. Workers’ Compensation Appeals Board) popped up on my radar as an employer tried (and failed) to contract around workers’ compensation benefits.
Gerald Lark was employed by Canon Business Solutions when he allegedly sustained an injury to his back, left shoulder, psyche and internal system. A few days after the date of injury, applicant entered into a “severance agreement and general release,” by which the employer would pay applicant 44 weeks of wages. When applicant was released to work roughly a month after his date of injury, there was no job to return to.
Applicant filed a declaration of readiness to proceed to an expedited hearing, claiming he was owed temporary disability. The Workers’ Compensation Judge concluded that applicant was entitled to ongoing temporary disability payments and that defendant was entitled to no offset or credit for the 44 weeks of severance already paid.
The Workers’ Compensation Appeals Board denied defendant’s petition for reconsideration, adopting the WCJ’s report and recommendation. The WCJ argued, in his report and recommendation, that reconsideration should be denied because the severance agreement was not reviewed by a Workers’ Compensation Judge.
But… applicant got the money.
Temporary disability is paid out at 2/3rd of an applicant’s income, for up to two years. Here, applicant is receiving his entire paycheck for 44 weeks (or 57 weeks of temporary disability), presumably all at once.
Yet, defendant is somehow not entitled to credit for money already paid. Does it really matter what we call it? Severance, temporary disability, get-well-soon fund, it shouldn’t matter. Applicant received a benefit from his employer and, pocketing the money, now wants more.
Sadly, the Court of Appeal denied defendant’s petition for a writ of review, and thus declined to correct this injustice to an employer.
Greg, I am not a lawyer, but your initial comment says a lot. You state that the “employer tried (and failed) to contract around workers’ compensation benefits.” What precedent or legal theory did the employer rely upon that led them to believe letting the employee go with severance would relieve them of liability for TD?
Steve – I’m not sure what the thinking was. Going purely on speculation, I imagine that human resources or some department unfamiliar with the workers’ compensation system thought that you could contract around anything. It could also be that this was just severance, and the insurance company tried to get credit after the fact. I think this latter option had some merit and logic to it, and it was too bad the WCAB didn’t see it that way.
What do you think? Have you ever seen something similar?
TD is a wage replacement benefit for goodness sake!! This applicant had his wages replaced. Getting a windfall with this decision, but no surprise. What kind of incentive does an employer now have to provide it’s employees with severance benefits when it the employee has also filed a comp claim? None, in my opinion. This is a good example of why employers need to keep tabs on the interaction between WC and HR issues.