Workers Compensation

When a person is injured in the course and scope of his employment, he is entitled to recover benefits from his employer, including medical treatment, loss of income, disability compensation and more. This is referred to as "workers compensation." The citations in this brief are to California law but the laws of other states are similar. 

Workers compensation statutes represent a compromise between two competing interests. Employees want full compensation without having to prove the employer was at fault, while employers want to pay little or nothing. The compromise was made with regard to what the employees would be paid. Employees do not have to prove fault, but are not paid full compensation. Recovery under workers' compensation does not provide the full range of relief available in a personal injury tort action, and the workers' compensation remedy denies any recovery at all for noneconomic damages such as pain and suffering. (See, i.e., 2 Witkin, Summary of Cal. Law (9th ed. 1987) Workers' Compensation, §249, p. 820.)

A worker can, however, sue in tort a third party whose negligent or intentional act has injured the employee. (Privette v. Superior Court (1993) 5 Cal.4th 689, 697.) The employee is entitled to a full range of tort relief; the third-party tortfeasor is liable for noneconomic damages to the extent of his proportionate fault. (DaFonte v. Up-Right, Inc. (1992) 2 Cal.4th 593, 598, 604.)

Workers Compensation Is the Employee's Exclusive Remedy Against His Employer

"Under the Workers' Compensation Act ., all employees are automatically entitled to recover benefits for injuries 'arising out of and in the course of the employment.'" (Privette v. Superior Court (1993) 5 Cal.4th 689, 696-697.) "When the conditions of compensation exist, recovery under the workers' compensation scheme 'is the exclusive remedy against an employer for injury or death of an employee.'" (Id. at p. 697.)

If an employer secures insurance for payment of workers' compensation benefits for a residential employee, the employee's exclusive remedy is workers' compensation and the employee does not have a cause of action for damages in a civil action. (Philip Travis v. Bruce Choder 5 WCAB Rptr. 10, 207)

As a general rule, an employee who sustains an industrial injury arising out of and in the course of employment is limited to recovery under the workers' compensation system. To be within the scope of employment, the incident giving rise to the injury must be an outgrowth of the employment, the risk of injury must be inherent in the work place, or typical of or broadly incidental to the employer's enterprise. (See Torres v. Parkhouse Tire Service, Inc. (2001) 26 Cal.4th 995.)

There must be a causal nexus between the tort and the employer's work; the tort must be engendered or arise from the work; the incident leading to injury must be an outgrowth of the employment. (See Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal.4th 291.)

The test for whether an injury arises out of the employment is: If the particular act is reasonably contemplated by the employment, injuries received while performing it arise out of the employment, and are compensable. In determining whether a particular act is reasonably contemplated by the employment, the nature of the act, the nature of the employment, the custom and usage of a particular employment, the terms of the contract of employment, and perhaps other factors should be considered. (LaTourette v. Workers' Comp. Appeals Bd. (1998) 17 Cal.4th 644.)

Workers' compensation is the exclusive remedy for a housekeeper bitten by the homeowner's dog and bars the personal injury action against the homeowner under Civil Code §3342, a strict liability statute for personal injury caused by dog bites. (Rosa Pale v. Sabrina Coble 8 WCAB Rptr. 10, 332 ___Cal.App.4th___ .)

Injuries caused by unsafe working conditions are compensable solely under workers' compensation, even if the employer recklessly or deliberately failed to correct known safety violations. (See Vuillemainroy v. American Rock & Asphalt, Inc. (1999) 70 Cal.App.4th 1280.)

Exceptions to the Exclusive Remedy Aspect of Workers Compensation

Willful and unprovoked physical act of aggression of a co-employee-Labor Code §3601(a)(1): The exception to the exclusive remedy of workers' compensation when the injury is proximately caused by the willful and unprovoked act of aggression of a co-employee applies when the injured employee proves the other employee had an intent to injure. (See Torres v. Parkhouse Tire Service, Inc. (2001) 26 Cal.4th 995.)

Not a bar to a premises liability claim by injured employees of independent contractor against landowners: Workers' compensation exclusivity precludes an injured employee from suing hirers only when the injury arises from the act or omission of the contractor employing the injured worker. In a premises liability action, the claim is that a known pre-existing condition of the property affirmatively contributes to the injury, the Privette doctrine does not bar liability; the rule creates a bar only when the dangerous condition is determined to be the result of the contractor's negligence. (See Sheeler v. Greystone Homes Inc. (3003) 113 Cal.App.4th 908.)

Employee's Right to Sue Non-Employer Who Cause Injury

The employee and employer each have an independent cause of action for damages against a negligent third party. Lab. Code § 3852; Buell v. CBS, Inc. (1982) 136 Cal. App. 3d 823, 825, 186 Cal. Rptr. 455. The employee may simultaneously proceed against the third party for civil damages and against the employer for workers’ compensation benefits for the same injury. Lab. Code § 3852; Finney v. Manpower, Inc. (1981) 123 Cal. App. 3d 1066, 1069, 177 Cal. Rptr. 74. See California: Somebody Else Did It: A Primer on Third Party Claims by Howard Stevens. 

Employer's or Workers Compensation Insurer's Subrogation Right

When an employer or insurer pays benefits, it is entitled to recover those benefits from any third party who was responsible for injuring the employee to whom benefits were paid. This right has various names, but often is called a right of subrogation even though it is not technically "subrogation" because the right is based on statutory law. 

The opposite is not true. When the employee obtains workers compensation benefits from his employer and tort damages from a third party, the third party cannot sue the employer for equitable indemnification. California Labor Code section 3864 provides: "If an action as provided in this chapter prosecuted by the employee, the employer, or both jointly against the third person results in judgment against such third person, or settlement by such third person, the employer shall have no liability to reimburse or hold such third person harmless on such judgment or settlement in absence of a written agreement so to do executed prior to the injury."

Procedures Available Under the California Labor Code for Employer or Workers Compensation Insurer to Enforce Subrogation Right

The following applies to employers who paid benefits, and to the workers' compensation insurer. The latter is within the definition of employer. (LC §3850). References to "employer" therefore include both the employer and the insurer.

1. Suing the third-party directly by way of Complaint for Subrogation. (LC §3852)

Employer or insurer is full party entitled to service of all pleadings and discovery.

2. Intervening in injured employee's case on file by way of Complaint-in-Intervention. (LC §3853)

Employer is full party entitled to service of all pleadings and discovery.

Complaint-in-Intervention continues against third-party even if the employee settles the case with that party (LaBorde v. McKesson & Robbins, Inc. (1968) 264 Cal.App.2d 363, 369, 70 Cal.Rptr. 726, 33 CCC 478) or if the employee's case is dismissed for lack of prosecution (Carnation Co. v. Superior Court (Johnson) (1969) 1 Cal.App.3d 891, 896, 82 Cal.Rptr. 98, 35 CCC 650).

If the employee prevails at trial, the employer is entitled to separate judgment.

3. Filing a lien on an employee's judgment against the third-party by way of Notice of Lien. (LC §§3856(b), 3862)

The Notice of Lien may be asserted any time before satisfaction of judgment or, where the case is settled, before the settlement proceeds are distributed. (Harvey v. Boysen (1975) 50 Cal.App.3d 756,762, 123 Cal.Rptr. 740, 40 CCC 593)

Employer is not a party, and is not usually served with pleadings and discovery (does receive Court notices). Also, not usually permitted to participate in discovery or propound discovery on parties in case, or participate at trial. Also, there is no liability for third-party defendant's costs in the event that the injured employee does not prevail at trial.

Notice of Lien is honored and Order directing payment will issue if no employer negligence found with verdict and judgment in injured employee's favor. But, employer is at the mercy of evidence introduced at trial on employer negligence issue if notice of the issue was previously given and Complaint-in-Intervention is not filed.

Only if injured employee settles with third-party defendant and settlement is intended to include reimbursement claim will the employer prevail on a motion to impress lien on settlement proceeds - subject to potential award of attorney's fees to injured employee's attorney. (Marrujo v. Hunt (1977) 71 Cal.App.3d 972, 138 Cal.Rptr. 220, 42 CCC 697)

Notice of lien is advisable only in those cases involving very tenuous liability against the third-party defendant, serious issues concerning the injuries and damages claimed, where there is a potential for a finding of significant employer negligence or where the amount of benefits paid is relatively minimal.

This method is less expensive because of nonparticipation at Court hearings and during discovery. However, the injured employee can settle around the Lien as long as sufficient notice of the settlement is given to the employer. The employer is also relying on the injured employee to provide such notice.