A California court recently rendered a positive decision for employers on an issue that has been unsettled for years. The issue centers on the “good faith personnel action defense.” Under this defense, an employee’s psychiatric injuries that are a result of an employer’s good faith personnel actions are not covered workers’ compensation injuries.

In County of San Bernardino v. Workers’ Compensation Appeals Board, 2012 WL 639460 (2012), the court ruled that a worker’s claim for migraine headaches was barred under this useful defense.

Good Faith Personnel Action Defense

Labor Code section 3208.3(h) provides the good faith personnel action defense:

No compensation under this division shall be paid by an employer for a psychiatric injury if the injury was substantially caused by a lawful, nondiscriminatory, good faith personnel action.

This defense was enacted as part of workers’ compensation reform that took place in 1989. The defense was added to the Labor Code in response to growing public concern about increasing coverage costs, suspected fraud and abuse, and the explosion of stress injury claims.

In the past, the Workers’ Compensation Appeals Board (WCAB) issued conflicting decisions as to whether the defense extends to work-related stress injuries that manifest themselves in physical symptoms, such as gastrointestinal problems or headaches. And there were no appellate court cases deciding the issue.

This is the first appellate court decision to fully address and resolve this issue.

Stress Injury Led to Migraines

John McCoy worked as an automated systems technician for the County of San Bernardino. He filed a workers’ compensation claim alleging injury to his psyche over a six month period. He included a claim of injury in the form of migraine headaches. McCoy claimed that the injuries arose at work as a result of on-the-job stress caused by friction with his supervisor.

The county argued that the injuries were caused by lawful, nondiscriminatory, good faith disciplinary actions and were barred by the good faith personnel action defense.

The workers compensation judge agreed with the county and found the injuries were not compensable, including the migraine claim. On appeal, the WCAB reversed the judge’s decision. The WCAB ruled that the psychiatric injury claim was barred by the good faith personnel action defense, but the migraines were not. The WCAB concluded that the defense was only applicable to psychiatric injuries and not to the physical consequences of those injuries, such as migraines. This appeal followed.

Court Rules for Employer

The court of appeal reversed the WCAB and found the migraines were barred by the defense. The court concluded that section 3208.3 (h) precludes recovery for physical manifestations that “are directly and solely resulting from the psychological injury suffered as a result of good faith personnel actions.” To hold otherwise, according to the court, would undermine the intent of the law to limit stress claims because of their potential for fraud and abuse.

“It would be relatively easy for a claimant to avoid [the good faith defense] by asserting internal problems and symptoms, such as upset stomach, headache, and sleeplessness, but not injury to the psyche per se,” said the court.

The court emphasized that its decision is limited to cases where there is no evidence the employee suffered on-the-job stress apart from that caused by the good faith personnel action. If the work stress and its related physical symptoms are caused by bad faith actions, such as outrageous, objectively unreasonable conduct on the part of a manager, those injuries would still be compensable.

Best Practices

• When faced with a workers’ compensation stress claim, provide your carrier with information regarding any personnel action that may have contributed to the stress and why you took such action.
• Maintain documentation of the good faith reasons for your personnel actions. As always, good documentation will assist you in asserting a defense to liability claims based on workplace conduct.
• Nip bullying or other outrageous conduct by supervisors in the bud. Besides exposing you to liability, such behavior leads to poor morale and an unproductive work environment.