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November 16, 2022

By Olivia Gordon

If you thought you knew what constituted lawful, non-discriminatory, good faith personnel actions, think again.  As highlighted by a 2021 case, only actions that are specifically directed towards an individual’s employment status are considered “personnel actions.” Otherwise, all other good faith management actions would be so overly broad as to result in the denial of compensation.

In Countrywide Home Loans, Arrowood Indemnity Company v. WCAB, the applicant alleged a cumulative trauma claim to her psyche, internal organs, hemorrhoids and shingles, from July 31, 2000, to August 9, 2002, while employed as a computer programmer.  The defendants denied liability and raised the defense of lawful, non-discriminatory, good faith personnel action.

After trial, the Judge found the personnel actions, to which the applicant was subjected, did not exceed 20% causation of her psych injury, and that the defendants did not meet their burden of establishing that personnel actions were a substantial cause (35% to 40%) of the injury.  Further, the Judge relied on the treating psychologist rather than the qualified medical evaluator (QME) physician.

The applicant filed a Petition for Reconsideration regarding a temporary disability benefits issue.  The defendants also filed a Petition for Reconsideration, arguing the treater’s opinion was not substantial evidence as he had not evaluated the applicant since 2013, and that he was not fully aware of the applicant’s subsequent medical and employment history.

Passage of Time Did Not Render Medical Report Irrelevant

The Judge found the passage of time does not render a medical report irrelevant as the same must be grounded in a complete understanding of the relevant vocational, medical, and legal history, in order to constitute substantial medical evidence.  The psych treater reviewed medical records from the treating physicians as well as the trial testimony.  The record established the psych treater was aware of applicant’s current condition, her medical history and development, and her pre-and post-employment history.  The doctor also had familiarity with the applicant’s medical and vocational history.

The applicant’s psych treater apportioned 10% to preexisting non-industrial factors, 20% disciplinary/personnel actions, and could not parse out the causative factors for the remaining 70% as it would have been speculative.  The Judge concluded that the defendants did not meet their  burden of establishing that personnel actions were a substantial cause of the applicant’s psychiatric injury.

The defendants contended that two factors described by the psych treater, which included an assignment to create a manual for the “Merlin” computer program, and decisions made by defendantsregarding the applicant’s work from home accommodation, should be deemed personnel actions.  The Judge rejected this contention  and discussed case law distinguishing “personnel actions” from other administrative actions.

Case Law Regarding Psychiatric Injury Claims and Good-Faith Personnel Action Defenses

Case law has established how to determine whether a specific event of employment may be considered a personnel action.  The distinction between the effect on working conditions, and the effect of an action directed towards an individual’s employment status, has been recognized in determining whether a psychiatric injury was substantially caused by lawful, non-discriminatory, good faith personnel actions.

In Berman, corporate reorganization that increased workloads was not found to be a “personnel action” for purposes of Labor Code section section 3208.3(h), even though it was not discriminatory and applied to all employees.

In Brodsky, increasing sales quotas, changing commission structure, reassigning applicant’s sales accounts to other people, and offering applicant a lower-paying job at a fixed salary, were not found to be “personnel actions.”

In Milliron, the announcement of a shift change to seven days per week/nine hours per day for an indefinite period, was also not found to be a “personnel action.”

Lastly, in Rivera, an assignment of new and increased work requirements was also not found to be a “personnel action.”

The court noted that not every Appeals Board has recognized the distinction between a psychiatric injury caused by stressful working conditions and injury caused by an action specifically directed towards an individual’s employment status, Schultz. 

Relying on Larch and Purcell, the court reasoned the phrase “personnel action” would encompass everything in the employment environment that stems from good faith management actions, and that “would be too broad an interpretation that would prelude from consideration practically all events occurring such as workloads.”  Not all actions by management may be construed as personnel actions as it would be overly broad and result in a denial of compensation for injuries caused by management’s criticism of an employee’s conduct.

Judge Concludes Work-Related Decisions Were Administrative Actions Not Personnel Actions

The WCJ concluded that both the decision to have the applicant work on the “Merlin” manual and the decisions made about her physical working location/work from home accommodation would be considered administrative actions rather than personnel actions, as neither event reasonably implicated the applicant’s employment status nor would otherwise qualify as personnel actions within the meaning of Labor Code section 3208.3(h).

The WCAB granted Reconsideration to amend the Judge‘s decision regarding the temporary total disability  issue and affirmed the Judge’s other opinions. The defendants’Petition for Writ of Review was denied.


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