California Labor Code Section 3202 provides that the section “shall be liberally construed by the courts with the purpose of extending their benefits for the protection of persons injured in the course of their employment.” Thus, the Labor Code requires the Workers’ Compensation Appeals Board to inherently favor the interests of the injured worker in a workers’ compensation claim. However, while the Labor Code was designed to protect the injured worker, it also provides some protections to employers in workers’ compensation claims. One area in which employers are protected by the Labor Code is psychological injuries. Both the Labor Code and case law have established high standards when awarding workers’ compensation benefits for claimed psychological injuries. Additionally, the Labor code provides various defenses to claimed psych injuries. One of the most popular defenses is the good faith personnel defense. As a result, although the legislative intent of the Labor Code is to protect the injured worker, there are several protections for employers as well.

Section 3208.3 of the Labor Code defines a psychological injury as 1) a “diagnosable disorder” that is 2) caused by “actual events of employment” when these events are the 3) “predominant cause” of the injury. One example of the high standards that the Labor Code provides for establishing a compensable psych claim is Sakotas vs. WCAB, 80 Cal. App. 4th 265 (2000). In this case, the court ruled that the injured worker’s alleged psych injury was barred by Section 3208.3 as it was not predominately caused by her employment. Sakotas worked as a desk clerk at a motel and occasionally would act as the manager on duty for the property. During the periods where Sakotas would act as the manager on duty, her supervisor was often unavailable to help, and she would regularly be contacted at night to resolve issue on the property. She felt that this was too much stress for one person to handle and filed a psych claim. However, the court ruled that, because of the psychological impact of several external factors unrelated to the injured worker’s employment, her stress would have existed absent the industrial exposure and thus, she was denied workers’ compensation benefits for her psych claim.

Further, Labor Code 3208.3 also provides that “no compensation…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 provision establishes the good faith personnel action defense. Employers are allowed some discretion in making normal personnel decisions related to work evaluations, discipline, or termination. One example of a successful good faith personnel defense argument to a psych claim is the in City of Oakland vs. WCAB, 99 Cal. App. 4th 261 (2002). In this case, the court ruled that a position demotion was barred by section 3208.3 because it was a good faith personnel action. In this case, the applicant was a park supervisor who eventually rose to the position of management assistant. After 5 months in this position, he was demoted back down to park supervisor due to budget cuts. The court opined that, since employers will go through periods of budget cuts in order to sustain the fiscal integrity of the organization, employers should be able to implement demotions without fear of employees filing psych claims. As such, the applicant’s psych claim was denied due to the good faith personnel defense.

Although the inherent theme of the Labor Code is to protect the injured worker, the high standards set by the Labor Code for psychological injuries and the good faith personnel defense provide employers strong protections when defending against claimed psychological injuries. Unlike orthopedic injuries that can be proven or disproven using x-rays or MRIs, emotional and psychological states are more difficult to substantiate as their effects are sometimes undetectable. Thus, this makes psych claims easier to misrepresent in order to fraudulently obtain workers’ compensation benefits. With this in mind, the Labor Code’s stringent standards for establishing a psych claim and many defenses to claimed psych injuries are reasonable protections to provide employers in workers’ compensation claims.