Case Law Guidance on Labor Code section 4658(d)
Since its inception as part of SB 899 in 2004, the 15% increase/decrease provisions in Labor Code section 4658(d) have baffled and plagued claims examiners. On its surface, the statute appears to be a good faith effort to provide an incentive for employers to return injured employees back to work. However, the language used in drafting the statute and its application by Workers’ Compensation Judges have resulted in peculiar results which could not have been anticipated by the legislature. Thankfully, the recent SB863 does away with the provisions of Labor Code section 4658(d) for injuries occurring on or after January 1, 2013. However for the foreseeable future we will continue to encounter issues involving the 15% increase or decrease provisions as those earlier claims work their way through to resolution.
Essentially, an employer has sixty days from the date the applicant becomes permanent and stationary (P&S) to offer an employee regular or alternative work, or the rate of permanent disability payments goes up by 15%. In the alternative, if within sixty days from P&S, the employer makes an offer of regular or alternative work, then the permanent disability payments are decreased by 15%.
There are many cases where an employee misses no time from work after an injury. In those cases, it appears futile, if not silly, to issue a formal Offer to Return to Work Notice to working employee. However, the statute is clear that the claims administrator must timely present an offer of regular or alternative work in the form and manner proscribed by the administrative director and the trial judges have applied the language of the statue to its strict reading despite what appears to result in futile or silly results.
In Audiss v. City of Rohnert Park, (2007) 35 CWCR 123, an employee missed no time from work as a result of an industrial injury. As such, the employer failed to serve a timely work offer. When time for settlement came, the employer sought to reduce the PD rate by 15% based on the ability to continue the employee’s work without interruption. The Board held that the mere fact of the continuation of a regular job “is equivalent to an offer of work.” Therefore, the employer in Audiss was entitled to the 15% decrease.
Not long after Audiss was decided, the WCAB confronted a case of similar facts. In Tsuchiya v. County of Los Angeles Sheriff’s Dept (2009), the injured worker, a Deputy Sheriff, was found to have suffered injury to his heart and hypertension, resulting in PD at 49%, but he had missed no time from work. The employer failed to served a timely return to work offer. The issue was whether the employer was entitled to a 15% decrease or whether the employee entitled to a 15% increase in the PD rate. On reconsideration, the WCAB Commissioners reasoned that where there is no lost time from work, there is no need to present an incentive for the employer to return the employee thereby frustrating the intent of Labor Code section 4658(d). They concluded that in cases where there is no lost time from work, there is no need to make any effort to return the employee. Therefore (1) no offer is required BUT (2) the 15% increase/decrease provisions of 4658 are not triggered. PD is payable at the neutral rate of $230 per week.
Given the conflicting decisions and controversy over the application of LC 4658(d) in cases involving no missed work time, the 1st District Court of Appeals reviewed the case City of Sebastopol v. WCAB (Braga) (2012) 208 Cal.App.4th 1197. In this case, despite suffering an industrial hearing injury, Mr. Braga continued working regular duties. Within one month of the medical evaluator determining that Braga had a permanent disability, the City served Braga with a “Notice of Offer of Regular Work,” which he accepted. At the time of settlement, the employer took the position that in light of the timely return to work offer, 4658(d) was triggered and the employer was entitled to reduce the PD by 15%.
The Braga court’s decision was consistent with Tsuchiya. They noted that the legislative history behind Labor Code section 4658 was that the statute was intended to provide “return to work incentives” for employers. “In situations where an injured employee like Braga remains on the job with no time lost from work, he does not ‘return to work.’ Therefore, the employer does not need an incentive to return the employee to work, and there is no purpose served by applying section 4658 to such situations.”
NOTE: The Braga decision is clear that an employer may not trigger the provisions of Labor Code section 4658(d)(3) to decrease the PD rate by 15%. However, I am aware of applicant’s attorneys taking the position that the Braga case does not address the alternative issue of whether an employer may be taxed with an increased PD rate for failure to serve the return to work offer in cases of no lost time. This is not an accurate reading of the case. I believe the case serves to nullify both Labor Code section 4658(d)(2) and (3) where there is not lost time from work, [“An injured employee, like Braga, who is ultimately entitled to PDI and remains on his or her regular job with no time lost from work, does not “return to work” in any common understanding of that phrase. Therefore, the employer needs no incentive to return that employee to work, and we fail to see any statutory purpose served by application of section 4658(d)(2) and (3) to such situations.” See City of Sebastapol, p. 1209.]