Serious and Willful for Employers - Part 1

Saturday, May 10, 2003 | 0

California Labor Code section 4553 appears relatively simple, and inconsequential to the average reader:

"The amount of compensation otherwise recoverable shall be increased one-half, together with costs and expenses not to exceed two hundred fifty dollars ($250), where the employee is injured by reason of the serious and willful misconduct of any of the following:
"(a) The employer, or his managing representative.
"(b) If the employer is a partnership, on the part of one of the partners or a managing representative or general superintendent thereof.
"(c) If the employer is a corporation, on the part of an executive, managing officer, or general superintendent thereof."

The term "serious and willful misconduct" has been defined by case law to mean: "...something much more than mere negligence, or even gross or culpable negligence and as involving conduct of a quasi criminal nature, the intentional doing of something either with the knowledge that it is likely to result in serious injury, or with a wanton and reckless disregard of its possible consequences." (Mercer-Fraser Co. v. Industrial Acc. Com. (Soden) (1953) 40 Cal.2d 102.)

The fact that a violation of LC 4553 is deemed almost criminal in nature means that it is not covered by workers' compensation insurance, and in fact, is not covered by any insurance (intentional acts rarely are).

The consequences of a finding of serious and willful misconduct can be devastating for the employer, because the entire amount of benefits are increased by one-half, not just indemnity. Thus, if the employee incurs large medical bills for a serious injury, those are added into the equation.

In Ferguson vs. WCAB (1995), 33 Cal.App.4th 1613, Judy A. Ferguson (applicant) slipped and fell on a wet floor while employed as a general merchandise clerk for respondent Raley's Supermarkets. Her permanent disability award amounted to just over $66,000. She also incurred large medical bills, as well as significant time off work on temporary total disability for which she was indemnified. The Workers' Compensation Judge found that Raley's had violated section 4553 and awarded Ferguson an increase of 50% of all benefits, both indemnity and non-indemnity. On Reconsideration, the WCAB affirmed the finding of serious and willful misconduct, but said that the increase applied only to indemnity.

Ferguson appealed and the First Appellate District of the California Court of Appeals ruled that the increase is applicable to both indemnity and non-indemnity benefits:

"[W]e are persuaded the legislative scheme contemplates that an award for increased compensation due to the serious and willful misconduct of an employer under section 4553 must be calculated with reference to 'every benefit or payment conferred by Division 4 upon an injured employee', as broadly defined in section 3207 to include medical treatment payments, medical-legal fees and vocational rehabilitation costs, as well as all indemnity benefit payments."

The court even went so far as to deal with the constitutionality of the section, affirming its legitimacy, and also defined what the WCAB should do in the face of an argument that an injured worker would get more under such a workers' compensation award than he or she would in a civil case.

Labor Code section 4553.1 sets forth specifically what factual elements the WCAB must address in finding a serious and willful violation:

"In order to support a holding of serious and willful misconduct by an employer based upon violation of a safety order, the appeals board must specifically find all of the following:
"(1) The specific manner in which the order was violated.
"(2) That the violation of the safety order did proximately cause the injury or death, and the specific manner in which the violation constituted the proximate cause.
"(3) That the safety order, and the conditions making the safety order applicable, were known to, and violated by, a particular named person, either the employer, or a representative designated by Section 4553, or that the condition making the safety order applicable was obvious, created a probability of serious injury, and that the failure of the employer, or a representative designated by Section 4553, to correct the condition constituted a reckless disregard for the probable consequences."

The key elements in a factual finding of a 4553 violation are set forth in subsection (3) - the element of intent or willful disregard for the safety of the employee is implied in that language.

We will take a look in our next article in this series on what kind of factual situations will give rise to an allegation of serious and willful misconduct, what the courts have found constitute such a violation, what an employer should do to prevent such a situation from occurring in the first place, and what an employer should do to defend itself from an allegation of a 4553 violation.