Worker's Compensation Act No Longer Protects Against Employment
Discrimination Claims
By Carol Nolan Skinner
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Until recently, an employee who
sustained an emotional injury from harassment on the job was barred from
pursuing a claim for the harassment under the Wisconsin
Fair Employment Act (WFEA). The Labor Industry Review Commission
(LIRC) dismissed such claims on grounds that the Worker's
Compensation Act (WCA) contains an exclusive remedy provision
barring all claims against an employer when liability exists under the
WCA. LIRC's position has been upheld by the Wisconsin Court of Appeals
in often-cited decisions such as Schachtner v. DILHR 1 and Norris v. DILHR.. 2
All that has been changed by the 1997 Wisconsin Supreme Court
decision in Byers v.
LIRC.3 In Byers a female
employee terminated a sexual relationship with a male coworker. Due to
problems Byers had terminating the relationship, she obtained a
restraining order against the coworker. After showing the restraining
order to her employer and explaining its meaning, Byers continued to be
harassed by the coworker. Byers reported the problem to her employer on
numerous occasions. The employer talked to the coworker, but the
harassment continued. Despite the fact that the coworker was jailed
several times for violating the restraining order, he was not suspended,
terminated, or otherwise reprimanded by the employer. After this had
continued for more than a year, Byers notified her employer that she
could not return to work while the coworker continued to work there.
Procedural history of Byers
Byers' sexual discrimination claim under the Wisconsin
Fair Employment Act 4 was dismissed by
the Equal Rights Division. The dismissal was affirmed by LIRC, because
the discrimination resulted in emotional injury, which is covered by the
Worker's Compensation Act; thus Byers' exclusive remedy against the
employer was under the WCA. On review of LIRC's decision, the circuit
court decided that Byers could pursue both a claim under the WCA and the
WFEA. The circuit court's decision was reversed by the District III
Court of Appeals, which held that the exclusive remedy provisions of the
WCA barred Byers' sexual discrimination claim.5 That holding was reversed by the Wisconsin Supreme
Court, which unanimously decided that discrimination claims are not
barred by the WCA.
WCA's exclusive remedy
The exclusive remedy provision of the Worker's
Compensation Act, section 102.03(2), provides that when the
conditions for an employer's liability under the WCA exist, the
employee's right to recover under the WCA shall be the employee's
exclusive remedy against an employer. This provision was enacted to
insulate employers from common law tort claims arising out of workplace
injuries, in exchange for smaller but more certain recoveries under the
WCA, regardless of fault. 6 However, the use
of this exclusive remedy provision in the last several years has
expanded to include any claims arising out of or relating to a workplace
injury. Notably, employees bringing discrimination claims under the WFEA
have been turned away by decisions barring their claims under the
exclusive remedy provision of the WCA.
The status of the law before Byers
In 1988 the court of appeals decided Schachtner v. DILHR,
holding that the exclusive remedy provision of the WCA barred an
employee who was refused rehire after a work-related injury from
pursuing a handicap discrimination claim under the WFEA. Two years later
a similar result was reached for part of an employee's discrimination
claim in Norris v. DILHR. In Norris a mentally retarded
employee, who was refused rehire after a work-related injury, was barred
from bringing a disability discrimination claim based on the
work-related injury, but was permitted to bring the same claim based on
his mental retardation.
The LIRC, relying on
Schachtner and Norris, has routinely barred employees'
disability discrimination claims where the discrimination is based on a
work-related injury. 7 Using the same
reasoning, it also has barred sexual discrimination claims.8 Later court of appeals decisions, Marson v.
LIRC (1993)9 and Finnell v.
DILHR (1994),10upheld the notion that
the right of an employee to recover compensation provided by worker's
compensation is exclusive of all remedies against the employer. Unlike
Byers, neither Marson nor Finnell dealt
specifically with the issue of whether a discrimination claim was barred
by the WCA's exclusivity provision. However, both the Marson
and Finnell courts, relying on Schachtner and
Norris, stated that such claims were barred by that
provision.
In 1994 the supreme court in County of La Crosse v. WERC
11 held that an employer's refusal to
rehire an employee because of a work-related injury is not controlled by
the WCA's exclusive remedy provision when the refusal to rehire is
"distinct in time and place from the injury." The plaintiff employee
claimed that her termination was based upon her work-related disability,
and violated the collective bargaining agreement between her employer
and union. The court stated that the WCA exclusive remedy provision
barred common law tort claims, not contract claims, as that case
involved. It therefore distinguished, but did not overrule
Schachtner and Norris, which involved statutory,
rather than contract claims.
The Byers decision
Byers, however, presented the supreme court squarely with
the issue of whether the WCA's exclusivity provision barred other
statutory claims against the employer, that is, discrimination claims
under the WFEA. Byers' position was that the WCA and the WFEA serve
entirely different purposes. The WCA focuses on remedying an employee's
physical or mental workplace injury. The purpose of the WFEA is to
eradicate discrimination in the workplace, focusing on employer conduct
that violates employees' civil rights. The employer argued that where a
claim is cognizable under both the WCA and the WFEA, the WCA is the only
remedy. The court disagreed, recognizing the different purposes of the
two Acts, and pointing out the irony in the employer's position:
"If we were to interpret the WCA exclusive remedy provision as the
employer proposes, only employees whose claims were not covered under
the WCA would be afforded relief under the WFEA. Those employees whose
claims for physical or mental injuries were covered by the WCA, those
perhaps most harmed by discriminatory conduct violating the WFEA, would
be limited to worker's compensation." 12
Principles of statutory construction cited by the Byers
court include the court's duty to harmonize two statutes that appear to
conflict in a way that will give effect to the Legislature's intent in
enacting both statutes. The court reasoned that because the WCA does not
identify, fully remedy or adequately deter an employer's discriminatory
conduct, it cannot adequately address discrimination in the workplace.
To allow the WCA to bar WFEA claims, would make enactment of the WFEA "a
hollow legislative gesture." 13
Concluding that it could best preserve the purposes of both the WCA
and the WFEA by "steering a different course than did the court of
appeals in Schachtner and Norris," the Byers
court overruled Schachtner and disavowed the reasoning of
Norris, on the premise that those decisions did not give effect
to the Legislature's intent in enacting the WFEA. The court went on to
overrule Marson and Finnell, "to the extent they stand
for the proposition that 'the right of the employee to recover
compensation provided for by worker's compensation is exclusive of all
remedies against the employer.'" 14
Byers was remanded for hearing.
WCA and federal claims
Generally parallel state and federal laws address employment
discrimination for Wisconsin employees. (See the accompanying sidebar
article.) While Wisconsin's Worker's Compensation Act does not bar
federal discrimination claims brought under Title VII of the Civil
Rights Act or the Age Discrimination
in Employment Act (ADEA), for
example, many employees cannot avail themselves of the relief afforded
by the federal laws. Employers with fewer than 15 employees are not
subject to Title VII, the ADEA, or the Americans with Disabilities Act
(ADA), so those employees typically have only one avenue of relief from
discrimination ­ the WFEA, a state statute. These small
employers will be the most noticeably affected by Byers,
because they now can be sued under WFEA, regardless of any worker's
compensation claim their employees may have. Byers also will
affect larger employers, because many claimants, often unemployed,
cannot afford to pursue federal discrimination claims in state or
federal court, and thus are forced to proceed under the WFEA, regardless
of their employers' size.
Where do we go from here?
The Byers court did not reach the issue of double recovery,
a possibility because the same set of circumstances may form the basis
for a claim under both the WCA and the WFEA. An award of lost wages
under the WCA, for example, overlaps an award of backpay under the
WFEA.
The nature and degree of emotional injury
may dictate whether filing a claim under the WCA is wise. For example,
if harassment results in severe emotional injury such that the claimant
is unable to work at all, worker's compensation may be the only source
of "prompt" relief. The claimant will not be entitled to unemployment
compensation, as he or she will not be "available for work." In a
perfect world, worker's compensation is "prompt and assured relief";
that is, a claim for temporary wage loss and medical treatment is
supposed to be paid without undue delay or protracted litigation, as
liability is not premised upon fault of the employer. (However, in
reality, many WCA emotional injury claims are hotly contested.) Later
damages recovered in a discrimination suit can be offset for whatever
wages were paid under the WCA. If the emotional injury is long lasting
or permanent, and the employer is not subject to Title VII, which
provides for compensatory damages, the only way a claimant can receive
redress for such injury would be a loss of earning capacity claim under
the WCA.
Carol Nolan Skinner,
Indiana-Bloomington 1984, represented Janet Byers in Byers v.
LIRC. She practices with Bakke Norman in New Richmond.
The downside of filing a worker's compensation claim while awaiting
the discrimination hearing is that the employer may argue issue and/or
claim preclusion. A determination of certain facts by the Worker's
Compensation administrative law judge, for example, could be binding in
the discrimination proceeding either at the administrative level or in
state or federal court. Attorneys should ensure that their clients are
well represented in any WCA proceeding, and attempt to limit that
proceeding to WCA issues only (that is, whether the claimant sustained
an injury that arose out of the employment, and not whether the
employer took appropriate action to eliminate harassment in the
workplace). Although the Equal Rights Division administrative law judge
in Byers denied the employer's claim of issue preclusion,
neither LIRC nor any court reviewed that decision because Byers
settled. Undoubtedly, this issue will appear before the supreme court in
the future.
Conclusion
The impact of Byers is far-reaching. The exclusive remedy
provision of the Worker's Compensation Act will no longer protect
employers against employment discrimination claims. After
Byers, employees of small employers will not be barred from
bringing state law discrimination claims simply because the
discrimination caused, or was the result of, a work-related injury.
Further, employees of any size employer who cannot bear the expense of
litigating a federal discrimination claim may have their day in
court.
Endnotes
1Schachtner v. DILHR, 144
Wis. 2d 1, 422 N.W.2d 906 (Ct. App. 1988).
2Norris v. DILHR, 155 Wis.
2d 337, 455 N.W.2d 665 (Ct. App. 1990).
3 Byers v. LIRC, 208 Wis. 2d
388, 561 N.W.2d 678 (1997).
4 Wis. Stat.
§§ 111.31 - 111.77.
5Byers v. LIRC, 200 Wis.
2d 728, 547 N.W.2d 788 (Ct. App. 1996).
6 See County of La Crosse v.
WERC, 182 Wis. 2d 16, at 30, 513 N.W.2d 579, at 583 (1994).
7 Holze v. American Family Mut.
Ins. Co., (LIRC 5/4/90); Wright v. Computer People
Unlimited, (LIRC 3/28/95); Byrne v. West Allis-West Milwaukee
School Dist., (LIRC 9/18/91).
8 Cameranesi v. John Charles
Hair Designs Inc., (LIRC 3/7/94); Petri v. Midwest Lodging
PTR 7, (LIRC 9/20/94); Genger v. Waukesha County Technical
College, (LIRC 9/21/94).
9 Marson v. LIRC, 178 Wis.
2d 118, 503 N.W.2d 582 (Ct. App. 1993).
10 Finnell v. DILHR, 186
Wis. 2d 187, 519 N.W.2d 731 (Ct. App. 1994).
11County of La Crosse v.
WERC, 182 Wis. 2d 16, 513 N.W.2d 579 (1994).
12Byers v. LIRC, 208
Wis. 2d at 401; 561 N.W.2d at 683.
13Id. at 399; 561 N.W.2d
at 682.
14 Id. at 406, note 13;
561 N.W.2d at 685, note 13.
Wisconsin
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