Employers can depress the value of post-termination workers’ compensation claims by pressing charges against employees who have committed severe criminal acts, such as stealing large sums of money or assaulting co-workers.

John P. Kamin

If one practices workers’ compensation law long enough, eventually, he will come to work on a case that features a post-termination cumulative trauma claim after the applicant was fired for allegedly committing a criminal act.

Sometimes, the criminal act is short and simple, such as sucker-punching a supervisor in front of numerous witnesses. Other times, it’s more pervasive and intentional, such as stealing from the employer’s coffers over a long period.

So, why wouldn’t an employer press charges in situations like this? Well, that’s best explained by example.

A war story

Once upon a time, in a faraway land deep in California, the nanny for a famous actor’s children was stealing items daily from the actor’s home.

The actor reported the crime to law enforcement in that faraway land, and a report memorializing the thefts was generated. The report documented that when they asked the nanny if she knew anything about a missing item, she would deny it, and the next day, the missing item would appear in a seemingly random spot in the house. For example, one missing item reappeared a few days later in a closet where it would have never been stored.

The report cited numerous occasions with great specificity, and the stolen items were worth anywhere from $70 to as much as $2,500 apiece. (Had it not confronted the nanny, it appears the actors’ family feared she would have stolen thousands of dollars of items in jewelry and clothing.)

Rather than be hassled with having to personally testify against the nanny, the actor opted to simply fire her and hope the matter was done with instead.

Of course, that wasn’t the end of it. The nanny turned around and filed a post-termination cumulative trauma claim against the famous actor. She was covered as a household employee under the actor’s homeowner’s policy, and it led to a nominal settlement after some litigation.

The consequences of failure to prosecute

Though the decision not to prosecute the applicant for her crimes was understandable in this instance, it becomes problematic when one magnifies this example onto a grander scale.

For instance, what if the applicant is a mid-level manager who is skimming tens of thousands of dollars from the employer? Or what if the applicant sucker-punches his supervisor in the back of the head? Should employers press charges against these applicants?

In situations like these, it is very important that the employer prosecute clear-cut cases of criminal behavior. Why?

Failure to prosecute the bigger examples of criminal behavior has multiple negative outcomes, such as:

• It suggests to other employees that they can get away with similar criminal acts.
• It suggests that the employer doesn’t mind criminal behavior.
• It almost invites a post-termination CT claim by an unethical applicant.
• If the employer wants to prevail in workers’ compensation court, employer witnesses have to testify anyway against the applicant.
• Without a conviction, the more unethical applicant advocates will invent fake narratives about how they were injured and downplay the criminal behavior.
• If the applicant is never found guilty of a criminal charge, it weakens the employer’s credibility when it accuses the applicant of criminal behavior at trial.
• LC 3600(a)(8)’s elements require the criminal act to have caused the injuries at the heart of the allegation. So if the criminal act did cause the injuries (ex: the supervisor defends himself and wins the fight), failure to prosecute the crime bars the defendant from potentially using LC 3600(a)(8). Think of how the supervisor will feel about the employer’s refusal to press charges. He is probably going to have a negative reaction.
• If law enforcement hasn’t fully investigated the criminal act, it’s very possible that the employers themselves are unaware of the severity of the criminal act. For instance, when I was a newspaper reporter, I covered a parole hearing for a charity employee who embezzled about $2 million from the employer. Often, in embezzlement cases, the victim initially only notices a few small red flags, but it’s very possible for law enforcement to find many more red flags that went unnoticed by the employer.

Conclusion

To be clear, we aren’t suggesting that employers prosecute every single instance of minor theft or minor offenses. Nobody wants to go to criminal court over a few missing sodas, stationary or — if it’s a grocery store — small potatoes. But if employers are going to be dragged through the mud by someone who fought a supervisor or embezzled money, they might as well take it to criminal court first.

The criminal proceedings are likely to use up more of the employer’s time and resources than the workers’ compensation claim, and those proceedings have the potential to make the defense of any post-termination workers’ compensation claims much easier.

John P. Kamin is a workers’ compensation defense attorney and partner at Bradford & Barthel’s Woodland Hills location. He is WorkCompCentral's former legal editor. This entry from Bradford & Barthel's blog appears with permission.