DATE: December 27, 2000
TO:

All Interested Parties
FROM: Christine Baker, Executive Officer
SUBJECT:  Draft Issue Paper – Workers’ Compensation Liability under Labor Code §3368

       

At its October 2000 meeting, the Commission on Health and Safety and Workers’ Compensation requested the development of an issue paper on the responsibility for workers' compensation coverage of students and apprentices engaged in vocational education programs under Labor Code Section 3368. At the CHSWC meeting on December 14, C.L. Swezey, consultant to the Commission, presented findings from the study and submitted a draft issue paper.

The study’s analysis indicated that when an injured worker, who has released the initial employer from all liability except for vocational rehabilitation services, is provided retraining at the public educational facility and sustains new injury, the school will be liable for workers compensation benefits for which the initial employer would have been liable in absence of a compromise and release. Mr. Swezey proposed a recommendation to add sections to the Labor Code and Education Code which provide that in cases where an injured worker has settled his liability, the school district won’t have workers’ compensation liability for new and further disability.

The Commission voted to release the draft issue paper to the workers’ compensation community and the public to get input on the extent of the problem and what remedies, including the proposed legislation, that might be useful.

The Commission welcomes your comments on the enclosed draft "Issue Paper on School District Liability for Injuries to Persons Engaged in Work Experience Education, Cooperative Vocational Education, or Community Classrooms". We are requesting that you submit your response by Friday, March 2, 2001.

The Commission will consider all comments and decide upon any further action. Thank you for your interest.

cc:    Stephen J. Smith, DIR Director
        Suzanne Marria, DIR Assistant Director
        Richard Gannon, DWC Administrative Director

Enclosure

 

 

COMMISSION ON HEALTH AND SAFETY AND WORKERS' COMPENSATION

MEMORANDUM

Date:         November 16, 2000

To:            Christine Baker, Executive Officer

From:       C.L.Swezey, Consultant

Re:             Issue Paper on School District Liability for Injuries to Persons Engaged in Work Experience Education, Cooperative
                   Vocational Education, or Community Classrooms

The Commission has requested development of an issue paper on the responsibility for workers' compensation coverage of students and apprentices engaged in vocational education programs.

Problems Reported

(1) Many injured workers compromise industrial injury cases, either with or without a waiver of claims for injuries incurred while participating in vocational rehabilitation, and subsequently obtain vocational rehabilitation services provided by public schools or junior colleges. Not infrequently they sustain new injuries or exacerbations of their prior injuries while participating in the vocational rehabilitation program. Pursuant to Labor Code §3368, the school is liable for the subsequent injury unless (1) the worker is being paid a cash wage or salary by a private employer while engaged in the program or (2) the entity for which services are being performed has secured the payment of workers' compensation. Because the initial injury case has been settled, the employer in that case has no further liability, and the school district may be required to provide benefits that might otherwise have been the liability of the initial employer.

(2) At least one regional occupational training center has attempted to avoid its liability to unemployed apprentices by inserting in the apprentice agreement a clause to the effect that it has no responsibility for workers' compensation coverage for any apprentice while attending the related instruction classes. The regional center relies upon the following provision of the Shelley-Maloney Apprentice Labor Standards Act of 1939:

§3078. Every apprentice agreement entered into under this chapter shall directly, or by reference, contain:

    (k) A clause providing that there shall be no liability on the part of the other contracting party for an injury sustained by an apprentice engaged in schoolwork at a time when the employment of the apprentice has been temporarily or permanently terminated.

Background

The question of worker's compensation coverage for trainees arose as early as 1936 in Union Lumber Co. v IAC (Thornquist)(1936) 12 CA2d 588, 1 CCC 108, where a high school district provided vocational training in cooperation with local businesses under which the students spent a portion of their school day working for the various industries. The students were graded on the basis of reports from the managers for whom they worked. One student worked and received vocational training in a butcher shop maintained by the lumber company. The company paid $25 each semester into the school's vocational training fund. It was held that the company was the employer of the student for workers compensation and liable for an injury sustained when the student caught his hand in a meat cutting machine.

Eight years later, the Industrial Accident Commission reached the same result in the case student nurse performing nursing services while in training. Pacific Employers Ins. Co. v. IAC (Morris)(1944) 9 CCC 295. The Court of Appeal later agreed that student nurses performing six hours of floor duty after two hours of class room instruction were employees of the hospital where the floor duty was performed in Anaheim Gen. Hosp. v WCAB (Craig)(1970) 3 CA3d 468, 35 CCC 2.

The year following the decision in Craig, The Legislature adopted Labor Code §3368 which is the statute with which the persons bringing this section to the attention of CHSWC are primarily concerned. Section 3368, as originally adopted in 1971 and amended in 1974 and 1980, provided that any

        school district, or

        county superintendent of schools

        under whose supervision

                work experience education, or
                occupational training classes held in the community, as defined
                by regulations adopted by the State Board of Education,

were provided, would, for workers' compensation purposes, be considered the employer of the persons receiving the training unless the persons receiving the training were being paid a cash wage or salary by a private employer, or unless the person or firm under whom such persons were receiving work experience or occupational training elected to provide workers' compensation coverage.

Apprentices were considered employees of their employer and not subject to the section unless they were unemployed.

If the program was being operated by two or more districts jointly, the district in which the trainee resided was deemed to be the employer.

In 1997, §3368 was amended to

This legislation was proposed at the request of the union apprenticeship committees to assure that all apprentices were protected by someone's workers' compensation coverage. School districts were opposed to assuming any additional liability.

Section 3368 was again amended in 1998 by a "clean-up bill," to make it clear that the school district, county superintendent of schools, or school administered by the State Department of Education could elect to cover students or apprentices being paid by private employers if that employer did not have workers' compensation coverage. This coverage could not, however, exceed a transitional period of three months. Thus, the section now provides that any

            school district,
            county superintendent of schools, or
            school administered by the State Department of Education

under whose supervision

            work experience education,
            cooperative vocational education, or
            community classrooms,

as defined by regulations adopted by the Superintendent of Public Instruction, or

            student apprenticeship programs registered by the Division of
            Apprenticeship Standards for registered student apprentices,

are provided, shall be considered the employer for workers' compensation purposes unless the persons during the training are being paid a cash wage or salary by a private employer.

        If, however, the student or apprentice is being paid by a private employer, the school district, county superintendent, or State Department of Education school may elect to provide workers' compensation coverage unless the person of firm under which the training is being provided elects to provide coverage. The district or school's coverage may only be for a transitional period of not over 3 months.

        Registered apprentice is defined, and apprentices are considered to be employees of their employer and not covered by the section unless they are unemployed.

        If the program is under the supervision of a regional occupational center being operated by two or more districts jointly, the district in which the trainee resides is deemed to be the employer.

In Grant v. WCAB (1997) 62 CCC 1454, the WCAB adopted a workers' compensation administrative law judge's statement that the legislative intent in adopting §3368 was to provide compensation for students working with dangerous equipment in occupational training when not on the pay roll of another employer.

Section 3368, which is duplicated in Education Code §51769, is not the only statute providing for workers' compensation coverage for students engaged in work experience education. Education Code §78249 contains essentially identical provisions for community college district under whose supervision work-experience education, or occupational training classes are held. Education Code §52317 requires regional occupational centers or programs or school districts within the area controlled by regional occupational centers or programs offering training to pupils residing outside its attendance area, to provide for workers' compensation coverage for pupils enrolled in a community classroom program. Education Code §52413 provides that the environmental interns may be deemed to be temporarily employees of the agency involved for purpose of workers' compensation or may be deemed to be employees of the school district or the county superintendent of schools.

Labor Code §3351.5 provides that when the Department of Rehabilitation arranges employment training with an employer, the trainee will be deemed the employee of the employer for worker's compensation purposes, but the Department will reimburse the employer for the resulting increase in its workers' compensation insurance costs.

 

Discussion

The law thus summarized demonstrates a legislative policy to assure that the protection of the workers' compensation laws is provided to everyone engaged in vocational training, but that any employer of the apprentices or students must eventually assume the responsibility. The statutory provisions appear to be somewhat of a retreat from the case law holding the entity for whom the services are being provided liable for workers' compensation. This is probably indicative of a legislative intent to encourage "private sector" employers to take on the trainees by relieving them of liability for injuries during the on the job training. According to school district and union personnel interviewed by CHSWC staff, many businesses and training centers would otherwise refuse to take on previously injured workers.

Over sixty percent of claims filed with the Workers' Compensation Appeals Board are settled by compromise and release. After the settlement is approved by a workers' compensation administrative law judge, the employer ordinarily has no liability to provide further benefits for that injury even though it causes new and further disability or contributes to a new injury.

New and further disability occurs when there is a recurrence or an increase in an injured worker's disability. When new disability manifests itself when the worker is on a new job, it is often difficult to determine whether it is a result of a recurrence or an aggravation of the pre-existing condition. A recurrence is the liability of the employer at the time of the initial injury. An aggravation is a new injury for which the new employer is liable. As a practical matter, the issue is more likely to be resolved in favor of a new injury if the worker has released the initial employer from further liability by compromise and release.

New and further disability is a compensable consequence of an injury. Other compensable consequences are those incurred as a result of the first injury such as an injury in the treating physician's office (see Laines v. WCAB (1975) 48 CA3d 872, 40 CCC 365) or a further injury caused by pain or weakness from the injury (Beaty v. WCAB (1978) 80 CA3d 397, 43 CCC 444). An injury incurred while an injured worker is engaged in vocational rehabilitation is considered to be a compensable consequence of the original injury. Rodgers v WCAB (1985) 168 CA 567, 50 CCC 299. Thus, if an injured worker is injured while engaged in such activity, the resulting disability is the liability of the initial employer. If, however, the initial injury has been settled and the worker has expressly released all claims against the initial employer for injuries sustained while engaged in vocational rehabilitation, a new employer providing on the job training will be liable.

Thus, when an injured worker that has released the initial employer from all liability except for vocational rehabilitation services (liability for which can not be released) is provided retraining at a public educational facility (which is encouraged by Labor Code §4635.1) and sustains a new injury, the school will be liable for workers' compensation benefits for which the initial employer would have been liable in the absence of the compromise and release. In view of the current policy to use the maximum amount available funds for educational purposes for classroom training, Labor Code §3368, Education Code §51769, and Education Code §78249 appear to have an unintended, or at least uncontemplated, consequence, i.e., the shifting the liability to provide compensation for an industrial injury from the employer to public funds designated for educational purposes.

 

Recommendations

(1) Limit Study to Specific Issue

The particular problem of the effect of injuries to workers that have settled prior injury claims while engaged in a vocational rehabilitation program under the supervision of a "school district, county superintendent of schools, or school administered by the State Department of Education" or a community college on funds available for education can probably be solved by specific remedial legislation. An exception to Labor Code §3368 and Education Code §§51769 and 52317 could be adopted for workers' compensation benefits for which a previous employer had been released.

If the Commission decides that this is as far as it should go with this problem, it is recommended that the Commission solicit comments from the workers' compensation community on the extent of the problem and on a proposal that Education Code §51769 be amended by adding the following subdivision:

and that Labor Code §3368 and Education Code §52317 be similarly amended.

Opposition to such amendments can be expected from some applicants' attorneys, insurers, employers, and representatives of labor. The proposal is not inequitable, however, because if a Compromise and Release agreement is adequate as approved, it includes compensation to the injured worker for this eventuality.

(2) Study Broader Problems Suggested

The problems posed, however, suggest consideration of broader issues such as whether admitted injuries that are likely to result in new and further disability should be settled and whether liability for injuries while engaged in rehabilitation should be released. There is also an apparent inconsistency between the recent amendments to Labor Code §3368 and Labor Code §3078(k).

If the Commission decides to broaden the study, it is recommended that proposals be solicited from the workers' compensation community regarding the extent of the problems and possible solutions. Depending on the responses, convening an advisory committee to develop remedial legislation or regulations may be warranted. In addition to the usual interested groups from whom CHSWC advisory committees are selected, representatives of school districts, county superintendents, the Department of Education, community colleges, unions, and the Division of Apprenticeship Standards should be included.