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Tuesday, July 02, 2013

Employee eligible for Workers’ Compensation benefits after suffering a psychic injury that was found to be employment related and not in the nature of discipline


Employee eligible for Workers’ Compensation benefits after suffering a psychic injury that was found to be employment related and not in the nature of discipline
2013 NY Slip Op 04861, Appellate Division, Third Department

The Employer appealed a decision of the Workers' Compensation Board that ruled that employee had sustained a compensable injury in the course of her employment.

The basic facts:

1. The employer required employee to frequently travel between her office and New York City and the employer paid her travel and lodging expenses.

2. The Inspector General investigated an anonymous complaint regarding the employee’s travel and determined that she had committed no wrongdoing, but referred the matter to the Comptroller to assess the tax implications of the employer's travel reimbursement practices.

3. The Comptroller determined that to correct the employer'sreimbursement practices that violated Internal Revenue Service rules the employee should be deemed to have earned over $100,000 in additional income as a result of those practices and that the employee was responsible for paying back taxes and penalties on that amount.

4. Upon learning of the Comptroller's findings the employee “incurred a psychic injury” and applied for workers' compensation benefits.

5. The Workers' Compensation Board rejected the argument advanced by the employer and its workers' compensation carrier that her claim was barred by Workers' Compensation Law §2 (7).

6. Workers' Compensation Law §2 (7) provides that the term "injury" and "personal injury" for the purposes of the Workers' Compensation Law "mean only accidental injuries arising out of and in the course of employment and such disease or infection as may naturally and unavoidably result therefrom. The terms "injury" and "personal injury" shall not include an injury which is solely mental and is based on workrelated stress if such mental injury is a direct consequence of a lawful personnel decision involving a disciplinary action, work evaluation, job transfer, demotion, or termination taken in good faith by the employer."

The Appellate Division affirmed the Board’s determination, explaining that in contrast to the employee suffering psychic injury stemming from work-related stress that was "a direct consequence of a lawful personnel decision [by the appointing authority] involving a disciplinary action, work evaluation, job transfer, demotion, or termination taken in good faith by the employer," the review of the employer’s travel “reimbursement practices,” was not "aimed at" her and thus substantial evidence supports the Board's determination that the employee’s resulting mental injury was not the direct consequence of a disciplinary action or work evaluation.*

In addition, the court said it would not disturb the Board's determination that the stress that the employee experienced was greater than that generally experienced by similarly situated workers in a normal work environment as that factual finding was also supported by substantial evidence. Here, said the Appellate Division, the stress from being advised that “she was responsible for taxes and penalties on over $100,000 of imputed income due to her employer's mistaken reimbursement practices, with no wrongdoing on her own part, along with her knowledge that she was not financially in a position to handle that substantial liability, was not a normal occurrence in the workplace and exceeded the typical stress associated with claimant's position.”**

* Judge Egan dissented from the majority opinion, noting that in his view, and notwithstanding the fact that such investigation ultimately did not culminate in disciplinary charges being lodged against employee, the employee’s workers' compensation claim has its genesis in — and is the "direct consequence [of] a lawful personnel decision involving a disciplinary action … taken in good faith by the employer."

** In a press release dated July 1, 2013, the State Comptroller reported that auditors examined the travel costs of another Albany-based Department employee whose long-term assignment to a New York City work location resulted in travel costs exceeding $100,000. Auditors examined $156,124 in travel costs associated with this employee's assignment, finding there was a lack of documentation to establish whether the official station of the selected employee was in the best interest of the state. The release also stated that the Department “may also have incorrectly failed to report taxable travel expenses to federal and state taxing authorities for 2010 and 2011.”  The matter is still being examined by the Comptroller's office to determine if further corrective action is needed. The Comptrollers report has been posted on the Internet at: http://osc.state.ny.us/audits/allaudits/093013/12s75.pdf 

The decision is posted on the Internet at:

Handbooks focusing on State and Municipal Public Personnel Law continue to be available for purchase via the links provided below:

The Discipline Book at http://thedisciplinebook.blogspot.com/

A Reasonable Penalty Under The Circumstances at http://nypplarchives.blogspot.com

The Disability Benefits E-book: at http://section207.blogspot.com/

Layoff, Preferred Lists at http://nylayoff.blogspot.com/

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