Tuesday, August 14, 2018

Tax and Workers' Compensation

Are workers’ compensation benefits taxable on your Federal and California Income Tax Return? Answer, no, but disclosure is needed in California if workers’ compensation benefits supported your household.
Federal - IRS
(1040 U.S. Individual Income Tax Return)
The Code of Federal Regulations - 26 CFR § 1.104-1(b) excludes from gross income, amounts received under a Workers’ Compensation Act (such as the Longshoremen’s and Harbor Workers’ Compensation Act, 33 U.S.C., c. 18), or under a statute in the nature of a Workers’ Compensation Act which provides compensation to employees for personal injuries or sickness incurred in the course of employment.
IRS Publication 525, 2017, page 18, specifically states, “[a]mounts you receive as workers' compensation for an occupational sickness or injury are fully exempt from tax if they are paid under a workers' compensation act or a statute in the nature of a workers' compensation act.”  The exemption does not apply to retirement benefits.  The IRS confirmed this exemption in IRS Publication 907, 2017, page 4, specifying, “[t]he following payments are not taxable....[w]orkers' compensation for an occupational sickness or injury if paid under a workers' compensation act or similar law.”  In conclusion, your workers’ compensation benefits are tax free at the federal level.
California - FTB
(540 California Resident Income Tax Return)
Like your 1040 U.S. Individual Income Tax Return, qualifying workers’ compensating is excluded from gross income on your 540 California Resident Income Tax Return, so long as that compensation was received under a statute in the nature of a Workers’ Compensation Act. Note, if any amount of your workers’ compensation supported your household, you must list the source and amount of workers’ compensation on California Form 3506, Part I, as “Unearned Income and Other Funds Received.”  See California 540, Form & Instructions, 2017, Personal Income Tax Booklet, page 68.  Further, page 69, ibid, explains that workers’ compensation is not “[e]arned [i]ncome.”  In conclusion, your workers’ compensation benefits are tax free in California but need to be disclosed if any portion of it supported your household.
Disclaimer
(Please Read)
The information contained in this website and its associated websites is provided as a service to the internet community and does not constitute legal advice. We try to provide quality information, but we make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in or linked to this website and its associated sites and we make no claim that any of the information contained in this website is appropriate for your particular needs. As legal advice must be tailored to the specific circumstances of each case and laws are constantly changing, nothing provided herein should be used as a substitute for the advice of competent counsel. Have a nice day.

If you have questions, please contact attorney Jonathan Char at (916) 491-4215.

Wednesday, July 25, 2018

Permanent Disability: Workers’ Compensation v. Social Security

Under Workers’ Compensation (herein referred to as “WC”) the term permanent disability has a very broad meaning. Labor Code section 4660(a) explains that when determining how disabled a person is, WC shall take into account “the nature of the physical injury or disfigurement, the occupation of the injured employee, and his or her age at the time of the injury, consideration being given to an employee’s diminished future earning capacity.”

If an employee injures his or her back at work, taken into account is the above as well as any previous injuries, preexisting conditions, and any other contributing factors to the injury. Once an applicant is declared permanent and stationary, he or she will be seen by a PQME/AME doctor. The PQME/AME doctor will determine the applicant’s impairment pursuant to the Journal of American Medical Association guidelines and adjusted based on the applicant’s age and occupation. Once all the factors are taken into consideration, the applicant may be entitled to an award of permanent disability for the diminished capacity of the injury. A “permanent disability” is more about the loss from the workplace injury in which compensation can be paid based on the rating of the disability. Depending upon the level of impairment and work restrictions it will determine whether he or she can return to their usual customary occupation.

Unlike Workers’ Compensation, Social Security is very strict in defining disabilities, which are called “listings.” However, in order to qualify for Social Security (herein referred to as “SS”), the requirements are more than just being disabled. There are five steps to a disability case. Step one has financial and past-earned income requirements based on the type of program the person is applying for. (POMS SI 00810.001)

Step two looks at the severity of the injury. SS defines a severe impairment as “whether medical evidence establishes a physical or mental impairment or combination of impairments of sufficient severity as to be the basis of a finding of inability to engage in any substantial gainful activity (SGA). When medical evidence establishes only a slight abnormality or a combination of slight abnormalities which would have no more than a minimum effect on an individual's ability to work, such impairment(s) will be found “not severe,” and a determination of “not disabled” will be made…” (POMS DI 24505.001)

Step three evaluates the condition to see if it meets or equals the listing of impairments. Under the listing for Spine (POMS 1.04 Disorders of the spine), there are three different categories in which a person with a spine impairment can qualify, which includes the requirement that the impairment has a “compromise of a nerve root (including the cauda equina) or the spinal cord.” These impairments need to be well documented with medical imaging. In addition, under the third spinal category are requirements for “manifested by chronic nonradicular pain and weakness, and resulting in inability to ambulate effectively, as defined in 1.00B2b.” POMS 1.00B2b has additional requirements and examples such as the “inability to climb a few steps at a reasonable pace with the use of a single hand rail.” Even if a person meets or equals the requirements of the listing and any additional sub parts, the person also needs to meet the second requirement of the severity of the impairments.

If a person does not meet the step three requirements, then under step four SS looks to see if the person can return to their past relevant work of the last 15 years. (POMS DI 25005.015) If they cannot perform their past relevant work, then SS continues to step five to determine if the person can perform any job in the national economy with their limitations. (POMS DI 25005.005) A vocational expert will make an assessment of the person’s limitations and determine if a person with those impairments can perform any jobs on the national economy. These steps four and five are important because even if a person is found severely impaired under step two but does not meet or equal a listing, the person will have to also show that these impairments prevent them from working any job, not just their previous job.

As demonstrated, a person who has a permanent disability as defined by WC may not meet the five-step process under SS. The injuries to the back may hinder someone in the workplace but may not be severe enough to prevent the person from doing any job in the national economy under the SS standards.

A permanent disability under WC, like a back injury, may allow an applicant to receive compensation for the diminished capacity from the injury. Unlike Workers’ Compensation, Social Security does not pay a person for a particular injury, but, rather, pays someone for having severe impairments that prevent them from working at all, whether the impairments are work related or not.

If you have questions or are interested in starting the social security application process, please contact attorney Asia Kowalski at (916) 491-4292.

Monday, June 4, 2018

Employee vs. Independent Contractor - A Civil Test

Businesses sometimes attempt to disclaim an employment relationship between themselves and the people who work for them.  Frequently, this is done by asserting that workers are independent contractors, rather than employees. Businesses see an advantage to classifying workers in this way because they may not have to provide benefits or pay for certain types of insurance - such as worker’s compensation insurance - for independent contractors.  Businesses also may not have to pay payroll, social security, and other types of taxes for independent contractors.  Statutes and regulations concerning wages, hours, and working conditions that apply to employees may not apply to independent contractors.  And, with only a few exceptions, a business might not be held vicariously liable – under a respondeat superior theory – for the tortious conduct of an independent contractor, while the same would not be true concerning the torts of an employee. 
Generally, the test for whether a worker is classifiable as an employee or independent contractor is heavily based upon whether the business maintains the right to control the work.  This is particularly true with regard to claims made by the worker against the hirer.  Blackwell v. Vasilas (2016) 244 Cal.App.4th 160, 168 [“A worker is an independent contractor when he or she follows the employer's desires only in the result of the work, and not the means by which it is achieved.”]. 
In a recent California Supreme Court case, Dynamex Operations West, Inc. v. Superior Court, the Court utilized a test called the “ABC test” to determine if an employee was an independent contractor for purposes of determining the worker’s wage and pay rights.  The ABC test requires an analysis of the following three factors:  (A) whether the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact; (B) whether the worker performs work that is outside the usual course of the hiring entity's business; and (C) whether the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, 916–917
It remains to be seen whether the Supreme Court’s adoption of the ABC test will impact the lower court’s analysis of what makes an employee vs. an independent contractor in context of other employees’ rights cases, or in cases of tortious injuries caused by workers

Monday, May 7, 2018

Preparing for Depositions


When people are injured on the job and they file a workers’ compensation claim, they are known as applicants. Many applicants have never had their deposition taken before. Although it may seem like a daunting task, depositions are not as complicated as they may seem. Additionally, depositions are an essential opportunity for both the applicant’s attorney and the defense counsel to obtain facts which are vital to the claim.

A deposition is an opportunity for the defense counsel assigned to the case, to ask the applicant questions while “under oath.” There are many reasons why the deposition may be taken. The defense counsel may need answers to simple questions. However, the defense counsel cannot just call the applicant because they cannot speak with them outside the presence of their attorney. Thus, they must schedule a deposition to get the answers they need.

Deposition testimony is considered the same as if an applicant were sitting before a judge in court. Just because the depositions are taken outside of court, in a “relaxed” atmosphere, does not mean the same obligation to tell the truth does not apply. An oath is administered at the beginning of all depositions asking the applicant to affirm they will tell the truth. This means that not telling the truth in response to any questions asked, could result in criminal penalties such as penalties for perjury and workers’ compensation fraud. Thus, it is best to prepare for a deposition well in advance to ensure any information relayed in response to questions asked is accurate.

Often, the defense counsel has performed a substantial amount of research prior to the deposition. They will have already obtained information about prior workers’ compensation claims, car accidents, and will also often have information from investigators who have observed the applicant in performance of various daily activities. The defense counsel will use such information to verify the applicant’s credibility. For instance, they will ask the applicant questions they may already have answers to, such as “were you in a car accident in May of 1995?” The defense will already have proof that the applicant was in such an accident, and if the applicant does not answer truthfully, they will use that dishonesty against them later. The applicant’s credibility is essential to their case and must be preserved.

Being credible makes the applicant a good witness. The better they are as a witness, the easier it will be for the applicant’s attorney to prevail on issues in court that the defense counsel may challenge. This will also cause the defense counsel to report to their client (the insurance adjuster) that the applicant will make a good witness at trial, which could subsequently push them toward settlement without putting up a fight in court.

Not all of the questions asked by the defense will be directly relevant to the particular case at issue but may lead to relevant evidence. Such information includes past residences, places of employment, the names and addresses of doctors the applicant has seen, hospitals where they have been a patient, and any other lawsuits, accidents, injuries, etc.
It is important for the applicant to listen carefully to each question. The applicant should never assume they know the answer or begin to respond to a question before the defense counsel has finished speaking. This is because, once complete, the question may be designed to elicit certain information and if answered prematurely, the applicant may not answer the question correctly, which can cause harm to their case and credibility. This is also important because a court reporter will be making a transcript of the deposition. If people are talking over each other, or if they are talking to fast, it will be difficult for the reporter to accurately transcribe all that transpired, which can cause difficulty later if issues about what was said during the deposition are raised in the future.

It is also important to answer questions with words rather than gestures. When describing an injury to a body part, do not merely say “I was hurt here” and point to that area of your body. Rather, you should state, “I injured my left knee.” Additionally, questions should be answered with yes or no responses. Responses such as yeah, uh huh, or head nods, may not accurately reflect what the applicant is attempting to say, making it difficult for the court reporter to take down an accurate record of the proceedings.

If the applicant is not sure they understand the question, they should ask for clarification. There are no penalties for asking for a question to be repeated or explained. As mentioned before, it is essential that the applicant thoroughly understands the question so they can answer it accurately.

Applicants should not guess. However, applicants can provide approximations based on personal knowledge. For instance, if the defense counsel asks the applicant to tell them how much change is in the defense counsel’s pocket, the applicant would have to guess because they have never seen the defense counsel before and would have no reason to know how much money they have. Whereas, if defense counsel asks them to state the length of the conference table in the room where they are sitting, the applicant can estimate what the length of the table is because they have seen it with their own eyes and have personal knowledge of the circumstances or surroundings at issue. Thus, it is acceptable for an applicant to provide estimates or approximations based on personal knowledge, but it is not acceptable to guess. It is important to remember that the depositions are taken under oath and a guess can later be construed as a lie, which can lead to penalties.

If the applicant’s counsel objects to a question, the applicant should not answer the question until instructed to by their attorney. There are situations where the applicant’s attorney will instruct the applicant not to answer a question to protect certain rights, such as the right against self-incrimination. Thus, the applicant should pay close attention and strictly adhere to their attorney’s instruction to ensure such rights are protected.

The applicant should not volunteer information that is not requested. Often, there will be a period of silence following a question by the defense counsel and the time when the applicant has answered. This usually occurs because the defense counsel is recording their notes. However, many applicants feel the need to fill the silence with greater explanation of their response. Applicant’s should refrain from doing so. If the defense counsel requires more information, they should be forced to ask follow-up questions. Under no circumstance should the applicant unnecessarily volunteer more information than is necessary to provide a truthful answer to the specific question asked. If the applicant is confused or requires guidance, they should ask for a break and consult with their attorney.

The applicant should be made aware that they can take breaks. If they need to use the restroom, confer with their attorney, or just get up and stretch, they are welcome to ask for a break so they can do so. It is understandable that a person who was injured on the job may have to stand and stretch or move around at certain intervals because of the condition they are in. The depositions are not designed to be uncomfortable or overly unpleasant. If the applicant needs a break, they can simply let their attorney know at any time. Additionally, they do not need to remain seated while answering the questions. If it is easier or more comfortable for them to stand, they are allowed to do so.

It is important to remain professional and courteous at all times. This applies to the applicant, and their attorney. A little professionalism and cordiality go a long way. Especially since the applicant’s counsel will be working closely with the defense counsel to obtain resolution of the case. They do not have to agree on everything, but they do need to treat each other with courtesy. Such treatment will make it much easier for the parties to settle the case and provide expedient resolution to the applicant.

At the conclusion of the deposition a transcript of the proceedings will be prepared. The applicant will be provided an opportunity to review the transcript and correct any errors. It is important to provide accurate answers during the deposition, because, if the applicant makes changes based on the transcript, the defense counsel can comment on such changes at trial, which could undermine the applicant’s credibility as a witness. Depositions are a means to gauge future testimony at trial and if the testimony at trial is not consistent with the answers provided during the deposition, it can lead the judge to believe the applicant has not been truthful. Additionally, the deposition transcript can also be shown to doctors and others involved in the case who can provide insights which may assist in determining the outcome of the case. Thus, it is imperative that an accurate record be obtained during the deposition.

To better prepare for the deposition and ensure the accuracy of the information presented in the applicant’s answers, it is perfectly acceptable to review documents prior to, or even during the deposition. Applicant attorneys should review potential questions with the applicant to make sure they are prepared. The attorney should also show the applicant what has been subpoenaed or discovered already to ensure the applicant is prepared to answer questions related to that material. It is also important for the applicant to understand that they should not exaggerate or underestimate their disability. Honesty and accuracy are essential to the proper resolution of the claim.

During the deposition the applicant will also be asked how much time they spent in preparing for the deposition. The applicant should provide an accurate estimate, or actual time, if known, of the time spent in preparation with their attorney. This is one of the few occasions where the defense must pay the applicant’s attorney for time spent working on the case. The applicant may also be reimbursed for their time off work to attend the deposition, along with mileage and parking expenses.

For more information about evidence and depositions see the following and be sure to consult with a licensed attorney:

Thursday, April 5, 2018

Flying Soil Compactors and What Exactly is “Sudden and Extraordinary” Under Labor Code 3208.3?


Under Labor Code Section 3208.3, “no compensation shall be paid for a psychiatric injury…unless the employee has been employed by that employer for at least six months. This subdivision shall not apply if the psychiatric injury is caused by a sudden and extraordinary employment condition." (Italics added).

What exactly is “Sudden and Extraordinary?” Jose Guzman was operating a soil compactor when he was injured. The compactor hit a rock while Guzman was working on a hillside with a 45-degree slope. The compactor rose in the air, caused Guzman to fall backwards, and then fell on top of him. The workers' compensation judge determined that Guzman sustained an injury to his back and psyche, and that the psychiatric injury was caused by a “sudden and extraordinary employment condition.” The workers’ compensation carrier petitioned for reconsideration, which was denied. The carrier filed a petition for writ of review.  The Sixth District Court of Appeal agreed with the carrier.  Flying soil compactors are not “sudden and extraordinary.”  The Court reasoned that since Guzman had not introduced any evidence of what happens when soil compactors hit rocks he did not meet the burden of proof.   SCIF v. WCAB (Jose Guzman), No. H044300 (Cal. Ct. App. Feb. 23, 2018) was originally de-published but on February 23, 2018, ordered published at the request of SCIF.

There are several decisions where “sudden and extraordinary” is examined. The latest issue of the California Workers Compensation Reporter had a nice write up on the issue.  Here are some recent examples.

In Matea v. WCAB (2006) 144 Cal.App.4th 1435, the court determined that a rack of lumber falling on an employee of The Home Depot was “a sudden and extraordinary employment condition.”  The court believed that “all the lumber in a rack falling into an aisle and onto an employee's leg causing injury to the employee was . . . such an uncommon, unusual, and totally unexpected event or occurrence.” In SCIF v. WCAB (Garcia) (2012) 204 Cal.App.4th 766  an avocado picker fell from the top of a 24-foot ladder while picking avocados from a tree. The Court determined that the employee's fall was sudden, but not extraordinary.  In Travelers Casualty & Surety Co. v. WCAB (Dreher) (2016) 246 Cal.App.4th 1101 it was determined that falling on slippery concrete while walking at the job site was not extraordinary.  

Here are a few more cases where the Court made a finding of “sudden and extraordinary.”  Applicant was driving a truck and trailer and lost control on a wet highway, the trailer jack-knifed and Applicant was thrown to the passenger side of the truck and then out the passenger side door, the Applicant saw the trailer coming toward him…circumstances here were sufficient to be interpreted as "extraordinary" (California Insurance Guarantee Association v. WCAB (Tejera) (2007) 72. Cal. Comp. Cases 482). Employee suspended half way up an 80-foot tree that he was cutting and the trunk of the tree fell, hitting him in the chest and causing serious physical and psychiatric injury (Campos v. WCAB (2010) 75 Cal. Comp. Cases 565) (unpublished). A wall unexpectedly fell and the Court found that it was both uncommon and unusual for a wall to fall on a worker. (Production Framing Systems v. WCAB (Dove) 77 Cal. Comp. Cases 756).

What is “sudden and extraordinary” is still a matter of debate among applicant and defense counsel and a matter of opinion among the appellate courts.  These types of cases seem to be extremely fact sensitive.  That said, there does seem to be a loose consensus that the event causing injury must really be extraordinary, unless it’s a flying soil compactor, apparently.

Thursday, March 1, 2018

The Social Security Application Process

If you are injured, and have been unable to work for a year or longer or are expected to be unable to do so, you may be entitled to receive social security benefits.  

The social security application process can be long, often taking over two years.  The first step is to file an application.  This can be done online or at your local social security office.  Many people are denied.  This can be discouraging, but should not stop you from appealing your denial.  Similar to your application, you can appeal your denial online or at your local social security office.  This first appeal is called a Request for Reconsideration.  That is, you are asking the Social Security Administration to reconsider your claim.  Unfortunately, many people are denied at this level as well.  If you are denied a second time, and it is not uncommon to be denied twice, you should appeal a second time.  Again, this appeal can be done online or at a social security office.  This appeal is called a Request for Hearing by an Administrative Law Judge.  By filing this appeal, you are requesting that a social security judge review your claim.  This gives you the opportunity to present your case, in person, to an Administrative Law Judge.  However, the time between filing this second appeal and the hearing is extensive, often over a year.  During this waiting period, you should see your healthcare professionals as needed, and submit your medical records to the Social Security Administration to prepare for your hearing.  While this hearing is your best opportunity to obtain social security benefits, if you are denied, there are further appeals you can pursue.  

How can an attorney help you with regard to your social security claim?  First, they can help you determine if you meet the requirements for applying for either social security disability program, social security disability insurance (SSDI), or supplemental security income (SSI).  These programs have different eligibility requirements, and an attorney can help you determine which program, if either, you should apply for.  Second, an attorney can look at your denial and pinpoint the reasons for that denial.  Once the reasons for the denial are understood, an action plan can be developed to best target those reasons.  Third, an attorney can prepare you for, and represent you at, your hearing.  An attorney can write a brief to prepare the judge for your hearing, highlighting your best arguments.  He or she will be able to effectively cross examine the vocational and medical experts that may be present at your hearing.  Most importantly, an attorney will be able to make sure that your hearing gives you the best possible opportunity to tell the judge your story.  For all of these reasons, hiring at attorney to assist you in your social security disability claim gives you the best chance of success in your claim.  

If you have questions or are interested in starting the social security application process, please contact attorney Andrew Doriott at (916) 491-4224.

Thursday, February 8, 2018

Extending a Helping Hand to Survivors of the Napa and Sonoma County Fires

Mastagni Holstedt is pursuing civil claims against Pacific Gas & Electric Co. (PG&E) and any other at-fault parties over the series of destructive wildfires that swept across Northern California in October 2017.

State regulators released reports from PG&E that document at least 20 cases of toppled trees and downed power lines across Northern California the night of October 8, 2017, when strong winds and drought-parched vegetation caused fires from Sonoma to Butte Counties. These deadly wild fires are among the most destructive in California history and were declared a major disaster by President Donald Trump.

Mastagni Holstedt employs a team of highly experienced lawyers who understand the intricacies of mass tort lawsuits and who care deeply about those effected by the devastation caused by these fires. Although our investigation is ongoing, Mastagni Holstedt’s team of experts believes that PG&E is likely to blame for the spark that ignited this series of devastating fires. Our preliminary investigation indicates that PG&E’s negligent maintenance of its power poles and power lines is to blame for starting the fires that resulted in billions of dollars in property loss and the death of dozens of Californians.

This lawsuit will seek to recover compensation for any and all costs that are not covered by homeowner’s insurance, including any personal injuries, wrongful deaths, lost wages/profits, and emotional distress. Because our representation is on a contingency fee, we handle all upfront costs and our clients do not pay anything unless we recover damages for them. Moreover, we are offering a reduced attorneys’ fee to handle these cases.

If you or anyone you know is interested in obtaining our representation for this civil lawsuit, or if you are experiencing issues with your homeowner’s insurance, then please contact Justine Lamy at (916) 491-4244 and she will put you in touch with one of our civil litigation attorneys.

Phillip R.A. Mastagni is a Partner in the civil litigation department of Mastagni Holstedt, A.P.C. He specializes in complex civil litigation including mass tort, fire damage, and burn injury cases. Mr. Mastagni also has extensive experience litigating against PG&E and other utilities and telecommunications companies.