Employment: Employers Can't Offset Damages with Unemployment Benefits in Workers' Comp Retaliation Cases

09.01.11

Philip Estrada was an employee of Port City Properties, Inc. He worked in the warehouse unloading freight. He sued Port City Properties alleging he was terminated for filing a workers' compensation claim and for retaining an attorney to represent him regarding the claim. Estrada injured his ankle tripping over a steel beam. Estrada's doctors restricted his work on three different occasions and finally recommended surgery on the ankle. After returning from surgery, Estrada was allegedly told that there wasn't any more work for him. A week later, he filed and began receiving unemployment benefits.

The jury found in favor of Estrada and awarded him monetary damages.

During trial, the court applied the "collateral source rule," refusing to allow the jury to consider evidence that the employee received unemployment benefits as a collateral source. Under the common law collateral source rule, benefits received by the plaintiff (Estrada) from any source other than the defendant (Port City Properties) will not reduce the amount of damages recoverable. Accordingly, the jury was not allowed to reduce the amount of damages awarded to the employee because of his receipt of unemployment benefits. Port City Properties argued that evidence of the employee's unemployment benefits should be admissible for impeachment purposes when an employee claims financial hardship caused by the alleged retaliatory discharge.

On appeal, the Oklahoma Supreme Court agreed with the trial court. It held that because the common law collateral source rule was codified in the Workers' Compensation Act and incorporated into traditional Workers' Compensation proceedings, it extends to Workers' Compensation retaliatory discharge proceedings. The Oklahoma Supreme Court noted that had the Oklahoma Legislature intended retaliatory discharge actions to be exempt from the collateral source rule, it could have easily carved it out.

Bottom Line. In Workers' Compensation retaliatory discharge actions, evidence that the employee received collateral benefits through unemployment compensation, or the like, will not be admissible to reduce an employee's recovery, regardless of whether the employee claims financial hardship.

By Ken T. Short, kshort@dsda.com

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Rebecca D. Bullard

Rebecca D. Bullard

Rebecca represents clients primarily in labor and employment
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