Handling requests for EDD records in employment cases

A primer on discovery and admissibility of EDD records regarding claims of unemployment and state disability

2014 October

“Discovery” and “evidence”− the two words are synonymous and, yet, can mean two totally different things in the world of litigation. One issue that comes up time and time again is records from the California Employment Development Department (EDD). There are basically two types of EDD records that may be at issue in both personal injury and employment cases. The first are those based on claims for unemployment following termination. The second are those related to claims of disability.

Many questions are at play when dealing with EDD records. For example, are the unemployment benefits an offset to lost wages? Can the decision or findings from an EDD hearing have a collateral estoppel effect in subsequent cases? Can I use those findings as evidence in subsequent cases? Do claims for disability affect a claim for lost wages? How do the disability certification and records affect ability to work? Does certification of total disability ruin your disability discrimination and failure to provide reasonable accommodation claims? Are these documents even discoverable? If these documents are produced or somehow wind up in the hands of the defense, can they be used as evidence at trial?

Are EDD findings or rulings admissible evidence?

Your client’s former employer claims that your client was fired for theft, dishonesty, or poor work performance and challenges her right to unemployment. The appeal/ruling is in your client’s favor and finds that she wasn’t fired for theft, dishonesty, or poor performance. You now want to use that ruling as evidence or even as collateral estoppel in your civil case. Is this allowed? In state court, the answer is no.

The Unemployment Insurance Code specifically states that findings made in unemployment compensation proceedings are not collateral estoppel in subsequent proceedings. Unemployment Insurance Code section 1960 provides that “Any finding of fact or law, judgment, conclusion, or final order made by a hearing officer, administrative law judge, or any person with the authority to make findings of fact or law in any action or proceeding before the appeals board, shall not be conclusive or binding in any separate or subsequent action or proceeding, and shall not be used as evidence in any separate or subsequent action or proceeding, between an individual and his or her present or prior employer brought before an arbitrator, court, or judge of this state or the United States, regardless of whether the prior action was between the same or related parties or involved the same facts.” (emphasis added). This, of course, cuts both ways. Should the findings and/or conclusions at the EDD go against your client, a motion in limine to exclude this evidence should be granted.

What about the money your client received from the EDD while she was out of work? Can that be used as evidence of an offset to economic damages? No. California courts have routinely found that unemployment benefits are a collateral source and may not be deducted from damages. (Mize-Kurzman v. Marin Community College District (2012) 202 Cal.App.4th 832, 876. See also Monroe v. Oakland Unified School District (1981) 114 Cal.App.3d 804.) Thus, at trial, plaintiff’s counsel must object and file the appropriate motion in limine to exclude evidence about your client’s receipt of unemployment benefits.

Are EDD records discoverable?

Many times the defendant will already have documents and information about your client’s claims and/or submissions to the EDD. This may be because your client provided these documents during a leave of absence, your client may have provided to their employer before your representation began, or the documents were obtained during an EDD appeals process. Other times the defendant may not have documents or information about your client’s disability or unemployment claims submitted to the EDD. Are these documents discoverable? Should plaintiff produce those documents in response to a request for production of documents? Should plaintiff object when a subpoena is sent to the EDD? Should plaintiff answer questions at deposition about unemployment or disability claims?

As we all know, discovery may be obtained “regarding any matter, not privileged, that is relevant to the subject matter involved…if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence.” (Code Civ. Proc., § 2017.010, emphasis added.) “Not privileged” is the key phrase here.

There are three key sections of the Unemployment Insurance Code which makes all these records and documents pertaining to unemployment and disability claims absolutely privileged. First, Unemployment Insurance Code section 1094(a) provides “information obtained in the administration of this code is confidential, not open to the public, and shall be for the exclusive use and information of the director in discharge of his or her duties.” Unemployment Insurance Code section 1094(b) further provides that “any information released to authorized entities pursuant to other provisions of the code shall not be admissible in evidence in any action or special proceeding, other than one arising out of the provisions of this code or one described in Section 1095.” (emphasis added). Second, Unemployment Insurance Code section 2111 provides that “information obtained in the course of administration of this division is confidential and shall not be published or open to public inspection in any manner.” Finally, Unemployment Insurance Code section 2714 provides that all medical records obtained “shall be confidential and shall not be published or be open to public inspection in any matter revealing the identity of the claimant or family member, or the nature or cause of his or her disability. Medical records that are disclosed shall be disclosed only pursuant to Section 1095, and shall remain confidential.” These three sections provide ample authority that these pieces of evidence are not discoverable. As such, any request for production of these documents should be met with an objection citing these three sections.

The only exceptions to this rule are set out in Unemployment Insurance Code section 1095. For example, section 1095 allows an employer to use the information as part of a petition for writ of mandate challenging the EDD’s ruling(s). (Unemp. Ins. Code, § 1095(d).) Or to enable an employer to receive a reduction in contribution rate. Unemp. Ins. Code, § 1095(e).) As well as other exceptions related to administration of the EDD or for criminal prosecution for unlawful applications. (Unemp. Ins. Code, § 1095.) However, there are no exceptions which allows for the use of these documents or information in subsequent civil cases such as personal injury or employment/wrongful termination related actions.

Furthermore, the cases of Crest Catering Co. v. Superior Court of Los Angeles County (1965) 62 Cal.2d 274 and Richards v. Superior Court (1968) 258 Cal.App.2d 635 confirm that these records are privileged and not discoverable.

In Crest Catering, the California Supreme Court confirmed that Unemployment Insurance Code section 1094 is a bar as to both admissibility at trial and as to discovery. In Crest Catering, the plaintiff (an administrator of an Employee Welfare and Retirement Fund) brought an action against Crest Catering Company to compel payment of contributions allegedly owed to the fund under the terms of a contract with a labor union. In discovery, the plaintiff sent interrogatories to Crest seeking the number of employees and the hours worked by each during the period in question. When Crest responded that all its books and records had been destroyed by fire, plaintiff sought copies of Crest’s employment tax returns, which Crest objected and refused to provide. Plaintiff filed a motion and Crest was ordered to produce copies of its quarterly returns submitted to the California State Department of Employment. Crest filed a writ on the grounds that those records submitted to the EDD were privileged.

The Court of Appeal in Crest Catering agreed that the records were privileged. “With exceptions not here relevant, section 1094 of the Unemployment Insurance Code provides that the information delivered to the Department of Employment by an employing unit ‘shall be for the exclusive use and information of the director ... and shall not be open to the public, nor admissible in evidence in any action or special proceeding. ...’ Section 2111 provides that the information ‘is confidential and shall not be published or open to public inspection in any manner ...’ and declares that any employee of the department who violates this section is guilty of a misdemeanor.” (Crest Catering, 62 Cal.2d at p. 276.) The Court in Crest Catering strongly concluded that “[t]hese provisions manifest a clear legislative purpose to preserve the confidentiality of information submitted to the Department of Employment. (Id. at pp. 276-277.)

Richards v. Superior Court presents a scenario that is familiar in many personal injury matters. Richards arose out of an automobile accident and at some point after the accident plaintiff made a claim to the State Department of Employment for disability insurance benefits under the Unemployment Insurance Code. The department referred plaintiff to Dr. Clancy for an examination and a report of his findings. Following the examination of the plaintiff, Dr. Clancy made a report to the EDD and kept a copy for his files. During litigation, the plaintiff signed a document addressed to Dr. Clancy which authorized defense counsel to inspect and copy the records pertaining to his examination of the plaintiff relative to the accident. The defendants also served a subpoena for Dr. Clancy’s deposition and to produce the records, including all “medical reports” of the examination. The EDD moved to quash the subpoena on the ground “that the records subpoenaed are confidential and privileged under the provisions of the Unemployment Insurance Code.” The trial court granted the motion and defendants appealed.

The Richards court rejected defendant’s appeal. “Where, as in the instant case, the disclosure is, in fact, sought by and for the benefit of the personal injury defendant, the public agency has a real interest in nondisclosure. The agency wants its applicant to give the doctor a full, complete and honest report; that report and examination should not be impeded by the applicant’s fear that something she says there may be used against her in some later lawsuit.” (Id., 258 Cal.App.2d at p. 638.) The court went further saying “Fairly interpreted, sections 2111 and 2714 of the Unemployment Insurance Code manifest a clear legislative intent to preserve the confidentiality of the information submitted to the department and to its examiner pertaining to the nature and cause of the claimant’s disability. Insofar as the doctor’s records are sought to be used as a means of invading that confidentiality, the records are also privileged.” (Ibid.)

Nothing has changed since Crest Catering and Richards. Currently, if a subpoena is sent to the EDD, they will serve a letter of objection stating that the records cannot be produced due to Unemployment Insurance Code sections 1094, 2111, and 2714. The EDD also relies on Code of Federal Regulations Part 603 of Title 20 which provides that states are required under federal law to maintain the confidentiality of unemployment compensation information and to bar the disclosure of such information. We should not rely on the EDD alone. Any request for production of documents or service of a subpoena seeking EDD documents for unemployment or disability claims can be met with citations to these cases and code sections. Furthermore, since this information is privileged it is not discoverable. Thus, at deposition, counsel could instruct the client not to answer questions about EDD claims for unemployment and disability claims on grounds of privilege.

Do disability claims crush your employment case?

A different issue arises in employment claims alleging disability discrimination and failure to provide reasonable accommodations under the California Fair Employment and Housing Act (FEHA). Many times, employers will not return an employee to work and/or will not accommodate an employee to allow them to return to work. A lot of times these people are living paycheck to paycheck and they need money from EDD Disability in order to provide for their family. So they apply for EDD disability in order to get paid, though they may be able to work with some form of reasonable accommodation.

The issue here is that the certifications which are typically signed by the employee and/or the doctor typically state that the person is “temporarily totally disabled” or “cannot perform his/her regular and customary work” or “I continue to be disabled and incapable of doing my regular work.” This seems to set up a Catch-22 situation. On the one hand, in the FEHA disability discrimination/failure to provide reasonable accommodation case the plaintiff is claiming they could have worked had they been provided reasonable accommodations. Yet, in the EDD documents they are claiming they could not work. Do these submissions to the EDD bar plaintiff’s FEHA claims? No, it does not. Just because someone applies for or receives disability benefits does not judicially estop a later disability discrimination or failure to provide reasonable accommodation claim. However, those documents and information may be received as evidence at trial.

The two cases to know on this issue are Prilliman v. United Air Lines, Inc. (1997) 53 Cal.App.4th 935 and Bell v. Wells Fargo Bank, N.A. (1998) 62 Cal.App.4th 1382.

In Prilliman, the plaintiff, a pilot for United Air Lines, was grounded by United’s physicians following his blood tests coming back positive for HIV with a diagnosis of AIDS. (Prilliman at 943-944.) Following further investigation, United then determined that Prilliman no longer satisfied FAA physical requirements and discontinued his flight responsibilities and placed him on medical disability at the end of his sick-leave eligibility. “After Prilliman was grounded, a United Administrative Coordinator advised him to apply for social security benefits in order to supplement his disability income, and he did so.” (Id. at p. 944.) As a result of his grounding, Prilliman began to receive from United a monthly disability benefit, a monthly Social Security Disability benefit, and for a year he had received a monthly disability benefit from the State of California. Prilliman did not request an alternative job position after he was grounded by United, and United admitted it did not consider him for any other positions.

The court in Prilliman concluded that the fact that the plaintiff was receiving disability benefits do not establish any defense, and in particular a defense based on the inability of Prilliman to perform an alternative job position with United. The mere fact that he was receiving disability benefits did not resolve the issue as to “whether United violated the FEHA by failing to make known to Prilliman other suitable job opportunities within United that do not require medical certification from the FAA.” (Id. at pp. 962-693.)

Bell v. Wells Fargo Bank, N.A. also presents a situation that comes up frequently in employment cases. In Bell, after being diagnosed with HIV, the plaintiff requested and received an accommodation of telecommuting to work and a four-day, 40-hour work week. After three years of accommodating plaintiff, Wells Fargo informed him that he could no longer telecommute. The plaintiff’s doctor told Wells Fargo this change would threaten his health and would force him out on a disability leave. Wells Fargo “refused to budge” and the plaintiff went out on leave and applied for disability benefits. As in many leave cases, the disability benefits medical records/submissions include statements to the effect that “sickness” rendered him “disabled” and unable to perform “his regular and customary work.”

The court acknowledged that these documents “will support an inference unfavorable to plaintiff” that there was other evidence from two of his treating physicians that he could have continued working with reasonable accommodations. The court concluded that “the evidence of his physicians supports an inference that plaintiff did not consider himself “disabled” and incapable of performing “his regular and customary work” prior to Wells Fargo’s abolishing his existing accommodation. Plaintiff’s statements are not inherently and totally inconsistent with his litigation position that he could have continued working had his accommodation been left in place. It is possible to reconcile the statements made by plaintiff at different times about the nature and extent of his disability. The statements thus do not necessarily exclude his subsequent litigation posture.” (Bell, 62 Cal.App.4th at p. 1388.)

Prilliman and Bell illustrate why it is important to safeguard and object to the discovery of the EDD records if the employer does not already have them. However, if the other side already has these state disability documents, plaintiff will need to have a tight explanation for how to reconcile the submissions to the State and why they could still do their old job – or an alternate job – with reasonable accommodations.