SB1466

SECTION 1. The purpose of this bill is to disallow workers’ compensation claims for mental illness or injury proximately caused by all personnel actions taken in good faith by employers. Personnel actions include disciplinary action, counseling, work evaluation or criticism, job transfer, lay-off, promotion, demotion, suspension, termination, retirement, or other actions ordinarily associated with personnel administration.

This measure ensures that employers can exercise their lawful management right to take personnel action such as issuing a poor performance evaluation or not selecting an applicant for a promotion without fear of workers’ compensation liability.

In Mitchell v. State of Hawaii, DOE,85 Haw. 250 (1997), the Court held that a teacher's stress-related injury resulting from disciplinary action taken by the employer in response to her alleged misconduct was compensable under workers’ compensation law. Consequently, in 1998, the legislature amended section 386-3, Hawaii Revised Statues, to exclude injuries arising from “good faith” disciplinary action from being compensable. However, under this 1998 amendment, injuries arising from all other good faith personnel actions are still compensable.

In December 2002, the Hawaii Supreme Court rendered an opinion in the case of a firefighter against the City and County of Honolulu Fire Department, Davenport v. City and County of Honolulu, Honolulu Fire Department, 100 Haw. 481 (2002). Mr. Davenport had filed for workers' compensation due to a mental stress injury he received while trying to attain a promotion. In Davenport, the Supreme Court opined that, under the "unitary" test, and without explicit exclusion from state law, a stress-related injury that stems from an essential function of the employer and results from an activity that serves an important interest of the employer is compensable.

In Davenport, the promotion process was an essential function of the employer and served an important interest of the employer. Thus, an injury that stems from such a process is compensable. Consequently, the Supreme Court held in Mr. Davenport's favor. This measure ensures that employers can exercise their lawful management right to take personnel action such as issuing a poor job performance evaluation or not selecting an applicant for a promotion without fear of reprisal through the form of a workers’ compensation claim for mental stress.

SECTION 2. Section 386-3, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) [A claim for mental stress resulting solely from disciplinary action taken in good faith by the employer shall not be allowed; provided that if a collective bargaining agreement or other employment agreement specifies a different standard than good faith for disciplinary actions, the standards set in the collective bargaining agreement or other employment agreement shall be applied in lieu of the good faith standard. For purposes of this subsection, the standards set in the collective bargaining agreement or other employment agreement shall be applied in any proceeding before the department, the appellate board, and the appellate courts.] No claim for compensation shall be allowed for mental injury or illness, or the physical manifestation brought on by mental injury or illness, for which personnel actions, taken in good faith by the employer are the stated cause or factor in aggravation of the claimed injury. Personnel actions include disciplinary action as defined in section 386-1, counseling, work evaluation or criticism, job transfer, layoff, demotion, suspension, termination, retirement."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

BY REQUEST

THE SENATE	S.B. NO.	1466
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII