Office of Workers' Compensation Programs (OWCP)

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Division of Longshore and Harbor Workers' Compensation (DLHWC)

CHAPTER 8-400 — DISCRIMINATION: SECTION 49

1. Purpose and Scope. This Chapter contains guidelines and procedures for the assessment of penalties against an employer who has discriminated against an employee because of a workers' compensation matter.
2. Authority. Section 49 of the Act makes it unlawful for any employer to discharge or in any other manner discriminate against an employee because such employee claimed or attempted to claim compensation, or because the employee has testified or is about to testify in a proceeding under the Act. If it is demonstrated that the employer did in fact discriminate against the employee on this basis, the employer (not the carrier) shall be liable for a penalty payable to the Special Fund.
3. Initial Complaint by Employee.
   1. Initial Inquiry by District Office. When a District Director (DD) receives a complaint from an employee covered by the LHWCA, alleging discrimination as defined under section 49, the DO shall within five working days initiate a specific inquiry to determine the facts and circumstances pertaining to the allegation. This will be done by interviewing the employee and requesting information from the employer's representative(s), and other parties who may have information about the matter.
   2. Method of Inquiry. Information may be obtained by written correspondence, telephone, or personal interview. If necessary, the DD or DD's designee may also conduct an informal conference to obtain information concerning the allegations.
   3. Consideration of Evidence. Considering the medical evidence available in the case file, the DD will also determine whether the employee is qualified to perform the duties of employment. In the event there is disagreement, which cannot be resolved without another medical evaluation, the DD should have the employee examined by a physician selected by the DD, the cost of which may be charged to the Special Fund. The examination should be directed toward resolving the question of whether the employee is able to perform his/her former duties.
4. Informal Recommendation by District Director.
   1. Agreement with DD's Recommendation. If the DD determines that discrimination against the employee has occurred as defined under section 49, and the employee is able to resume his or her duties, the DD will recommend that the employer make restitution to the employee as indicated by the circumstances of the case, to include reinstatement of employment and payment for any wage loss suffered as a result of discrimination. The DD shall also assess an appropriate penalty against the employer (see paragraphs 10 and 11, below). If the employer and employee accept the DD's recommendation, it will be incorporated in a written memorandum and mailed to each party within fourteen days. They will be asked to indicate their agreement or disagreement with the recommendation within another fourteen days.
   2. Disagreement with DD's Recommendation. If either of the parties indicates disagreement with the recommendation, the DD shall, within ten days of receipt of such notice, prepare a narrative memorandum summarizing the disagreement, mail a copy to all interested parties, and within fourteen days thereafter refer the case to the OALJ for a formal hearing as to whether discrimination under section 49 has occurred, and any other issues requiring formal adjudication. (See PM 4-600 for full details on preparing cases for formal hearings.)
5. Assessment of Penalty by DD. Following the hearing, if a penalty is to be assessed, the matter is referred to the DD by the ALJ, for assessment and collection of the penalty.
6. Transmittal of Penalty Check to National Office. Upon receipt of the penalty check, the DD shall immediately forward it, with a copy of the penalty letter and a DL Form 1-303, Cash Transfer Receipt (see Exhibit 57, PM 10-200 and PM 1-200.9f), to the Director, DLHWC, for deposit in the Special Fund. A copy of the penalty letter should be retained in the case file with a notation of the date the above action was taken.
7. Penalty Log. Each DO shall maintain a log (Exhibit 20, PM 10-300) recording each penalty assessment, with information as to the outcome of the action in each instance a penalty is assessed. Any payment received shall also be recorded on the Cash Receipt Register (see PM 1-200.9). Note the requirement on the log by indicating whether or not the penalty is being assessed against a small business, as required by SBREFA.
8. Action by National Office. Upon receipt of the copy of the penalty letter and check at the NO, the check will be deposited in the Special Fund. A copy of the penalty letter, check and certificate of deposit shall be retained in the National Office files. A signed receipt (pink) copy of DL Form 1-303 will be returned to the DO.
9. Employer's Refusal to Pay Penalty. In the event the employer refuses to pay the penalty assessed, the DD shall prepare a memorandum summarizing his/her attempts to collect the penalty. The DD shall then refer the complete administrative file to the Director, DLHWC for subsequent transmittal to the Associate Solicitor for Employee Benefits, with a request that appropriate legal action be taken to recover the penalty.
10. The 1984 Amendments and the Federal Civil Penalties Inflation Adjustment Act of 1990. The amended Act specifically provides that the discharge or refusal to employ a person who has been adjudicated to have filed a fraudulent claim for compensation (see LHWCA section 31(a)) is not a violation of Section 49. The penalty for a violation under section 49 was also increased to a sum not less than $1,000 and not greater than $5,000. However, effective November 17, 1997, the penalty was increased to the amounts of not less than $1,100 or more than $5,500. This increase came about as a result of the Federal Civil Penalties Inflation Adjustment Act of 1990 (FCPIAA), as amended by the Debt Collection Improvement Act of 1996 (DCIA). The DCIA, amending the FCPIAA, requires that the civil money penalties be adjusted by a cost-of-living increase equal to the percentage, if any, by which the Department of Labor's Consumer Price Index (CPI) for all urban consumers for June of the calendar year preceding the adjustment exceeds the June CPI for the calendar year in which the civil penalty amount was last set or adjusted. Due to inflation since the LHWCA civil money penalties were last set or adjusted, the increase effective on November 17, 1997, was the maximum 10% initially permitted under the DCIA. The adjusted penalty amounts of not less than $1,100 or more than $5,500 apply only to violations occurring on or after November 17, 1997. The previous penalty amounts of not less than $1,000 or more than $5,000 apply to violations prior to November 17, 1997.
11. Small Business Regulatory Enforcement Fairness Act (SBREFA). SBREFA requires agencies to consider the waiver or reduction of civil penalties for violations of statutory requirements by small businesses (see PM 9-700 for a full discussion of SBREFA). Section 49 is a civil penalty under the LHWCA. However, Section 49 indicates that if it is determined that a violation has occurred, the violator "shall be" subject to the civil penalty. Thus, there is no allowance under the LHWCA for waiver of this penalty. Nevertheless, since the LHWCA does not specify a fixed amount of penalty for violations under Section 49, the provisions of SBREFA for reduction of this civil penalty for small businesses may be applied. No fixed amount of reduction is specified. Taking into consideration the gravity of the violation and the range in amount of penalties, which may be assessed under Section 49, the District Director should also consider the size of the business before determining the penalty amount to be paid by the employer to the Special Fund. The Small Business Act's Standard Industrial Classification codes (SIC), giving size standards for small businesses, may be helpful in considering the size of the reduction in penalty for a small business (see PM 9-700.3).