Post-Termination Psychiatric Cumulative Trauma Claims: Key Strategies Under Labor Code Section 3208.3
July 17, 2026
The end of the employer-employee relationship marks a significant period that can result in potential problems for an employer. Among the potential issues that an employer may deal with are post-termination psychiatric cumulative trauma claims.
Defining Post-Termination Psychiatric Cumulative Trauma
Labor Code Section 3208.1(b) defines a cumulative trauma injury as “an injury resulting from repetitive mentally or physically traumatic activities extending over a period of time whose combined effect causes disability or the need for medical treatment.” A post-termination claim is simply a claim filed after the applicant has been terminated or laid off (or been given notice thereof).
Following the passage of SB863, there was a clear statutory intent to reduce the overall number of psychiatric injury claims arising out of physical injuries. However, this did not reduce psychiatric claims arising out of the employment itself. All psychiatric claims have a high threshold for proving industrial causation under Labor Code Section 3208.3(c). Therefore, per Labor Code Section 3208.3(b)(1), an Applicant has the burden to prove that a compensable psychiatric injury claim was predominantly caused (i.e. 51%) by actual events of employment.
Defenses to Post-Termination Psychiatric Cumulative Trauma
In addition to the heightened causation requirements applicable to psychiatric claims, applicants asserting psychiatric cumulative trauma claims must overcome statutory defenses contained in Labor Code Section 3208.3.
One such affirmative defense is the six-month rule under Labor Code Section 3208.3(d), which provides that an employee must be employed for six months to be able to claim a psychiatric injury.
Another significant defense under Labor Code Section 3208.3(e), is that a psychiatric claim is barred if it is filed after the notice of termination for an injury occurring before the notice of termination.
Separate and apart from the post-termination bar, is the “good faith personnel action” defense under Labor Code Section 3208.3(h). This defense applies when the psychiatric injury was substantially (i.e. 35% to 40%) caused by lawful, nondiscriminatory, good faith personnel actions, including discipline, performance evaluations, investigations, demotions, layoffs, and terminations.
The court’s decision in Bray v. WCAB (1994) 59 CCC 475 illustrates the rationale underlying this defense. The court in Bray recognized that termination is certainly upsetting, but concluded that a lawful termination does not, by itself, provide a basis for a compensable psychiatric injury. The court reasoned it would be against public policy to allow everyone that was upset over a lawful termination to bring a psychiatric injury claim against their employer. Thus, consistent with Bray, a psychiatric injury that is substantially attributable to a lawful and good faith termination may bar a workers’ compensation claim.
Exceptions to Statutory Defenses to Post-Termination Psychiatric Cumulative Trauma
Once an employer establishes that a psychiatric claim was filed after notice of termination or layoff, then the burden shifts to the employee to establish one of the statutory exceptions outlined in Labor Code Section 3208.3(e)(1)-(5). Those exceptions are: (1) sudden and extraordinary events were the cause of the injury; (2) the employer had notice of the psychiatric injury; (3) the employee’s medical records show psychiatric treatment prior to the notice of termination or layoff; (4) the finding of sexual or racial harassment by any judge; and (5) evidence that the date of injury is after the date of the notice of termination or layoff, but before the effective date of the termination or layoff.
Sudden and Extraordinary Events
Sudden and extraordinary events are limited to “the type of events that would naturally be expected to cause psychic disturbances even in a diligent and honest employee.” (Wal-Mart Store, Inc. v. WCAB (2003) 112 Cal. App. 4th 1435, p. 1441). Courts have held that “sudden and extraordinary events” include events such as gas main explosions or workplace violence. (Id. at p. 1441).
It is important to note that when dealing with a cumulative trauma psychiatric injury claim, existing case law involves specific incidents only. As such, the definition of a cumulative trauma injury and “sudden and extraordinary events” are incompatible per statute and case law; as cumulative trauma injuries arise from repetitive events rather than a single unexpected event.
One example of the sudden and extraordinary events exception is Matea v. Workers’ Comp. Appeals Bd., (2006) 144 Cal. App. 4th 1435, 1450) when the Court of Appeals rescinded the Board’s finding that a psychiatric injury was not compensable. In that case, the applicant, who worked at Home Depot, claimed both physical and psychiatric injuries after lumber from a nearby rack fell on him. The defendant denied psychiatric liability on the basis that applicant had worked at Home Depot for less than six months at the time of the injury. The trial judge issued an award barring recovery. However, the Court of Appeals determined that Home Depot failed to show evidence that the lumber falling was a regular and routine event of employment. As such, the Court of Appeals held that the applicant established the accident was an uncommon, unusual, and unexpected event that would cause psychiatric disturbances. (Matea)In contrast, the Court of Appeals has considered verbal altercations with customers or clients as insufficient to be considered a “sudden and extraordinary event.” (Alfama v. Smart & Final, LLC Cal. Wrk Comp. P.D. LEXIS 299.)
Pre-Termination Psyche Medical Treatment
Turning to exception (3), the employee’s medical records show psychiatric treatment prior to the notice of termination or layoff, the general rule is that employer awareness of applicant’s strained relationships at work or ordinary work stress is insufficient to establish employer knowledge. For example, in Ontario-Montclair School District v. WCAB (1997), the Court held that a post-termination psychiatric claim could succeed because employer was placed on notice when the applicant provided them with a letter indicating he was suffering from stress at work. In another case, it was held that applicant’s claim was not barred as she sought care for a psychiatric injury after she was suspended. The key detail in this case was the existence of treatment before her termination. (Chan v. Carl Karcher Enterprises, Inc. 2011 Cal. Wrk. Comp. P.D. LEXIS 469.) In light of these exceptions, the prudent employer must ensure there was no prior knowledge of psychiatric issues and/or psychiatric treatment.
Racial or sexual harassment
An employee can present a claim if there is a finding of racial or sexual harassment by a trier of fact. This exception is rooted in malice from an employer. As such, it is imperative that employers ensure there are strong protocols in place to prevent harassment of an employee.
Injury Occurring After Notice but Before Effective Termination
The fifth and final exception arises when the claimed psychiatric injury occurs after the employee receives notice of termination or layoff but before the termination or layoff becomes effective. Labor Code Section 3208.3(e)(5) expressly recognizes this circumstance as an exception to the post-termination bar. Consequently, where an employer provides notice of termination but the employee continues working for a substantial period thereafter, the employee may argue that the psychiatric injury arose during the interval between notice and the effective termination date. Employers should therefore be mindful that delays between notice and implementation of a termination or layoff decision may render the post-termination defense void. Accordingly, as a practical matter, termination decisions should be carried out promptly and consistently once notice has been provided to an applicant.
Conclusions
Litigating psychiatric cases in California is expensive. Recognizing this, the legislature over thirty years ago enacted legislation to reduce the costs and create a higher threshold of compensability for psychiatric injury under Labor Code 3208.3. Post-termination psychiatric cumulative trauma claims are a common type of worker’s compensation claim with a very specific set of rules and defenses under the law. Employers and insurers should be aware of the tools that the legislature has put in place to help defending these claims.
Written By:
Joshua T. Gomez, Esq. of our LFLM-San Diego Office
Laughlin, Falbo, Levy & Moresi, LLP.