Canada: WCB Taking New View On Modified Work

A modified work program has long been a very useful tool for employers to reduce the impact of workplace injuries on operations and to limit the occurrence of lost-time injuries. An injured worker who is unable to return to his previous tasks can commence duties that are consistent with any medical restrictions. Often, it is also beneficial to the worker because he is fully compensated instead of receiving a reduced economic loss payment (ELP) from the workers' compensation board (WCB).

But problems can arise where the modified work program comes to an end while the injured worker is still engaged in it. When an employer stops being able to offer modified work, the WCB will assess the worker for temporary disability benefits and some sort of ELP will be issued. Things become less clear in circumstances where the modified work ceases to be available because of the actions of the employee.

For example, a fairly common side effect of modified work programs is that they encourage a certain "relaxed" work ethic that would otherwise be unacceptable in the worker's normal position. Employers often complain that workers engaged in modified work will not do a good job, work slowly, complain too often, take too many breaks or simply fail to show up at all. This may result in termination of the employment relationship for just cause.

It is at this conflict point, where the Alberta WCB is now starting to re-interpret its policies, which will undoubtedly have a significant impact and may affect how other provinces' WCB regimes will start administering their benefits.

The WCB's past approach to this issue was as follows: First, the WCB would consider the reason for why the modified work program came to an end. In the event that the employee removed himself from modified work, either as a result of a resignation or termination, the WCB would cease payment of any sort of ELP on the basis that the modified work came to an end due to "circumstances within the employee's control."

Such an interpretation flows naturally from the provisions of the Workers' Compensation Act, which state, in part, where a worker refuses modified work, the WCB would assess his compensation entitlement under the act as though the worker had accepted the modified work.

As such, the WCB considered it fair that a worker who could mitigate claims cost by accepting reasonable modified work could not unilaterally choose to forego that work and collect WCB benefits instead. For example, an employee who, as a result of her own misconduct (such as failing to show up for modified work or acting unsafely) was removed from modified work is disentitled to WCB benefits - presumably, the idea being that the employee has, by virtue of her misconduct, "refused" the modified work.

This interpretation resulted in a long line of WCB Appeals Commission cases where no further claims costs as a result of ELPs were allowed under this interpretation. This, in turn, allowed employers the relative freedom to make termination decisions where significant performance concerns arose, without regard to what impact this would have on their WCB experience rating.

'No fault' principle

This "worker accountability" approach is no longer the WCB's preferred interpretation. Employers are now faced with WCB decisions at the case management level and with the Dispute Resolution and Decision Review Body, which impart the "no-fault" principle underlying the workers' compensation regime.

The WCB's position on these claims now is that when the employer has severed the employer-employee relationship, the modified work program is no longer available due to the termination of employment, rather than due to the worker refusing to participate in the program. As a result, ELPs continue to be payable as long as the employee remains willing to engage in modified work (notwithstanding its availability).

This means that where an employee is at fault for the cessation of modified work, the no-fault scheme of the act will come to his aid and the employer is left collecting the claims costs on its experience rating.

It is noteworthy that the WCB has not expressly changed its policies in this regard — this is merely a shift in interpretation. But it is one that is fraught with difficulty. Primarily, it is questionable whether the no-fault principle is properly imported into the administration of benefits at all. Historically, the concept of no fault was used to address issues of access to the regime, such as to decide who was a "worker" under the act.

No definitive answer to this question is yet available, but proceedings are underway at the Alberta Court of Queen's Bench, which will hopefully provide clarity. Should the WCB's new interpretation be supported, WCB regimes in other provinces may take another look at how they administer benefits, and there is a risk that the no-fault principle may find its way into the administration of benefits as well.

In the meantime, employers need to be aware this new interpretation raises important considerations and issues with respect to their modified work programs.

For instance, the new interpretation forces employers to weigh the unacceptable consequences of incurring a lost-time claim, or other WCB account cost consequences, against the prospect of continuing the employment of a worker who may present a safety risk or who has undermined the employment relationship through other misconduct.

One also has to question whether this interpretation ultimately provides an incentive to workers to terminate their modified work assignments since there appears to be no real consequences to doing so.

This article originally appeared in the April/May 2015 issue of Canadian Occupational Safety Magazine.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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