United States: Be Careful When Firing An Employee Who Is Out On Workers Compensation

Handling workers' compensation claims can present a number of challenges, such as determining whether an injury is work-related and evaluating back-to-work accommodation requests. Another challenge arises when you consider terminating an employee who has filed a workers' compensation claim.  For example, most states' workers' compensation laws impose penalties, either fines, jail time, or both, for wrongful termination.  While terminating an employee who has filed a workers' compensation claim is not outright prohibited, employers must take great care to avoid a situation where it is deemed that an employee was fired because of the workers' compensation claim.

Here are a few tips to help reduce the risk of retaliation or wrongful termination claims, and the imposition of criminal penalties, arising out of terminating an employee who has filed a workers' compensation claim.

State workers' compensation laws create a special set of protections for employees injured in work-related activities. One goal of these laws is to create a quick and efficient process to pay for medical benefits and to replace wages while the employee is out of work. One of many statutory employee protections is that employers may not terminate someone "because," or in some states "solely because," the employee filed a workers' compensation claim. In fact, state law typically provides that it is unlawful to discipline or terminate an employee because the employee filed a claim and that an employer who does so has committed a crime.

Therefore, it would be wise to devote extra care when considering whether to terminate an employee who has filed a workers' compensation claim.

  • Consult your state statute. Workers' compensation statutes can be long and detailed and will almost always apply to you. Most state workers' compensation laws cover employers who have very few employees, some as few as one. Make sure that you know if your company is covered by the statute.
  • Review your personnel policies/Employee Handbook. What are your rules and policies for progressive discipline and termination? Do you require verbal counseling, written notice, or both, before terminating an employee? Do your policies identify as possible grounds for termination the conduct you are considering under the current circumstances? You can have trouble, even with valid grounds to terminate, if you fail to follow your policies. The risk of criminal exposure makes following your policies to the letter even more important.
  • Scrutinize discipline imposed for similar misconduct. You would not, of course, fire an employee simply because they were hurt at work and filed a workers' compensation claim. However, what if you issued a warning or demoted an employee who had engaged in misconduct or exhibited poor work performance, but fired another employee – who had a pending workers' compensation claim – for the same behavior? Much like the analysis in a discrimination context, the fired employee could question the stated reason for being fired as a pretext if the discipline imposed on them for similar conduct was more severe than for the other employee.
  • Consider the facts, circumstances and timeline. Let's say you are considering terminating an employee for misconduct that occurred 4 weeks ago, but who suffered a work injury and filed a workers' compensation claim 3 weeks later. If you documented the misconduct, investigated the report, interviewed witnesses, considered discipline imposed under similar circumstance, consulted management and decided to terminate a few weeks later, after the employee filed the claim, you will have a plausible explanation that the timing of the termination decision was caused by the length of the investigation and was not related to the filing of the workers' compensation claim. On the other hand, if you took none of those investigative steps and delayed acting for a few weeks, it may be more difficult to establish that the termination decision was unrelated to the employee having filed the workers' compensation claim. Terminating an employee is difficult in any circumstances, as you generally must consider the particular circumstances of the employee's behavior or performance and compare it to other situations where discipline was imposed. The risk that terminating an employee who has filed a workers' compensation claim could be treated as a misdemeanor adds an additional level of complexity to the decision-making process. Therefore, in addition to taking the steps above, consider consulting with counsel to make sure that you have properly evaluated all of the potential issues and risks.

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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