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The Negative Effects of Firing Employees on Worker's Comp Leave

written by: •edited by: Michele McDonough•updated: 5/18/2011

Can you fire an employee who is on workman’s comp? What are the pitfalls of firing employees while on workers comp leave? You may be surprised at some of the rules and HR expert and business owner Jean Scheid reveals the ins and outs of workers comp leave.

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    The Suspicious Employer Syndrome

    Workers Comp Claims Can Be Tricky As employers and HR managers, we are all suspicious of workplace injuries, especially if there are no witnesses. However, when injuries are real and you need to place a claim to your workman’s comp carrier, your next issue is how to get that person back at work—fast—before your experience mod rises; or your workers comp carrier ends up paying out many dollars for wages, medical expenses, and even travel expenses.

    There are pitfalls of firing employees while on workers comp leave, one is your investment in the injured employee. The other pitfall many HR managers and business owners face is the legality of terminating a person who is receiving workers comp benefits.

    Image Credit (MorgueFile)

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    The Fine Line

    When Can You Terminate Even if a state in an “at will” state, where both employer and employee can terminate the employment relationship for any reason, this doesn’t always apply to workers comp cases—but there is a fine line.

    Laws protect employees from retribution if they do indeed file a claim, but the small business owner is not expected to keep a position open for someone that is on a lengthy workers comp leave. Basically, this means you can’t threaten job loss for claiming an injury, but on the other hand, you can fire an employee that is receiving workers comp benefits for a couple reasons.

    Image Credit (WordSell)

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    Fair Terminations

    Injuries Happen at Work The circumstances that allow you to fire (or replace) an employee on workers comp are:

    • Key Employee – If the employee is a key employee; manager, supervisor, only worker in a certain department, you can indeed replace the employee. This is often looked upon as being unable to run your business effectively since you are missing a key employee.
    • Length of Time Off – If an employee has been off for an extended period of time due to the injury. No business owner is required to keep any employee that is receiving worker’s comp benefits, however, the fine line comes into play if you do terminate, especially if the employee finds an attorney and files a lawsuit.

    The largest pitfall of firing employees on workers comp leave is indeed the avenues they often take to contest the termination.

    Image Credit (Blogspot)

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    I Have a Lawyer!

    The Judge Must Decide Labor law attorneys are abundant across the US and they will and do take cases when an employee that is receiving workman’s comp benefits is terminated. Let’s look at a scenario:

    John is a poor to average employee and works for a drycleaner. He is not a key employee or an exceptional employee but was injured at work and hurt his back (keep in mind here that John’s poor work history has not been documented in his employee file with an employee warning) John reports the injury and the company files a workman’s compensation claim.

    After numerous MRI scans and tests, John’s doctor still says he is unable to return to work. After 3 months of time off and receiving benefits from workers comp, the company owner terminates John.

    John hires an attorney who will fight the good fight by saying the employee’s rights were violated. He was a good employee—never had a single write-up and just because he was injured, he lost his job.

    How a judge looks at this case is anyone’s guess and it often depends upon the judge to make the right determination. That’s why it’s so important for employers to document written warnings for poor performance. In this case, John’s lawyer may very well win the case and the employer would not only be forced to take John back (when he is able to return to work), but also pay damages to John.

    To a judge, the questions to decide are:

    • Why was John’s poor performance never documented?
    • Why was he fired?
    • Was he fired because he filed a worker’s comp claim?

    If the judge feels the answers here are all a “yes,” you may lose this lawsuit.

    Image Credit (LegalJuice)

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    Fear of Filing Claims

    Do Not Fear Claims Indeed labor laws do state you can’t threaten to fire an employee if they want to claim a work injury. If you do this, be sure to lose a lawsuit.

    Many HR managers and business owner’s watch their experience mods like a hawk. They don’t want to see their annual workman’s compensation premiums go up. Keep in mind, however, that most workers comp insurance carriers take a look at two things—the dollar amounts paid out for a claim and the number of claims that have occurred during the last three years. This helps them determine your experience mod and if it goes up, so will your premiums.

    Still, if you dwell on the experience mod instead of trying to get the employee back to work, this is a huge pitfall of firing employees while on workers comp leave.

    Image Credit (SmallBizBee)

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    Get Them Back to Work

    Get Them Back to Work Over the years, I have experienced many workman’s comp injury claims—some valid, some not so valid. As the employer and owner of the workers comp policy, you need to keep in touch with the employee and the workers comp case worker to get the employee back to work.

    The employer has certain rights. For example, an employee of mine has been off on workers comp for 3 months (back injury). His doctor of choice is his family physician who continues to write “no return to work” notices so the employee continues to receive benefits.

    Although you can do this sooner than 3 months (even 1 month), I called the workers comp case worker who informed me that my employee’s medical tests and treatments requested by his family physician were denied because the worker’s comp doctors felt there was no real injury after looking at MRIs and x-rays.

    I requested the employee be seen by a doctor other than his family physician, which was done and the employee was told there was no injury that would keep him from performing his job duties and he could indeed return to work.

    The employee disagreed with the decision and refused to come back to work. His workers comp benefits, however, were canceled by the carrier.

    Here, this scenario worked out for me as I was able to state there was work available to the employee and he was cleared to work, but refused, so I terminated his position.

    To avoid the pitfalls of firing employees while on workers comp, keep communication lines open with both the employee and the workers comp case worker. Ask to receive weekly updates—insist on this. If you have a poor employee you don’t want back, avoid lawsuits by taking them back and then implementing the proper employee documentation.

    Finally, don’t make it known that if anyone on your staff files or attempts to file a workers comp claim, the result will be termination. Not only is this illegal, you’ll lose in court if the employee finds a lawyer to take the case. Placing this message out to employees will lower trust, respect, productivity, and morale.

    Image Credit (Freedigitalphotos)