What Happens If I Fire an Employee While They Are Receiving Workers’ Comp Benefits?

In some states, employers can legally terminate employees for filing Workers’ Compensation claims. However, some workers who are fired while receiving injury benefits might feel discriminated against and can sue their employer as a result. Keep reading to learn more on the topic if you’re an employer concerned about wrongful termination lawsuits.

Can an employee be fired while receiving benefits?

The law permits you to discharge any employee, including anyone receiving Workers’ Compensation benefits, if you have a valid reason. Common legal grounds for terminating workers include company policy violations, insubordination, misconduct, and poor performance at work. Remember that most states protect employees against wrongful termination. As such, you should carefully weigh all options and only fire when necessary and for a good cause.

What happens when an employee starts a new job while receiving benefits?

Employees who lose their job after an on-the-job injury or illness may receive different types of benefits while still unemployed. However, the law prohibits them from continuing to receive full compensation after finding a new job. It requires them to notify the Workers’ Compensation insurer about their new employment, including assigned duties and pay. Contravening this requirement exposes an employee to insurance fraud accusations.

What are the consequences of termination or placement on leave?

An injured employee that you place on leave may be entitled to receiving partial wages and some Workers’ Compensation claims. It’s different for discharged workers as they may not be eligible for any type of compensation. Apart from that, termination or placement on leave can hinder an employee’s future employment prospects. Most potential employers may deem such an individual incapable of doing their job and will hesitate to hire them. Also, you can legally terminate an employee who is on leave as per the Family Medical Leave Act (FMLA).

What about Workers’ Compensation claims and the tort of negligence?

Workers’ Compensation insurance allows employees to receive lost wages and medical expenses payments for work-related injury or illness. By accepting this coverage, employees relinquish their right to sue their employer for the tort of negligence. As such, an injured worker cannot file a negligence lawsuit against their employer while pursuing or receiving compensation under the insurance system.

Arranging a return to work formula with the employee

Lost wages is a common Workers’ Compensation claim for employees injured on the job. This benefit covers the earnings that an employee loses while they’re unable to work. Once the employee fully recovers, they can often return to work without major restrictions. However, any worker returning with reasonable permanent work restrictions should discuss their challenges with their employer. They should cooperate with you toward developing a return-to-work plan and schedule that accommodates their limitations and your interests as their employer.

Workers’ Compensation laws regarding at-will employees

You can file a Workers’ Compensation claim for any injured at-will employee in your workplace. This is the only job protection that such employers have, meaning that you can discharge them for any reason, at any time. Under the federal law, you don’t have to reserve the job position of an injured at-will worker while they receive treatment.

Keep these pointers in mind when navigating the sensitive issues related to Workers’ Compensation claims, including terminating injured employees. If you’re looking for practical Workers’ Compensation solutions for independent insurance agents, contact us at PMC Insurance today!

By PMC Insurance Group

Since 1996, PMC Insurance Group has worked to help independent agents grow their client base by offering workers' compensation solutions for a wide array of businesses. As one of the most distinguished workers' compensation wholesalers in the country, we have the tools and resources to help you create coverage programs for small businesses and large accounts.