Consequences of Terminating an Employee While on Workers' Compensation

Posted by Veritas Administrators on Mar 8, 2018 10:19:31 AM
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Claim handlingThere is a fine line in the legality of firing an employee while on workers’ compensation. The law protects employees from being fired while on disability. However, there are valid and legal reasons for dismissing an employee while on workers’ compensation. 

The Injured Worker

An employee disabled by a work-related injury is entitled to continued temporary total disability (TTD) workers’ compensation benefits until they are released by a physician to return to work. Return to work may be at a light duty capacity initially until they are released for full duty.

If the employee is provided work restrictions by his physician and the employer is unable to accommodate those restrictions, TTD benefits are owed. It is in the employer’s best interest to accommodate the light duty restrictions not only to mitigate the exposure, but to return the employee back into a routine to eventually return to work, full duty. In some cases, when an employee returns to work in a light duty capacity he may have a negative attitude or show misconduct. This is usually because he returned to a lesser paying job or is dissatisfied with the job he was assigned.  

It is critical that the employer work with the employee to get him to return to work full duty. When an employee is seeking treatment and wants to return to work, having a job to return to will keep him motivated. This will encourage him to continue medical treatments (physical therapy, etc.) to get healthy enough to return to work.

Claim handlingThe employee may reach maximum medical improvement (MMI) meaning his treatment options have been exhausted and his condition will not improve any further allowing him to return to work full duty at the job he had prior to his injury. The employer is required to make reasonable efforts to accommodate his new work restrictions so that he can perform his job.

The employer may be unable to accommodate the employee’s return to work restrictions or cannot keep the employee’s position vacant while out on WC. This would lead to the employer hiring someone to fill the vacant position and have the option to terminate the injured worker’s employment. The employer would work with their claims specialist to determine if they can let the employee go.

It is important to know that if you terminate an employee while receiving workers’ compensation benefits, they are still entitled to receive those benefits. The benefits do not terminate with their employment. As a matter of a fact, an individual with restrictions or totally disabled is not employable and therefore unemployment benefits are not available to them. Lost time benefits will continue until they are released to return to work full duty or are placed at MMI.

Workers’ compensation premiums are costly. In some cases, employers have attempted to limit an employee’s lost time benefits by seeking opportunities to terminate an employee for cause, unrelated to the work-related injury. Not only could this strategy expose an employer to a retaliatory discharge suit, the workers’ compensation benefits (medical and lost time benefits) will continue for the employee. Delaying the termination of an employee should be considered until they are at their pre-injury status. Once an employee is injured, terminating an individual will not provide a cost savings in your premium. It may be costlier if you do not have a position for the injured worker when they return because TTD benefits for lost time have no time limitations and can be made indefinitely.

In the Illinois case Interstate Scaffolding, Inc v Illinois Workers' Compensation Commission, No 107852, 2010 WL 199914 (Ill Sup Ct 1/22/10), Jeff Urban was a union carpenter who suffered from heat stroke while on a jobsite. As he was being transported to the ambulance, he fell and hit his head and sustained serious injuries to his head, neck and back. He underwent many treatments and tests for his injury. At times he was able to return to work light duty, and other times he was on TTD. In 2005 while he was working, he got into an altercation with another employee. Jeff’s company fired him and refused to pay him any more TTD benefits. The case was brought to an arbitrator and court, and it was ultimately determined that although he was fired, he was still due his TTD benefits.


There are instances in which it is legal to terminate an injured employee while on workers’ compensation.  An employer must be sure the reasons are valid, and they did everything possible to assist in the employee’s return to work, whether it is full duty, light duty or with restrictions. There are situations where the employer is unable to accommodate and cannot offer the employee alternate work.

During the claim handling process, it’s important to keep the lines of communication open between the employee, employer and workers’ compensation adjuster. This will encourage the employee to work with his doctor to regain his health to the point where he can return to work with no restrictions.

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Topics: Workers Compensation

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