The Problem with Firing an Employee on Workers’ Compensation Leave

By Sharyn Alcaraz

Significance: California law protects workers from certain employer conduct in response to a workplace injury or workers’ compensation claim. A range of remedies is available to the worker for such action, including back pay and reinstatement under the California Labor Code.

Discussion: Normally, workers’ compensation claims are covered by workers’ compensation insurance and the insurance company appoints and pays for counsel to defend the claims. However, certain claims of intentional employer misconduct are not covered by the insurance and the employer must hire its own counsel to defend that part of the case. In such a case, we were recently retained by an employer to defend a claim brought in the Workers’ Compensation Court for alleged employer retaliation against the employee. The employee claimed that he was fired because he took workers’ compensation leave.

In this case, the employer intended to terminate the employee for poor job performance. However, the employer delayed in taking action and the employee first asserted a work stress claim, entitling him to workers’ compensation leave. The employer terminated the employee after she went out on worker’s compensation leave. The employee accused the employer of unlawful retaliation, seeking back pay, statutory penalties, and reinstatement.

This is considered to be actionable conduct under the Labor Code. California law protects an employee from adverse conduct in response to a workplace injury or workers’ compensation claim. In such cases, the burden is on the employer to show that its action was not motivated by the workplace injury. Alternatively, the employer may establish that the action was a business necessity and outweighed the preservation of the employee’s job.

Factors an employer may use to establish business necessity include: (1) the employer is severely shorthanded, other employees could not cover the work, and the employer could not replace the worker without expensive training of others; (2) violations of important company policies (e.g., drinking on the job); (3) chronic absenteeism and failures to report to work or call in; (4) failure to keep employer advised of condition and date of anticipated return to work; (5) the employee’s substandard work performance; (6) the employee was unable to do the work (or any substitute work) at the company due to the disability. As a practical matter, an employer must establish that it had good cause to terminate an employee after learning about a workplace injury (even for at-will employees).

In this case, the employer was a small company and the employee’s absence placed an extreme hardship on it. The employee’s workers’ compensation leave had already been for many months at the time the employee was terminated and the employer’s customer needs were not being met. There was also evidence that the employee’s work was substandard and, as such, good cause existed for the termination. We used these facts to negotiate a settlement, which spared the employer from further legal expense and time for trial in a venue that is historically unfriendly to employers.

More importantly, the settlement allowed the employer to avoid a possible civil lawsuit for wrongful termination and disability discrimination. An employee who has made worker’s compensation claims may also have rights under the Americans With Disabilities Act (and a similar state statute under California law) for reasonable accommodation when returning to work.

Conclusion: Employers must be careful when taking any action against an employee who was injured in the workplace, even if a workers’ compensation claim has not yet been filed. The consequences of making a wrong decision, and not considering the disability discrimination laws, can invite uninsured worker’s compensation litigation and a civil lawsuit. Conferring with counsel before taking action can reduce the chances of claims, or if the claims are made, increase the odds of a successful defense.

© 1999 Reish & Luftman. All rights reserved. The Reish & Luftman Practical Guide to Employment Law is published as a general informational source. Articles are general in nature and are not intended to consitutute legal advice in any particular matter. Transmission of this report does not create an attorney-client relationship. Reish & Luftman does not warrant and is not responsible for errors or omissions in the content of this report.

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