Skip to main content

Can We Terminate an Employee on Workers’ Comp?

by Nancy Owen, PHR, Senior HR Consultant, East Coast Risk Management

If you are thinking about firing an employee that has just filed a workers’ compensation claim, is on a medical leave collecting workers’ compensation benefits, or has just returned from such a leave, you may want to re-think your decision to terminate.

Most states have laws that impose penalties when an employer takes an adverse action, such as termination of employment, against an employee who has filed a workers’ compensation claim if that action is considered to have been retaliation or discrimination based on the employee’s claim. These penalties can be either fines, or jail time, or both. They are put into place because employers wrongfully terminate their employees, not necessarily intentionally, but in some cases without just cause.

While terminating an employee who has filed a workers’ compensation claim is not against the law, it can be very risky.  Employers should take a careful look at the situation and should not proceed unless they feel confident that they can prove that the termination, or any adverse action, was not prompted by the employee’s workers’ compensation claim.

A few good points:

  • Firing employees who are collecting workers’ comp benefits may prevent other employees from filing claims for fear they will lose their jobs, too. According to a new survey from, nearly 1 in 10 U.S. workers who have been injured while at work said they didn’t report the incident because they didn’t want their employers to retaliate. It’s important to know that federal law prohibits employers from discriminating against an employee because the employee reports an injury or an illness.
  • Consult your state statute. It is important for you to know the details of your state’s workers’ compensation statutes. Most of the laws cover employers with as little as one employee. Many state workers’ comp statutes contain retaliation provisions which allow employees to sue their company in regular court, claiming that they were fired in retaliation for using workers’ comp benefits. The best practice before considering termination is to consult with your employment attorney first.
  • Do you know your company policies when it comes to the rules regarding terminations? This is very important when you are considering a termination. If you do not follow your company’s policies, you may have some extra trouble ahead of you. Do you have a progressive disciplinary action process? Did you follow it? Can you prove that you have treated this employee consistently with policy and practice?
  • Is it a good time? Don’t use this as the time to terminate an employee who has not performed when no action was taken to correct the conduct or performance in the past. From the start of employment, you should be setting clear expectations and holding your employees accountable. And doing so in real time. For example, let’s say you had a really good reason to discipline your employee weeks ago, but neglected to do so in a timely manner. Now that they are on medical leave due to a work injury, or have just returned from such a leave, this is not the time to take a disciplinary action for that old conduct issue. If you terminate an employee for misconduct that occurred weeks prior to the employee suffering a work injury and filing a workers’ compensation claim, you will most likely lose if a retaliation claim is filed against you.

What constitutes retaliation when it comes to workers’ compensation?

All too often it is common practice that employers get mad because of the cost of a workers’ compensation claim and they take their frustration out on employees. Termination is just one of the results. There are several behaviors that could be construed as retaliatory or discriminatory actions.  Just to name a few:

  • Demoting the employee.
  • Changes in the employee’s position, responsibilities, location or job title.
  • Negative feedback on an employment evaluation with no just cause.
  • Reducing the salary or hourly rate.
  • Changes in work hours or giving the employee the worst schedule.
  • Disciplinary action when it is not warranted.

Remember, it is illegal for an employer to fire or retaliate in any other way against an injured worker for filing a claim. Adverse actions taken against an employee who is testifying in workers’ compensation case may also be considered retaliatory.

Does all this mean you cannot discipline a person who has filed a workers’ compensation claim?

No, an employer can generally discipline if they can show good cause. Good cause is defined as a “fair and honest” cause or reason that has been considered in good faith on the part of the employer. Remember, any time you are disciplining an employee, whether or not they are a workers’ compensation claimant, be sure to have evidence to back up the need for discipline. And make sure you are following your company policies.

If you are an employer with questions about leaves of absence or terminations, contact our HR team by sending an email to or by calling us at (724) 864-8745.

Disclaimer: The information provided on this web site is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this web site does not create an attorney-client relationship between East Coast Risk Management or our employment attorney and the user or browser.