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Terminating an Employee on Workers Comp?

By the HR and Claims Team at ECRMterminated

Workers Compensation claims can be challenging for employers to deal with and even more so when considering terminating an employee who has filed a worker’s compensation claim. An employer should be informed and aware of the risks when making an ongoing employment determination.

It would be beneficial to consider the laws regarding the matter as some states cover an employee headcount as little as 1 employee. In fact, most state laws consider it to be unlawful to discipline or terminate an employee because the employee filed a claim and that an employer who does so has committed a crime. In most states there are laws that include penalties, fines, and even jail time for a wrongful termination.  Although it is not prohibited, employers should try to avoid a situation where the termination could be considered as retaliation of filing a workers’ compensation claim.  In Oklahoma, for example you cannot terminate an employee who is on workers compensation unless there is a mass layoff or entire facility closure.

The best practice is to start by reviewing your policies in your employee handbook when it comes to discipline and termination before you consider terminating an employee. Reviewing the conduct and your policy as well as past practices for similar conduct would be beneficial. Traditionally employers have progressive disciplinary action policies that included steps or multiple notices before termination takes place. To lessen the risk, you may want to consider a verbal counseling or written notice before you terminate.

Did you know that when you terminate an employee who has an open workers compensation claim that you are only terminating the employee, not the claim or the benefits the employee is receiving? If you terminate an employee while receiving workers’ compensation benefits, they are still entitled to receive those benefits, along with the costs of medical care on that claim being continued. Lost time benefits will continue until the claimant is released to work full duty or placed at maximum medical improvement. Even at that time, if a claimant is unable to secure employment with a similar wage, the employer may still have to pay partial benefits. The time period differs in every jurisdiction.

Let’s look at an example:

An employee is on light duty after a work-related injury and repeatedly violates the employer’s attendance policy. His medical documentation does not support the need for him to do so.  Before the employer decides to terminate, the employer should consider:

  1. What effect termination will have on the open worker’s compensation claim – are the reasons for the absences related to his injury?
  2. Is the employee violating a policy of which he had knowledge?
  3. Does the employer policy support the termination?
  4. Did the employer apply that policy consistently with all employees, including those who are not on worker’s compensation?
  5. If the employer chooses not to terminate where such decision is warranted and consistent with how others have been treated, what type of message does that send to that employee and others?

It is up to employers on how to handle this situation after considering all of the above and our professionals can help you in making an informed decision.

If you are an employer with questions about anything relating to human resources, safety, or workers’ compensation, contact East Coast Risk Management by calling 724-864-8745 or emailing us at

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