An employee has submitted a claim for permanent disability under workers’ compensation. Assuming it is awarded, what do we do next? Do we terminate him? If so, at what point? How long do we have to keep him on our group health insurance? What about other issues like bonuses? —Sybil, HR Specialist in Ventura
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California’s workers’ compensation laws are generally very accommodating of injured employees, but employers do have some clear rights. Let’s look at the decisions you face. As we do, keep in mind the overriding principle that you cannot discriminate against an employee in any respect based on the employee filing a workers’ comp claim or taking workers’ comp leave.
When an employee is first injured and leaves work, the employer can stop paying the employee’s base wages because the employee is no longer providing services. However, the employee remains employed and is simply on leave with a guaranteed right to reinstatement. Terminating employment at this point would be discrimination.
You should deal with other compensation issues as soon as the leave begins. If the employee participates in a performance-based bonus plan, you must address the issue of how to apportion the bonus. You should not simply exclude the employee from the bonus because the work-related injury prevented the employee from contributing throughout the period covered by the bonus. That, too, would be discrimination.
Also, you should address paid leave. Ideally, sick leave, paid time off, and vacation should be coordinated with workers’ compensation benefits so that the employee maintains full compensation for as long as possible. Paying out accrued paid leave early in the process is good for the employee because it puts the dollars in his or her hands. It is also good for the employer because it gets the paid leave off the books and eliminates potential issues down the road.
Accrual of paid leave should be handled just as it would for any other leave. If you normally continue accrual during vacation or sick leave, you must continue accrual during the portion of the workers’ compensation leave covered by vacation or sick leave.
You should also consider other available leaves and leave-related benefits. For example, if the employee is eligible for the Family and Medical Leave Act (FMLA) or if the company has a long- or short-term disability plan, the injured worker must be treated just as you would treat any other employee eligible for these leaves. It is important to formally designate the leave as FMLA leave to ensure that FMLA leave runs concurrently with the workers’ compensation leave.
This brings us to the health insurance issue. As you have probably guessed, the rule is that you must treat the employee on workers’ comp leave just as you would treat any other employee on any other kind of leave. An employer covered by FMLA that allows employees on FMLA medical leaves to continue on the group health plans for 12 weeks should do the same with employees on workers’ compensation leaves. If you have in the past allowed a well-liked employee to stay on health insurance for 6 months while on a disability leave, not giving the same benefit to an employee on workers’ compensation leave could be considered discrimination. The best approach is to adopt a policy for how long an employee on any kind of medical leave can remain on the group health plan, probably 12 weeks if you are covered by FMLA, and stick to that policy consistently.
Finally there is the terminating employment issue. This is one of the challenging areas of workers’ compensation law. That an employee has applied for permanent disability, even total permanent disability, does not give the employer the right to terminate employment—nor does an initial finding of permanent disability by the employee’s doctor. Instead, there is a point in the workers’ compensation proceeding when a formal finding is made that the injured worker’s condition is “permanent and stationary.” Only after that formal finding is made may the employer begin the process of considering terminating employment. Unfortunately, this can take months or even years. Once the employee’s condition is determined to be “permanent and stationary,” you can evaluate whether the person can perform the essential functions of his or her job with reasonable accommodation. If the answer is yes, both workers’ compensation law and the Americans with Disabilities Act require that you provide the accommodations and offer the employee reinstatement. If the answer is no, employment can be terminated. However, you should also consider whether the company has other jobs that the employee can perform with reasonable accommodation. Although the employer is not required to create an alternate position, if one is available, this can save on workers’ compensation costs for both temporary and permanent workers’ compensation disabilities.
Thomas N. Makris, Esq., SPHR, is counsel at the Sacramento office of law firm Pillsbury Winthrop Shaw Pittman.