Firing an Employee Who Has Filed a Claim for Workers' Compensation Benefits Can Land You in the Middle of a Wrongful Termination Lawsuit
Mark A. Wagner
On November 17, 2006, the Utah Supreme Court held that an employer who fires or constructively discharges an employee for filing a workers' compensation claim violates "a clear and substantial public policy" of the state of Utah and "may be sued for wrongful discharge by the discharged employee." For many employers this holding likely will not come as a surprise, except, possibly, for the fact that it had not been previously reached in Utah. The Court's decision, however, has potentially far-reaching consequences, and the holding underscores the need for employers to have clear, well-documented, and legitimate reasons for terminating an employee who has made a workers' compensation claim, and to be able to demonstrate that its termination decision is consistent with disciplinary actions against employees who have not filed workers' compensation claims.
The Utah Supreme Court issued its ruling in response to a request by the federal District Court for the District of Utah for a clarification of Utah law relevant to a case pending in the federal court. The federal case involved a plaintiff who had been hired by a company to serve as an "environmental/assistant safety manager." One of her job responsibilities was to investigate why the company had high workers' compensation costs. After investigating the matter, the employee wrote a memorandum to her superiors concluding that the company had a high injury rate, and that employees were waiting extensive periods for testing, treatment, and resolution of their claims "due to the intentional mismanagement of their claims." She also informed her superiors that the company's claims adjuster was "hostile" toward employees who had filed workers' compensation claims, and she documented an alleged attempt by the claims adjuster to improperly deny benefits to an employee with a documented work-related injury.
After submitting her memorandum, the employee met with various members of the company's senior management. During these meetings, she informed management of her belief that the company was utilizing various tactics to discourage employees from reporting injuries and to deny improperly benefits to the employees who did report workplace injuries. According to the employee, her reports were met with hostility, and she was told not to discuss employee rights with the employees and threatened with the loss of her job if she did so. Several months later, the employee took maternity leave. During her leave, the company informed her that she had been terminated and that her had position had been filled.
In analyzing the case, the Utah Supreme Court acknowledged that the general rule under Utah law is that an employment relationship for an indefinite term is presumed to be terminable at the will of either the employer or the employee. Utah law recognizes three general exceptions to this general rule: (1) an express or implied contract between the parties that alters the at-will nature of the relationship; (2) statutory restrictions on employment decisions, such as statutory prohibitions on gender or racial discrimination; and (3) a "clear and substantial public policy" that would be violated by a termination of the employment relationship. In the case before it, the Utah Court concluded that a termination of an employee in retaliation for exercising rights under Utah's workers' compensation statute would violate a clear and substantial public policy, and would subject the employer to a claim for wrongful discharge by the terminated employee. The Utah Court also ruled that an employee who is constructively discharged; that is, who resigns in the face of working conditions a reasonable person would view as intolerable, can also assert a wrongful discharge claim against his or her employer. The Court drew a line, however, at harassing conduct or discrimination not rising to the level of intolerable circumstances, holding that such harassment, while deplorable, does not give an employee a claim for wrongful discharge. The Court also refused to extend a wrongful-discharge cause of action to an employee who "opposes" her employer's treatment of other employees who are entitled to workers' compensation benefits. The Court left open, however, a possibility that such a cause of action might extend to an employee fired or constructively discharged for "actually assist[ing]" one or more other employees in the filing of workers' compensation claims, or for refusing to follow an employer's alleged order to "interfere with" another employee's workers' compensation claim.
At first glance, the Utah Court's holding may not appear to be of major significance to most Utah employers. After all, it is the rare employer who intentionally fires an employee for the act of filing a workers' compensation claim. However, as many HR professionals are painfully aware, termination decisions are sometimes based on reasons that are not clearly separable from impermissible considerations. For example, a senior manager might resent an employee's filing of a workers' compensation claim that the manager views as illegitimate, and this resentment might carry over into the manager's assessment of the employee's overall performance. More commonly, the timing of a termination decision is sometimes just plain "bad," falling closely on the heals of the filing of a workers' compensation by the soon-to-be-former employee. In either situation, the Utah Court's ruling makes it essential that the reasons for termination in such cases are not only legitimate, but clear, well-documented, and evenly applied to employees who have not filed workers' compensation claims, as well as to those who have.
The Utah Supreme Court issued its ruling in response to a request by the federal District Court for the District of Utah for a clarification of Utah law relevant to a case pending in the federal court. The federal case involved a plaintiff who had been hired by a company to serve as an "environmental/assistant safety manager." One of her job responsibilities was to investigate why the company had high workers' compensation costs. After investigating the matter, the employee wrote a memorandum to her superiors concluding that the company had a high injury rate, and that employees were waiting extensive periods for testing, treatment, and resolution of their claims "due to the intentional mismanagement of their claims." She also informed her superiors that the company's claims adjuster was "hostile" toward employees who had filed workers' compensation claims, and she documented an alleged attempt by the claims adjuster to improperly deny benefits to an employee with a documented work-related injury.
After submitting her memorandum, the employee met with various members of the company's senior management. During these meetings, she informed management of her belief that the company was utilizing various tactics to discourage employees from reporting injuries and to deny improperly benefits to the employees who did report workplace injuries. According to the employee, her reports were met with hostility, and she was told not to discuss employee rights with the employees and threatened with the loss of her job if she did so. Several months later, the employee took maternity leave. During her leave, the company informed her that she had been terminated and that her had position had been filled.
In analyzing the case, the Utah Supreme Court acknowledged that the general rule under Utah law is that an employment relationship for an indefinite term is presumed to be terminable at the will of either the employer or the employee. Utah law recognizes three general exceptions to this general rule: (1) an express or implied contract between the parties that alters the at-will nature of the relationship; (2) statutory restrictions on employment decisions, such as statutory prohibitions on gender or racial discrimination; and (3) a "clear and substantial public policy" that would be violated by a termination of the employment relationship. In the case before it, the Utah Court concluded that a termination of an employee in retaliation for exercising rights under Utah's workers' compensation statute would violate a clear and substantial public policy, and would subject the employer to a claim for wrongful discharge by the terminated employee. The Utah Court also ruled that an employee who is constructively discharged; that is, who resigns in the face of working conditions a reasonable person would view as intolerable, can also assert a wrongful discharge claim against his or her employer. The Court drew a line, however, at harassing conduct or discrimination not rising to the level of intolerable circumstances, holding that such harassment, while deplorable, does not give an employee a claim for wrongful discharge. The Court also refused to extend a wrongful-discharge cause of action to an employee who "opposes" her employer's treatment of other employees who are entitled to workers' compensation benefits. The Court left open, however, a possibility that such a cause of action might extend to an employee fired or constructively discharged for "actually assist[ing]" one or more other employees in the filing of workers' compensation claims, or for refusing to follow an employer's alleged order to "interfere with" another employee's workers' compensation claim.
At first glance, the Utah Court's holding may not appear to be of major significance to most Utah employers. After all, it is the rare employer who intentionally fires an employee for the act of filing a workers' compensation claim. However, as many HR professionals are painfully aware, termination decisions are sometimes based on reasons that are not clearly separable from impermissible considerations. For example, a senior manager might resent an employee's filing of a workers' compensation claim that the manager views as illegitimate, and this resentment might carry over into the manager's assessment of the employee's overall performance. More commonly, the timing of a termination decision is sometimes just plain "bad," falling closely on the heals of the filing of a workers' compensation by the soon-to-be-former employee. In either situation, the Utah Court's ruling makes it essential that the reasons for termination in such cases are not only legitimate, but clear, well-documented, and evenly applied to employees who have not filed workers' compensation claims, as well as to those who have.
Copyright 2007. Published for general informational purposes only, and should not be construed as legal advice. If you need legal advice please consult with your attorney.