Skip to Main Content

Difficult economic times have forced employers to limit workforce expenses. However, while looking to streamline employees, employers must be alert to increasing Workers’ Compensation costs and exposing themselves to additional liability for discrimination and retaliation.

At Work or At Home?

One key element in controlling Workers’ Compensation claims is keeping injured employees working or returning them to modified duty as soon as possible. Employees under limited working conditions may be less productive, and a reduced workforce makes it difficult to justify having an employee who cannot perform the full functions of his or her job. However, by extending periods of lost time for injured employees, the amount of temporary total disability payments increase. This can make the injury appear even more serious than it actually is when it is evaluated for permanent partial disability by the insurance carrier or by an arbitrator of your state’s Workers’ Compensation Commission.

Employees experiencing extended periods of lost time also tend to have greater difficulty reintegrating into the workforce. The situation is magnified when an employee is unable to return to unrestricted duty and has permanent restrictions. The inability of an employer to accommodate those restrictions can create the responsibility on the behalf of the employer to provide vocational assistance to the employee, and can turn a case of partial disability into a claim for a permanent wage reduction, which is calculated for the life of the employee. This is particularly dramatic in cases involving an otherwise minor impairment that prevents a high earning laborer from returning to heavy work. For example, a $25 per hour union laborer who suffers an injury requiring shoulder surgery and returns to work within his profession would likely receive a permanency award based upon a percentage loss of use of the arm in the range of $45,000-$50,000. But if he cannot be accommodated and finds work at $12 per hour at a service job, the value of the case can increase to more than $200,000 depending on the age of the worker. That cost does not even include the expenses of rehabilitation and vocational counselors or weekly maintenance benefits for the time needed to complete the labor market survey and job placement efforts!

Obviously, not all restrictions can allow the worker to be productive in his prior position, but unreasonable high lifting or other requirements that do not match the usual physical demands of the job should not be used to artificially limit return to work for individuals who otherwise can perform all or most of the job requirements. Efforts that allow a helper to assist an employee to avoid occasional tasks beyond his limitations can also greatly limit these “loss of trade exposures.”

For low income laborers, the exposure is not the wage reduction, but rather that, without a return-to-work program, the employee might not have sufficient transferable skills to find any work, thus becoming an “odd lot permanent total disability.” Taking a minimum wage laborer with the same shoulder injury, the loss of use of the arm would result in a permanency award of about $17,500. But if that individual was found to be an “odd lot permanent total” due to lack of transferable skills, including education, ability to speak English, or prior job history, the cost would increase to $250,000-$300,000. The minimum weekly rate for these individuals is now $441.93 (tax free), which is often more than they could earn at any other job they are qualified for. In that case who would not want tax-free income for life?


While a Workers’ Compensation case does not guarantee the injured employee continued employment after he has returned to limited duty, the decision making for layoffs must not be discriminatory, negatively affecting those with physical limitations. Choosing criteria that adversely affect prior Workers’ Compensation claimants can result in a claim of retaliatory discharge. Prior cases have held that a prima facie case can be stated if the timeline suggests retaliation by the employer. In other words, the layoff of a claimant shortly after he files an injury application or after he settles his case can provide the possibility of a separate tort action against the employer, with compensatory and punitive damages. Any layoff that includes current or previous Workers’ Compensation claimants must be blind to the issue of prior claims.

Targeting light duty positions for layoffs, whether or not related to Workers’ Compensation claims, can also run afoul with the ADA. When planning a layoff, it is critical to prepare a plan outlining the objectives of the force reduction, the factors to be utilized in making the decision (i.e. seniority department assignment, performance evaluations, etc.), and the mechanism for implementing the decisions. Prior Workers’ Compensation claims, and any physical limitations unrelated to the essential functions must not be considered.

When contemplating force reductions, be careful about eliminating employees in restricted work positions, as it could be viewed as terminating due to physical limitations. Economic layoffs have already created a limited job market for employees working within restrictions. The loss of a limited job option places the restricted employee back in the job market with a competitive disadvantage, placing the onus on the employer just as if no job was initially offered. An employer can argue that the new restricted position is, in fact, a permanent job change, and depending on how long the employee has been at that position, avoid such a claim. However, for the employee returned to limited duty and then laid off within a short period, the risks of falling into the wage loss or “odd lot” categories previously outlined is significant. In defending these claims, it is always important to make clear that the restricted job is a position that will continue to exist as economic conditions improve, and that the employee’s physical limitation was not the reason for his or her layoff.

Employers must be aware of these considerations while making workforce decisions. The Workers’ Compensation cost saving of offering a light duty position must be considered, as well as the economic and morale effect. Employers should be alert to workers who, in the face of layoff rumors, suddenly seek to reinitiate medical treatment after previous releases from care. When seeking to reduce workforce, decisions must not be based upon past claim history. In addition, special care should be paid to outlining neutral criteria for determining who will be affected. By being alert to the issues and properly documenting your actions, many unexpected exposures can be minimized during these difficult economic times.

Stephen J. Friedman is a Managing Partner in the Workers’ Compensation Department for Rusin, Maciorowski and Friedman, and was one of the original founding partners in 1984. He has written chapters for OSHA handbooks, as well as numerous articles related to Workers’ Compensation. For legal issues related to Workers’ Compensation, please please contact Steve at 312.454.5118 or

For more information about Horton Risk Management Services, contact Jason Wallace at 708.845.3157 or via email at 

Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.

Get Started

Let Your Aspirations Set the Agenda

Grow with who you know. Reach out to us today and start the conversation, so you’re better protected and prepared for what comes next.

Talk to an Advisor

man looking left