Terminating Employees on Workers’ Compensation

Malvern employment attorney advise when it's permissible to terminate an employee who is on Workers’ Compensation.Although workers in New Jersey, Pennsylvania, and other states throughout the country may be fired for legitimate, non-discriminatory reasons, they may not be terminated for collecting or attempting to collect Workers’ Compensation benefits. Employers should be aware of the potential legal consequences of firing an employee who is on Workers’ Compensation.

At-Will vs. Contract Employees

Neither at-will nor contract employees may be terminated in retaliation for their Workers’ Compensation claims. However, at-will employees may be terminated for any or no reason at all, whereas contract employees must typically have the permissible reasons for termination outlined in their contract.

Contracted employees may be more difficult to fire because the reasons for, and methods of, determination are laid out in the contract and must be adhered to. However, although employers are not allowed to terminate employees for simply being on Workers’ Compensation, they may terminate employees who are absent for a specific period of time (usually six months) regardless of the reason, as outlined in their contract.

Employers’ Duties

As an employer, you have certain duties to uphold regarding employees on Workers’ Compensation. Failure to uphold these duties may result in civil and criminal legal liability.

It is also important to note that employees who are terminated while they are on Workers’ Compensation leave may still be eligible to continue receiving benefits until they are medically cleared to return to work.

Full Recovery/MMI

You are required to retain employees receiving Workers’ Compensation until they reach full recovery or maximum medical improvement (MMI). If you cannot accommodate an employee’s work restrictions after he or she has reached MMI, you may then terminate the employee or offer them alternative, light duty work.

Company Policy

You should also consult your personnel policies and employee handbooks to ensure that you are following the proper protocol before firing an employee on Workers’ Compensation. Certain policies may require both verbal counseling and written notice prior to termination, or list possible grounds for termination.

Be sure to follow these policies to the letter, in order to minimize your exposure to civil and criminal liability.

Similar Instances of Misconduct

Similar instances of misconduct should be evaluated to ensure that your behavior is not perceived as discriminatory. For example, if another employee was only issued a warning or demotion for poor work performance, whereas the worker receiving Workers’ Compensation was fired for that same behavior, you may open yourself up to liability. The discipline imposed on a worker who is not receiving Workers’ Compensation should be similar to that imposed on the worker who is.


It is also important to consider timing when deciding whether to fire an employee who is receiving Workers’ Compensation. If you have a legitimate reason for firing an employee but wait too long after they file their Workers’ Compensation claim to fire them, you may have a difficult time proving that the employee was fired for a reason unrelated to their claim.


You must comply with Family and Medical Leave Act (FMLA) requirements. Workers who were employed by you for at least 12 months, and worked at least 1,250 hours, are entitled to up to 12 weeks of unpaid leave for a serious health condition.

Make sure that this time has been exhausted, and that you have complied with the FMLA, prior to terminating an employee receiving Workers’ Compensation on FMLA leave.

For more information on your duties as an employer regarding termination of employees on workers’ compensation, contact an experienced employment attorney at MacMain Leinhauser. Call us at 484-318-7106 or submit an online inquiry form.