R&R Insurance Blog

As a general rule, if an employee is terminated for cause, the obligation to pay workers compensation benefits continues. Similar to a layoff or the employer's inability to provide light duty work, a termination is viewed in much the same way. The injured worker is still considered to be restricted in the general labor market due to injury, until he or she reaches maximum medical improvement, or is released to return to work without restrictions.

See Brakebush Brothers Inc and Employers Insurance of Wausau vs LIRC 1997

However, in recent years, the Wisconsin Department of Workforce Development has expanded their scope of potential situations where benefits may be suspended as the result of termination.

Here are a few exceptions:

1. The employee's employment with the employer has been suspended or terminated due to the employee's violation of the employer's policy concerning employee drug use during the period when the employee could return to a restricted type of work during the healing period. Compensation for temporary disability may be denied only if prior to the date of injury the employer's policy concerning employee drug use established in writing and regularly enforced by the employer.
2. The employee's employment with the employer has been suspended or terminated due to the employee's alleged commission of a crime, the circumstances of which are substantially related to that employment, and the employee has been charged with the commission of that crime. If the employee is not found guilty of the crime, compensation for temporary disability shall be payable in full.
3. The employee has been convicted of a crime, is incarcerated, and is not available to return to a restricted type of work during the healing period.

The exceptions listed above all make good sense as it relates to benefit cessation. Without those exceptions, the employer's insurance carrier is obligated to continue benefits. This certainly makes good sense as you could create a moral hazard whereby an employer terminates a work simply to circumvent the payment of benefits.