Beyond Insurance

Interaction of the ADA and workers compensation

Questions and answers for agents and employers

By Christopher Brown, Donald Brown and Alycia Weigley, CPCU, PHR, MBA

(Editor’s note: Compliance Check™ executives will be contributing occasionally to the “Beyond Insurance” column. Compliance Check maintains a strategic alliance with Addis Intellectual Capital and the Beyond Insurance Process.)

One of the first things that new property/casualty agents often learn is that workers compensation coverage provides an exclusive remedy when an employee is injured on the job. While this statement is generally true, real-world management of an on-the-job injury is often much more complex than just reporting the incident to the workers compensation carrier.

Part of the complexity and confusion often results from the interaction of workers compen­sation (which is regulated on a state-by-state basis and subject to an insurance contract) and employment laws. These include the Family and Medical Leave Act (FMLA) and the Americans with Disabilities Act (ADA). Furthermore, employees receive the greater protection offered by either state or federal law. That is, if a federal law provides greater benefits or protections to an employee who is also receiving workers compensation benefits under state law, the federal law also protects the employee.

ADA is of particular interest when managing workplace injuries because employees who have been injured on the job may often qualify for protection under the ADA. The ADA provides an expansive definition of disability which will apply to many individuals who may not fall under common perceptions as being disabled. This expansive definition has been expanded even further by recent legislation—the Americans with Disabilities Act Amendments Act of 2008—which nullified court rulings that had limited the scope of ADA.

The purpose of Title I of the ADA is to prohibit employers from discriminating against qualified individuals with a disability in all aspects of employment. Workers compensation provides a system for securing prompt and fair settlement of employees’ claims against employers for occupational injury and illness. Although the purposes of the two laws are not directly in conflict, the simultaneous application of the laws has raised questions for Equal Employment Opportunity Commission (EEOC) investigators, employers, and for individuals with disabilities.

Following are excerpts from EEOC enforcement guidance which addresses some common misunderstandings regarding the interaction of workers compensation and the ADA.

Do exclusive remedy provisions in workers compensation laws bar employees from pursuing ADA claims? No. The purpose of workers compensation exclusivity clauses is to protect employers from being sued under common law theories of personal injury for occupational injuries. Courts have generally held that the exclusive remedy provisions of state workers compensation laws cannot bar claims arising under federal civil rights laws, even where a state workers compensation law provides some relief for disability discrimination. Applying a state workers compensation law’s exclusivity provision to bar an individual’s ADA claim would violate the Supremacy Clause of the United States Constitution and seriously diminish the civil rights protection that Congress granted to persons with disabilities.

If an employer reserves light duty positions for employees with occupational injuries, does the ADA require them to consider reassigning an employee with a disability who is not occupation­ally injured to such positions as a reasonable accommodation? Yes. If an employee with a disability who is not occupationally injured becomes unable to perform the essential functions of his or her job, and there is no other effective accommodation available, the employer must reassign the employee to a vacant reserved light duty position as a reasonable accommodation if (1) the employee can perform its essential functions, with or without a reasonable accommodation; and (2) the reassignment would not impose an undue hardship.

This is because reassignment to a vacant position and appropriate modification of an employer’s policy are forms of reasonable accommodation required by the ADA, absent undue hardship. An employer cannot establish that the reassignment to a vacant reserved light duty position imposes an undue hardship simply by showing that it would have no other vacant light duty positions available if an employee became injured on the job and needed light duty.

When my workers compensa­tion carrier offers a vocational rehabilitation service, does this satisfy my obligation to provide a reasonable accommodation? No. An employer cannot substitute vocational rehabilitation services in place of a reasonable accommodation required by the ADA for an employee with a disability-related occupational injury. An employee’s rights under the ADA are separate from his or her entitlements under a workers compensation law. The ADA requires employers to accommodate an employee in his or her current position through job restructuring or some other modification, absent undue hardship.

If an employee is no longer able to perform his or her duties with a reasonable accommodation, do I have further responsibilities under the ADA? Yes. Where an employee can no longer perform the essential functions of his or her original position, with or without a reasonable accommodation, because of a disability-related occupational injury, an employer must reassign that employee to an equivalent vacant position for which he or she is qualified, absent undue hardship. If no equivalent vacant position (in terms of pay, status, etc.) exists, then the employee must be reassigned to a lower graded position for which he or she is qualified, absent undue hardship.

Under the ADA, is the physi­cian who is treating my employee responsible for determining when an employee is to be released to work? No. The employer bears the ultimate responsibility for deciding if an employee with a disability-related occupational injury is ready to return to work. Therefore, the employer, rather than a rehabilitation counselor, physician, or other specialist, must determine whether or not the employee can perform the essential functions of the job, with or without reasonable accommodation, or can work without posing a direct threat.

May an employer refuse to hire or return a person to work with a disability simply because they assume—correctly or incorrectly—that the person poses some increased risk of occupational injury and increased workers compensation costs? No, unless the employer can show that employment of the person in the position poses a “direct threat.” In enacting the ADA, Congress sought to address stereotypes regarding disability, including assumptions about workers compensation costs.

Where an employer refuses to hire a person because they assume, correctly or incorrectly, that, because of a disability, that employee poses merely some increased risk of occupational injury (and, therefore, increased workers compensation costs), the employer discriminates against that person on the basis of disability. The employer can refuse to hire the person only if they can show that his or her employment in the position poses a “direct threat.” This means that an employer may not “err on the side of safety” simply because of a potential health or safety risk. Rather, the employer must demonstrate that the risk rises to the level of a direct threat.

“Direct threat” means a significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation. The determination that a direct threat exists must be the result of a fact-based, individualized inquiry that takes into account the specific circumstances of the individual with a disability.

When may an employer ask questions about an applicant’s prior workers compensation claims or occupational injuries? An employer may ask questions about an applicant’s prior workers compensation claims or occupational injuries after making a conditional offer of employment, but before employment has began, as long as it asks the same questions of all entering employees in the same job category.

When may an employer require a medical examination of an applicant to obtain infor­mation about the existence or nature of prior occupational injuries? An employer may require a medical examination to obtain information about the existence or nature of an applicant’s prior occupational injuries after a conditional offer of employment has been made, but before employment has begun, as long as the employer requires all entering employees in the same job category to have a medical examination. Where an employer has already obtained basic medical information from all entering employees in a job category, the employer may require specific indi­viduals to have follow-up medical examinations only if they are medically related to the previously obtained medical information.

When does a person with an occupational injury have a disability under the “regarded as” portion of the ADA definition? A person with an occupational injury has a disability under the “regarded as” portion of the ADA definition if he or she: (1) has an impairment that does not substantially limit a major life activity but is treated by an employer as if it were substantially limiting, (2) has an impairment that substantially limits a major life activity because of the attitude of others towards the impairment, or (3) has no impairment but is treated as having a substantially limiting impairment. For example, an employee has an occupational injury that has resulted in a temporary back impairment that does not substantially limit a major life activity. However, the employer views her as not being able to lift more than a few pounds and refuses to return her to her position. The employer regards her as having an impairment that substantially limits the major life activity of lifting. The employee has a disability as defined by the ADA.

The above listed examples deal with only a few aspects of the Americans with Disabilities Act. Overall, the ADA provides broad protections to an increasing percentage of the U.S. workforce. Employers must consider the implications of the ADA in many of their decision-making processes. ADA coordination with workers com­pensation presents a special area of concern for the property/casualty agent because employers often look to their agent to provide critical advice when managing an on-the-job injury.

Unfortunately, many agents and claims adjusters are not familiar with this important law and may be giving their clients advice that is consistent with state workers compensation law but violates aspects of the ADA. An agent cannot and should not give legal advice. However, making your client aware of ADA implications may earn you greater respect from your client and reduce headaches in the future.

Compliance Check is an educational program designed to train insurance agents in their efforts to assist their clients in risk management through compliance with various applicable federal laws, rules and regulations. This is neither an effort to practice law nor a legal service. Compliance Check does not engage in the practice of law, accounting or tax consulting. Compliance Check encourages everyone to consult with their own attorney, certified public accountant and tax professional on any issues involving specific facts, persons, circumstances or situations.

The author
Christopher Brown, Donald Brown and Alycia Weigley, CPCU, PHR, MBA, all of Compliance Check, have designed programs and trained hundreds of agents from coast to coast. Compliance Check originally was developed in a large central Florida insurance agency to provide service before the sale in nontraditional risk management areas that affect almost all businesses. It became an indepen­dent entity in March 2002. For more information about Compliance Check or about the sources for this article, call: (800) 506-4224, or e-mail: questions@drbventures.com.