Can You Be Laid Off While Receiving Workers' Comp?

Learn about the rules for when employers can and can't lay off or fire injured employees who've filed workers' comp claims.

Updated by , Legal Editor
Updated 9/22/2022

Whether you can be laid off or fired while receiving workers' comp depends on the reason for the layoff. Receiving workers' comp generally protects you from being laid off, but not all layoffs are illegal.

Here's what you need to know if you've been laid off while collecting workers' comp.

Layoffs and Workers' Comp

State and federal law protects workers from illegal retaliation for filing for workers' comp benefits. That means if you employer laid you off because you filed for workers' comp, were receiving workers' comp, or were on workers' compensation leave, that is likely a case of illegal retaliation.

However, if your employer would have laid you off even if you were still on the job, the fact that you are away from work on temporary disability leave doesn't necessarily protect you from a layoff or other termination. If that sounds like legal hairsplitting, read on.

What Is Illegal Retaliation?

All states have laws that prohibit employers from retaliating against employees who ask for or receive workers' compensation benefits. An employer cannot fire, demote, harass, lay off, or otherwise harm these employees because they are exercising their rights under the workers' comp system. An employee who has been the victim of unlawful retaliation can sue the employer for wrongful termination.

In most states, however, employers aren't required to give special treatment to employees just because they're out on temporary disability leave. Employers in these states may lay off or fire injured employees who are on leave for any legal reason (meaning that it's not illegal retaliation).

Learn more about whether and where injured employees have job-protected workers' comp leave.

Pretextual Firings

How often will an employer actually admit to firing an employee because they filed for workers' comp? Almost never. In most cases, the employer will cite another reason—say, a business downturn or poor performance—as a pretext for the firing.

So how can you determine the real reason? This is where an employment lawyer generally gets involved. In a lawsuit for wrongful termination, your lawyer will try to gather evidence to show that the employer's cited reason for the layoff was merely a pretext.

For example, if your employer cites poor performance, your attorney can argue that you never received a negative performance review. If your employer cites a lack of business or an economic downturn, your attorney can ask why similarly situated employees were not also laid off.

In a wrongful termination case, it will be up to the judge or jury to sort out the fact from the fiction.

When to Contact an Employment Attorney

If you believe you may have been targeted for the reduction in workforce specifically because you filed a workers' comp claim and were out on temporary disability, you should speak to a lawyer.

There may be short time limits for claiming that your employer has retaliated against you. An attorney who's experienced in workers' compensation can look at the facts of your case, explain how the law in your state applies to your situation, and help protect your rights.

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