Texas Workers Compensation Compliance: Avoiding Retaliation Claims

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July 23, 2018


I. PROHIBITED RETALIATION

The Texas Labor Code prohibits an employer from discharging or otherwise discriminating against an employee because the employee has: (1) filed a workers’ compensation claim in good faith; (2) hired a lawyer to represent the employee in the claim; (3) instituted or caused to be instituted in good faith a proceeding under the workers’ compensation statutes; or (4) testified or is about to testify in a workers’ compensation proceeding. Tex. Labor Code § 451.001. Initiating protection under the statute is not difficult and generally does not even require the filing of a workers’ compensation claim. Instead, the mere act of reporting an injury to a supervisor is sufficient to trigger the statute if it constitutes taking a step toward instituting a compensation proceeding. Stephens v. Delhi Gas Pipeline Corp., 924 S.W.2d 765, 771-72 (Tex.App.—Texarkana 1996, writ denied).

While prompting coverage under the statute is simple, that does not mean a protected employee is immune from the employer’s routine application of rules and policies. There is common misconception that an employee cannot be terminated while he or she is out on worker’s compensation leave, but § 451.001 only prohibits the employer from intentional retaliation against the employee for the employee’s participation in the workers compensation process. In other words, the law only prohibits an employer from terminating or disciplining a § 451.001 protected employee if the employer’s motive for the negative job action is based on the employee’s participation in the workers’ compensation process. For example, an employer does not violate § 451.001 if it terminates the employee as a result of workers’ compensation covered absences if the employer has consistently terminated all other non-protected similarly situated employees for the same attendance issues. There is no violation of the statute in that situation because the motive for the termination is based on uniform application of an objective attendance policy rather than the employee’s participation in the workers’ compensation process.

II. WHO IS COVERED

Texas Labor Code § 451.001 applies only to subscribers to the workers’ compensation system. Texas Mexican Ry. Co. v. Bouchet, 963 S.W.2d 52, 56 (Tex. 1998). However, non-subscribers who offer an ERISA qualified on-the-job injury benefit plan still need to be cautious when terminating employees who file or may file claims against the plan. ERISA prohibits an employer from retaliating against an employee for exercising rights under an ERISA-qualified employee benefit plan. 29 U.S.C. § 1140. Additionally, non-subscribers must be careful to adhere to the terms of their plan, since a failure to follow the plan terms could subject the employer to liability as a fiduciary. In fact, in the context of a non-subscriber plan, it is much more common for an employer to get sued for failing to adhere to the terms of their ERISA qualified plan than it is for the employer to get sued for retaliation under ERISA.

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III. BURDEN OF PROOF

An employee who asserts a workers’ compensation retaliation claim has the initial burden of demonstrating a “causal link” between his or her termination and his or her filing of a claim for benefits (i.e., that filing a claim “caused” or triggered the termination). The causal link must establish only that the termination would not have occurred when it did if the employee had not filed the workers’ compensation claim. Continental Coffee Prod. Co. v. Cazarez, 937 S.W.2d 444, 450 (Tex. 1996). To prove the causal connection, the employee may present direct or circumstantial evidence.

A. Direct Evidence

Direct evidence is evidence that provides a direct connection between the act andthe motive. An example of direct evidence would be an email between managers that says, “Joe Smith filed yet another workers’ compensation claim yesterday. I fired him because he is driving up the cost of our coverage by making claims against our comp policy.” Similar verbal statements would also constitute direct evidence. From the employer’s perspective, credible direct evidence of an illegal retaliatory motive is a compelling reason to settle before trial in order to avoid risking a large punitive damage award.

B. Circumstantial Evidence

The Texas Supreme Court has recognized a number of types of acceptable circumstantial evidence in retaliation cases. See id. Because circumstantial evidence is, by definition, less compelling1 than direct evidence, the amount and type of evidence necessary to carry the employee’s burden of proof varies depending on the individual circumstances. Knowledge of how the courts analyze the different types of circumstantial evidence can help an employer reduce the risk of retaliation liability associated with negative employment actions.

1. Knowledge of the claim by those making the termination decisions.

If the person who made the negative employment decision had knowledge of the employee’s claim, this knowledge can, under some circumstances, create an inference that the information influenced the decision. Fortunately for the employer, the opposite also holds true. If the decision-maker had no knowledge of the employee’s claim, then the employee will have a difficult time establishing a causal connection. It is still possible, however, for the employee to establish a causal connection if he can establish that the decision-maker relied on negative information or a negative recommendation provided by a supervisor who was aware of the claim or injury at the relevant time. See City of Univ. Park v. Van Doren, 65 S.W.3d 240, 250 (Tex. App.—Dallas 2001, pet. denied).

As a practical matter, the human resources manager should take this category of circumstantial evidence into consideration when he or she receives notice of a claim or injury. If the manager is aware that a disciplinary action is already in process, and if the decision-makers are unaware of the employee’s claim or injury, the manager should, if possible, prevent disclosure of the information until the decision-makers reach a decision on the appropriate discipline. Similarly, if an employee’s review is scheduled for completion contemporaneously with the receipt of a notice of claim or injury, the human resources manager should, if possible, screen the information from the reviewing supervisor until the review is complete. While the potential for liability will still exist in either situation, allowing the decision to be made without knowledge of the claim or injury provides the employer with a strong defense to a retaliation claim. The human resources manager should also expedite the documentation process for discipline and termination of problem employees because it is not uncommon for such employees to try to protect their jobs by “racing” to file an injury-related claim if they believe they are about to be terminated. If the employer can prove that the discipline/termination documentation was in process before the injury or claim occurred, the employer may be able to establish that the decision was made before the employer was aware of the employee’s claim or injury or was otherwise inevitable (i.e., the initiation of disciplinary action simply had not yet been communicated to the employee). See Lee v. Haynes & Boone, L.L.P., 2004 Tex. App. LEXIS 1560 (Tex.App.—Dallas Feb. 18, 2004, no pet. h.).

2. Negative attitude expressed toward the employee's injured condition

A negative attitude regarding the employee’s condition can also provide circumstantial evidence of a retaliatory motive. Evidence of a negative attitude can come from a variety of sources. Although it usually is connected to supervisor or management comments, it can result from negative comments made by coworkers if a supervisor was aware of the comments and failed to do anything about them. See Grey Wolf Drilling Co., L.P. v. Perez, 2004 Tex. App. LEXIS 2011, (Tex App.—San Antonio March 3, 2004, no pet. h.) Examples of negative attitude circumstantial evidence include:

  • A supervisor personally called the employee’s health care provider and said the employer intended to contest the claim. La Tier v. Compaq Computer, 123 S.W.3d 557, 563 (Tex.App.—San Antonio 2003, No Pet.).
  • A supervisor called the employee at home and stated, “So you were able to work last week, but you can’t work this week. . . tell me how this works.” Id.
  • A supervisor shouted at the employee in a meeting and told her it was “damn
  • inconvenient” for her to take time off. Id.
  • In mentioning his past experience as a ship’s captain, a supervisor told the employee stories about how Filipinos sailors who developed hernias were thrown overboard. Miller v. Stolthaven Houston, Inc., 2003 WL 1563806 (Tex.App.— Houston [1st Dist.] 2003, pet. denied).
  • An employee on light duty was called a “lazy bastard” by a supervisor. Id.
  • With a supervisor’s knowledge, a co-worker frequently called an employee “handicapped” and a “vegetable” and told him that he was “injured” and "ain't worth shit.” Grey Wolf Drilling Co., 2004 Tex. App. LEXIS at *6.

Training is one way to avoid problems associated with negative comments uttered by supervisors and managers. If supervisors and managers understand their legal obligations and the potential implications of what are frequently off-hand remarks, the frequency of such comments should decrease. Alternatively, an employer can remove supervisors entirely from the injury/claim/leave process, and require that all communication with the employee go directly through the human resources department. Since human resource employees are usually the only employees who receive training in this area, removing supervisors from the equation is advisable given the increasing complexity of coordinating the Family and Medical Leave Act (“FMLA”), the Americans with Disabilities Act (“ADA”), and state workers’ compensation laws.

Additionally, employers should be careful to avoid inadvertently creating a retaliatory climate as a result of a safety incentive program. Most safety incentive programs reward employees for low group injury occurrence rates. While the legitimate goal of such programs is avoidance of injuries, they can lead to a climate where employees are intimidated and pressured by coworkers into not reporting injuries, or where employees are ostracized and threatened when they do report injuries. This type of climate will support a retaliation claim and may even lead to an award of punitive damages. See Haggar Clothing Co. v. Hernandez, 164 S.W.2d 407, 418 (Tex.App.— Corpus Christi 2003), rev’d on other grounds, 164 S.W.3d 386 (Tex. 2005) (plaintiff’s verdict and punitive damage award of $1,400,000 reversed due to existence of absence control policy). To avoid this problem, supervisors and employees should be trained about the legitimate goals of the program and cautioned against any efforts to suppress injury reports or claims. Additionally, disciplinary action should be taken against any employee or supervisor who engages in such acts.

3. Failure to follow established company policies

Assuming that the employer has a history of following its written policies, a termination that does not follow those policies creates significant problems for the employer. This includes policies related to termination, discipline, leave, or performance. Any deviation from the normal policy and procedure could create an inference that the deviation resulted from an illegal motive. More significantly, a failure to follow an applicable policy forces the employer to explain its actions. As a practical matter, the more explaining an employer has to do at trial, the more likely it is that the judge or jury will view the story with skepticism.

If the employer has established policies but has a history of ignoring them, the employer will again be forced to explain itself. In this situation, however, the employee or employer may look to a consistent past practice in similar situations to support its case. If past decisions were made on an entirely ad hoc basis, a lack of consistency will not favor either side, although it will force the employer to provide an explanation.

4. Discriminatory treatment in comparison to a similarly situated employee or employees

Evidence that an employer’s discipline of a § 451.001 protected employee was harsher than its discipline of other similarly situated employees creates a significant hurdle for the employer at trial. The disparate treatment creates an inference that the real motive behind the termination or discipline was the employee’s participation in the worker’s compensation process rather than the employer’s stated reason. For example, if an employee reports a job-related injury and is later fired for failing to strictly adhere to the employer’s time-clock rules, the judge or jury can infer that the real motive was retaliation if there is evidence that other employees routinely engaged in the same conduct without significant consequences. Miller v. Stolthaven Houston, Inc., 2003 WL 2639 (Tex.App.—Houston [1st Dist.] March 27, 2003, pet. denied). To avoid this problem, the human resources manager should carefully scrutinize the grounds for the termination decision and independently verify that the stated reasons for termination are valid and consistent with the employer’s past enforcement of the applicable policies.

5. Evidence that the stated reason for discharge was false

Employees rarely agree with reprimands or criticisms of their performance so it is common for an employer to face a claim that a performance or discipline based discharge is false. The employer can protect against such a claim by taking steps to contemporaneously and thoroughly document all performance and discipline issues. Moreover, the employer will have a much easier time establishing the veracity of the reason for discharge if it is based on objective and quantifiable data. Examples of easily supported discharge reasons include a failure to meet an established quota or excessive tardiness.

Employee evaluations can either help or hinder the employer’s defense, depending on how they are completed. An employer can safely rely on employee evaluations as support for a termination if the evaluations are regularly performed, completed in a consistent manner by all supervisors, substantially based on objective criteria, consistent with the impressions of coworkers, and/or are supported by backup data. However, a post-injury/claim evaluation that is inconsistent with the employee’s past work and evaluation history may create an inference that the most recent evaluation was created solely for the purpose of providing a false explanation for an unlawful termination. To avoid this issue, the human resources manager should conduct a pretermination review of the employee’s entire personnel file and performance history and question the supervisor (or other decision-maker) about any discrepancy or sudden change in the perception of the employee’s performance. If the supervisor cannot readily explain the change to the human resources manager, the supervisor will likely not be any more convincing when he testifies before a jury.

IV. ABSENCE CONTROL POLICIES

One of the most effective methods for avoiding a workers’ compensation retaliation claim is to implement a neutral absence control policy that requires uniform termination of employment under certain defined circumstances. See Haggar Clothing Co. v. Hernandez, 164 S.W.3d 386, 388 (Tex. 2005). A neutral and objective policy of this type has advantages and disadvantages. On the positive side, such a policy generally:

  • requires less hands-on HR administration;
  • promotes the principals of consistency fairness and nondiscrimination in the workplace;
  • reduces the possibility of unfair treatment due to a decisionmaker’s
  • subjective perception of an employee; and
  • serves as the first (and often best) line of defense in a lawsuit.

Of course, the obvious detriment is that a uniform, objective policy undermines the employer’s ability to exercise good faith discretion and to work flexibly with employees based on the particular facts of a given situation. Hard luck cases, such as a loyal, long-term employee on extended leave due to a long-running and debilitating bought with cancer, make it difficult for the employer to stay true to a policy’s neutral application principal. In difficult situations, it might be possible to soften the termination blow by agreeing to provide a severance benefit in the form of COBRA premium payments. Unfortunately, this could set a precedent and create the basis for an entirely separate discrimination claim under Texas Labor Code § 451.001 if severance benefits following an absence control policy termination are offered only to employees who do not file for workers’ compensation benefits.

Although there are a wide variety of attendance policies in use in today’s workplace, there are two general types of absence control policies that can help an employer avoid a workers’ compensation retaliation claim. Applicable laws such as the FMLA and the ADA affect these policies differently.

A. “No-Fault” Attendance Policy

Under a typical “no-fault” attendance policy, the employee is allowed a finite number of attendance or tardy violations, regardless of reason or fault, before discipline is imposed. This system looks at attendance on a micro, rather than macro, scale. For example, an employee who is out on workers’ compensation leave and who has exhausted all FMLA and other approved or permissible leave will be processed through the attendance policy like any other employee. Under a typical progressive “no-fault” policy, the employee will receive some form of warning or reprimand for each of the first few absences and will eventually be fired once he or she reaches the policy’s predetermined limit on unexcused absences. On a practical level, this type of policy is difficult to administer in conjunction with the FMLA because qualifying FMLA absences (which are often difficult to determine) cannot be counted against the employee. It also removes any semblance of discretion in the termination process.

B. Automatic Termination After Prolonged Absence

An automatic termination policy serves to terminate employees who have been absent from work for a predetermined extended period of time. The time limit for most policies varies between 90 days and 6 months. As with the “no-fault” attendance policy, the key to upholding the protection afforded by this policy is its uniform application to all employees regardless of the reason for the absence.

Applying this policy is not as easy as it might seem. In the author’s experience, a large number of employers maintain one or more individuals on the employment rolls, despite an extended absence, due to extenuating personal circumstances such as a debilitating illness and/or a desire to help the employee keep health insurance coverage. While this practice is commendable from a humanitarian perspective,2 it is not compatible with an automatic termination policy. If the employer wants the full benefit of the policy, the employer must apply the policy without regard to the reason for the leave.

While uniformity of application as to the reason for the leave is critical, application of the actual termination date must take into account the Americans With Disabilities Act (the “ADA”). If an employee is covered by the ADA and requests a disability-based modification of the policy, the employer must go through the ADA’s reasonable accommodation process. For example, an ADA covered employee who is about to be terminated under a six month automatic termination policy could notify the employer that he will be medically released to return to work ten days after the six month deadline. Unless there are extenuating circumstances, adding ten days to a six month leave will be deemed a reasonable (and thus required) accommodation under the ADA. Dealing with the ADA has become increasingly difficult for employers. The definition of a covered disability has expanded significantly and many employers take the cautious approach and now assume that the ADA applies to most health conditions beyond routine short term illnesses and conditions. Moreover, the definition of a reasonable accommodation is a constantly shifting and subjective target. In the context of an absence control policy, whether a request for a leave extension qualifies as a reasonable accommodation can be difficult to determine. In general, if an employee (or, more accurately, the employee’s health care provider) cannot provide a definite return date, an extension will not be considered reasonable. Additionally, leaves of a year or more are viewed by most courts as per se unreasonable.

The biggest challenge for employers is determining where to draw the line with requested extensions that are less than a year but more than a few weeks. As a practical matter, the employer should analyze requests on a case-by-case basis and take into account the length of the leave and the nature of the job. It is easier to deny a long-term leave request under the ADA if the employee’s position requires specialized skill/training, is critical to the company’s success, and the duties cannot be readily filled or assumed by existing coworkers. A longer leave extension is more reasonable with a low skill/high turnover position where there are a large number of incumbents who can readily absorb the work normally done by the absent employee. Finally, the employer should also make sure that its automatic termination policy takes into account military leave issues under the Uniformed Services Employment and Reemployment Rights Act (USERRA). USERRA provides veterans with certain job entitlement benefits and related advantages that will typically prohibit an employer from applying a standard absence control policy to an armed forces veteran returning from leave.

V. OTHER POLICIES

A. Mandatory Post Accident/Incident Drug Testing

Employers should consider implementing a mandatory post accident/incident drug testing requirement. This type of policy will allow the employer to lawfully terminate employees who cause accidents or are injured on the job, so long as the injury or accident was the result of the employee’s substance abuse and the employer consistently applies a policy mandating automatic termination for a positive test result.

B. Mandatory Immediate Reporting Requirement for Job Related

Injuries and Accidents

In conjunction with a mandatory post accident drug testing policy, employers should consider implementing a mandatory “immediate” reporting requirement for all job-related injuries and accidents. This requirement will enable the employer to conduct a more thorough investigation into the circumstances of the incident. For example, water that causes a slip and fall quickly evaporates. This policy may also reduce the number of false claims for on-the-job injuries that are actually the result of off-the-job injuries. For this policy and the related mandatory post-accident drug testing policy to be effective, they must be strictly adhered to and effectively communicated to employees. If an employee who is injured on the job knows that he is going to fail a drug test, he has an incentive to delay reporting the injury until he has a better chance at passing the drug screening. This unfortunate result is less likely if the employee knows that he will be subject to significant discipline for delaying his report.

VI. CONCLUSION

Avoiding workers compensation retaliation liability is no different from avoiding liability under other exceptions to the at-will doctrine. A consistent and well-documented approach to discipline combined with a well-trained workforce should enable the employer to make employment decisions that are supported by ample evidence and confirm with applicable law.

1 Circumstantial evidence is not necessarily “second-rate” evidence. Many cases are built and won on circumstantial evidence alone.

2 It is important to note that this common practice probably violates the terms of most group health insurance policies.


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