The Workers' Compensation Crisis
The workers' compensation crisis can no longer be ignored. For
most companies, workers' compensation is growing faster than any other cost.
Workers' compensation premiums nationwide were estimated to be $70 billion in
1992, a 45% increase over 1989 premiums. These costs are expected to be more
than double by the year 2000, or $150 billion by the end of the decade. The
value of the average claim is estimated at $34,000, twice that of the cost of a
claim in 1980.
Disability Management Program
An effective disability management program can curb the escalating
costs for workers' compensation disability claims. The key to a successful
disability management program is communication--early, frequently, and on a
continuous basis among the employee who is injured, management, and labor. An
effective program should include the following components: having a written
plan with top down support; implementing safety and prevention programs,
including keeping employees fit, safety training, and careful design of the
workplace; using a managed health care network of providers; avoiding
litigation; using a team approach, which includes representatives from all
relevant departments; and implementing early return to work programs, which
include modified duty jobs.
Federal disability nondiscrimination laws and an effective
workers' compensation program share the goal of retaining employees with
disabilities in the workforce. Each state has its own workers' compensation law
and second injury fund. The employers' return-to-work policies and procedures
must be consistent not only with state workers' compensation laws, but also
with federal disability nondiscrimination laws.
Workers' Compensation and Federal
Disability Nondiscrimination Laws
Workers' compensation laws are designed to provide needed
assistance to employees who are injured on the job, whereas the purpose of
federal disability nondiscrimination laws is to protect people from
discrimination on the basis of disability. These laws prohibit an employer from
discriminating against a person with a disability who is qualified for a job.
The EEOC regulations prohibit employers from making medical inquiries of
employees that are not job-related and consistent with business necessity.
However, the federal disability nondiscrimination laws are consistent with an
employer taking reasonable steps to avoid increased workers' compensation
liability claims while protecting persons with disabilities against exclusion
from jobs they can safely perform.
The following questions and answers will assist employers in
developing its workers' compensation policies and procedures, as part of its
disability management program.
Are all injured workers protected by
federal disability nondiscrimination laws?
Whether federal disability nondiscrimination laws protect an
injured employee will depend on whether the person meets the definitions of an
"individual with a disability" and "qualified individual with a disability."
The person must have an impairment that "substantially limits a major life
activity," or have a "record of" or be "regarded as" having such an impairment.
The worker also must be able to perform the essential functions of a job
currently held or desired, with or without a reasonable accommodation.
The fact that an employee is awarded workers' compensation
benefits, or is assigned a high workers' compensation disability rating, does
not automatically imply that federal disability nondiscrimination laws protect
her or him. Not every employee injured on the job will meet the definition of
disability. An employer must consider work-related injuries on a case-by-case
basis to determine if the nondiscrimination laws protect a worker.
When are medical examinations
With regard to employees, employers are prohibited from making
disability-related inquiries and requiring medical examinations that are not
job-related and consistent with business necessity. However, there are
exceptions to this general prohibition:
- Post-offer medical examinations following a conditional offer
of employment and before work begins, provided these are required of all
individuals in that job classification,
- Fitness-for-duty examinations if such examinations are
job-related and consistent with business necessity (e.g. to determine if the
employee can perform the essential functions of the job), as well as to
determine what reasonable accommodations may be required, and
- Voluntary medical examinations that are part of on-site
employee health programs (e.g., "wellness programs").
An employer may not subject applicants, before a conditional offer
of employment, to disability-related inquiries or medical examinations.
If post-offer inquiries or examinations are given before entry on
duty, they must be required of all entering employees in a particular category
regardless of disability. The results may not be used against individuals with
disabilities unless they show that the individual is not qualified for the job.
For example, a moving company may test all of its furniture moving laborers,
but not its other employees, as long as it tests all furniture moving laborers.
Once an employee is on the job, actual performance is the only
permissible measure of the employee's ability. When the need arises to question
a person's continued ability to do the job, the employer may make
disability-related inquiries, including medical examinations only if they are
job-related and consistent with business necessity. Such circumstances
generally occur when an employer has a reasonable belief, based on objective
evidence, that (1) an employee's ability to perform essential job functions
will be impaired by a medical condition; or (2) an employee will pose a direct
threat due to a medical condition.
Who can employers inform of an individual's
In all situations in which medical information is obtained, strict
confidentiality is required. Medical information must be maintained in separate
files from personnel and other information. While maintaining strict
confidentiality, the employer may inform the people listed of an individual's
personal medical data to the following extent:
- Supervisors and managers, regarding necessary restrictions in
the employees' duties and reasonable accommodations,
- First aid and safety personnel if the disability may require
emergency treatment, and
- Government officials investigating compliance with federal
disability nondiscrimination laws, upon request.
How can information from these inquiries
and examinations be used?
The employer may use information from post-offer medical inquiries
and examinations for various purposes, such as:
- To verify employment history,
- To screen out individuals with a history of fraudulent workers'
- To provide information to state officials as required by state
laws regulating workers' compensation and "second injury" funds,
- To screen out individuals who would pose a "direct threat" to
the health and safety of themselves or others, which could not be eliminated or
reduced to an acceptable level by a reasonable accommodation.
What is the role of "light duty" under
federal disability nondiscrimination laws?
Many employers provide what is generally called "light duty" or
modified duty for employees who are recovering from an injury or other
disability. This may involve a temporary reassignment of the employee to an
entirely new job with lighter physical demands, or it may consist of allowing
the worker to perform the regular job at less than full productivity. Light
duty may also include a temporary exclusion of certain difficult tasks from the
employee's regular job duties. Federal disability nondiscrimination laws do not
require an employer to allow a person with a disability to work permanently on
a reduced productivity basis.
Can employers refuse to allow an individual
with a disability to return to work?
The employer cannot refuse to let an individual with a disability
return to work on the basis that the employee is not fully recovered from
injury, unless she or he:
- Cannot perform the essential functions of the job she or he
holds or desires with or without a reasonable accommodation, or
- Would pose a significant risk of substantial harm that could
not be reduced to an acceptable level with reasonable accommodation (i.e.
Since reasonable accommodation may include reassignment to a
vacant position, an employer may be required to consider an employee's
qualifications to perform other vacant jobs for which she or he is qualified.
The information in this fact sheet came from various DOL
agencies, as well as the following sources: Center on Education and Work,
University of Wisconsin-Madison ADAlliances to Educate and Employ People with
Disabilities: Ideas to Solve your ADA Problems, September 1994; and the
Workers' Compensation Research Institute, Cambridge, MA.
Updated April 2002