Don't Get Trapped between Workers' Compensation and the ADA

By Kalet, Joseph E. | Risk Management, September 1994 | Go to article overview
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Don't Get Trapped between Workers' Compensation and the ADA

Kalet, Joseph E., Risk Management

The Americans with Disabilities Act of 1990 (ADA) requires that individuals with disabilities be treated fairly and equally with regard to employment opportunities, government services, access to public accommodations, commercial facilities, telecommunications and in other areas. The ADA employment provisions became effective for most employers on July 26, 1992, and the Act also prohibits disability discrimination by employment agencies, labor organizations or joint labor-management committees. Congress charged the Equal Employment Opportunities Commission (EEOC) with the responsibility of administering these requirements, but neither Congress nor the EEOC gave full thought to the delicate interplay between this federal statute and state workers' compensation laws.

The attempt to regulate fairness for those with disabilities places unexpected burdens on employers. In cases where an employer made a lump-sum settlement of future workers' compensation benefits, the employee's new-found wealth may lead the employer to believe that any return-to-work request can be denied. But the ADA requires an employer to provide "reasonable accommodation" to a "Qualified Individual with a Disability" (QID) which can result in returning an employee to work who incurred a work-related injury, even though he or she previously received an award of workers' compensation benefits. Although this is a costly prospect, employers can remedy the situation by adopting a strategy that gets the employee to waive his or her right to a lawsuit while honoring the employee's rights concerning workers' compensation and the ADA.


Although the ADA is not explicit on what constitutes "reasonable accommodation," the requirement effectively saddles employers with a greater burden with respect to current employees than to job applicants, because current workers have already established their qualifications. Therefore, when raising ADA challenges to employment decisions, current employees will generally be able to establish that they are "qualified" individuals. Job applicants, on the other hand, will have greater difficulty establishing their "qualified" status. In cases where qualified individuals incur on-the-job injuries, the employer must also contend with numerous workers' compensation issues.

In the typical job-related injury case, the employee will file with the state industrial commission or workers' compensation board for workers' compensation benefits. Such benefits are generally awarded for a fixed amount over a fixed period (in Virginia, for example, the maximum weekly amount in 1993 was $434 per week for a maximum of 500 weeks). The employer and/or the workers' compensation insurance carrier will attempt to negotiate a lump-sum settlement of future workers' compensation benefits, in order to reduce long-term financial exposure and administrative costs.

As a rule, employees will agree to such settlements, particularly if the lump-sum is attractive. Once the state workers' compensation commission approves the settlement, the lump-sum is distributed to the employee. But this does not mean that the employment relationship is ended, because the workers' compensation program is administered by the employer's risk management office, and the hiring/separation function resides with the company's personnel department. In other words, it is possible for the risk management office to make a lump-sum settlement of workers' compensation claims and for the personnel office to list the individual as an "employee" who is still "on the books."

Prior to the enactment of the ADA, this situation was not a problem; the employer could simply terminate the employee for inability to perform the essential functions of the job. Now, however, the employee, as a QID, can assert his or her right under the ADA to a reasonable accommodation, irrespective of any workers' compensation settlement. The qualified employee's right to reasonable accommodation under the ADA means that he or she may request that the essential functions of the job be modified to allow him or her to perform the job.

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Don't Get Trapped between Workers' Compensation and the ADA


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