No Sale: Recovery Period Rehire Exception Doesn’t Apply to New Positions

March 13, 2023

Wisconsin’s workers’ compensation statute requires employers, absent reasonable cause, to rehire employees who suffered a workplace injury. Normally, employees need to show they reapplied to their old position to make a valid claim under the statute.

An exception exists, however, where an employee doesn’t need to reapply if they were terminated during their recovery period. A recent Wisconsin Court of Appeals case decided if this exception applies when an employee, who was fired during the recovery period, alleges he wasn’t rehired to a different position with the same employer.

Primer on the Statutes

Under section 102.35(3) of the Wisconsin statutes, an employer can’t terminate an employee (or refuse to rehire an employee) because of a workplace injury. If the employer does so, an employee can make a claim to recover up to one year’s worth of wages.

To make a valid claim under the statute, an employee need only show that they were employed, suffered a workplace injury and were fired or not rehired after suffering the injury.

After the employee successfully shows these limited facts, the burden shifts to the employer to show it had reasonable cause, unrelated to the injury, to discharge the employee. Reasonable cause has been defined by courts as a reason that is “fair, just, or fit under the circumstances.” Even if termination is based only in part on a workplace injury, that is still a violation of section 102.35(3).

Typically, as part of employees’ initial claims, they must demonstrate they had applied to be rehired after the injury. There’s an exception to that rule, however, when an employee is fired during their recovery period.

When this occurs, courts have ruled that terminated employees don’t have to report to work or reapply to make a valid claim under section 102.35(3). Requiring an employee to do so would be “unreasonable” and “an exercise in futility.” This is sometimes called the L & H Wrecking exception.

A Recent Case

Recently, the Wisconsin Court of Appeals was asked to determine if the L & H Wrecking exception applies when a terminated employee makes a section 102.35(3) claim against a former employer who didn’t rehire them to a different position.

In other words, when an employee who was fired during their recovery period pursues a section 102.35(3) claim regarding a new position with the same employer, do they need to show they applied to the new position? The court of appeals answered “yes.”

In this case, Daniel Anderson worked as a parts advisor at Northridge Chevrolet, a car dealership. He was seriously injured at work. As a result, he was restricted from working for at least 60 days and was expected to have a one-year recovery period.

Northridge was already short-staffed and was unsuccessful in finding a temporary replacement for Anderson, so the dealership had to hire a permanent replacement. It contacted Anderson, informing him of his termination from the parts advisor position, but advised him that when he felt better, he should report to Northridge to discuss a sales position, which didn’t have the same physical requirements as the original parts advisor position.

Anderson never returned to discuss the sales position. He then filed a worker’s compensation claim under section 102.35(3) seeking the “refusal to rehire” penalty against Northridge for both his original parts position and the new sales position.

The trial court ruled in favor of Northridge, determining its termination decision was supported by reasonable cause because the parts advisor position was integral to its operation, and Anderson’s restrictions prevented him from doing that work. Further, because he never contacted Northridge about the sales position, he didn’t successfully assert a claim under section 102.35(3) regarding the sales position. He appealed the decision.

On to the Court of Appeals

On appeal, Anderson argued he wasn’t required to apply for rehire to the sales position because he was terminated during his recovery period. In other words, he fit into the L & H Wrecking exception. The court of appeals rejected his argument and ruled in favor of Northridge.

The court of appeals stated that when a terminated employee can’t resume their previous work, they don’t have to reapply to make a valid claim for their previous job under section 102.35(3). An employee, however, does need to apply to new positions to make a claim under section 102.35(3) for a new position.

Based on this, when Anderson never followed up with Northridge on the new sales position, he failed to make a valid claim under section 102.35(3). Although he wasn’t required, under the L & H Wrecking exception, to reapply for his old position to make a valid claim, the dealership had reasonable cause to not rehire him. As a result, it wasn’t liable under section 102.35(3) when it didn’t rehire him for his old position.

The court of appeals specifically noted that the application requirement is informal. An employee’s application doesn’t need to be written. The employee just has to express interest in being hired back in a different position. An informal telephone conversation would accomplish the requirement. Anderson v. Lab. & Indus. Rev. Comm’n, 2021 WI App 44, 398 Wis. 2d 668, 963 N.W.2d 89.

Bottom Line

You should be aware of section 102.35(3) and exercise caution when dealing with employees who suffer a workplace injury. If an injured employee is fired or not rehired, under section 102.35(3), they have an easy burden to make a valid claim, and you bear the greater burden to show the termination was reasonable.

If an employee is fired during their recovery period, their burden is lessened even more. That exception, however, doesn’t apply if they want to claim a refusal to rehire from a new position.

This article, slightly modified to note recent updates, was featured online in the Wisconsin Employment Law Letter and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.

Sterling Knoche
Sterling Knoche