Although Pennsylvania is an employment-at will-state, employers should be mindful of a recent state Supreme Court ruling that limits an employer's ability to terminate an employee. The Supreme Court found that in a case involving an employee that applied for Workers' Compensation benefits and was subsequently terminated, the employer violated public policy. Specifically, the Court held that terminating an employee in retaliation for exercising his or her right to file for Workers' Compensation benefits is contrary to the state legislature's intent in drafting the Workers' Compensation statute and therefore is not permissible.

In the case of Schick v. Shirey, 716 A.2d 1231 (Pa.1998), Shick sustained an injury to his knee in September, 1993, while working for Donald L. Shirey Lumber. Approximately 10 weeks later, Shick received a notice of compensation payable, which was issued pursuant to the Workers' Compensation Act. In December, 1993, Schick underwent surgery on his knee. He received Workers' Compensation benefits until March, 1994, when he was released by his physician to return to work.

When Shick informed his employer of his release, Shirey told Schick that Schick no longer had a job owing to his filing for a Workers' Compensation claim. Shick sued Shirey, alleging that he was terminated in retaliation for filing his claim, and that a discharge on this basis violated public policy. Shirey defended on the ground that Schick was an "employee-at-will," that is, he did not have a contract securing his job. Shirey also defended on the basis that although Pennsylvania offers some protection to employees-at-will who are wrongfully terminated, Pennsylvania law does not recognize a claim for retaliatory discharge for an employee that files a Workers' Compensation claim.

After Shick's claim was dismissed by the trial court, and the dismissal was upheld by the Superior Court, the Pennsylvania Supreme Court reversed the decision and created a new exception to the employment-at-will doctrine. The Court explained that "as a general rule, no cause of action exists based upon an employer's termination of an at-will employee." However, the Court rejected Shirey's argument that the Workers' Compensation Act contemplates that injured employees will be discharged to make room for employees who are able to perform the work. Shirey's basis for its argument was that the Workers' Compensation Act failed to provide a statutory remedy for terminating an employee when he or she files a Workers' Compensation claim. The Court dismissed this reasoning, finding that in the absence of an ability to file a Workers' Compensation claim without fear of termination, employees would be discouraged from exercising the statutory rights granted by the Workers' Compensation Act. If employees opted to continue working rather than filing a Compensation claim, employers would be "effectively relieved of [their] obligation(s)" under the Act. This, the Court concluded, would be contrary to the purpose of the Workers' Compensation Act and therefore contrary to public policy.

The Court also rejected Shirey's argument that by interpreting the Act to provide legal recourse to employees, where such recourse is not explicitly contained in the language of the Act, the Supreme Court was engaging in improper legislation. Rather, the Court held, that there exists ample support for courts to articulate public policy where the legislature is silent. Specifically, the Court held that "no sound analysis can be drawn from legislative silence," and that it is possible that the legislature simply failed to foresee a need to protect employees from retaliatory termination on the basis of filing a Workers' Compensation claim. More importantly, the Court noted that the Workers' Compensation Act was not designed to govern at-will employment, but rather was designed to address work-related injuries. Thus, the legislature's failure to provide recourse for employees that are terminated in retaliation for filing a claim was not necessarily a purposeful omission, but rather was probably the result of the Act's specific focus. Thus, in the absence of legislative guidance, it is appropriate for the Courts to interpret the statute in a manner consistent with public policy.

The holding in Shick v. Shirey is significant because it creates a new exception to the employment-at-will doctrine. Employers must now be careful when dealing with employees who have been on Workers' Compensation leave but who desire to return to work: a denial of reinstatement may give rise to a cause of action. Employers must thoroughly review an employee's situation before denying reinstatement, and must not terminate employees without good cause that is based upon something other than retaliatory motive or the need to make room for other, non-injured workers.

Another new development in the Workers' Compensation context of which employers should be aware is a federal court case holding that an employee may have a claim under the Americans with Disabilities Act (ADA) where the employee is not disabled, but is merely perceived to be disabled. In Taylor v. Pathmark Stores, Inc., 177 F.3d 180 (3d Cir. 1999), the plaintiff, Taylor, injured his ankle at work in December, 1991, when he slipped on a piece of cellophane. In January, 1992, he aggravated the injury when he fell down a flight of stairs at home. After nearly eleven months off from work, he returned and was told that his job had been filled during his absence; Taylor was given alternate, light-duty work. Approximately one year later, in November, 1993, he had surgery on his ankle. He continued to perform light-duty work and was permitted periodic resting time at work.

In March, 1994, the employer, Pathmark, requested an updated doctor's note regarding Taylor's physical limitations. Taylor provided a family doctor's note stating that Taylor could not stand for prolonged periods of time. Pathmark, without Taylor's knowledge, sent a request for an update to Taylor's orthopedic specialist. Based only upon the fact that Taylor had not returned to see him since December, 1993, the specialist reported to Pathmark that Taylor could work without restrictions. Relying upon this note, Taylor's supervisor informed Taylor that he had to work a full-duty cash register for that particular day. Because Taylor believed that he could not comply with this requirement, he left the store.

When he learned of the contents of the specialist's note, Taylor obtained an examination with the specialist and received a new note indicting that he could work full time with limited standing. Pathmark's administrative offices never forwarded this letter to Taylor's supervisor, and Taylor was never asked to return to work. At Pathmark's directive, Taylor thereafter obtained an independent medical examination (IME) from an orthopedic surgeon, who determined that Taylor could work with restrictions. However, Pathmark did not invite Taylor to return to work and for approximately one year after that, took no action on Taylor's case.

Finally, in September, 1995, Pathmark's ADA committee evaluated Taylor and sent his orthopedic surgeon a questionnaire about Taylor's restrictions. The surgeon indicated that Taylor was subject to "temporary" increased work restrictions owing to a recent re-aggravation of the ankle. Six months later, Taylor wrote to Pathmark and represented that his temporary restrictions had been lifted. Pathmark's ADA committee again evaluated Taylor's case, but took no action for seven months.

In May, 1996, Pathmark fired Taylor on the basis of Taylor's "inability to work." Pathmark based this decision upon Taylor's family doctor note indicating that Taylor could continue to work but could not stand for prolonged periods of time. Pathmark compared Taylor's work restrictions with his job requirements and determined that Taylor could not perform the essential functions of his job. Pathmark also indicated that it had been informed that Taylor's injuries were "permanent." Pathmark put these conclusions in writing to Taylor.

Although Taylor had his family doctor issue a new report as to his less restricted ability to work, Pathmark failed to reinstate Taylor. Further, Pathmark failed to offer Taylor a job that required less standing. Finally, Pathmark's workers' compensation department insisted that Taylor could return to work full time; despite regular efforts to gain reinstatement since 1994, however, Taylor was never returned to work.

Based upon these facts, the Third Circuit held that Taylor's slight limp and his need for ten-minute breaks each hour did not constitute substantial impairments that were protected under the ADA. However, the Court concluded that Pathmark regarded Taylor as disabled because it believed that Taylor could not perform the essential functions of his job; Pathmark's written statements to Taylor that Taylor's limitations were permanent and that he could not perform the essential functions of his job were evidence of Pathmark's belief.

The Court determined that Pathmark's misreading of Taylor's doctor's note, and its subsequent failure to reinstate Taylor on the basis of that misreading, gave rise to liability under the ADA. The Court concluded that an employer may be liable for wrongly regarding an employee as disabled and then denying the employee a job. An employer may rely upon an employee's assertions regarding his or her own ability to work, and will not be liable if it is factually mistaken about the employee's impairment if the mistake is based upon the employee's assertions to the employer. However, the employer must be correct when it decides that an employee's work restrictions are permanent and prevent the employee from performing the essential functions of his or her job.

So how should employers handle employees who have been on Workers' Compensation leave and want to return to work? First and foremost, an employee should not be terminated simply for filing a Workers' Compensation claim. All Workers' Compensation claimants are potential ADA claimants, and the employer must endeavor to have a good faith dialogue with the employee. An employer that fails to return an employee to work after the employee has been approved to return runs the risk of ADA-based litigation. In order to avoid potential litigation, an employer should keep in mind the following:

• An employee should NOT be terminated without a thorough examination of the circumstances surrounding the employee's injury, leave and potential return. Do not simply presume that an employee is incapable of returning to work. In light of the Taylor case, this is a dangerous assumption that could lead to liability: if the employer assumes an employee is injured, the employee may now be entitled to ADA protection even if he or she is not disabled!
• Make an individualized assessment of the employee and make sure that your assessment is correct! Thoroughly examine documentation provided to you by the employee and confer directly with the employee about his or her abilities and inabilities with regard to the requirements and demands of the employee's job.
• Don't let the hostility of Workers' Compensation litigation affect the process of evaluating an employee. While you may feel that the employee's pursuit of Workers' Compensation benefits is without merit, or conversely, evidences the employee's inability to perform his or her job, you must still thoroughly evaluate the employee in the context of returning to work, NOT in the context of your personal feelings toward the employee.
• Do not presume that the employee will be re-injured upon returning to work. While an employer is not required to return to work an employee who poses and significant and reasonably likely risk of re-injury, the better option is to reinstate the employee with accommodations. Otherwise, the employer should be prepared to prove to a court the likelihood of the employee's re-injury.

In short, the safest course of action is to maintain open and regular communication with an employee that is injured and/or has filed for Workers' Compensation benefits. An employer should demand written support from an employee's physician of an employee's disability and the permanency of the disability before presuming that an employee cannot be returned to work. Open communication and clear documentation may ultimately protect an employer from burdensome and costly litigation.

Employers are advised to consult an attorney before making decisions or taking actions that can affect potential liability in this area. This paper is provided for general review purposes only and is not intended as a complete statement of the law or as a substitute for competent legal representation.

The Labor and Employment Group of Swartz Campbell LLC is dedicated to serving clients concerning workplace issues. The matters handled by the group involve counseling on personnel issues, labor regulations and dispute resolution, and litigation. The lawyers of the group are accustomed to providing representation for all employment and labor related litigation including employment discrimination actions based on Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act (ADA), the Pennsylvania Human Relations Act, New Jersey Law Against Discrimination, ERISA, Whistleblower, and wrongful discharge. The group provides risk avoidance counseling and seminars on issues of importance to employers. Managing internal investigations and responding to investigations by administrative agencies is part of the practice of the group. Our labor and employment lawyers represent clients before federal agencies including the EEOC, NLRB, Department of Labor, and Pennsylvania Human Relations Commission.