Wisconsin’s Unreasonable Refusal to Rehire Statute: A Costly Trap for Employers

All Wisconsin employers know the basics of the state’s workers’ compensation statute. If an employee is hurt on the job, they may be entitled to benefits under workers’ compensation insurance.

However, many don’t realize that if they fail to bring the employee back to work when suitable employment is available, the employer may be exposed to liability in the form of paying the employee up to one year of wages and benefits.

This risk comes from Wisconsin’s Unreasonable Refusal to Rehire (URR) statute. Although the consequences of this statute are significant, it is frequently overlooked until it is too late.

What the Unreasonable Refusal to Rehire Statute Requires

In plain English, if an employee is hurt on the job, the employer must rehire the employee if suitable work is available within the employee’s physical and mental limitations unless the employer can prove “reasonable cause” for refusing to do so.

Despite its name, the URR statute doesn’t just apply strictly in rehire scenarios. Wisconsin courts have made clear that it effectively functions as an anti-discrimination statute for those with workplace injuries: “its purpose is to prevent discrimination against employees who have previously sustained injuries and to see to it, if there are positions available and the injured employee can do the work, that the injured person goes back to work with his former employer.”  West Allis School Dist. v. Department of Industry, Labor & Human Relations, 116 Wis. 2d 410, 422, 342 N.W.2d 415, 422 (1984).  It applies equally in classic rehire scenarios, instances where you rehire an employee only to subsequently terminate them without “reasonable cause,” or if you just outright terminate an employee due to their workplace injury.

Wisconsin Employers Bear the Higher Burden

To meet their prima facie burden of demonstrating URR occurred, an employee must simply show:

1. They were an employee of the employer,
2. They were injured in the scope of employment, and
3. Subsequent to the injury, the employer refused to rehire the employee.

Critically, while there is conflicting language in Wisconsin caselaw, an argument can be made that the employee does not need to prove that they were not rehired because of the injury, only that they were not rehired. If the employee meets this rather simple burden, the employer must prove it had “reasonable cause” to refuse to rehire.

Successful “reasonable cause” defenses generally fall into one of three general categories:

1. Elimination of the position due to business necessity. The employer will need to prove, likely through more than convenient anecdotal testimony, that the position was eliminated to achieve some greater business purposes.
2. No suitable work within the employee’s limitations. There is no duty to accommodate under the worker’ compensation statute, so the employee has to be able to perform the job duties within their physical and mental limitations. If no available positions exist that the employee is qualified to perform within these restrictions, refusal to rehire may be reasonable.
3. Post-injury performance-related issues that are independent legitimate grounds for termination. An employer may rely on performance‑based reasons, but only if those reasons are well‑documented and consistent with how similarly situated employees are treated.

There are two important nuances to URR claims compared to other traditional employment claims.

• The burden rests on the employer to prove the central issue (reasonable cause), making these cases more difficult to defend.
• The employee has no duty to mitigate their damages (though amounts they happen to earn will be offset).

Practice Steps for Wisconsin Employers to Reduce URR Exposure

Employers can significantly reduce URR risk by following a few best practices.

• Maintain regular, documented communication with an employee about their status and anticipated return to work date following a workplace injury. Even if they don’t respond to you, reach out every several weeks. A lack of response can prove useful in defending a URR claim. Document all conversations and attempts at contact.
• Confirm whether the employee is seeking rehire. When the employee indicates they have been cleared to return to work and has restrictions, ask whether they are willing to work in a different position within their restrictions. If they decline, document it as it will be important to any URR defense later.
• Evaluate the available positions you have for which the employee is qualified to determine whether any fit within the employee’s restrictions. While you are not required to accommodate an employee under the URR, if their condition separately constitutes a disability under the ADA or Wisconsin Fair Employment Act, you may have a separate duty to provide a reasonable accommodation.
• Don’t rely on previous undocumented performance issues. Problems most often arise when you attempt to terminate the employee post-workplace injury for their undocumented “long-existing record of poor performance.” Bring the employee back to work. A problematic employee will almost certainly provide you ample legitimate reasons to terminate them after the workplace injury and the claim will be much more defensible.
• Recognize when workers’ compensation, FMLA, and ADA issues intersect. Because of the nature of such situations, oftentimes you will run into the Bermuda Triangle where Worker’s Compensation, FMLA and ADA issues intersect. For more information, watch Amundsen Davis’ Breakfast Briefing on this topic presented by the very talented Heather Bailey.