What should an employer do when an employee announces plans to retire on a definite date? Get the employee a gold watch? Plan a luncheon? Maybe the best answer, at least from a workers’ compensation perspective, is to bid him adieu, immediately.
A nightmarish situation can develop if an employee announces his retirement to be effective on a definite date in the future, and then gets injured on the job. This factual scenario was recently addressed by the Supreme Court of Virginia in McKeller v. Northrop Grumman Shipbuilding, Inc. , 2015 Va. Lexis 14.
In McKellar, on April 1, 2010 the Claimant advised his employer that he was retiring effective May 1, 2010. On April 15, 2010 the Claimant sustained a compensable injury by accident. The Claimant was placed on restricted duty through the end of April. He retired on May 1, 2010.
However, sometime after his retirement the Claimant was found to be totally disabled. The Claimant then filed a claim with the Virginia Workers’ Compensation Commission, seeking temporary total disability benefits.
The Deputy Commissioner awarded compensation and medical benefits, finding that although the Claimant was retired his total incapacity entitled him to benefits.
The Full Commission, in a 2-1 decision, affirmed the award of medical benefits but reversed the award of compensation, reasoning that the wage loss would have occurred regardless of his compensable injury.
The Court of Appeals affirmed the decision from the Commission, concluding that the Claimant’s retirement, not his injury, caused his loss of compensation because the record was devoid of evidence that the Claimant sought or held income-producing employment after his retirement and the record supports the Commission’s finding that the Claimant intended to retire and not seek other employment income.
The Supreme Court granted an appeal on the following assignment of error: The Court of Appeals’ ruling that the Claimant’s retirement from his employment with the Employer precludes an award of TTD – even where he was in a no work status and medically unable to work during the period of benefits claimed – is contrary to the law and should be reversed.
The Supreme Court reversed the Court of Appeals and awarded the Claimant compensation. The Court noted that the plain language of Va. Code §65.2-500(A) provides that employers shall pay during total incapacity two-thirds of an injured worker’s weekly earnings. Loss of earning capacity is the proper test for awarding compensation in total disability cases. Injured workers who leave the workforce for reasons unrelated to their injuries are nonetheless entitled to TTD benefits if deemed totally disabled.
The Court noted the Claimant’s status in the labor market is irrelevant when the Claimant is totally disabled. As such, a retired worker whose work related injury causes total incapacity need not produce evidence of a pre-injury intent to reenter the workforce.
In McKellar, it is unknown whether the claimant has been released to at least light duty work since the date of the ruling. If nothing has changed in this matter from a medical standpoint the Claimant stands to receive TTD from May 1, 2010 through at least October 29, 2015, the date of the opinion, plus interest.
If an employee announces an intention to retire on a date in the future, the employer should immediately consider ways to reduce the risk of injury to that employee, particularly if the job is very labor intensive or dangerous. Depending on how far in advance retirement is announced and how risky the job duties, it may be worth considering ending the employment relationship early or as soon as possible after the announcement to avoid the scenario confronted by the employer in McKellar. This may not be practical in every case, but it’s worth considering, given the risk of injury in the particular job. Some employers have also given the employee a few weeks of paid leave as their retirement date approaches, so they are not on the job site to risk injury.
Otherwise, the carrier should do whatever it can to try and facilitate a light duty release from the claimant’s treating physician. Even the most minor restriction would make the claimant ineligible for TTD because his wage loss would not be attributable to total incapacity, but to his own decision to remove himself from the labor market.