2016 Worker’s Compensation Act Changes: Violations of an Employer’s Alcohol or Drug Policy

2016 Worker's Compensation Act Changes: Violations of an Employer's Alcohol or Drug Policy

Along with the typical technical and administrative changes in the Worker's Compensation Act, 2016 brought three more notable changes to the Act. Apportionment of PPD for preexisting disability and new exceptions to Brakebush for terminations involving misconduct or substantial fault gave employers new tools to reduce liability for worker's compensation benefits as detailed here and here. The third major change alters the benefits available to workers in cases involving injuries causally related to violations of drug and alcohol policies.

Section 102.58 of the Wisconsin Statutes allows for reduction in benefits for employees that fail to use safety devices or fail to follow safety rules enforced by the employer. Historically, the provision also covered a reduction in benefits where the injury resulted from the intoxication of the employee by alcohol or a controlled substance. In both cases, compensation (not medical expenses) could be reduced by 15 percent, up to a maximum of $15,000. The 2016 revisions to §102.58 substantially alter the reduction for drug and alcohol use: there is now a complete elimination of compensation if the employee violates the employer's drug or alcohol policy and where there is a direct causation between violation of the policy and the workplace injury. As before, the employer and insurer remain liable for the costs of medical treatment.

This provision requires three elements of proof: (1) existence of a policy; (2) violation of that policy; and (3) a causal connection between the violation and the employee's injury. Interestingly, there are other sections of the Worker's Compensation Act which also deal with drug policies that have slightly different criteria; §102.43(9)(c) allows temporary disability to be suspended or terminated if there is a violation of a regularly enforced written drug policy. Additionally, the newly added §102.43(9)(e) adopts the Unemployment Compensation Act's definition of misconduct, which allows denial of UC benefits where an employee violates the employer's "reasonably written policy," if the employee had knowledge of that policy, and either admits the violation, refuses to be tested, or fails the test.

Each of these provisions has slightly varying criteria; viewed in context with the other drug and alcohol provisions in the Act, the revisions to §102.58 leave several unanswered questions. Must the policy be in writing? Does it need to be regularly enforced? Does the employee need to confirm knowledge of the policy? Are there testing methodologies to which an employer must adhere?

On its face, a defense based on §102.58 need only satisfy the three specified criteria. That being said, a prudent employer may want to craft a policy that meets the requirements of these other related provisions as well. This would mean that the policy should be reasonable and clearly written, regularly enforced by management, and that employees should confirm their knowledge of the policy in writing. It also seems prudent to specifically set forth the prohibitions and testing methods as well as what constitutes a violation. To fully satisfy the requirements of §102.58 from a litigation standpoint, the employer and carrier will also need to provide a report from a medical expert such as a toxicologist to establish a causal connection between the violation and the injury in order to rely on this defense.

As referenced in this and two previous articles, the 2016 revisions to the Worker's Compensation Act contain substantial and substantive changes that seem to reflect the increased clout of management/employer concerns in the periodic revisions to the Act. While these revisions are similar to early proposals and drafts, which provides some insight to the intent of the changes, the final language of these revised sections leaves some question marks as to how they should be applied and as to the overall implications for the system. As is often the case, the final impact will not be clear until cases involving these provisions have been litigated and decided by the ALJs and by the LIRC.

There are many nuances to the interpretation and application of new statutory provisions. If you have questions or are interested in a presentation on the 2016 statutory changes, please contact Kurt Anderson