February 17, 2016Client Alert

New Wisconsin Worker’s Compensation Law Changes Impact Human Resource Management

The Wisconsin worker’s compensation law has historically undergone adjustments through a negotiation process involving a group of leaders representing business and organized labor, known as the Worker’s Compensation Advisory Council. Because of the give and take necessary to reach an agreement, most changes are minor and impact the pricing for worker’s compensation and the benefits received by employees. Changes made by the Council do not typically impact how employers manage employees. However, the law passed by the Wisconsin State Legislature on February 16, 2016, contains some sweeping changes that will impact how human resource and safety professionals manage worker’s compensation cases. In order to take advantage of these changes, employers will need to review and possibly revise their safety, health and employment policies.

Loss of Worker’s Compensation Benefits for Violations of Employer Drug and Alcohol Policies

The new law provides that if an employee violates an employer policy against drug or alcohol use, and that violation causes the employee’s injury, then neither the employee nor the employee’s dependents may receive any compensation under the law. This provision does not eliminate the duty of the employer’s worker’s compensation insurer to pay for the medical cost of treating the employee’s injury, but the employee cannot collect any benefits for temporary or permanent disability. Prior to this change, benefits could be reduced by 15% for drug and alcohol policy violations that led to injury, though this seldom was enforced.

In light of the more significant consequence of drug and alcohol policy violations and the corresponding reduction in the amounts payable to the employee, denial of benefits for such violations is likely to be enforced more often than in the past. Employers and their insurers should expect challenges that the employer policy was unclear, the employee did not violate it or that the drugs and/or alcohol did not cause the injury. The most difficult aspect of the employer’s proof will be establishing that drugs or alcohol caused the injury. This will require documentation of the employee’s behavior leading up to and after the accident. Employers should have their policies and procedures concerning drug and alcohol use and testing reviewed by legal counsel.

Employees Suspended or Terminated for Misconduct or Substantial Fault May Lose Benefits

If an injured employee is suspended or terminated from employment due to “misconduct” or “substantial fault,” the employee’s worker’s compensation temporary disability benefits may now be denied. In the past, employers who wanted to terminate an injured employee due to misconduct were faced with the reality that termination would drive up worker’s compensation costs because the terminated employee would get paid disability benefits while not working. Now, these benefits may be denied if the employee’s termination is found to arise from misconduct or substantial fault.  

The most likely cases in which employers and insurers will choose to deny benefits for misconduct or substantial fault include safety violations or ignoring specific directives of the employer. A positive drug test may also meet this definition, even if the employee was not injured due to the use of illegal substances. A post-accident positive drug test may be basis for denying temporary disability benefits after termination or suspension. Employers should have their disciplinary rules and procedures reviewed by legal counsel to make certain the procedures that call for termination or suspension meet the definitions of misconduct and substantial fault.

Apportionment of Permanent Disability: Denying Benefits Due to a Pre-existing Condition

In the past, an employer was responsible for an entire injury or disease suffered by an employee, even if the employee suffered from a pre-existing condition. The prior rule was that, so long as the employer’s work “precipitated, aggravated and accelerated the condition beyond its normal progression,” the employer would be responsible for the entire injury, including the pre-existing conditions. The only exception to that rule was if the employee had previously been assessed to have a specific percentage of permanent disability associated with the pre-existing condition, before the workplace injury or exposure. However, doctors rarely assess the level of impairment when treating a non-work related injury, so there is rarely such evidence available.

The law has now been changed to allow the Department of Workforce Development to accept evidence that an employee’s permanent disability was only caused partially by an accidental injury sustained in the course of employment with the employer against whom compensation is claimed. If the doctor concludes that a percentage of that disability was caused by other factors, whether occurring before or after the time of the work injury, the Department can reduce the employees benefit award proportional to the percentage caused by those other factors.

This change will provide an incentive for employers to engage in more thorough screening regarding employee pre-existing conditions. While the American’s with Disabilities Act prohibits pre-employment medical inquiries, the law allows post-job offer screening prior to an employee commencing employment. In order to take advantage of this change in the law, employers should screen for pre-existing conditions consistent with the law. This will then allow the employer to make information available to doctors so that an apportionment decision can be made early in the case, before the full benefits are paid. Occupational health experts and legal counsel should be contacted for assistance in designing such screening.


Now is a good time for employers to upgrade their safety procedures and policies, drug and alcohol testing rules and new employee screening. The employer will need to notify its insurance carrier whenever an injury may have been caused by a violation of employer safety rules, employee misconduct, or drug/alcohol use in violation of company policy, or may involve a pre-existing condition. For further information or assistance with the policy revisions discussed, please contact your Michael Best attorney or Charles B. Palmer at or 262.956.6518.

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