Can You Terminate an Employee on Workers’ Comp in California?

In California, terminating an employee on workers’ comp is legal only when the reason has nothing to do with the injury or the claim. The state is at-will, so an employer can end the employment relationship for any lawful reason,¹ but Labor Code Section 132a and the Fair Employment and Housing Act layer on protections the moment a claim is filed or an injury creates a disability. The practical test isn’t whether a firing is possible. It’s whether the stated reason would have existed if the injury never happened.

Lawful Reasons an Employer Can Rely On

An injured worker can be let go for reasons that are genuinely independent of the claim. Three categories come up most often.

Company-wide layoffs or restructuring, as long as the injured worker wasn’t singled out within the group.
Documented performance or misconduct problems that were recorded before the injury. A write-up that first appears in the file after the claim reads as retaliation.
Inability to perform the essential functions of the job even with reasonable accommodation, and only after the employer completes the interactive process required by FEHA.²

The employer carries the practical burden of showing the termination would have occurred anyway. Timing weighs heavily. A firing two weeks after a claim, even one dressed up in a legitimate reason, invites a retaliation finding.

What Makes a Termination Unlawful

Labor Code Section 132a prohibits firing, threatening to fire, or discriminating against an employee for filing a workers’ comp claim, announcing an intent to file, receiving a settlement or award, or testifying in another worker’s case.³ The prohibition reaches beyond outright termination. Demotion, cuts to hours or pay, reassignment to undesirable duties, and pressure tactics meant to force a resignation are all covered.

FEHA adds a second layer. Most work-related injuries qualify as disabilities under California law, so firing someone because of physical limitations caused by a workplace injury is disability discrimination, regardless of what the termination paperwork says.² An employer who never explored whether modified duties or assistive equipment could keep the worker on the job is likely on the wrong side of FEHA even before Section 132a comes into play.

The Accommodation Step Employers Can’t Skip

Before terminating an injured worker, California employers must engage in a timely, good-faith interactive process to explore whether reasonable accommodations would let the employee keep working.² Skipping the process is itself a FEHA violation, even if no accommodation would have worked.

Accommodations can include modified duties, ergonomic equipment, schedule adjustments, remote work, reassignment to an open position the employee can perform, or additional unpaid medical leave. The employer doesn’t have to invent a new position, but it does have to consider existing open roles that fit.⁴ An accommodation can be refused only if the employer can show it would cause genuine undue hardship, meaning significant difficulty or expense rather than mere inconvenience.

Blanket rules requiring workers to be “100% healed” before returning are a common trap. California law requires individualized assessments of each worker’s ability to do the job, with or without accommodation. A one-size-fits-all policy is itself an invitation to a discrimination claim.

When Protected Leave Runs Out

Workers hurt on the job often qualify for protected leave under overlapping laws. Federal FMLA gives up to 12 weeks of unpaid, job-protected leave for employees who have worked at least 12 months and 1,250 hours for an employer with 50 or more employees within 75 miles.⁵ The California Family Rights Act also provides 12 weeks, but applies to employers with as few as five employees and has no geographic radius requirement.⁶

Exhausting FMLA and CFRA leave does not clear the path to termination. FEHA may require additional unpaid leave as a reasonable accommodation if the employee is expected to recover and return within a reasonable timeframe. Firing a worker on the last day of CFRA leave, without asking whether a short extension or a different arrangement would work, walks the employer straight into a lawsuit. By the end of protected leave, the employer is on notice of the disability, which strengthens the duty to accommodate rather than ending it.

Penalties for Getting It Wrong

An employer found to have violated Section 132a faces both financial and criminal exposure. The employee’s workers’ compensation benefits are increased by 50%, capped at $10,000, plus costs and expenses up to $250. The Workers’ Compensation Appeals Board can also order reinstatement to the former position and reimbursement of all lost wages and benefits caused by the termination.³

The violation is also classified as a misdemeanor, so criminal prosecution is possible, though civil penalties are the more common outcome.³ A separate FEHA disability discrimination claim can add damages for emotional distress and attorney fees, which frequently dwarf the $10,000 cap under 132a.

How a Fired Worker Challenges the Termination

An employee who believes the firing was retaliatory can file a petition for discrimination with the Workers’ Compensation Appeals Board. The deadline is one year from the discriminatory act or the date of termination, and missing it forfeits the 132a claim entirely.⁷

A 132a petition requires a pending WCAB case. If the underlying comp claim hasn’t been opened, the worker files an application for adjudication of claim first. The petition itself goes to the local WCAB district office, with copies served on the employer and any other parties. The filing package includes a document cover sheet, the petition form, a verification, and proof of service.⁷

A FEHA disability discrimination claim is filed separately with the California Civil Rights Department. The two claims protect against overlapping but distinct violations, and many terminated workers pursue both.

What Survives the Termination

Losing the job does not end workers’ compensation benefits for the underlying injury. Medical treatment continues as long as it is medically necessary. Temporary disability payments continue as long as the worker remains unable to work because of the injury. Permanent disability benefits, if awarded, turn on the injury itself and are unaffected by employment status.

One benefit becomes especially relevant after termination. If a workplace injury causes permanent partial disability and the employer doesn’t offer regular, modified, or alternative work within 60 days of learning the disability is permanent, the worker is entitled to a $6,000 Supplemental Job Displacement Benefit voucher for education and retraining at accredited schools or training programs.⁸

Health Insurance After the Job Ends

Workers’ comp pays for treatment of the work injury, not for unrelated medical care, so losing employer coverage matters. Federal COBRA applies to employers with 20 or more employees and requires them to offer continuation of the group health plan at the worker’s expense after any termination other than for gross misconduct, typically for 18 months and up to 36 in certain circumstances.⁹

For smaller employers with 2 to 19 employees, California’s Cal-COBRA provides similar continuation rights for up to 36 months, and workers who exhaust 18 months of federal COBRA can bridge into Cal-COBRA for an additional 18.¹⁰ Premiums are higher than the employee share while working, because the employer no longer subsidizes the cost, but the coverage prevents a gap in care for anything unrelated to the work injury.

1
California Legislative Information. California Code Labor Code 2922
2
California Legislative Information. California Government Code 12940
3
California Legislative Information. California Code Labor Code LAB 132a
4
California Civil Rights Department. Employment Discrimination Based on Disability
5
U.S. Department of Labor. Fact Sheet 28H – 12-Month Period Under the Family and Medical Leave Act
6
California Civil Rights Department. Family Care and Medical Leave and Pregnancy Leave
7
California Department of Industrial Relations. How to File a Petition for Discrimination (Labor Code Section 132a)
8
California Legislative Information. California Labor Code 4658.7
9
U.S. Department of Labor. FAQs on COBRA Continuation Health Coverage for Workers
10
California Department of Managed Health Care. Keep Your Health Coverage (COBRA)