Workers Compensation

A Louisiana court upheld the denial of workers compensation benefits to an injured worker who had been seen performing compensated services for a church.

Church Law and Tax 2006-11-01

Workers compensation

Key point 8-02. All states have enacted workers compensation laws to provide benefits to employees who are injured or become ill in the course of their employment. Benefits generally are financed through insurance premiums paid by employers. Churches are subject to workers compensation laws in most states.

Workers Compensation

* A Louisiana court upheld the denial of workers compensation benefits to an injured worker who had been seen performing compensated services for a church. An employee (‘Gary’) of a company was injured in a work-related accident. Since the accident, Gary was under the care of various physicians for evaluation and treatment of his injuries. He eventually was awarded workers compensation benefits based on a finding of disability. His employer provided for these benefits by paying worker compensation insurance premiums to an insurance company (the ‘insurer’). The insurer hired a private investigator to conduct surveillance on Gary. The investigator filmed Gary engaging in activities that he claimed he could not do. One of the surveillance tapes showed Gary working at a church. Based on this evidence, the insurer terminated Gary’s benefits on the basis of his knowingly false descriptions of his injuries. Gary also filed a claim in which he argued that the insurer unreasonably terminated his benefits. A workers compensation judge found that Gary had intentionally misrepresented his abilities for the purpose of bolstering his entitlement to workers compensation benefits, and it ruled that he thereby forfeited any entitlement to benefits.

A state appeals court affirmed the forfeiture of workers compensation benefits. It noted that under Louisiana law a forfeiture of workers compensation benefits is proper when: (1) there is a false statement or representation, (2) that is willfully made, and (3) that is made for the purpose of obtaining workers compensation benefits. The court concluded that each of these elements was met. It relied, in part, on the surveillance videotape showing Gary working at a church despite the fact that his workers compensation benefits were based on his claim that he was unable to perform compensated work. When asked if he had heard of the church where he was seen on the videotape, he responded that he knew “some of the parishioners there.” Upon being asked if he had ever provided “work of any kind” for the church, he explained that he thought he “did some volunteer work for them there.” The court concluded that Gary’s statement that he had performed no work for wages was willful and was made for the purpose of affecting workers’ compensation benefits.

Application. What is the significance of this case to church treasurers? Consider the following points:

1. Workers compensation benefits are based on the degree and nature of an injured worker’s work-related injury. ‘Total disability’ benefits may be awarded upon a finding that the injured employee can no longer perform compensated employment. As a result, a person’s eligibility to receive total disability benefits is directly affected if he or she begins performing compensated employment. And, such employment may not only result in a discontinuation of benefits, but also a legal obligation to return benefits already paid.

2. Is a church subject to any penalties if it knowingly hires and compensates a person who is receiving workers compensation benefits? In most cases, the answer is no. It is the worker, and not the employer, who may be required to return benefits paid while he or she was earning wages from a job. Still, it is a ‘best practice’ for churches to consider the following precautions:

• If a church employee or independent contractor is receiving workers compensation benefits, be sure the person is legally permitted to perform compensated employment before allowing him or her to continue working.

• If a church employee or independent contractor is receiving workers compensation benefits, be sure the employee complies with any ‘notification’ requirements prescribed by state law. Persons receiving workers compensation benefits may be required to notify a state agency if there is any improvement in their condition, or if they perform compensated employment. Failure to do so may make the recipient legally obligated to return some or all of the workers compensation benefits that were paid.

• Note that an injured employee or independent contractor is performing ‘compensated employment’ (which may jeopardize eligibility for workers compensation benefits) if he or she is receiving compensation for performing services.

• If your church has at least 15 employees, and is engaged in commerce, then you are subject to the Americans with Disabilities Act. This Act generally prohibits covered employers from discriminating in employment decisions on the basis of the disability of a person who is able to perform the essential functions of a job with or without reasonable accommodation by the employer. There are exceptions. For example, churches are permitted to discriminate on the basis of religion in their employment decisions. Many states have their own disability laws, and some of these laws apply to employers with fewer than 15 employees (and none requires interstate commerce). Cajun Rental & Services v. Hebert, 918 So.2d 605 (La. App. 2005).

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