For Nevada employers, few employment decisions carry more risk than terminating an employee who has a pending workers’ compensation claim. The optics alone raise concern, and the timing invites scrutiny. If the documentation is not airtight, what may otherwise be a legitimate employment decision can quickly evolve into a retaliation claim.

Nevada At-Will Employment and Workers Compensation

While Nevada is an at-will employment state, that principle is not without limits. Employers generally retain broad discretion to terminate employees at any time, with or without cause, but that discretion is subject to exceptions. One of those key limitations arises in the workers’ compensation context.

Nevada Supreme Court Recognizes Workers’ Compensation Protections

The Nevada Supreme Court addressed this directly in Hansen v. Harrah’s, holding that terminating an employee for filing a workers’ compensation claim violates Nevada public policy and may give rise to a tort claim for wrongful discharge. This decision established that, although employers have significant flexibility in managing their workforce, that flexibility does not extend to actions that penalize employees for exercising their legal right to seek benefits after a workplace injury.

The Court reinforced this public policy exception in Dillard Department Stores, Inc. v. Beckwith, emphasizing Nevada’s strong interest in protecting injured workers and ensuring they are not discouraged from seeking benefits for a workplace injury. In Dillard, the Court recognized that employer conduct interfering with an employee’s ability to exercise workers’ compensation rights could support a claim for tortious discharge.

Together, these cases make clear that while Nevada employers maintain operational discretion, that discretion cannot be exercised in a way that penalizes employees for pursuing workers’ compensation disability benefits.

Federal Enforcement Mirrors Court Decisions

Federal enforcement trends further reinforce this point. Recently, in a well-publicized matter involving Union Pacific Railroad, after federal investigators conducted an investigation, the U.S. Department of Labor (DOL) concluded that the company wrongly terminated an employee for reporting and seeking medical care for a work-related injury.  

All of these cases highlight that actions perceived as discouraging injury reporting, or perceived retaliation after a report is made, will receive heightened scrutiny.

Termination Must Be Unrelated to Claim

While these cases certainly establish a precedent for protecting employees who file a workers’ compensation claim, this does not mean that an employee with a pending workers’ compensation claim is immune from discipline or termination. Employers retain the right to enforce performance standards, address misconduct, implement reductions in force, and manage business operations. The key issue is not whether termination is permissible, but whether the employer can demonstrate that the decision was entirely unrelated to the employee’s claim.

The Importance of Consistent and Contemporaneous Documentation

One of the most significant and common risks arises from inconsistent documentation practices. In many workplaces, performance concerns may exist long before an injury occurs, but those concerns are often handled informally through verbal coaching or internal discussions rather than documented objectively. When an employee later files a workers’ compensation claim, employers often become more disciplined about documenting performance issues.

While it is not legally too late to begin documenting at that stage, the timing creates problematic optics. From a legal perspective, it can appear that the employee is being subjected to heightened scrutiny because of the injury or claim. Even where performance issues are legitimate, documentation that begins only after protected activity can undermine the employer’s credibility and support an inference of retaliation.

Timing is Critical to Avoid Retaliation Claims

Timing remains one of the most critical factors in these cases. When discipline or termination closely follows a workers’ compensation claim, courts will tend to examine whether the employer’s rationale is supported by contemporaneous evidence. If documentation is weak or begins after the claim, the employer may struggle to prove that the decision was unrelated.

This is not a theoretical risk. Based on existing case law, courts will allow retaliation claims to proceed where employers assert legitimate reasons for termination but lack pre-injury documentation or consistent enforcement of policies. A sad reality is that the financial and operational cost of defending these claims can often far exceed the cost of the underlying workers’ compensation matter.

Common Pitfalls in Termination Decisions

For Nevada HR leaders and business owners, several recurring risk patterns emerge. First, performance issues that are not documented until after a workers’ compensation claim is filed can raise suspicion. Second, inconsistent treatment of injured employees compared to similarly situated employees without claims can create an issue. Third, decision-making influenced by frustration over operational disruption, costs, or skepticism about the claim itself can increase the level of scrutiny.

When is Termination Defensible?

Despite these risks, termination during a pending workers’ compensation claim can be defensible in certain circumstances. These include situations involving clearly documented misconduct unrelated to the injury, well-established performance deficiencies documented before the injury, legitimate reductions in force applied consistently across employees, or circumstances where the employee is unable to return to work after exhausting applicable leave and accommodation obligations have been satisfied.

Having a Disciplined, Structured Approach is Key

The key is disciplined, structured decision-making. Before proceeding with discipline or termination, employers should conduct a focused review: Would the same decision be made if no claim had been filed? Is the documentation clear and contemporaneous? Have similarly situated employees been treated consistently? Have overlapping obligations under disability accommodation laws been considered?

Navigating Workers’ Compensation, Disability, and Leave Laws in Nevada

Workers’ compensation issues rarely exist in isolation. They often intersect with disability accommodation requirements and leave protections, thereby increasing the complexity and potential liability of employment decisions.

Best Practices for Defensible Termination Decisions

The most common mistake employers make is acting too quickly. A measured, deliberate approach is far more defensible. HR should be involved early. Documentation should be carefully reviewed. Decision-makers should be aligned on the legitimate business rationale. Emotional reactions should be separated from objective analysis.

A workers’ compensation claim is a legal event. A termination is a legal event. When they occur in close proximity, we need to know and be prepared for a heightened level of scrutiny.

Key Takeaway: Termination is High Risk, Not Prohibited

For Nevada employers, the takeaway is clear: terminating an employee who has filed a workers’ compensation claim is not prohibited, but it is high-risk. Strong documentation, consistency in application, and proactive performance management, well before any injury occurs, are the factors that distinguish defensible decisions from costly litigation.

By: Brian Lahargoue, Esq.

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