Workers' Compensation Is Not Your Only Remedy: Minn. Stat. § 176.82 Puts Two Separate Civil Claims Outside the Exclusivity Bar, and Only One of Them Reaches a Small Employer

The exclusivity provision, and why it does not swallow this

The sentence people are told about is real. Minn. Stat. § 176.031 opens:

The liability of an employer prescribed by this chapter is exclusive and in the place of any other liability to such employee, personal representative, surviving spouse, parent, any child, dependent, next of kin, or other person entitled to recover damages on account of such injury or death.

Read what it makes exclusive: the liability prescribed by this chapter, in place of other liability “on account of such injury or death.” Section 176.82 is in the same chapter. It is not another liability substituted for the compensation remedy; it is a liability the chapter itself prescribes, for a different act — the discharge, the threat, the obstruction, the refusal to take the worker back — rather than for the injury.

Two subdivisions, and they are not variations on one idea

Section 176.82 has been amended exactly once since it was enacted in 1975 — Laws 1995, ch. 231, art. 1, § 30, per the revisor’s History line and Table 2. That amendment is what produced the two-subdivision structure the section has now. When the Supreme Court quoted the section in full in Flaherty v. Lindsay, 467 N.W.2d 30, 32 (Minn. 1991), it was a single undesignated paragraph, and the words it quoted are the words of today’s subdivision 1.

Subdivision 1, in full:

Any person discharging or threatening to discharge an employee for seeking workers’ compensation benefits or in any manner intentionally obstructing an employee seeking workers’ compensation benefits is liable in a civil action for damages incurred by the employee including any diminution in workers’ compensation benefits caused by a violation of this section including costs and reasonable attorney fees, and for punitive damages not to exceed three times the amount of any compensation benefit to which the employee is entitled. Damages awarded under this section shall not be offset by any workers’ compensation benefits to which the employee is entitled.

Subdivision 2, in full:

An employer who, without reasonable cause, refuses to offer continued employment to its employee when employment is available within the employee’s physical limitations shall be liable in a civil action for one year’s wages. The wages are payable from the date of the refusal to offer continued employment, and at the same time and at the same rate as the employee’s preinjury wage, to continue during the period of the refusal up to a maximum of $15,000. These payments shall be in addition to any other payments provided by this chapter. In determining the availability of employment, the continuance in business of the employer shall be considered and written rules promulgated by the employer with respect to seniority or the provisions or any collective bargaining agreement shall govern. These payments shall not be covered by a contract of insurance. The employer shall be served directly and be a party to the claim. This subdivision shall not apply to employers who employ 15 or fewer full-time equivalent employees.

Six differences sit on the face of those two paragraphs.

Who can be sued. Subdivision 1 reaches “[a]ny person.” Subdivision 2 reaches “[a]n employer.” The Court of Appeals took the first phrase at face value in Summers v. R & D Agency, Inc., 593 N.W.2d 241, 244 (Minn. Ct. App. 1999): “We conclude from the plain language of the statute and caselaw that any person, including nonemployers, may be liable under Minn.Stat. § 176.82.” The defendants there were a claims administrator and an investigation agency, not the employer.

Employer size. Subdivision 2’s last sentence excludes employers with 15 or fewer full-time equivalent employees. Subdivision 1 contains no size threshold at all.

What the employer did. Subdivision 1 is about discharge, threatened discharge, or obstruction. Subdivision 2 is about a refusal to offer continued employment — a refusal that can happen while the employee is still nominally employed and that requires no discharge.

The state of mind. Subdivision 1’s obstruction branch reaches only a person “in any manner intentionally obstructing an employee seeking workers’ compensation benefits.” Subdivision 2 asks only whether the refusal was “without reasonable cause.”

The remedy. Subdivision 1 is a damages statute: actual damages, diminution in benefits, costs, reasonable attorney fees, and punitive damages capped at three times the compensation benefit. Subdivision 2 is a wage formula with a hard ceiling — one year’s wages at the preinjury rate, running only during the refusal, “up to a maximum of $15,000.” Subdivision 2 says nothing about attorney fees or punitive damages.

Who pays. Subdivision 2 states that its payments “shall not be covered by a contract of insurance” and that “[t]he employer shall be served directly and be a party to the claim.” Subdivision 1 has no equivalent sentence.

What “obstruction” means, and how high the bar is

Every decision retrieved for this page that construes the obstruction branch narrows it.

In Bergeson v. United States Fidelity & Guaranty Co., 414 N.W.2d 724, 727 (Minn. 1987), the court set both the conduct standard and the burden of proof:

We conclude, therefore, that a cause of action under section 176.82 lies where a person, such as an insurer, obstructs or hinders, whether by deliberate action or inaction, the receipt of benefits due the injured worker and does so in a manner that is outrageous and extreme, or, to put it another way, in a manner which is egregiously cruel or venal. We hold, further, that this conduct must be proven by evidence that is clear and convincing.

The court explained the line it was drawing: the civil action “is intended to cover those situations where the insurer’s delay or denial of benefits goes beyond unreasonableness, neglect, or obstinance,” which “keeps the remedies provided by sections 176.82 and 176.221 separate and distinguishable, and gives due deference to the exclusivity scheme of the Workers’ Compensation Act.” Id. Ordinary foot-dragging is answered by the administrative penalty, not by this statute.

Flaherty added that something has to actually happen to the benefits. A city offered an injured police officer a code-enforcement position the trial court found was made in bad faith, and the Supreme Court still reversed the judgment. At 32: “A plain reading of the statute also suggests some actual denial or disruption in the receipt of benefits must occur to warrant recovery ….” It declined to read an attempt into the statute — “[i]f the legislature had intended to include attempts in the liability encompassed by this statute, it would have included language of attempt” — and grounded the whole approach in exclusivity at 33:

A narrow construction of the term ‘obstruction’ also is required in deference to the mandate of exclusivity set forth in Minn.Stat. § 176.031 (1990) (liability of employer prescribed by workers’ compensation act is exclusive of any other liability).

Summers is what that means in practice. The claims administrator and investigation agency had put the injured worker and his family under surveillance, and the Court of Appeals still affirmed dismissal. “[I]t is undisputed that Summers received all workers’ compensation benefits to which he was entitled,” and because appellants “failed to offer any evidence that Crawford or R & D actually impeded or frustrated Summers’ receipt of benefits,” summary judgment stood. Summers, 593 N.W.2d at 244.

Notice what the discharge branch of subdivision 1 does not carry. The Bergeson clear-and-convincing standard and the “egregiously cruel or venal” language were stated for the obstruction branch, in a case against an insurer about the payment of benefits. No decision retrieved for this page applies that standard to a discharge claim under the same subdivision. That is a report of what was retrieved, not a statement about the whole corpus. [UNVERIFIED — Lee: please confirm against a citator whether any Minnesota appellate decision has extended the Bergeson standard to the discharge branch of subd. 1.]

Six years, and the reasoning matters as much as the number

Employers argue the short wage-claim periods. That argument was made and rejected.

In McDaniel v. United Hardware Distributing Co., 469 N.W.2d 84 (Minn. 1991), an employee sued about two years and four months after his discharge. The trial court applied the two-year wage period in § 541.07(5); the Court of Appeals applied the three-year willful-nonpayment period in the same clause. The Supreme Court applied neither. At 85: “We find that McDaniel’s claim is governed instead by the six year limitation for actions upon a statutory liability in Minn.Stat. § 541.05, subd. 1(2) (1990).” That clause covers an action “upon a liability created by statute, other than those arising upon a penalty or forfeiture or where a shorter period is provided by section 541.07.”

Two steps got the court there. First, § 176.82 creates rights rather than codifying old ones: “Section 176.82 is not a codification of the common law. The legislature enacted section 176.82 more than a decade before this court recognized a common law action for retaliatory discharge in violation of public policy.” McDaniel, 469 N.W.2d at 85. Second, treble punitive damages did not make it a penalty statute: a plaintiff “can only recover punitive damages if he is able to prove actual damages,” and “any punitive damages will be merely incident to the redress of this private injury.” Id. at 87–88.

The court also rejected the argument that this is a lost-wages claim: “not all claimants under section 176.82 will have lost wages,” and “[a]ccordingly, the statute of limitations governing actions for lost wages is inapplicable to actions brought under section 176.82.” Id. at 86.

Six years is long by the standards of the rest of this area — one year to bring a Human Rights Act claim, § 363A.28, subd. 3(a); two years for defamation, § 541.07(1) — but it is not a reason to wait. Evidence about who knew what, and when, is what these cases turn on.

Proving the discharge claim

Subdivision 1 says nothing about how a plaintiff proves the connection between seeking benefits and the discharge. No Minnesota Supreme Court decision retrieved for this page states a prima facie test written specifically for § 176.82.

What exists is the reprisal test the court stated for the Human Rights Act as that Act was then codified, at Minn. Stat. § 363.03, subd. 7 (1990) — a subdivision the revisor’s section page now shows as “[Renumbered 363A.15],” though § 363A.15 has been amended since — a test the Eighth Circuit, sitting in diversity, has applied to § 176.82. Dietrich v. Canadian Pacific Ltd., 536 N.W.2d 319, 327 (Minn. 1995): “In order to establish a prima facie case of reprisal an employee must establish: (1) that she engaged in statutorily protected conduct; (2) an adverse employment action by the employer; and (3) a causal connection between the two.” Causation “may be satisfied ‘by evidence of circumstances that justify an inference of retaliatory motive, such as a showing that the employer has actual or imputed knowledge of the protected activity and the adverse employment action follows closely in time.’” Id.

The Eighth Circuit applied exactly that framework to a § 176.82 claim in Kunferman v. Ford Motor Co., 112 F.3d 962, 965 (8th Cir. 1997), and the claim failed on the third element: “Timing alone cannot establish retaliatory intent,” and the plaintiff “must show that the person who lifted her medical restrictions knew of her protected activities.” Kunferman is a federal court’s prediction of Minnesota law, not a Minnesota decision, and it binds no Minnesota court.

Kunferman also decided something worth knowing before an employee counts on the compensation proceeding. The plaintiff asked the federal court to give preclusive effect to findings the state workers’ compensation court had made; the answer, at 966, was that “[u]nder Minnesota law, collateral estoppel was not appropriate,” citing Graham v. Special School District No. 1, 472 N.W.2d 114, 119 n.7 (Minn. 1991). Winning the compensation claim does not decide the retaliation claim, and losing it does not decide it either.

The Human Rights Act runs alongside, on different terms

A work injury that leaves a lasting limitation can implicate the Minnesota Human Rights Act as well, and the two statutes do not line up.

Section 363A.08, subd. 2, makes it an unfair employment practice, “[e]xcept when based on a bona fide occupational qualification,” for an employer to “discharge an employee” or to “discriminate against a person with respect to hiring, tenure, compensation, terms, upgrading, conditions, facilities, or privileges of employment” because of, among other characteristics, “disability.”

Section 363A.08, subd. 6(a), adds the accommodation duty, and it is written with an employer-size threshold on its face:

Except when based on a bona fide occupational qualification, it is an unfair employment practice for an employer with a number of part-time or full-time employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year equal to or greater than 25 effective July 1, 1992, and equal to or greater than 15 effective July 1, 1994, an employment agency, or a labor organization, not to provide a reasonable accommodation for a job applicant or qualified employee with a disability unless the employer, agency, or organization can demonstrate that the accommodation would impose an undue hardship on the business, agency, or organization.

The same subdivision requires a process, not just an outcome: “To determine the appropriate reasonable accommodation the employer, agency, or organization shall initiate an informal, interactive process with the individual with a disability in need of the accommodation.”

Three practical points follow from the text alone. The accommodation duty in subd. 6 and the refusal-to-reemploy claim in § 176.82, subd. 2, land at the same 15-employee line from opposite sides — subd. 6 applies at 15 or more, § 176.82, subd. 2, does not apply at 15 or fewer. The discharge prohibition in subd. 2 of the Human Rights Act carries no size threshold at all: “employer” is defined for the whole chapter as “a person who has one or more employees.” § 363A.03, subd. 16. And the Human Rights Act deadline is nothing like six years: a claim runs on the one-year period covered in the guide on how discrimination claims are lost on the calendar.

Whether a particular work injury is a “disability” within the Human Rights Act is a separate question the definitions section answers, and this page does not answer it.

One more asymmetry worth knowing

Chapter 268 tells courts to construe unemployment ineligibility narrowly and to apply the chapter “in favor of awarding unemployment benefits.” § 268.031, subd. 2. Chapter 176 says the opposite about itself. Minn. Stat. § 176.001:

It is the specific intent of the legislature that workers’ compensation cases shall be decided on their merits and that the common law rule of “liberal construction” based on the supposed “remedial” basis of workers’ compensation legislation shall not apply in such cases. … Accordingly, the legislature hereby declares that the workers’ compensation laws are not remedial in any sense and are not to be given a broad liberal construction in favor of the claimant or employee on the one hand, nor are the rights and interests of the employer to be favored over those of the employee on the other hand.

That directive is part of why Bergeson, Flaherty, and Summers read § 176.82 the way they do.

What this page does not do

This page describes a statute and the decisions construing it. It does not evaluate a discharge, a refusal to reemploy, or a claims-handling history. Which subdivision fits, whether the employer crosses the 15-employee line, whether the employer’s decisionmaker knew about the compensation claim, and whether any benefit was actually denied are all questions of proof that the text of § 176.82 does not settle.

Related: was my firing illegal, the Whistleblower Act protects the report, and every Minnesota employment deadline in one table.