An Employee’s Choice to Quit May Increase Employer Benefit Obligation for Unscheduled Injuries
In Iowa, workers who sustain permanent injuries on the job are entitled to permanent disability benefits. The way these benefits are calculated depends on whether the injury involves a “scheduled” or “unscheduled” body part.
Certain body parts are listed in Section 85.34(2)(a)-(u), and injuries to these areas—such as the shoulder, arm, leg, foot, or hand—are considered "scheduled injuries." Compensation for these injuries is based on the degree of functional impairment.
Injuries to body parts not specifically listed in the scheduled categories are considered "unscheduled." These are covered under Section 85.34(2)(v) and are typically compensated based on the worker’s loss of earning capacity (also known as industrial disability).
If a worker with an unscheduled injury returns to work with the same employer, earning the same or a higher wage, they are compensated based on their functional loss. In this case, the injury is evaluated based on functional loss (similar to scheduled injuries), rather than loss of earning capacity.
Generally, unscheduled injuries compensated based on loss of earning capacity tend to receive larger permanent partial disability awards compared to those based on functional loss.
On January 9, 2025, the Iowa Court of Appeals issued an important ruling in the case of Den Hartog Indus. v. Dungan, addressing how a worker’s voluntary resignation affects their entitlement to workers’ compensation benefits for an unscheduled injury. No. 23-1402, 2025 Iowa App. LEXIS 32 (Ct. App. Jan. 9, 2025). In this case, the employee suffered a work-related back injury and later returned to work making the same or greater wage. However, the employee later voluntarily quit to take a new position, earning more than he had earned with his former employer. In arbitration, the deputy awarded the employee industrial disability benefits. The employer appealed, arguing that because the employee voluntarily left his job, compensation should be based on functional loss under Section 85.34(2)(v). The employer contended that the industrial disability award was not an appropriate interpretation of Section 85.34(2)(v).
However, the Workers’ Compensation Commissioner, the district court, and the Iowa Court of Appeals all upheld the deputy’s decision, affirming the award of industrial disability benefits. The Court of Appeals interpreted Section 85.34(2)(v) to mean that the employee would still be entitled to industrial disability benefits regardless of whether he voluntarily quit or was terminated. The ruling was made with a 2-1 majority, with the dissent arguing that the statutory language of Section 85.34(2)(v) was clear in requiring compensation based on functional loss when the employee voluntarily quit after returning to work making the same or higher wage. At this time, it is unknown whether the case will be appealed to the Iowa Supreme Court for further clarification.
This case highlights the complexities of how workers' compensation benefits are determined when an employee has returned to work after an unscheduled injury and voluntarily quits their job. It is an important decision for both workers and employers to consider as it may impact future claims involving similar circumstances. As always, please feel free to contact any of our attorneys with questions regarding this or any other workers’ compensation issues.
