When Does an Employee Return to Work for the Pre-Injury Employer? - Articles

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Posted by: Robert Meyers & Eileen Kuo on Jul 21, 2010

Journal Issue Date: Aug 2010

Journal Name: August 2010 - Vol. 46, No. 8

Tennessee's Workers' Compensation Law

The question of whether an employee returned to work for her pre-injury employer arises when the employee is entitled to an award of permanent partial disability (PPD) benefits pursuant to Tenn. Code Ann.  § 50-6-241(d)(1)(A). This section provides in pertinent part:

For injuries occurring on or after July 1, 2004, in cases in which an injured employee is eligible to receive any permanent partial disability benefits either for body as a whole or for schedule member injuries ... and the pre-injury employer returns the employee to employment at a wage equal to or greater than the wage the employee was receiving at the time of the injury, the maximum permanent partial disability benefits that the employee may receive is one and one half (1 1/2) times the medical impairment rating determined pursuant to the provisions of  § 50-6-204(d)(3).

In most instances the answer is self-evident. If the employee was working for ACME Inc., at the time of her injury and she returns to work for ACME Inc. at her pre-injury wage or higher, then the statutory 1.5 multiplier applies to limit the maximum amount of PPD benefits to which the employee is entitled. Otherwise, if the employee does not return to work for ACME Inc., then the employee may be entitled to a PPD award up to six times the anatomic impairment rating, pursuant to Tenn. Code Ann.  § 50-6-241(d)(2)(A).

However, the answer is less clear if the employee returns to work for ACME Inc., but a successor company purchases ACME Inc. before her workers' compensation claim can be resolved. If the employee continues to work at the same location, performing the same job duties and earning her pre-injury wage, is the employee working for her pre-injury employer for purposes of Tenn. Code Ann.  § 50-6-241(d)(1)(A)? For injuries occurring after July 1, 2009, the answer depends on whether the legislature's 2009 amendment to Tenn. Code Ann.  § 50-6-241(d)(1), adding new section (d)(1)(C), overrules the Tennessee Supreme Court's decision in Barnett v. Milan Seating Sys.[1]

In Barnett, the plaintiff settled her first complaint for workers' compensation benefits against Defendant Milan Seating Systems (Milan) after being diagnosed with bilateral carpal tunnel syndrome.[2] While still working at Milan, the plaintiff filed a second workers' compensation lawsuit against Milan after her doctors later diagnosed moderately severe carpal tunnel syndrome in her right hand and mild cubital tunnel syndrome also on the right.[3] Before the conclusion of Barnett's second suit, Milan was sold to Kongsberg Automotive (Kongsberg).[4] The Chancery Court found that in spite of the fact that she was working for a new employer, Barnett's award was nevertheless subject to the 1.5 multiplier under Tenn. Code Ann.  § 50-6-241(d)(1)(A) and Barnett appealed.[5]

On appeal, the Tennessee Supreme Court addressed the issue of whether "an employee is working for the 'pre-injury employer' for purposes of Tenn. Code Ann.  § 50-6-241(d)(1)(A) when the company she was working for at the time of her injury is sold to a new entity and the employee's place of work, job duties and rate of pay with the new entity remain unchanged."[6] The court heavily relied on Perrin v. Gaylord Entm't Co.[7] in its analysis. Previously, in Perrin, the court found that the phrase "no longer employed with the pre-injury employer" in Tenn. Code Ann.  § 50-6-241(a)(2) (allowing an employee to seek reconsideration of her PPD award when the employee is no longer employed by the pre-injury employer within a prescribed period of time), though not defined in statute, must be read "harmoniously" with the phrase "loss of employment."[8] The court held that the requirement under Tenn. Code Ann.  § 50-6-241(a)(2) that an application for reconsideration be made within one year of the employee's "loss of employment" refers to loss of employment with the pre-injury employer, not with a subsequent or later employer, even in the case of a purchase or acquisition.[9] The plaintiff in Perrin argued that "pre-injury employer" and "loss of employment" should include a later employer that purchases the pre-injury employer because employees may not know if their employer had been purchased.[10] With regard to that argument, the court noted that although the legislature could have specifically included later or successor employers in the language of the statute, it did not, and thus rejected Perrin's assertion.[11]

Following its holding in Perrin, the Barnett court reversed the Chancery Court's decision and held that because Milan had been sold to Kongsberg, Barnett had not remained employed with her pre-injury employer for purposes of Tenn. Code Ann.  § 50-6-241(d)(1)(A), even though she remained employed by Kongsberg performing the same job duties at the same rate of pay and at the same location.[12] When deciding the issue of whether the purchase or acquisition of the pre-injury employer equates to loss of employment, the Barnett court found important that although in 2004 the General Assembly amended Tenn. Code Ann.  § 50-6-241(d)(1)(A), the amendment did not address the loss of employment issue the Tennessee Supreme Court decided in Perrin.[13]

Accordingly, under Barnett (relying on Perrin), if an employee files a complaint for workers' compensation benefits but does not settle before his employer is purchased by another entity, the employee would be considered to have lost his employment and would thus not be subject to the 1.5 multiplier cap provided under Tenn. Code Ann.  § 50-6-241(d)(1)(A). Under these holdings, the employee escapes the cap meant to limit the liability of the pre-injury employer when the employee does not lose employment, while still remaining employed at an equal or greater rate of pay, seemingly penalizing the pre-injury employer for being sold.

However, the Barnett court's reliance on Perrin has been called into question by the General Assembly's May 2009 amendment to Tenn. Code Ann.  § 50-6-241(d)(1), which added subdivision (C). That section provides in relevant part:

Notwithstanding any other law to the contrary, for injuries occurring on or after July 1, 2009, if an injured employee receives permanent partial disability benefits for body as a whole injuries, or if the injured employee receives permanent partial disability benefits for schedule member injuries pursuant to subdivision (d)(1)(A) and the pre-injury employer is sold or acquired subsequent to the receipt of the permanent partial disability benefits, then the injured employee shall not be entitled to seek reconsideration:
Provided, that the injured employee continues to be employed by the successor employer at the same or higher pay; or
If employee declines an offer of employment with the successor employer at the same or higher pay.

New subdivision (C) effectively reverses the holding in Perrin by specifying that the purchase or acquisition of the pre-injury employer by a successor employer is not a triggering event allowing reconsideration, as long as the employee remains employed when the purchase occurs and receives the same or higher rate of pay. Accordingly, the Barnett court's reliance on Perrin and the lack of legislative treatment of the holding in Perrin is no longer supported.[14]

Recently, the Special Workers' Compensation Panel of the Tennessee Supreme Court discussed the effects of the 2009 amendment adding new subdivision (C) on the viability of the court's decision in Barnett. In Day v. Zurich Am. Ins., the plaintiff's employer was also sold before the resolution of her second claim for worker's compensation benefits and the plaintiff continued to work for the successor employer.[15] Though all parties in Day considered Perrin to be controlling, the panel noted that by enacting Public Chapter 364, amending Tenn. Code Ann.  § 50-6-241(d)(1), the General Assembly had essentially abrogated Perrin and Barnett.[16] In Day, the plaintiff's injury took place prior to July 1, 2009, the effective date of Tenn. Code Ann.  § 50-6-241(d)(1)(C), and thus the new provision did not apply.[17] However, the panel was nonetheless clear that the 2009 amendment to Tenn. Code Ann.  § 50-6-241(d)(1) reversed the effects of Perrin and Barnett for injuries occurring on or after July 1, 2009.[18]

Accordingly, at least for injuries that occurred on or after July 1, 2009, when a pre-injury employer is sold prior to the resolution of the employee's workers' compensation claim and the successor employer retains the employee in the same job and at the same rate of pay, the pre-injury employer's liability to the employee for benefits under Tenn. Code Ann.  § 50-6-241(d)(1)(A) should be subject to the 1.5 multiplier cap. Any other construction would lead to incongruent results dependant only on whether the sale of the pre-injury employer occurred before or after the employee resolved his workers' compensation claim under Tenn. Code Ann.  § 50-6-241(d)(1).

Consider two employees with the same injury and anatomical rating.   Employee A settles his claim after the pre-injury employer is sold to a successor company.   Employer B settles prior to the sale to a successor company.   Under Barnett, Employee A would not be limited by the 1.5 multiplier.   However, Employee B, pursuant to the 2009 amendment, would be limited by the 1.5 multiplier and is barred from seeking reconsideration based on the sale. To avoid this unjust result, the Tennessee Supreme Court, like the Panel in Day, should find that the 2009 amendment to Tenn. Code Ann.  § 50-6-241(d)(1)(C) abrogated both Perrin and Barnett. Alternatively, the legislature should further amend Tenn. Code Ann.  § 50-6-241(d)(1)(A) to remedy this inequity.


  1. Barnett v. Milan Seating Sys., 215 S.W. 3d 828 (Tenn. 2007).
  2. On Nov. 24, 2003, the Chancery Court approved a settlement that provided lump-sum benefits for a vocational disability of 19.75 percent to the left upper extremity and 9.87 percent to the right upper extremity. Barnett, 215 S.W. 3d at 830.
  3. Id.
  4. Id.
  5. The Chancery Court further found that Barnett was not entitled to new vocational disability benefits for her carpal tunnel injury, as she had already recovered for it in her first lawsuit and it was not a new injury. Id. at 830-31.
  6. Id. at 829.
  7. Perrin v. Gaylord Entm't Co., 120 S.W.3d 823 (Tenn. 2003).
  8. 120 S.W.3d at 827.
  9. Id. In Perrin, the plaintiff's pre-injury employer, The Nashville Network, was purchased by CBS on Oct. 1, 1997, and he did not file for reconsideration until September of 1999.
  10. Id. In spite of plaintiff's argument that an employee might not know if or when his employer was sold to a successor, the Perrin court found that the plaintiff did in fact know of the sale of The Nashville Network, his employer which was owned by Gaylord Entertainment, to CBS in October 1997.
  11. Id.
  12. Barnett, 215 S.W.3d at 833.
  13. Id.
  14. Moreover, the 2009 amendment includes successor employer liability if the employee receives PPD, returned to work for the pre-injury employer and the employee is no longer employed by the successor corporation at the same or higher pay within the applicable reconsideration period. Tenn. Code Ann.  § 50-60241(d)(1)(C)(ii)(a) and (b).
  15. 2010 Tenn. LEXIS 171, at *2-3 (Tenn. Spec. Workers' Comp. App. Panel, Mar. 31, 2010).
  16. Id. at *8-9.
  17. Id. at *9.
  18. Id.

Robert D. Meyers ROBERT D. MEYERS is a member of Kiesewetter Wise Kaplan Prather PLC in Memphis. He received his law degree from the University of Tennessee in 1986, where he was a member of the Tennessee Law Review. He has varied litigation experience, defending companies and individuals with employee medical cases included ADA, FMLA and workers’ compensation concerns.



Eileen Kuo EILEEN KUO is licensed to practice law in Tennessee and Mississippi. She graduated from Duke University School of Law, where she served as senior research editor for the Duke Journal of Gender Law and Policy and as editor-in-chief for the law school’s paper. She clerked for King and Wood in Bejing, China, and interned for the Court of Appeals in Raleigh, N.C.