Thank you for the information and your question. I assume that you meant to say that the employer opted out of the State's workers' compensation coverage, since an employer may not opt out of unemployment
coverage, and the issue you are asking about is a workplace injury. So, with that assumption in mind, to answer your main question, if an employer terminates an employee for filing suit, whether under WC laws, or the parallel private coverage the employer has for workplace injuries, then they are violating public policy
. In other words, terminating an employee for exercising their legal rights, is against the law. There is no legal issue of hostile environment, since that is a term that has nothing to do with workplace injuries or the employee's right to file suit.
That said, I completely understand, that as the employer, it is frustrating to have an employee work for you who has filed suit against you, for whatever reason, but this termination
has exposed your company to a wrongful termination
suit based on the reason I discussed above and also a disability discrimination
claim. I can't advise you what to do since I am not your attorney, but I highly recommend that you sit down with a local employment law
attorney and come up with a plan of how you will handle this issue. That might include you calling this employee back and reinstating them, or simply standing by to be possibly served with a law suit or discrimination
complaint from the State or the EEOC
Please let me know if you need any clarification. I would be glad to assist you further if I can.