Automatic Employee Termination Following Leave of Absence May Violate Law

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November 15, 2010

The American with Disabilities Act (“ADA”) requires employers to make reasonable accommodations for qualified employees with disabilities. Although the ADA does not mandate that an employer grant a leave of absence to an employee with a disability, such a leave in certain cases may be necessary to comply with the ADA’s reasonable accommodation requirement. Thus, in an effort to comply with the ADA and other reasons, many employers maintain leave of absence policies. Some policies include an employee’s automatic termination if the employee is not able to return to work at the end of a leave of absence or after a specified period of time.
The U.S. Equal Employment Opportunity Commission (“EEOC”) in the recent past made a determination that automatic termination policies do not comply with the reasonable accommodation requirement under the ADA. The EEOC believes that employers must individually assess each employee situation and investigate whether accommodating an employee by granting additional leave, which can be beyond an employee’s Family and Medical Leave Act (FMLA) entitlement, would be a reasonable accommodation. The EEOC has taken the position that automatic or “no-fault” termination policies that are inflexible and that do not allow for the possibility of an extended period of time away from work violate the law.
The EEOC has been aggressively taking action against employers that have policies that require automatic termination of employees. Here are some examples:

In September 2009, the EEOC and Sears entered into the largest ADA settlement agreement in history. In a class action lawsuit, Sears agreed to pay $6.2 million to resolve the EEOC’s claim that Sears maintained an inflexible leave policy that called for an employee’s automatic termination if the employee was unable to return to work after exhausting worker’s compensation leave, and which failed to leave room for the possibility that extended leave or other forms of accommodation may be required as a reasonable accommodation under the ADA.

In August 2009, the EEOC sued UPS for an allegedly discriminatory leave of absence policy. In this case, an administrative assistant took a 12-month leave of absence due to multiple sclerosis. She returned to work for a few weeks, but soon needed additional leave to deal with her medication’s side effects. UPS’s leave policy called for automatic termination should an employee require more than 12 months of medical leave. UPS terminated the employee for exceeding its 12-month leave policy. The EEOC determined that UPS failed to reasonably accommodate the employee. The EEOC stated: “[P]olicies like this one at UPS, which set arbitrary deadlines for returning to work after medical treatment, unfairly keep disabled employees from working.” This case is ongoing.

In 2006, the EEOC and JP Morgan Chase & Co. (Chase) entered into a $2.2 million settlement agreement to resolve an ADA claim. In this case, the employer’s policy permitted employees who returned from medical leave within six months to return to their jobs. Employees who required more than six months of medical leave were not guaranteed a return to their previous position. If their position had been filled, employees who were released to return to work after more than six months of medical leave had 30 days to find another position or were terminated. The EEOC maintained that the ADA requires employers to individually assess whether additional leave or other forms of accommodation will assist employees in returning to work without placing an undue hardship on the employer. The EEOC found that Chase had violated the ADA by applying its automatic termination policy and failing to determine on an individual basis whether additional accommodation was possible.

Employers should recognize that the duty of reasonable accommodation under the ADA (and Wisconsin’s Fair Employment Act) does not have a date of expiration and that, therefore, an automatic termination after a specified length of time does not comply with the law. There is no magic number of days, weeks, or months that makes a leave of absence an undue hardship. Rather, what constitutes an undue hardship is specific to the employee, the employer, and the position at issue.
To avoid action by the EEOC, an employer should review its ADA and attendance policies to ensure that they do not call for automatic or no-fault termination after exhaustion of an employee’s FMLA entitlement or other internal medical leave entitlement. Instead, the policies should allow each employee to be evaluated on an individual basis. Applying its policies, an employer should evaluate all facts available regarding the employee, the disability involved, and the hardship that the company would have to endure if it were to grant an extended period of leave to accommodate the employee.
For questions regarding compliance with the ADA or FMLA, or to have your policies reviewed to ensure compliance, please contact any of the attorneys in the Employment, Benefits & Labor Relations Practice Group of Ruder Ware who will be happy to provide assistance.

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