Inflexible Leave Policies: Automatic Termination May Violate the ADA

by Laura Lapidus, Esq., CNA

The Equal Employment Opportunity Commission has stated its position with respect to employee leave policies. Once employees have exhausted their leave, their employers must determine whether they are considered disabled under the Americans with Disabilities Act and, if so, whether a “reasonable accommodation” is necessary to help them return to work. Inflexible leave policies that automatically terminate employees upon exhaustion of a maximum medical leave period, and in the absence of an individual assessment of whether an accommodation is necessary and possible, may violate the ADA and potentially result in litigation and consequent loss.

ADA Requirements

Many companies’ leave of absence policies provide for termination of employment if the employee fails to return to work within a fixed period of time, typically ranging from 12 weeks to one year. While such a policy may satisfy an employer’s obligation to provide unpaid leave under the Family Medical Leave Act or other similar laws, it does not necessarily comply with the ADA. The EEOC has stated that if the employee is a qualified individual with a disability, the employer must engage in an interactive post-leave process to determine whether reasonable accommodation is possible. Any policy that automatically terminates employment at the end of a set period, regardless of its length, prevents consideration of reasonable accommodation and will likely be viewed by the EEOC as a violation of the ADA.

The EEOC and courts have stated that an employer may accommodate a qualified disabled employee by granting additional unpaid leave beyond the requirements of the employer’s policy and other laws, such as the FMLA. Although a general consensus has emerged that indefinite leave is not a reasonable accommodation, no bright-line test exists to determine what length of unpaid leave constitutes a reasonable accommodation. Whether a request for a longer leave would be considered an undue hardship depends upon individual circumstances, such as the size of the company and the position held by the employee requesting leave.

EEOC Settlements

The EEOC has aggressively pursued organizations that maintain inflexible leave policies. For example, one company paid more than $4.8 million to settle leave-related claims alleging that it automatically terminated hundreds of employees who could not return to work after exhausting their 12 weeks of leave. The EEOC asserted that this policy violated the ADA because it did not allow for consideration of reasonable accommodation, such as additional unpaid leave. The agency also contended that the company’s policy of prohibiting employees from returning to work if there were any restrictions placed upon them violated the ADA. According to the EEOC, such a blanket prohibition precluded consideration of a reasonable job accommodation that would permit employees with restrictions to return to work in some capacity. EEOC actions against companies with inflexible leave policies have resulted in a number of significant damage awards and settlements, ranging into the millions of dollars. The loss potential of these lawsuits is high, as claimants often include many past and current employees.

Risk Control Measures

The following strategies can help employers mitigate the risk of potential ADA violations:

  • Understand the ADA and its regulations, especially the mandate to engage in an interactive process designed to explore reasonable accommodation.
  • Review policies and procedures to ensure they allow for consideration of a reasonable accommodation for qualified individuals with disabilities who have exhausted their initial leave. Options, which should be examined on a case-by-case basis, include additional unpaid leave, modification of job functions or reassignment to an open position.
  • Eliminate rigid policies and/or procedures that authorize automatic termination upon exhaustion of leave, or that limit employees’ ability to return to work unless they have “no restrictions” or are “100 percent able.”
  • Document discussions with employees regarding their needs and potential accommodations in order to demonstrate that an interactive process has occurred.
  • Retain an employment attorney to review any changes to policies and/or procedures prior to their implementation.
  • Educate managers regarding the ADA and its regulations, as well as the company’s own policies regarding leave and reasonable accommodation.

By following these simple guidelines, organizations can minimize leave-related risk and help ensure that their policies and procedures are both legally compliant and fair to employees.

Laura Lapidus, Esq., is CNA’s Management Liability Risk Control Director and provides risk control support to all of the insurance products which provide management liability coverage, with a focus on Employment Practices Liability insurance coverage. Lapidus has more than 25 years of experience in employment law. She has taught dozens of CNA’s School of Risk Control Excellence courses and webinars and has written various articles on employment practices issues.

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