Employment Law Update

What's The Issue?

Many employers have leave of absence policies under which employees face termination if they do not return to work within a specified period (such as 3 months, 6 months, or one year).

The Equal Employment Opportunity Commission (EEOC), the federal agency charged with enforcing the Americans With Disabilities Act (ADA), has announced that such policies generally violate the ADA. The EEOC asserts that because the ADA requires employers to engage in an interactive process with each disabled employee to find a reasonable accommodation, employers must review each employee's facts and circumstances and cannot automatically terminate employment at the end of a predetermined period. The EEOC's position is causing employers to review and modify existing leave policies.

The ADA requires employers to provide reasonable accommodations to employees with disabilities unless doing so would cause an undue hardship to the employer. In the context of an employee who needs leave from work as an accommodation, the EEOC takes the position that unless granting leave to that particular employee creates an undue hardship, the employer must grant the leave. Policies that impose inflexible limits on leave prevent the employer and employee from engaging in the required interactive process to determine whether a reasonable accommodation exists.

EEOC Enforcement Efforts

In January 2011, the EEOC settled a class action lawsuit for $3.2 million on behalf of 110 former employees of the Chicago-area supermarket chain, Jewel-Osco. The EEOC alleged that Jewel-Osco had a policy of firing employees after one year of leave if they were not medically able to return to their job without restrictions, rather than provide them with extended leave or other reasonable accommodations. This was only the most recent in a series of enforcement actions by the EEOC against employers with inflexible leave policies.

In an earlier case, the EEOC issued an administrative finding against J.P. Morgan Chase. Chase's leave policy protected the jobs of employees who went on a leave of absence for less than six months. However, employees who went on longer leaves of absence faced termination if they could not find an open position within 30 days of being released to return to work. The EEOC charged that Chase violated the ADA by terminating some employees without first attempting to determine on an individual basis whether they required other accommodations because of a disability. Chase agreed in 2007 to a $2.2 million settlement to be distributed among 222 employees who lost jobs under the policy.

The EEOC also filed suit against Sears, charging that Sears' leave policy imposed an inflexible one year deadline, after which employees faced automatic termination. The suit was originally brought on behalf of an employee who was unable to return to work within a year of beginning a worker's compensation leave, but evolved into a class action on behalf of more than 100 employees. In 2009, Sears agreed to a $6.2 million settlement, the largest ADA settlement to date.

The EEOC is continuing its enforcement efforts and recently filed lawsuits against UPS and Princeton Healthcare Systems arising out of the companies' use of inflexible leave policies. Both of those suits are pending and more cases concerning this issue are likely to follow.

When Is "Enough" Leave Enough?

It is generally agreed that indefinite leave is not a reasonable accommodation. Beyond that generalization, however, each situation must be assessed individually considering all the relevant aspects of the employee's job and the employer's business. The only limit the ADA places on the requirement that an employer provide a reasonable accommodation is that no action is required if providing the accommodation would impose an "undue hardship" on the employer. The EEOC has stated that "'[u]ndue hardship' means significant difficulty or expense and focuses on the resources and circumstances of the particular employer in relationship to the cost or difficulty of providing a specific accommodation." To qualify as an undue hardship, the requested accommodation must be one that is either financially impractical or "unduly extensive, substantial, or disruptive, or those that would fundamentally alter the nature or operation of the business." Larger companies and those with more assets will typically have a more difficult time establishing that an accommodation is an "undue hardship."

What Should Employers Do?

In light of the EEOC's recent enforcement efforts, employers should:

• Amend leave policies that set fixed limits on medical or disability leave beyond which termination is automatically imposed. This includes FMLA polices that provide for termination after 12 weeks of leave.
  
• Amend leave policies that allow employees to return to work only when they have no restrictions or are "100% able."
  
• Assess each employee's situation on an individual basis.
  
• Attempt to engage in an interactive process to determine whether there is a reasonable accommodation, including, but not limited to, extended leave, that will allow the employee to resume his or her job.
  
• Document. Document. Document. Employers bear the burden of demonstrating that they engaged in the interactive process. Employees often fail or are unable to cooperate in determining whether and when they will be able to resume work and what accommodations will be necessary. If the EEOC investigates, however, the employer will be disadvantaged if it has not recorded its efforts.

It is possible that the courts will reject the EEOC's position and allow employers to place some outer limit on leaves of absence. In the interim, the EEOC has declared war on inflexible leave policies. Until the law is ultimately resolved, prudent employers will ensure that their leave policies do not impose inflexible limits or automatic terminations.
If you need help drafting a leave policy, would like your current leave policy reviewed, or have other questions concerning these issues please contact: