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Maximum Leave Policy Found To Be Fair And Lawful

Over the last several years, the EEOC has been cracking down on employers who terminate employees for exceeding the maximum amount of leave available under company policy. For example, a policy may allow an employee to take a medical leave of absence for up to six (6) months. If the employee is unable to return to work at that time, they are automatically terminated.

The EEOC has concluded that such policies are “inflexible” and violate the Americans with Disabilities Act (ADA) because they do not take into account the possibility of additional leave as a reasonable accommodation. Over the last decade, numerous employers have entered into settlement agreements with the EEOC and have paid millions of dollars to settle claims arising from “inflexible” leave policies.

In a victory for employers, the Tenth Circuit has now rejected the EEOC’s position and concluded that “maximum” or “inflexible” leave policies are not inherently discriminatory. In fact, the Tenth Circuit went even further by finding that such policies actually “protect” the rights of the disabled and insure fair and uniform treatment. Hwang v. Kansas State University.

Hwang was employed at Kansas State University and was granted a six (6) month medical leave of absence to treat her cancer. When she asked for additional time off work, the leave was denied under the University’s policy and she was severed from her employment. She brought suit under the Rehabilitation Act, which applies to companies that are recipients of federal funding. The federal courts have applied the ADA reasonable accommodation standards when interpreting the Rehabilitation Act.

Hwang argued that the University violated EEOC guidelines because the six-month policy was inflexible and resulted in Hwang being automatically terminated without considering additional leave as an accommodation. The district court dismissed her complaint and the Tenth Circuit affirmed that decision.

Right out of the gate, the Tenth Circuit rejected the notion that employers cannot enforce a maximum leave policy. The court posed the question “Must an employer allow employees more than six months sick leave or face liability under the Rehabilitation Act?” Answering its own question, the court stated “Unsurprisingly, the answer is almost always no.”

The court’s opinion is chock-full of commentary about the EEOC guidelines and the need to apply common sense when analyzing these issues:

•  “It perhaps goes without saying that an employee who isn’t capable of working for so long [i.e., six months], isn’t an employee capable of performing a job’s essential functions – and that requiring an employer to keep a job open for so long doesn’t qualify as a reasonable accommodation.”

•  “After all, reasonable accommodations – typically things like adding ramps or allowing more flexible working hours – are all about enabling employees to work, not to not work.” Reasonable accommodations are not intended to “turn employers into safety net providers for those who cannot work.”

•  The court stated that EEOC guidance on this topic “commands our deference only to the extent its reasoning actually proves persuasive.” The court noted that the EEOC manual contains statements indicating that a leave of absence for six months is “beyond a reasonable amount of time.”

•  Finally, the court found that “inflexible” or “maximum” leave policies serve to “protect rather than threaten the rights of the disabled by ensuring disabled employees’ leave requests aren’t secretly singled out for discriminatory treatment, as can happen in a leave system with fewer rules, more discretion, and less transparency.” Such policies also create and fulfill “expectations of fair, uniform treatment,” and promote “due process” while limiting the potential for “unfairness in personnel decisions.”

In its conclusion, the court noted that not all inflexible leave policies should be upheld. If the policy provides an unreasonably short period of time for sick leave, it may not comply with the law. However, the court made it clear that a leave policy granting employees a “full six months sick leave” is “more than sufficient to comply with the Act in nearly any case” as long as it is consistently applied.

The Tenth Circuit’s decision is definitely a victory for employers who maintain maximum leave policies. The decision may pave the way for other courts to adopt a similar analysis. The Tenth Circuit covers Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming, but its holding is limited to the Tenth Circuit alone.

For the time being, it is our recommendation to still tread carefully when enforcing “maximum leave” policies. Employers should continue their efforts to meet with the employee and discuss accommodations including additional leave whenever the leave maximum is reached. If it appears that the employee may be able to return to work in the foreseeable future and perform the essential functions of the job, the company should consider additional leave as an accommodation.

However, an employer is not required to grant an employee an “indefinite leave” as an accommodation. If there is no reasonable prospect that the employee will return to work in the short term (after a leave of six months or longer), the Company may be in a position to deny additional leave and sever the employment relationship. As always, you should consult with your legal counsel to make sure all of the proper steps are followed before terminating a disabled employee under a leave of absence policy.