Tag: FMLA

Firing Employees Medical Leave

Firing Employees on Medical Leave

Can you legally do this? Yes . . . maybe. Firing an employee on medical leave is a tricky proposition. But sometimes it is appropriate. Even then, it might not go over well.

Let’s review some of the legal issues and practical considerations that come up in this area.

Legal Protections

The full range of legal protections for employees on medical leave depends on where the employee works. But the Americans with Disabilities Act (ADA) and Family and Medical Leave Act (FMLA) apply throughout the United States. We’ll focus on those laws here, but you should also consider any similar state or local laws that may apply.

ADA

The ADA covers all employers with at least 15 employees. It prohibits discrimination against qualified individuals with a disability. It also requires employers to provide reasonable accommodations to employees with disabilities. Reasonable accommodations may include unpaid medical leave. (Read more: Is Time Off a Reasonable Accommodation?)

Just as refusing time off to an employee with a disability might violate the ADA, so might ending their employment while they’re out of work.

FMLA

Employers with 50 or more employees must allow eligible employees to take up to 12 weeks of unpaid leave per year for specific reasons. These reasons include the employee’s own serious health condition.

Most employees on FMLA leave have the right to return to work at the end of their leave. It is also unlawful to retaliate against an employee for taking FMLA leave. These protections may come into play if an employer seeks to end the employment of someone on FMLA leave.

What You Can’t Do

Employers can’t fire a qualified employee because of their disability . . . . Unless the disability prevents them from performing the essential functions of their job despite any reasonable accommodations.

There are many reasons why managers may get frustrated with employees who seem to never be at work. But there has to be more than just not wanting to deal with someone with a medical condition.

Employers covered by the FMLA also shouldn’t automatically fire an employee who doesn’t return at the end of 12 weeks of FMLA leave. An employee with a medical condition might still be eligible for additional time off as a reasonable accommodation under the ADA.

When Could You Fire an Employee on Medical Leave?

There aren’t many absolutes here. Each situation is different and may raise unique concerns, but here are some times when an employer might be able to separate the employment of someone on medical leave:

  • The business is closing, so everyone is losing their job.
  • You are eliminating the person’s position–especially if others not on leave will also lose their jobs without being replaced.
  • The employee has falsified the medical basis for leave.
  • You’ve discovered misconduct that warrants termination regardless of leave status.
  • The employee won’t be able to return for an extended period of time, such that continuing employment is not a reasonable accommodation or would impose an undue hardship.

The above list roughly moves from straightforward to more complicated analyses regarding employees on medical leave. In particular, the last situation involves the complex evaluation of when an accommodation is no longer reasonable–which seldom has an easy answer.

Putting It All Together

Employers should understand that employees are not automatically untouchable just because they’re on medical leave. But, it adds a factor to consider before making the termination decision. The situations posed above are only some of the more common that could occur. As each case raises its own nuances, employers should consult with experienced employment counsel when faced with these decisions.

Time Off ADA Reasonable Accommodation

Is Time Off a Reasonable Accommodation?

The Americans with Disabilities Act (ADA) requires employees to provide reasonable accommodations to qualified employees with disabilities. These accommodations can take various forms, including structural modifications to the workplace and scheduling adjustments. The U.S. Equal Employment Opportunity Commission (EEOC) also considers time off from work to be a reasonable accommodation in many situations.

Time Off Under the ADA

Let’s start with a relatively unsurprising conclusion under disabilities discrimination laws. Employers cannot provide employees with disabilities less time off than other similarly situated employees. For example, an employer that allows employees to take vacation time for any purpose cannot exclude an employee with a disability from using vacation time to recuperate from a medical procedure.

Few employers would object to that principle. But many do not consider the possibility that an employee with a disability may be entitled to take more time off than company policies normally allow.

Leave as a Reasonable Accommodation

The EEOC’s ADA regulations define reasonable accommodation to mean modifications or adjustments:

  • to a job application process that enable a qualified applicant with a disability to be considered for the position the applicant desires;
  • to the work environment, or to the manner or circumstances under which the position held or desired is customarily performed, that enable an individual with a disability who is qualified to perform the essential functions of that position; or
  • that enable an employee with a disability to enjoy equal benefits and privileges of employment as are enjoyed by the employer’s other similarly situated employees without disabilities.

EEOC guidance states that: “The purpose of the ADA’s reasonable accommodation obligation is to require employers to change the way things are customarily done to enable employees with disabilities to work. Leave as a reasonable accommodation is consistent with this purpose when it enables an employee to return to work following the period of leave.”

As with other forms of accommodations, additional leave or time off must be reasonable and can be denied if it imposes an undue hardship. Often these issues raise questions of how much leave is reasonable?

The EEOC will not answer this question directly. There is no bright line amount of time off that an employee with a disability must receive under the ADA. Instead, the EEOC has historically taken the position that employers must evaluate each situation individually.

Factors that play into the analysis of reasonableness include

  • the reason(s) the employee needs leave;
  • whether the leave will be consecutive (all at once) or intermittent (periodic); and
  • when the need for leave will end.

Additional factors toward whether time off will impose an undue hardship include

  • size and skills of the remaining workforce;
  • ability to temporarily replace the employee; and
  • whether the time off is foreseeable or unpredictable.

Maximum Leave Policies

Trying to avoid the complicated analysis suggested above, some employers seek to enforce a maximum leave policy. Most commonly, these are for either 6 or 12 months. But some employers use longer or shorter periods.

Under these policies, employers would like to say that no matter the reason for the extended leave, any employee out longer than X months will be removed from the payroll, etc. The EEOC consistently rejects these policies. Sometimes courts allow them, however.

Still, even the risk of EEOC investigation makes it dangerous to try to apply a strict maximum leave policy. Accordingly, it is usually better to build some discretion into the policy. For example, while referencing a general maximum time period, the policy would advise employees that a brief extension of the leave may be available if medically necessary. You could then determine what a “brief extension” means on a case-by-case basis, providing the flexibility the EEOC seeks.

Don’t Let the FMLA Fool You

The federal Family and Medical Leave Act (FMLA) requires employers with 50+ employees to allow eligible employees to take up to 12 weeks off. Qualifying circumstances for FMLA leave include the employee’s own serious health condition.

Employees with serious health conditions often also qualify as employees with a disability under the ADA. Thus, they may be eligible for leave as a reasonable accommodation. And more than 12 weeks off might be reasonable under the circumstances.

Accordingly, employers should almost never automatically terminate an employee’s employment merely because they don’t return to work immediately after 12 weeks of FMLA leave. (In addition to the medical leave scenario, other forms of FMLA leave may also touch on other discrimination protections, such as sex/pregnancy discrimination. Plus, retaliation for taking FMLA leave is itself unlawful.)

Time Off as an Accommodation Can Be Unpaid

Allowing an employee time off as a reasonable accommodation does not mean employers must provide paid leave. As mentioned, if the employee is eligible to use vacation or other paid leave for a portion of the time off, then they should not be denied the opportunity to do so based on their disability. But, if they have exhausted any available paid time (or have none in the first place), then, like the FMLA, the ADA does not entitle anyone to receive paid leave.

Review Your Leave Policies

It is difficult to propose one-size-fits-all advice on this issue, but all employers should seek to avoid facially unlawful leave policies. At a minimum, this includes any wording that directly penalizes qualified employees with disabilities. But most employers should go further and build in flexibility to account for reasonable accommodations, as suggested above. This includes, by the way, so-called “no-fault” attendance policies. (But that will have to be a topic for another day!)

 

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Tax Reform Affects Sexual Harassment and Employee Benefits

Tax Reform Affects Sexual Harassment Settlements and Employee Benefits

On December 22, 2017, President Donald Trump signed sweeping tax reform legislation. The controversial tax bill includes many changes that directly affect the employment relationship. These range from sexual harassment settlements and paid family and medical leave to reimbursed employee expenses and retirement plans.

Although I am neither a tax lawyer, nor an accountant, I offer a synopsis of these changes here.

Tax Deductions for Sexual Harassment Settlements

In response to the ongoing #MeToo movement, Senator Bob Menendez (D-NJ) introduced a new provision to the Internal Revenue Code’s section on tax deductions for ordinary trade or business expenses. The provision prohibits deductions for:

  • any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement; or
  • attorney’s fees related to such a settlement or payment.

The tax reform bill doesn’t expand on the meanings of the terms used in this new provision. That leaves its application open for debate, at least until the IRS issues guidance and begins to apply the restriction to actual returns.

Clearly, this new tax code provision will affect settlements of employment claims. This may include both cases of an asserted claim involving sexual harassment or sexual abuse and those where the employer seeks a general release to cover all employment-related claims. In the latter scenario, the employee may not have specifically alleged sexual harassment/abuse. But a broad release would typically reference Title VII and similar state laws that could encompass sexual harassment claims. Employers (and employees) will need to weigh the trade-off between release coverage, confidentiality, and tax deductibility.

Employer Credit for Paid Family & Medical Leave

Employers can now claim a tax credit starting at 12.5% of wages paid to qualifying employees on family and medical leave. Wages paid must be at least 50% of the employee’s normal wages. The credit increases by 0.25% for each full percentage point by which the employer’s wage payment exceeds 50% of the employee’s normal wages, up to a maximum 25% credit.

To be eligible to take the credit, the employer must provide all qualifying full-time employees at least two weeks of paid family and medical leave each year under a written policy. The employer must also provide part-time employees leave on a pro-rata basis.

Qualifying employees are only those who have been employed for one year or more and whose wages do not exceed $72,000 (in 2018, indexed for inflation).

The credit is limited to 12 weeks of paid leave per employee in a tax year. It is only in place for 2018 and 2019 and does not apply to paid leave mandated by state or local law.

Certain Reimbursed Expenses No Longer Excluded from Employee Income

The 2017 tax reform bill repeals certain exclusions from employees’ taxable income. One such exclusion previously applied for certain moving expenses reimbursed by their employer. Another permitted employees to exclude up to $20 per month of qualified bicycle commuting expenses reimbursed by their employer. Under the new tax law, neither of these exclusions apply between January 1, 2018 and December 31, 2025. Subject to future Congressional action, these exclusions are scheduled to return in 2026.

The reforms also indefinitely eliminated employer deductions for certain transportation benefits provided to employees. Specifically, these deductions applied to up to $255 per month for employee mass transit commuting and parking and up to $20 per month in bicycle costs.

There are also changes to tax treatment of qualified equity grants to employees, employee achievement awards, and length of service award plans.

Retirement Plans

The tax changes also affect employer-sponsored defined contribution plans. It gives employees more time to roll over loan balances to an IRA following plan termination or separation from employment. Under the old rules, employees had 60 days to avoid having the loan treated as a distribution. They now have until the due date for filing that year’s tax return.

Other earlier drafts included additional changes that were ultimately dropped. These included reducing the age for beginning in-service distributions from defined benefit and state and local governmental plans to 59 1/2 and changing rules regarding hardship distributions.

Health Care

The new tax bill eliminates the penalty connected to the Affordable Care Act’s individual mandate as of 2019. The penalty still applies to individuals who haven’t maintained sufficient health insurance coverage in 2017 and 2018.

It also reduces the threshold for claiming itemized deductions for qualified medical expenses from 10% to 7.5% of income in 2017 and 2018. The 10% threshold returns in 2019.

Response to Employment-Related Tax Reform Issues

Most of these issues do not require employers to take action (other than paying taxes differently). However, because they will affect taxation of both the employing organization and the employees, questions are likely to arise. Proactive employers should consider the tax impacts and plan accordingly.

Businesses should seek further guidance from appropriate professionals in considering their approach in response to these developments. Often that will mean accounting or tax law professionals. But it will also include attorneys involved in settling disputes with employees, especially (but not only) those involving sexual harassment allegations. An experienced employment lawyer can also assist in preparing a credit-qualifying paid family and medical leave policy.

The IRS indicates that it will provide updates and resources about the new tax reforms here.