EEOC Continues To Target Maximum Leave Policies

by Ballard Spahr LLP
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[authors: Brian D. Pedrow, Meredith C. Swartz]

The Equal Employment Opportunity Commission (EEOC) secured another victory in its attack on employer maximum leave policies that do not take into account additional leave as a form of reasonable accommodation. Earlier this month, a federal judge in Colorado approved a consent decree between Interstate Distributor Co. and the EEOC, settling a lawsuit in which the EEOC alleged that Interstate’s policy of automatically terminating the employment of employees once they exhausted the maximum leave provided under the company’s policy violated the Americans with Disabilities Act (ADA). 

Interstate had a maximum leave policy that provided employees with up to 12 weeks of leave. Any employee who was unable to return to work without restrictions after exhausting the maximum 12 weeks of leave would be terminated. The EEOC asserted that by automatically terminating the employment of such individuals, Interstate denied  those employees a reasonable accommodation, in violation of the ADA. 

Contrary to most employment laws that prohibit certain discriminatory conduct, the ADA imposes upon employers the affirmative obligation to determine if a reasonable accommodation would permit a qualified individual with a disability to perform the essential functions of his or her job. The EEOC alleged that by imposing a maximum leave policy on all employees with no exceptions, Interstate failed to determine if additional leave would have been a reasonable accommodation for employees who were not yet able to return to work after exhausting 12 weeks of leave. According to the EEOC, the lack of any exceptions in Interstate’s policy resulted in its uniform failure to engage in the interactive process required by the ADA. 

The consent decree requires Interstate to make a $4.85 million settlement payment, and to implement new and/or revised policies, including the following:

  • Interstate is enjoined against any employment practice that discriminates on the basis of disability, as well as any retaliatory conduct.
  • Interstate must review existing policies and procedures, and within 120 days implement new and/or revised policies and procedures that prevent discriminatory decision making regarding employees' requests for reasonable accommodation and resignation and discharge of qualified individuals with disabilities. The policy must contain a description of the consequences for violators of the policy, including termination. All employees must be notified of the new policy in writing, and Interstate must notify the EEOC.
  • Interstate must conduct equal employment opportunity training on an annual basis. The consent decree sets forth the specific number of hours and focus of the training for employees, supervisors, and human resources. 
  • Interstate must post a notice within five business days of the District Court's consent decree in conspicuous areas and must appoint an internal monitor to ensure compliance with the consent decree. The monitor will report to and meet with the EEOC every six months.  

The consent decree has a duration of three years. As is apparent from these conditions, the ramifications of an EEOC lawsuit against an employer for violation of the ADA due to maximum leave policies can be significant. 

How Did We Get Here?

Employer neutral maximum leave policies did not always garner this level of EEOC scrutiny. The EEOC's initiative in the past several years represents a divergence from what employers once thought was a lawful approach to handling employee leaves of absence. 

The ADA regulations provide that uniformly applied leave policies or benefit plans do not violate the ADA simply because they do not address the special needs of every individual with a disability. In response to the regulations, many employers adopted a "one-size-fits-all" policy that places a maximum cap on leave, regardless of the reason, because such a policy treats all employees (disabled and non-disabled alike) in the same manner. While the EEOC always has considered additional unpaid leave to be a reasonable accommodation under the ADA, only in the past several years has it embarked on a campaign against otherwise neutral leave policies.

The EEOC has taken the position that such neutral leave policies are too inflexible and contrary to the ADA’s requirement that employers provide disabled employees with a reasonable accommodation. According to the EEOC, an employer must modify its "no-fault" leave policy to provide a disabled employee with the additional leave unless it can show that there is another effective accommodation that would enable the person to perform the essential functions of his/her position, or that granting additional leave would cause an undue hardship. The EEOC’s position is that modification of workplace policies, including maximum leave policies, is a form of reasonable accommodation. As a result, the EEOC has taken the position that any policy that sets a firm time limit for an employee to be out on leave, without exception, violates the ADA.

The Interstate settlement follows a widely publicized settlement the EEOC reached with Sears Roebuck & Company, in which Sears agreed to pay $6.2 million in connection with its policy of terminating employees who could not return after a full year of leave.

What Does This Mean For Employers?

As demonstrated by the Sears and Interstate decrees, the EEOC is aggressively targeting employers with maximum leave policies. The EEOC has been successful in extracting consent decrees across the country, and in most cases, the consent decrees include not only settlement payments, but also a variety of compliance requirements and conditions.

As a result of the EEOC's continued pursuit of employers with maximum leave policies, it is important for employers to review their leave policies -- Family and Medical Leave Act (FMLA), short- and long-term disability, and workers' compensation -- to ensure that they contain appropriate flexibility when it comes to the issue of terminating employees who are out on extended medical leaves. If you have questions about measures that your organization should take to ensure ADA compliance, please contact Brian D. Pedrow at 215.864.8108 or pedrow@ballardspahr.com, Meredith C. Swartz at 215.864.8132 or swartzm@ballardspahr.com, or the member of the Labor and Employment Group with whom you work.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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