Are maximum leave policies legal?

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An employer has agreed to pay $2 million to resolve a disability discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC), according to the EEOC and court records. 

The EEOC alleged that the employer violated the Americans with Disabilities Act (ADA) by applying its 12-month maximum leave policy “inflexibly” and discharging workers who could not return from medical leave after 12 months. In addition to the settlement payment, the employer agreed to update its policies and procedures on reasonable accommodation.

The employer denied violating the ADA and stated it settled to avoid continuing litigation. Still, the EEOC’s position in this case raises the question: Do maximum leave policies violate the ADA?

There are valid reasons for including time parameters in leave policies, subject to employers’ obligations to comply with the ADA.  Employers may impose leave caps to ensure consistency and to set expectations regarding how much leave generally will be provided absent extenuating circumstances.   

What is problematic is if an employer automatically terminates employees once they have used the maximum leave.  Maximum leave policies may violate the ADA if they do not build in flexibility to work with employees with disabilities who may need a reasonable accommodation to return to work.

The ADA does not require that employers provide indefinite leave, even to disabled employees. But leave caps, even those as generous as 12 months, may have to be extended as a reasonable accommodation if doing so may allow an employee to return to work in the foreseeable future and would not cause an undue hardship to the employer.

A best practice for employers is to include language in a leave policy with a cap that says a reasonable accommodation may be provided for employees who need leave in excess of the cap. 

Another best practice is for employers to engage in an interactive process with employees who are approaching the leave limit—whether that limit is 20 weeks, or 180 days, or 12 months—and to talk with the employees about any additional possible reasonable accommodations.

As a practical matter, rarely is 12 months of medical leave (or more) required as a reasonable accommodation, but this analysis depends on the facts of a given situation and the employer’s business and workforce. Therefore, to avoid a potential ADA violation by applying a maximum leave policy too rigidly, employers should treat leave caps as flexible and subject to exceptions in appropriate cases.

Our Insights are published as a service to clients and friends. They are intended to be informational and do not constitute legal advice regarding any specific situation.