Blanket Leave Policy Costs Employer $4.85 Million

Often employers assume that when an employee has exhausted their 12 weeks of leave under the Family and Medical Leave Act (FMLA) (or similar state law), they are not entitled to any additional time off and can be terminated if they do not return to work immediately. However, a recent class action settlement in Colorado highlights why employers must be careful not to have a blanket policy of terminating employees who exhaust their FMLA leave without considering whether each employee is entitled to additional leave under the Americans with Disabilities Act (ADA).

The case involved the Equal Employment Opportunity Commission (EEOC) suing Interstate Distributor Company. The EEOC alleged that Interstate (a trucking company in Tacoma, Washington) terminated over 200 injured employees without granting them reasonable accommodations as required under the ADA. The lawsuit alleged that when an Interstate employee needed over 12 weeks of leave due to a workplace injury, Interstate automatically terminated their employment rather than determining if it would be reasonable to provide an accommodation of additional leave. Although Interstate denied it had violated the law, it paid $4,850,000 to settle the lawsuit.

The lesson is that employers must not only harmonize their FMLA, ADA and workers’ compensation leave policies, but must also consider additional leave as a reasonable accommodation under the ADA for any employee who has exhausted their FMLA allotment for any medical reason. Further, employers must consider whether an employee on leave can return to work with a reasonable accommodation.