As your FMLA leave is nearly exhausted, we expect you to return to work on April 2, 2012 with a note from your physician stating that you are able to work with no restrictions.

Or take this one, which a third party administrator proposed to one of my clients for use in correspondence sent with the Company's FMLA Rights and Responsibilities Notice:

In addition, [the Company] cannot accept light duty restrictions upon your return to work.  If you are unable to return to work without restrictions, you must remain on leave until you are able to return without restrictions.

¡Ay, caramba!  Really?

What's the Problem with a "No Restrictions" Approach? 

When employers require that employees be 100% healed or have no restrictions upon their return to work, the far majority of courts have found that these policies discriminate against employees with disabilities who may be able to perform the essential functions of their position with or without a reasonable accommodation under the Americans with Disabilities Act.  To be clear, the ADA requires employers to make an individualized assessment when deciding whether an employee can return.  When employers implement a "100% healed" policy, most courts find that employers improperly bypassed the individualized assessment process.  Under these policies, the employer simply presumes that the employee is unable to perform the duties of his or her job without properly considering whether the employee’s restrictions can be accommodated. 

At a minimum, the problem with this practice is two-fold: 1) it bypasses the process requiring an employer to make an individualized assessment under the ADA; and 2) it increases the chance that the employer will have found to perceive the employee as disabled.

Not all courts feel this way, of course.  Recently, in Powers v. USF Holland (pdf), a federal appellate court found that "100% healed" policies are only problematic if the employee can show he or she is actually disabled or is regarded as disabled.  Hmmmm...that doesn't make me feel too comfortable.  Interestingly, this decision applied pre-ADA Amendments Act (ADAAA) law and regulations because the facts pre-dated the ADAAA.  However, even this conservative Seventh Circuit court warned employers:  “The risk of a [100% healed] policy is even greater, if not absolute, now that the ADAAA has changed the definition of ‘regarded as’ disabled.”

The Powers decision certainly echoes the EEOC's position, which has long held that these policies violate the ADA.  In fact, late last month, I had the chance to serve as a fellow speaker on ADA and FMLA issues at a DMEC conference with Chris Kuczynski, the EEOC's Assistant Legal Counsel and Director of its ADA/GINA Policy Division.  At the conference, Mr. Kuczynski reminded employers that they face significant risk under the ADA if they maintain a policy that requires an employee to return to work without restrictions (for the reasons stated above).     

Insights for Employers

Given the much broader regulations implementing the ADAAA, employers that still enforce “100% healed” policies or require evidence that employees can return to work “without restrictions” take on a tremendous amount of risk.  Far too much risk, in my opinion.  Therefore, employers must re-evaluate these practices and implement policies that provide for individualized assessments of an employee’s ability to return to work with or without a reasonable accommodation under the ADA.  In light of the EEOC's recent litigation in this area, this evaluation is imperative.

Naturally, this means employers also must do an effective job of obtaining medical information to which they are legally entitled so that they can make the most informed decisions about: 1) the employee's ability to return to work; and 2) whether an accommodation may help the employee perform the job.  Thus, in the context of FMLA, employers should engage in a consistent and regular practice of requiring all employees returning from FMLA leave to provide a fitness-for-duty certification from their health care provider that confirms their ability to return to work and perform the essential functions of their job, with or without a reasonable accommodation.

Only a true FMLA nerd would use this as an opportunity to explain a little-used, often forgotten rule under the Family and Medical Leave Act -- the "key employee" provision -- that actually could deny Colbert's reinstatement to his wildly popular comedy show. The FMLA allows employers to utilize this "key employee" provision to deny reinstatement to an employee who is among the highest paid in the workplace and whose reinstatement after FMLA leave creates a significant financial hardship on the employer.

Before I explain further, to all those who inadvertently stumbled upon this blog article while searching google for "Stephen Colbert," I assure you -- the man running for President of the United States of America of South Carolina most assuredly will be welcomed back to The Colbert Report once his FMLA leave ends.

But, let's suppose for an instant that we lived in the bizarro world, and Comedy Central wanted to get rid of Colbert as quickly as NBC chucked Conan O'Brien from the Tonight Show.  Could it do so under the FMLA? Under the FMLA's "key employee" exception, Comedy Central could terminate Colbert's employment so long as it could show that:

1. Colbert is among the highest paid 10 percent of all the employees working for Comedy Central.  Keep in mind two points: a) Earnings include wages, premium pay, incentive pay, and non-discretionary and discretionary bonuses; however, earnings do not include incentives whose value is determined at some future date, (e.g., stock options, future benefits or even incentives for Colbert because he reportedly is surging ahead of Buddy Roemer in the presidential polls in the upcoming Louisiana primary); and b) the determination of whether Colbert is among the highest paid 10 percent is made at the time he gives notice of the need for FMLA leave.

2. Having to reinstate Colbert would cause substantial and grievous economic injury to Comedy Central's operations.  This is an overwhelming standard for any employer to meet, and the FMLA regulations even note that this test is significantly harder to establish than the “undue hardship” test under the ADA.  In short, the only real guidance the regulations give employers is not much in the way of guidance at all:

A precise test cannot be set for the level of hardship or injury to the employer which must be sustained.  If the reinstatement of a "key employee" threatens the economic viability of the firm, that would constitute "substantial and grievous economic injury."  A lesser injury which causes substantial, long-term economic injury would also be sufficient.  Minor inconveniences and costs that the employer would experience in the normal course of doing business would certainly not constitute "substantial and grievous economic injury."  29 C.F.R. 825.218(c)

In other words, an employer has to show it would be in a world of hurt because of a key employee's reinstatement after FMLA leave.

Notice to "Key Employee" is Critical

Even if the employer can satisfy the above factors, the employer still must provide the employee written notice at the start of FMLA leave explaining the potential consequences with respect to reinstatement and maintenance of benefits.  If the employer fails to do so, it cannot deny reinstatement.  Once the employer makes a determination that substantial and grievous economic injury will occur to its operations, the employer must provide notice to the employee, including the determination that the employee’s reinstatement will cause such injury, and the basis for the determination.  If the employee already has begun FMLA leave, the employer still must provide FMLA leave but allow the employee a reasonable period to return to work in lieu of additional FMLA leave.

If the employee does not return after receiving this notice, he or she still is entitled to take FMLA leave.  Upon the employee's return from FMLA, the employer must again assess whether substantial and grievous economic injury will occur to its operations if the employee is reinstated. If the employer finds that this injury still will occur, the employer must deny reinstatement in writing and, like before, provide the basis for the determination.  Keep in mind: the "key employee" provision of the FMLA does not allow the employer to deny FMLA leave, but only to deny reinstatement.

Of course, as to Colbert himself, this is simply a hypothetical from the bizarro world.  We look forward to Stephen Colbert's return to his rightful place at The Colbert Report -- and making us laugh on the presidential campaign trail.

While this lawsuit was brought under the Americans With Disabilities Act rather than the FMLA, employees frequently attempt to return from FMLA leave with medical restrictions, forcing employers to decide whether they are capable of doing the job. Whether or not there was merit to the EEOC's claims, this case is a prime illustration of how important it is for employers to actively consider reasonable accommodations for employees returning with medical restrictions, and to document that they have done so. 

The consent decree governing the settlement requires Jewel-Osco to take a variety of remedial measures in addition to the monetary settlement. While some of these measures, such as mandatory compliance reporting to the EEOC, will no doubt be burdensome, some aspects of the consent decree can be seen as useful "best practices" for employers who wish to avoid seeing their names in a future EEOC press release. 

For example, the decree requires Jewel-Osco to engage a consultant to review and recommend changes to its current job descriptions to ensure that the descriptions accurately state the physical requirements of the job. While a consultant may not be necessary, accurate and up-to-date job descriptions are a crucial tool for employers, both in making decisions about whether and how to accommodate an employee's medical restrictions and in defending such decisions in the event of litigation. 

The decree also requires Jewel-Osco to obtain recommendations from the consultant regarding possible accommodations to common work restrictions in various positions within the store. Particularly for larger employers, working with a qualified expert in advance to determine whether and how common restrictions can be accommodated can be extremely helpful both in ensuring that employees are accommodated when required and in defending ADA claims from employees who could not be accommodated. 

Under the decree, Jewel-Osco is also required to revise its communications with employees who are attempting to return from a leave of absence to "assure them that they need not be 100% healed in order to be considered for a return to work ...."  Although the EEOC's preferred wording for such notices may not be optimal from the employer perspective, employers should be careful to avoid the use of terms such as "full duty" or "without restriction" in reference to an employee's return to work, as these are red-flags for the EEOC and plaintiffs' lawyers. Rather, employers should - echoing the requirements of the ADA - advise employees that they will be expected to perform the full range of essential job functions for their position, with or without a reasonable accommodations. Additionally, it is often advisable to invite employees to identify any accommodations they may need to return to work, both because doing so may help identify a workable accommodation, and because an employee who fails to request any accommodation when invited to do so will have a far more difficult time asserting a claim under the ADA.

Plaintiff Kate Breeden was a salesperson for Novartis Pharmaceuticals Corporation. In early 2005, she took FMLA leave in connection with her pregnancy. Around the same time, Novartis "realligned" its sales force and assigned Breeden a smaller sales territory than she had before. Although she complained about the change and her supervisor told her that she would be "made whole" soon after returning from leave, no changes were made to the territory. However, over the next few years her merit-based income was greater than before the reallignment, and her "sales rank" among her peers improved. In 2008, a new management team carried out a new reallignment. As a result, Breeden's territory was merged with that of another salesperson. Because her territory was the smaller of the two, her position was eliminated and Novartis terminated her employment.

The Lawsuit

Breeden sued Novartis, alleging that the company violated the FMLA in 2005 when it failed to restore her sales territory following her return from FMLA leave. Breeden argued that this violation in turn led to her termination in 2008. Breeden's case went to trial, and the jury found in her favor, awarding her $289,669, which the court ordered doubled to $579,338 under the FMLA's liquidated damages provision. However, in a rare move, the court subsequently reversed the jury's verdict on a motion from Novartis. Breeden's claim failed, the court found, because although her sales territory was reduced in 2005, she was not terminated "by reason of" the 2005 reallignment. Rather, the court held that the two reallignments were "completely disconnected from one another." The court noted that there was no evidence that anyone involved in the 2005 reallignment anticipated that Breeden would be terminated as a result, and none of those individuals were involved in the 2008 decision to terminate Breeden's employment. Rather, the 2008 reallignment was a "substantial intervening cause" for Breeden's termination.

Insights for Employers

1. FMLA leave is not a guarantee of permanent employment. While employers must ensure that employees returning from FMLA leave are reinstated to the same position that they held before leave, or to a position with equivalent pay, benefits, and other terms and conditions of employment, "[a]n employee has no greater right to reinstatement or to other benefits and conditions of employment than if the employee had been continuously employed during the FMLA leave period." 29 C.F.R. § 825.216(a). Further, while the FMLA prohibits retaliation against employees who have used FMLA leave, it does not prohibit employers from taking otherwise legal employment actions for reasons unrelated to an employee's FMLA leave.
2. However, employers should be prepared to prove that adverse actions are not related to FMLA leave. Novartis prevailed in this case because it was able to demonstrate that its 2008 termination was unrelated to her 2005 FMLA leave and the change in her sales territory that followed. Similarly, employers who find it necessary to take actions that may adversely employees who have been reinstated from FMLA leave should document and be prepared to explain the "substantial intervening causes" for such actions. 

Last month, the 11th Circuit Court of Appeals found that a drug company did not violate the FMLA when it demoted a top-level executive upon her return from maternity leave for performance deficiencies unrelated to her FMLA leave.  Schaaf v. SmithKline Beecham Corp. d/b/a GlaxoSmithKline (pdf).

Plaintiff Ellen Schaaf served as a regional vice president for GlaxoSmithKline (GSK), and after several years in this position, Schaaf’s subordinates complained about her “antagonistic and inflexible” management style, poor communication skills, and other shortfalls.  After an investigation, GSK placed Schaaf on a performance improvement plan (PIP).  Months later, while she was out on protected FMLA maternity leave, further deficiencies were discovered and she was demoted upon her return.  Schaaf sued, claiming her FMLA leave was the employer's reason for the demotion, rather than the employee complaints or her own work deficiencies.  She alleged that because GSK learned of her performance issues while she was on FMLA leave, her legally protected leave caused the demotion. In other words, according to Schaaf, but for the FMLA leave, GSK would have no reason to find out about her performance issues and demote her.

Court Ruling

The Court rejected this argument as “legally incorrect” and “logically unsound.” It reasoned that Schaaf’s reading of the FMLA would “effectively protect deficient employees from adverse employment actions, such that those workers could actually attain job security by seeking leave under the FMLA.” Such a result is “laughable,” according to the Court, which further found:

[The FMLA's] purpose is not implicated in the least if an employee's absence permits her employer to discover past professional transgressions that then lead to an adverse employment action against the employee. In such a situation, the employer is motivated not by the taking of the leave itself, but rather by prior deficiencies that, whenever they were discovered, would have prompted demotion or discharge whether or not the employee took FMLA leave."

Insights for Employers

This decision is a clear win for employers.  Moreover, the case itself is a great example of an employer taking immediate action to discipline an employee for performance deficiencies, a response which was supported by a thorough investigation into the employee’s conduct, written documentation and use of a PIP. Here, GlaxoSmithKline was able to establish quite clearly that it would have issued discipline regardless of Schaaf’s maternity leave and her exercise of FMLA rights.  Employers should follow GSK’s lead in the manner they approach their own employees’ performance problems.

Listen to our Podcast on point:  For further guidance, our May FMLA Insights Podcast provides practical advice regarding whether and when an employer can take disciplinary action when an employee’s performance deficiencies are uncovered while he or she is on FMLA leave.