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  • Writer's picturePaul F. Keneally

Is it Legal to Fire an Employee Who is Out on Short-Term Disability?

This question and answer was printed in a Monroe County Medical Society 2019 Bulletin.

This relatively short question implicates many employment law concepts. One fundamental point is that short-term disability is a partial income replacement insurance product for employees out of work because of their own medical condition. New York State employers are required to pay for short-term disability insurance for their employees, and it provides those employees with up to 26 weeks of benefits in any 52-week period. Short-term disability payouts are 50% of the employees’ average wages (calculated from the last 8 weeks of employment), up to the maximum payment of $170 per week. Given the far higher payout for employees out of work caring for a family member under Paid Family Leave, the Legislature is considering raising the short-term disability maximum payout.

As an income replacement insurance product, short-term disability does not specifically guarantee an employee his/her job. However, many factors make it risky to terminate an employee out on short-term disability. First, if an employee earned or accrued sick leave or paid time off, then s/he is entitled to exhaust that time prior to any possible termination. Second, for employers who have more than 50 employees within a 75-mile radius, the federal Family and Medical Leave Act entitles an employee to 12 weeks of unpaid leave without losing his/her job (employers may require those employees out on Family and Medical Leave to use their sick/vacation/paid time off benefits concurrently). Lastly, if an employee has used up his/her sick time, paid time off and Family and Medical Leave, or was not entitled to one or more of them, the federal Americans with Disabilities Act and the New York State Human Rights Law prohibit discrimination on the basis of disability, which is broadly interpreted under the general definition of a condition affecting a major life function. The disability discrimination laws require that the employer and employee engage in an interactive dialogue regarding any reasonable accommodation that the employer could provide so that the employee remains employed. This principal is usually applied in the context of an employee who contends s/he is able to be at work and perform the duties of his/her job with a reasonable accommodation.

If the employer wishes to terminate an employee out on short-term disability, it must analyze how much leave beyond the sick/paid time off/Family and Medical Leave entitlement the employee had is reasonable given the position at issue, potential coverage for that position, the employer’s number of employees and other factors unique to each situation. Often, the employer’s strongest basis to terminate an employee on short-term disability leave is where the employee’s doctor has no estimate of when the employee will be able to return to work (i.e., the prognosis is indefinite). Other times, the employer may have a good argument in favor of termination if there is a company or practice-wide layoff, and the employer can prove that the employee out on short-term disability would have been laid off even if s/he was not out on leave. As demonstrated by those two rather narrow examples, it is generally unwise to terminate an employee out on short-term disability.

As always, companies and practices considering any employee termination, much less one on short-term disability leave, should discuss all the relevant considerations with experienced employment law counsel.

As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

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