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Termination of employee while on short-term disability

The employee has been out on short-term disability for fifteen weeks. The disability is due scoliosis and she was placed on leave by her chiropractor. She is vague when I ask when she will be released or when she will be returning. She just says “Whenever he releases me”. The last APS indicated “Not able to return back to work – sitting or standing still too painful work/activity”. She is an LPN in a five-physician practice and of course has been replaced. Can she be terminated since the short-term disability has exceeded 12 weeks? The office policy states the duration depends on applicable laws and regulations of the Federal and State governing agencies. We are located in Tennessee.

This will depend upon who is providing the short term disability benefits — the employer or an insurance company — and on whether the employee was entitled to FMLA.

When short term disability benefits are provided by an insurance policy, they are unrelated to continued employment. Some STD policies provide 26 weeks or even 52 weeks of benefits. However, after collecting STD for 52 weeks, the employee would not have a job to return to. In many cases, even after collecting STD for 13 weeks or less, the employee would not have a job to return to.

When an employer provides short term disability benefits, there is an implied promise that the employee will be returned to the job when the benefits end (unless the employer has a written policy to the contrary.) After all, employees generally do not provide benefits to ex-employees — only to current employees. So an employer who provides 20 weeks of STD is implying that the employee can return to a job after 20 weeks. Again, if the employer has a different policy, it should be specifically stated in the handbook.

Tennessee has a family leave law at the state level, but it applies only to new parents, so it is not a factor in this case.

If the employer has 50 or more workers within 75 miles, the employee is entitled to 12 weeks of unpaid, job-protected leave under the federal FMLA, the Family and Medical Leave Act. That law requires the employer to inform workers of their rights under FMLA within 5 days of any absence that could be covered by FMLA. If FMLA applies in this case, and you have not informed the employee of her rights under FMLA, she may be entitled to an additional 12 weeks of leave.

Short term disability leave can run concurrently with FMLA, and usually does. If the employee has exceeded her 12 weeks of FMLA, and is unable to return to work, in many cases she can be terminated. (If she was not covered by FMLA, she could have been terminated after 4, 6 or 8 weeks of absence, in accordance with company policy.) Note that merely being on STD does not necessarily mean the employee is also on FMLA. As an employer, you must specifically designate the time as FMLA.

If the employee has a permanent disability under ADA, she may be entitled to additional time off as a reasonable accommodation. That law applies to employers with 15 or more workers. Otherwise, if the employee has exhausted any FMLA and cannot return to work, you can terminate her in accordance with company policy.

Be aware that if you have allowed other employees to take more leave, then it may be illegal discrimination to terminate this employee.

The employee handbook is intentionally vague. Despite that, you should formulate an internal policy that defines how much time an employee can take off and still be returned to the job — perhaps 6 weeks or 8 weeks of medical leave if FMLA does not apply. If your company is covered by FMLA, you should include an FMLA notice in the employee handbook.

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8 Responses to “Termination of employee while on short-term disability”

  1. Donna Whetsell Says:

    Our office pays the premiums for the disability insurance, which is through SunLife Insurance. The employer does not pay her the benefit, it comes from the insurance company – so would this be related or unrelated to continued employment?


  2. Caitlin Says:

    Hi Donna! This would be unrealated to continued employment.

    Suppose employee Anne has short term disability insurance through SunLife with premiums paid by the employer. If Anne is unable to work, she will receive STD benefits for several weeks — maybe even as long as 26 weeks or 52 weeks (depending upon your policy.) However, that is completely unrelated to her continued employment.

    If you are covered by FMLA, you must give Anne 12 weeks of FMLA leave. It could and should run concurrently with her STD. The 13th week, you could terminate Anne. She would still qualify for STD benefits from the insurance policy, but no longer have a job.

    If your company is not covered by FMLA, you could terminate Anne after an absence of 3 to 6 weeks according to company policy. As long as you treat employees consistently, this is lawful in most states. A few states have family leave laws that protect the employees job. HTH, and thanks for reading the blogs!~ Caitlin

  3. Angela Wyatt Says:

    I am current out of work due to a medical condition under the ADA and was terminated on my 13th week of absence following FMLA, my FMLA ended 8/19 and on 8/22 I was called and told that I was terminated immediately and my benefits would end in less than 15days on 8/31/2012. There has been another employee on this job with less senority than myself that is still employee with with company but with medical documentation and communication from myself I was terminated and the manager had mentioned my termination before it happened to a person whom did not work for the same institute but was a family member of my daughter stating, “Angela is out ill and her FMLA ends soon and she will lose her job”, do I have any legal grounds for file for wrongful termination. This is not out of anger but out of need for myself and my dependent child, I was never given a written notice of my attendance because this is the first time in 6 years that I have need to be out of work for my illnesses. I have been admitted into the hospital on 3 separate occassions this year and this resulted in the 12 weeks of leave, 6 weeks in March/April and this most recent July/Aug 2012.

  4. hrlady Says:

    Hi Angela,

    FMLA covers an employee for up to 12 weeks of unpaid leave for a serious medical condition. For 12 weeks on FMLA(and it does not need to be concurrent) your job is protected. It appears that your 12 weeks of FMLA entitlement ended in August of 2012. After that 12 week period your employer can terminate your employment with them. You do not, based on the expatriation of FMLA, have any legal grounds for wrongful termination.

    It does not appear from you question that your employer is in any violation of the law.

    Thank You for reading the

  5. Deborah Says:

    Can unemployment be collected after being fired on short term disability

  6. hrlady Says:

    Hi Deborah,

    In most all states, you cannot collect unemployment if you are physically unable to work. Each state has qualifiers for unemployment which fall under a Federal umbrella.
    You should contact your unemployment office for additional information.

    Thank you for reading the

  7. Sandy Says:

    Similar situation. Employee has only been with us a short time and is not eligible for FMLA. Has terminal illness. Will go on STD soon and then LTD. STD and LTD are paid for by the company but is from outside insurance company. STD and LTD will continue but at what point can we terminate him? Also, if we terminate him his life insurance goes away because it is a group plan. Checking on conversion of the life policy. Any other options for keeping him on life insurance?

  8. hrlady Says:

    Unfortunately, there is no exact date that the employee can be terminated. All the factors must be considered. The language of the LTD policy is important. Is there any statement, even implied, that the coverage will last a certain amount of time? If not, since the employee is not eligible for FMLA and assuming he is not able to return to work in any reasonable amount of time, termination is at your discretion. Be certain that the employee’s illness will absolutely prohibit him from returning to work. Depending on his condition, if he is able to return to work eventually, he may be covered under the ADA. Check the life insurance policy. If the employee paid into it, he may be able to continue it. HTH.

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