Can an Employee on Disability be Laid Off?

Can an employee on disability be laid off, if an employee is on short term disability and the position that the employee held is either outsourced or no longer a position with the organization?

According to federal law, employees out on medical leave generally do not enjoy any additional job protection than do current employees.  Therefore, if an employee is out on temporary disability or workers’ compensation leave, and during that time his/her entire department is laid off due to an organizational structure change, the employee out on leave may be subject to the layoff as well.

The main area of exposure for employers is when the employee out on leave is the only (or one of the only) employees subject to the layoff.  It is generally illegal to terminate an employee due to a disability or medical condition.  It is often difficult for the employer to demonstrate that the medical leave had no bearing on the termination decision.  So there are a few important items to consider prior to terminating an employee who is out on leave:

1. Was the decision in any way motivated by the employee’s medical condition, disability, workers’ compensation claim or leave of absence?
2. Would the employee have been terminated regardless of whether she took medical leave due to external forces (outsourcing, business downturn, restructuring, etc.)?
3. Is the employer able to substantiate such external forces to a reasonable third party if ever challenged on the layoff decision?
4. Was the employee terminated at the same time as other employees, or at the time when the organization made the change?    (It may look discriminatory if the employee is terminated just before returning to work, so the termination should be communicated to the employee on leave when the decision is made.)

Because laying off an employee who is on medical leave is a high-exposure termination, it is important to consult with your HR Professional or legal counsel prior to doing so.