So, you thought writing a paid time off policy was enough, but have you thought about all the ins and outs that could impact it?  A leave of absence must be viewed through the lens of many laws such as the Americans with Disabilities Act, the Family and Medical Leave Act, and myriad of state leave and discrimination laws. In particular, it has long been the position of the Equal Employment Opportunity Commission (EEOC) that a leave of absence is considered to be a reasonable accommodation for someone protected by the law. The EEOC has jurisdiction over job applicants and employees in a variety of discrimination matters. 

Recently, the EEOC issued informal, non-binding guidance addressing leaves of absence as a reasonable accommodation.  While this guidance does not break new ground and leaves many questions unanswered, it is worth reading for those responsible for such matters.  Following is a discussion of how the EEOC guidance applies to certain laws.

Americans with Disabilities Act

As background, the Americans with Disabilities Act (ADA) was enacted in 1990 and later amended by the Americans with Disabilities Amendments Act of 2008 (collectively referred to as ADA herein).  The ADA applies to all employers engaged in a business or industry affecting interstate commerce and who employs 15 or more employees on 20 or more calendar weeks in the current or preceding calendar year. 

For employment purposes, the ADA requires reasonable accommodations or appropriate modifications of a job be made to enable a qualified disabled individual to accomplish the essential functions of the job.  Such reasonable accommodation depends on whether or not it imposes an undue hardship on the employer.  Factors to consider in determining whether or not there is undue hardship include the nature and cost of the accommodation needed, the overall economic resources of the employer, the number of persons employed at the workplace, and the impact of the accommodation on the operation of the workplace.

Equal access to leaves of absence.  The EEOC guidance provides that an individual protected by the ADA must be given the same rights to a leave of absence as an individual not protected by the ADA.  In other words, any leave granted cannot be more restrictive than that which is granted to an individual not protected by the ADA.  For example, if an employer has a general purpose leave policy, and if an employee requests leave to seek repairs for his/her wheelchair, the employer must allow use of the general purpose leave and cannot compel the individual to use sick leave for this purpose

When granting leave requests, employers are encouraged to engage in an interactive process with their employees to determine how best to accommodate the leave.  For example, if an employee has a need for leave but is determined to be ineligible under the terms of the employer’s paid leave policy, the employer must engage in an interactive process with the employee to determine whether providing an unpaid leave of absence would be reasonable accommodation.

While the guidance does not provide explicit timeframes for what would constitute a reasonable extension of leave, neither does it impose the obligation to provide an indefinite leave of absence on the employer. 

The bottom line is that each situation becomes a facts and circumstances analysis.

Return to Work.  The EEOC guidance addresses reasonable accommodations relating to an individual’s return to work following a leave of absence, as well as job reassignment.  Generally, an individual on a leave of absence for a disability is entitled to request reasonable accommodations in order to return to work.  Depending on the nature of the disability, the essential functions of the job, and any work restrictions placed by the individual’s attending physician or other health care provider, certain workplace accommodations may be necessary unless such accommodation would cause an undue hardship on the employer.  For example, a doctor recommends an employee returning to work from a leave of absence to take a 15-minute seated break after standing and walking for 90 minutes. In this scenario, while it would be appropriate to allow the individual to take a 15-minute seated break, the employer could also require the individual to perform certain job tasks while taking the seated break without violating the law.

Family and Medical Leave Act (FMLA)

If the employer is subject to the Family and Medical Leave Act (FMLA), i.e., employs 50 or more employees and if the individual qualifies for FMLA leave, it might be necessary to provide a leave of absence that extends beyond the FMLA maximum standard (up to 12 weeks in 12-month period) if such extended leave would be considered a reasonable accommodation.  If both the ADA and FMLA apply, the situation must be looked at through the lens of each law, and an appropriate determination must be made that can accommodate the requirements of both laws.

Further, the guidance explains the EEOC’s position that an extended leave can be a reasonable accommodation unless providing the extended leave would create an undue hardship for the employer.  The interactive process for determining whether a particular accommodation is reasonable, as described in the guidance, must be followed. 

Maximum Leave Policies

Also very notable in the guidance is how the EEOC addresses maximum leave policies.  In a nutshell, the EEOC provides that a so-called maximum leave policy would violate the ADA if providing an exception or extension to the maximum leave policy could be a reasonable accommodation and would not create an undue hardship.  For example, an employee who has exhausted all leave available under the employer’s policy but needs an additional 5 weeks of leave before returning to work.   Unless the employer can show that the additional 5-week leave period would cause an undue hardship, granting the extended leave would be deemed a reasonable accommodation.  Thus, in a situation where an employer’s leave program contains a defined duration or term, the employer must be prepared to engage in an interactive process when individuals protected by ADA request leave beyond the maximum duration specified in the program.

Affordable Care Act (ACA)

If a leave of absence is granted and if the employer is subject to the Affordable Care Act’s employer shared responsibility rules (employs 50+ employees), the employer must consider the impact of the leave on the individual’s status as a full-time employee or not a full-time employee. 

As background, an employer subject to the ACA’s employer shared responsibility provisions may be at risk for an excise tax penalty pursuant to IRC §4980H(a) if an employer fails to offer minimum essential coverage to its full-time employees, as well as an excise tax penalty pursuant to IRC §4980H(b) if it fails to offer adequate and affordable coverage.  While the ACA does not require that health coverage be offered, it does leave the employer at risk of penalty for failure to do so. 

The ACA has a very specific definition of full-time employee - an individual who, on average, works 130 hours per month, 30 hours per week.  The ACA provides two methods for determining full-time status: a monthly measurement method and a look-back measurement method.  If the monthly method is used each month, an individual‘s hours worked are considered to determine whether an individual is full-time for that month.  If a look-back method is used, an individual’s status as full-time is determined over a measurement period.  If the individual is deemed to be full-time over the measurement period, the individual retains that full-time status for the corresponding stability period.  This is true even if the individual is on an unpaid leave of absence.

Unless the individual is terminated from employment, the individual would retain that full-time status.  If the break is more than 13 weeks (or, 26 weeks if the employer is a school district), the individual can start over as a new employee; but for the duration of the time, the individual is deemed full-time.  And while the ADA does not require continuation of health coverage beyond the FMLA standard (which requires continuation of health coverage), the ACA would put the employer at risk for an excise tax penalty if the individual is a full-time employee and health coverage is not offered.

What should an employer do?

• If you’re subject to the ADA, be aware that a leave of absence, including an intermittent or reduced scheduled leave, may be deemed a reasonable accommodation.  Be prepared to engage in an interactive process with your employees when they request a leave of absence.
• If you have a maximum duration leave policy, review its terms and consider making modifications to the policy when circumstances warrant it. 
• Make certain you know how your employee benefit plans and insurance contracts will accommodate an individual on a leave of absence. 
• If a plan, contract, provision or policy is not consistent with your intent, make appropriate modifications and coordinate it with other laws such as the FMLA and state leave laws.

The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.