Short-term and long-term disability insurance policies are intended to offer income protection (cash benefits) to people who become unable to work for medical reasons. What surprises many disability recipients is that these policies offer little to no job protection. In many cases, an employer is legally allowed to fire an employee who is receiving disability benefits, although there are some situations in which an individual would have legal grounds to file a lawsuit for wrongful termination.
Job Protection Under the Family and Medical Leave Act (FMLA)
A federal law known as the Family and Medical Leave Act (FMLA) provides employees with twelve weeks of unpaid leave per year to deal with one's own medical issues or to take care of a sick member of one's immediate family. Not all workplaces are subject to FMLA, and even in those that are, employees must meet certain requirements to be covered by the law. FMLA applies only to companies with 50 or more employees located within 75 miles of each other, and workers must have worked:
- for a total of at least one year for the employer, and
- for at least 1,250 hours in the preceding year.
Although FMLA leave is unpaid, an employee can receive short- or long-term disability benefits while on FMLA leave. And, in fact, many employers require you to use your allotted FMLA time while you're on disability. For many disabled employees, FMLA is the most important form of job protection they enjoy.
Your employer may not terminate you if you are on FMLA leave as long as you don't go over 12 weeks of FMLA leave per year. When you return from FMLA leave, your employer must employ you in your former position or one that is substantially similar. If you do exceed 12 weeks of FMLA, even by a day, you run the risk of being terminated for excessive absences. Of course, if you're fired while receiving disability insurance benefits, you'll still continue to receive benefits according to the terms of your policy.
Finally, remember that FMLA is a federal law, and that some states will have more generous policies regarding unpaid medical leave. Check with your state's Department of Labor or an employment law attorney to find out the rules where you live.
How the Americans with Disabilities Act (ADA) Can Protect Your Job
Although most employees in the United States work on an "at-will" basis, which means they can be terminated for virtually any reason, the Americans with Disabilities Act (ADA) makes it illegal to fire an employee due to disability. This law protects those who meet the ADA's definition of disability, which includes many individuals on disability leave and some who have previously received benefits and returned to work.
Under the ADA, disability is defined as "a physical or mental impairment that substantially limits a major life activity." Employers covered by the ADA (those with 15 or more workers) must offer to make reasonable accommodations of your disability as long as it will not cause them "undue hardship." The burden is, however, on the employee to inform their boss of their disability so that accommodations can be provided.
Accommodations can include restructuring a person's job duties or schedule, installing Braille signage, modifying desks, making the workplace more wheelchair accessible, and many others. Even granting additional unpaid leave can be a reasonable accommodation. Whether any of these accommodations constitute a hardship for the employer depends on many factors, including the size of the company and the cost of the changes. If there aren't any reasonable accommodations an employer can make that will allow a disabled employee to perform all the essential functions of the position, the worker may be legally terminated.
Before terminating an employee on leave — or not allowing a worker to return to work after his or her leave — an employer has to determine whether there are accommodations that would allow the employee to do the job. The employer must work with the employee to try several types of accommodations specific to his or her disability before deciding that the worker can't do the essential functions of the job. But remember, you may need to negotiate with your employer over the accommodations you'll need to keep your job, especially if the accommodations will be expensive for your employer or you work for a small company.
In practice, employers are often reluctant to fire employees who are on disability leave due to a fear of litigation. However, from the employer's point of view, it is often impractical or impossible to hold a disabled employee's job open for an extended period of time. In these cases, the employer is left with little choice but to hire another employee to fill the vacant position.
For more information on this topic, see Nolo's section on reasonable accommodations under the ADA.
How FMLA and the ADA Work Together
It can be confusing to figure out how the FMLA and the ADA apply to your particular situation, when you are on FMLA or other unpaid leave and receiving disability benefits but you want to return to work eventually. For example, can your employer argue that the fact you are collecting disability insurance benefits means you can’t perform the essential functions of the job? No. The definitions of disability used by the ADA and insurance companies (and Social Security and workers’ comp) are all different, so collecting disability benefits from any of these sources doesn’t necessarily mean you can’t do the essential functions of the job and are not protected by the ADA.
This summary may help you apply the FMLA and ADA rules to your personal situation.
Examples of When Employees Can't Be Fired
Employees on disability leave can’t be fired if:
- They are on FMLA leave (whether they can do the essential functions of their job or not under the ADA), OR
- They are able to do the essential functions of the job with reasonable accommodations, but the employer hasn't provided accommodations (whether the employee is on FMLA leave or not).
Examples of When Employees Can Be Legally Fired
Employees on disability leave can be fired if:
- They don’t return from leave after taking their 12 annual weeks of FMLA, OR
- They didn’t declare they were taking FMLA leave and they violated their sick leave policy or used up their sick time.
- They are not able to do the essential functions of the job, even with reasonable accommodations, OR
- They are able to do the essential functions of the job with accommodations, but they don’t return to work after the employer has provided the appropriate accommodations.
Health Insurance Coverage
Many employees wonder what will happen to their health insurance coverage if they're fired from their job. Fortunately, a federal law known as COBRA offers terminated employees the option to maintain health insurance coverage for a limited amount of time as long as they pay the full cost of coverage. COBRA insurance is often expensive, but it is frequently the only viable option for a recently terminated employee. Note that COBRA applies only to employers with 20 or more workers.
If things don't go your way and your employer doesn't reinstate you after your leave ends, read our article on wrongful termination and then consider hiring an employment attorney. You will probably need help proving that you weren't fired due to performance issues or business necessity, and an attorney will ensure you follow the correct procedures for filing a complaint with the Equal Employment Opportunity Commission (EEOC) and then filing a lawsuit, if necessary.