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.
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:
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.
Although FMLA leave is unpaid, an employee can receive short-term disability 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.
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.
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. But even granting additional unpaid leave can be a reasonable accommodation. If you're granted time off as an accommodation, you can't lose your job during that period.
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.
For more information on this topic, see Nolo's section on reasonable accommodations under the ADA.
Before terminating an employee on leave—or not allowing a worker to return to work after they return from 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.
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.
Employees on disability leave can't be fired if:
Employees on disability leave can be fired if:
Here are some answers to frequently asked questions on getting fired or laid off while on disability leave.
If you're collecting short-term disability (STD) through your employer, it's probably through your employer's ERISA-based insurance policy. These short-term disability insurance policies pay you cash benefits when you're off work due to a disability, but they offer no protection for your job. The same is true for temporary disability insurance offered through a handful of state governments.
To be protected while you collect short-term disability benefits, you need to rely on a medical leave law, like the FMLA or a disability discrimination law, like the ADA.
If you are able to go back to your job, or a different type of work, when you are fired, you should be able to collect unemployment benefits. State unemployment agencies require that you are capable of working and actively looking for jobs when you apply for unemployment.
But if you're still unable to work due to your disability, you can't collect unemployment. If you recover from your short-term disability and are ready to go back to work soon after you're fired, you'll likely to eligible for unemployment benefits at that point.
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 your employer refuses to take you back after your leave ends, read our article on wrongful termination and then consider hiring an employment attorney. Your employer may claim that you were let go because you couldn't do the essential functions of the job, or due to business necessity, and you'll need help proving that that's not the case. An employment lawyer can help you file a complaint with the Equal Employment Opportunity Commission (EEOC) and file a lawsuit, if it comes to that.
Need a lawyer? Start here.