Layoffs During Leave Require Adequate Documentation

​Workers who are on leave protected by federal statute may be laid off, provided there is a legitimate, nonretaliatory business reason for the termination. But employers should be certain they have adequate documentation that the layoff is unrelated to employees exercising their leave rights.

Termination of employees on protected leaves—such as time off under the Family and Medical Leave Act (FMLA), Americans with Disabilities Act (ADA), or Uniformed Services Employment and Reemployment Rights Act (USERRA)—can be risky, as workers may argue they were targeted for reduction in force because they were on leave.

This risk is why reduction-in-force plans should include objective and comprehensive selection criteria in addition to adverse-impact statistical analysis. That analysis should show that employees on protected leave are not overrepresented in a group selected for furlough or layoff.

Employers should be prepared to demonstrate that a legitimate business reason, independent of protected leave, justified the layoff affecting workers on leave, said Gregory Abrams, an attorney with Faegre Drinker in Chicago. A legitimate reason might be seniority, for example. "Employers should be careful that any reason used is not affected by the fact the employee was on leave," he said.

"Some employers choose to delay the layoff until the leave is over," said Chelsea Mesa, an attorney with Seyfarth Shaw in Los Angeles. "When including an employee on leave in the group of those impacted, employers should carefully evaluate the inclusion to ensure it's not happening because the employee is on the leave."

FMLA

That said, it's lawful to lay off workers who are on FMLA-approved leaves of absence for legitimate, nondiscriminatory business reasons, despite the job-protected status afforded to employees under the FMLA, said Scott Cruz, an attorney with Greensfelder in Chicago. But the employer must be able to show that the employee would have been laid off even if the employee was working and had not been on FMLA leave, he added. In other words, the layoff must be unrelated to the FMLA time off.

For example, if, as a result of the economic downturn, an employer can afford to keep only its top producers, it would need to provide evidence establishing that the laid-off employees were not meeting sales goals pre-pandemic and pre-FMLA, Cruz said. "This would generally suffice to support a layoff, even while the employee is out on an FMLA-approved leave of absence," he noted.

It's never lawful to lay off an employee because that person is taking the leave, in retaliation for taking the leave or retaliation for raising concerns related to leaves, Mesa noted. But the FMLA does not require protections greater than those provided to other workers. "If the employee would not otherwise have been reinstated because of lawful, nondiscriminatory, nonretaliatory reasons, the reinstatement wouldn't be required," she said. "An employer will have to be able to show this."

ADA

Lori Armstrong Halber, an attorney with Reed Smith in Philadelphia and Princeton, N.J., said the ADA also doesn't provide greater rights for someone who is on ADA leave. If someone is on leave as a reasonable accommodation and the company can show it would have laid off that worker anyway, that layoff does not violate the ADA, she said. "But it gets tricky because it creates at first blush an appearance of discrimination."

Sometimes an employer sees that other workers have absorbed the duties of someone who is on leave, realizes the job no longer is needed and decides to lay off the person who is on leave. Nonetheless, a plaintiff will have a more difficult time showing an ADA violation when layoffs include many employees rather than just one, she said.

When conducting layoffs, employers should use a system or matrix that allows them to evaluate the decisions as to who to lay off in a way that screens out potentially discriminatory conduct, she noted. The matrix might factor in seniority, type of work being performed and, even though it injects some subjectivity in the process, performance evaluations from the past several years, she said.

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USERRA

Similar analysis would apply under USERRA. If there is a legitimate, nondiscriminatory business reason for the layoff and for the selection of an employee on military leave, an employer may lay off that worker, Cruz said.

USERRA addresses the topic of layoffs in various regulations, he noted. Regulation 1002.248 gives an example of a reduction in force or a layoff as cause for discharge under USERRA.

"However, as under the FMLA, I would caution employers to be certain that they have adequate supporting documentation to establish that the layoff and layoff criteria used is not related to the employee exercising his or her rights," Cruz said.

Any recall rights promised to employees in a temporary layoff will apply to those on military leave as well, he added.

Nonetheless, Regulation 1002.42 further clarifies the rights and limitations of the USERRA protections. "If the employee is laid off before or during service in the uniformed services, and the employer would not have recalled him or her during that period of service, the employee is not entitled to re-employment following the period of service simply because he or she is a covered employee," the regulation states. "Re-employment rights under USERRA cannot put the employee in a better position than if he or she had remained in the civilian employment position."

Long View

"Employers sometimes view people who have been on leave and forget the value they provided to the company and could provide again," Armstrong Halber said.

"So, while those people aren't entitled to greater protections, it's sometimes easy to forget the contributions made," she stated. An employer may do itself a disservice if it does not take a long view, she said.