Sears Settles Largest Single ADA Suit in History

By Roy Maurer Oct 7, 2009

Sears Holdings Corp. will deposit $6.2 million into a settlement fund to be allocated among hundreds of former employees in what the U.S. Equal Employment Opportunity Commission (EEOC) is calling a record resolution to a class-action lawsuit under the Americans with Disabilities Act (ADA).

The largest monetary award in a single ADA lawsuit in EEOC history, the settlement covers former Sears employees harmed by the allegedly inflexible workers’ compensation leave policy from October 2001 through mid-2008, according to the EEOC. Sears did not admit wrongdoing as part of the settlement.

The suit alleged that Sears maintained an inflexible one-year workers’ compensation leave-exhaustion policy and terminated employees who were on workers’ compensation leave because of a disability resulting from a work-related injury. Sears was charged with failing to provide these employees with reasonable accommodations for their disabilities in violation of the ADA.

The EEOC alleged that appropriate accommodations could have included extending the one-year leave-of-absence period or allowing an employee to return to work in an available position for which the individual was qualified, with or without accommodation.

In response, Sears denied that its policy failed to provide for reasonable accommodation of employees with disabilities and denied that its policy inflexibly provided for termination of such employees’ employment. Sears further contended that many of the claimants on whose behalf the EEOC pursued claims under the ADA were not disabled as defined by the ADA, were not qualified individuals with disabilities under the ADA, or asserted claims that were time-barred by statutes of limitation.

In addition to the monetary penalty, the settlement requires the Chicago-based retail chain to revise its internal policies regarding workers’ compensation leave, accommodations and terminations of employees on leave, the EEOC announced Sept. 29, 2009.

“The facts of this case showed that, nearly twenty years after the enactment of the ADA, the rights of individuals with disabilities are still in jeopardy,” said EEOC Acting Chairman Stuart J. Ishimaru in a statement. “At the same time, this record settlement sends the strongest possible message that the EEOC will use its enforcement authority boldly to protect those rights and advance equal employment opportunities for individuals with disabilities.”

Lesson for Employers

“The Sears settlement is a product of a salvo of lawsuits that the EEOC has filed against companies with maximum leave policies pursuant to which an employee’s employment terminates automatically upon the employee’s expiration of the maximum leave,” said Jonathan A. Segal, a partner with Duane Morris LLP in Philadelphia.

The case arose from a charge of discrimination filed with the EEOC in 2004 by a former Sears service technician, John Bava. According to the EEOC, Bava was injured on the job, took workers’ compensation leave and attempted repeatedly to return to work while disabled because of his injuries. Sears never provided Bava with a reasonable accommodation that would have put him back to work. Sears fired him when his leave expired, the EEOC said in a news release.

Pretrial discovery in the lawsuit revealed that hundreds of other employees who had taken workers’ compensation leave were terminated by Sears without the company seriously considering reasonable accommodations to return them to work, the agency said.

“The era of employers being able to inflexibly and universally apply a leave-limits policy without seriously considering the reasonable accommodation requirements of the ADA are over,” said EEOC regional attorney John Hendrickson of the Chicago office. “Today’s consent decree is a bright-line marker of that reality,” he added.

“The EEOC’s attack on maximum leave policies relates to the perceived lack of flexibility in some of them,” Segal told SHRM Online. “More specifically, the consent decree with Sears highlights what the EEOC believes an employer should do before terminating an employee upon a leave of absence approaching the maximum,” he said. This means that:

*Before an employee’s leave runs out, the employer should let him or her know that he or she is approaching the maximum, said Segal. Sears will be required to notify injured employees at least 45 days before the expiration of their leaves that they can request potential accommodations enabling their return to work.

*The employer should engage in a dialogue with the employee to see if there are ways to return him or her to work. Sears’ revised policies must mention modified duty, part-time work, assignment to another job or additional leave on a non-exhaustive list of reasonable accommodation options.

*No employee on injury leave will be terminated without approval of an accountable “centralized leave management team.”

“If none of the above options works to return the employee to work, the employer should consider offering additional leave beyond the maximum leave, as set forth in the policy, as a reasonable accommodation,” said Segal.

The settlement requires Sears to post notices in all its stores informing employees about the settlement, including contact information for the EEOC’s Chicago district office.

Sears said it settled because the case could have continued another five years, at “considerable expense.”

“Sears continues to believe that it reasonably accommodates its associates on leave due to work-related illnesses or injuries” under the ADA, spokeswoman Kimberly Freely said in a statement. “We have always proceeded and will continue to proceed in good faith when considering and making reasonable accommodations for our associates.”

Sears declined to return calls for comment for this article.

“In light of the publicity given to Sears’ settlement, some employers who have terminated employees pursuant to maximum leave policies in the recent past may wish to consider reaching out to them, particularly if there are vacant positions available,” Segal said. “Of course reaching out to former employees involves some risk, so an employer will want to conduct a risk-balance assessment,” he said.

A hearing is scheduled for February 2010 to determine how the $6.2 million will be distributed, the EEOC said. If the settlement fund is not exhausted, the remainder will be donated to an Illinois disability rights advocacy organization.

Roy Maurer is a staff writer for SHRM.


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