Consider Your Auto-Termination Policy

Monday, October 12, 2009 | 0

By Eugene F. Keefe

Synopsis: Auto-termination policies may now be HR "poison" — we were stunned to see a record-high settlement between the EEOC and Sears involving an auto-termination policy based on extended absence.

Editor's comment: If you have an auto-termination policy for extended absence in place, please read this article! 

Please also note this settlement is just what it is; a settlement by the EEOC of a claim against a major U.S. retailer — it isn't a ruling by a trial or appellate court. However, the settlement indicates the U.S. Government's anti-business HR-busters are now probably going to be attacking auto-termination policies for anyone who uses them. If you have such a policy in place, we are happy to counsel you on how to best modify it.

We caution the worst thing that can happen to an HR department is to be sued by the federal government with their unlimited legal budget.

You can also share the groans of all HR folks to see the settlement fund demanded from Sears is $6.2 million dollars. We consider that absolutely preposterous in light of this new and unprecedented interpretation of the Americans with Disabilities Act by the EEOC. Please also note what Sears was doing was fully sanctioned under Illinois law by the Illinois Supreme Court in their ruling in Hartlein v. Illinois Power.

Auto-termination policies based on extended absence have been in vogue in the HR arena for several decades. The idea is to terminate folks who are off work and out of your work force for months and years on a fully neutral basis - duration of absence only. The concept is that a worker who isn't at your workplace for a long enough time has to be let go,
regardless of the reason. The focus is on neutrality in terminating them.

The problems with a fully "neutral" termination policy are multifaceted. What do you do about a hero? What if you have a worker who risks his/her life and saves five co-workers in a fire and is badly burned? Can you still terminate them if they are off work for a lengthy period of time but later fully recover? The public relations impact of such a termination could be disastrous.

In light of the "hero" model, our focus on such programs is to recommend a management-labor panel review all such individuals and see what the best overall approach might be for your company. You shouldn't impose a hard and fast line but should have an overall focus of keeping your business competitive while adjusting to the hopefully rare exception to
the rule.

In EEOC v. Sears, Roebuck & Co., the consent decree focuses on the disparate impact auto-termination policies might have on workers' compensation claimants. The U.S. Equal Employment Opportunity Commission obtained a record-setting consent decree resolving a class lawsuit against Sears under the Americans with Disabilities Act for $6.2 million and significant remedial relief. The suit alleged Sears maintained an inflexible workers' compensation leave exhaustion policy and terminated employees instead of providing them with requested reasonable accommodations for their disabilities, arguably in violation of the ADA.

EEOC Chicago District Director John Rowe said the case arose from a charge of discrimination filed with the EEOC by a former Sears service technician, John Bava. According to Rowe, Bava was injured on the job, took workers' compensation leave, and, although remaining disabled by the injuries, repeatedly attempted to return to work. Sears followed its policy and did not provide Bava with a reasonable accommodation which would have put him back to work and, instead, fired him when his leave expired. Pre-trial discovery in the lawsuit revealed numerous employees had taken workers' compensation leave and were terminated by Sears without seriously considering reasonable accommodations to return them to work while they were on leave, or seriously considering whether a brief extension of their leave would make their return possible.

The EEOC outlined inflexible leave policies which ignore reasonable accommodations making it possible to get employees back on the job cannot survive under federal law. In addition to providing monetary relief, the three-year consent decree includes an injunction against violation of the ADA and retaliation. It requires Sears to amend its workers' compensation leave policy, provide written reports to the EEOC detailing its workers' compensation practices' compliance with the ADA, train its employees regarding the ADA, and post a notice of the decree at all Sears' locations.

We are confident the issues in this case focused on the monster cost of defending EEOC charges and the unbelievably high rates some defense firms charge. If you want more reasonably priced employment law counsel or seek a copy of the consent decree, send a reply.

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Eugene F. Keefe is a partner in the Chicago law firm of Keefe, Campbell & Associates. This item from the firm's blog, www.keefe-law.com/blog, was reprinted by permission.
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