Legal Clinic

On Leave -- and Out of a Job?

When an organization seeks to fire an employee receiving long-term-disability benefits, it's important to ensure the employee -- and his or her co-workers -- do not perceive such a termination as disability discrimination.

Monday, May 21, 2012
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Question: I'm an HR executive for a company located in Maryland and am wondering if, in the State of Maryland, an employee can be terminated while they are receiving long-term-disability benefits? What are the risks of terminating an employee while he or she is receiving long-term benefits? Would the answer be different in different states?

Answer: No state or federal law specifically prohibits an employer from terminating an employee who is receiving long-term-disability benefits. However, terminating an employee on disability leave brings with it substantial litigation risks.

Before terminating such an employee, however, you should ensure that you are complying with federal and state leave laws and it is also important that you do not discriminate against that employee or give the impression that you are terminating the employee on account of a disability.

Closely scrutinize your reasons for terminating this disabled employee and have legal counsel involved in the examination process as well.

If you are terminating the employee due to substandard performance issues, avoid creating an inference that the termination decision was made on account of the employee's disability, rather than due to poor performance.

Thus, you should: (i) carefully document the reasons for the termination; (ii) ensure that the termination comports with the employer's policies and practices; and (iii) ensure that the termination is commensurate with actions taken in response to the substandard performance of employees without disabilities.

Compare Leffel v. Valley Fin. Servs., 113 F.3d 787, 794, 6 A.D. Cas. 1301 (7th Cir. 1997) (affirming summary judgment for employer; plaintiff was discharged because she failed to meet legitimate performance expectations as evidenced by excessive absenteeism, failure to submit reports on a timely basis and failure to attend required meetings; plaintiff offered no evidence demonstrating that the employer was motivated by "perceived disability rather than upon actual shortcomings in the work.") with Lawrence v. National Westminster Bank N.J., 98 F.3d 61, 65-67, 5 A.D. Cas. 1796 (3d Cir. 1996) (plaintiff created a factual dispute regarding whether the employer's proffered reason for termination -- substandard performance -- was a pretext to mask discriminatory motive; the evaluation form documenting performance issues was "unsigned, undated, incomplete and never provided to" plaintiff, the decision-maker contradicted the proffered discharge reason and co-workers testified uniformly that plaintiff was "competent, enthusiastic and professional" and they "knew of no complaints about [plaintiff's] overall performance").

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If you do decide to terminate the employee, the employee will be eligible for COBRA. Make sure that you inform the terminated employee that, under the 2009 economic stimulus legislation, they will have to pay only 35 percent of the premium for a nine-month period if they apply for the temporary COBRA subsidy.

You can get information on the COBRA subsidy, including downloadable notices, posters and flyers at

Keisha-Ann G. Gray is senior counsel in the Labor & Employment Law Department of Proskauer in New York and co-chair of the Department's Employment Litigation and Arbitration Practice Group.

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