Take Extra Care When Firing or Laying Off Disabled Employees

As a result of the recent economic crisis, many employers have been faced with the unpleasant task of laying off workers. But what happens when one of those employees is disabled? We recently received a question addressing that very issue. The situation involved a severely disabled part-time worker who was hired to stuff envelopes as a goodwill gesture by the past administration. Because of budget cuts and lack of work, the worker had to be let go. Most employers realize that layoffs come with the territory, but when the worker is disabled, anxiety runs high.

HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including the Americans with Disabilities Act

Discrimination charges still on the rise
The need for layoffs in the current economic situation no longer surprises most people. However, now is not the time to for employers to neglect their obligations under the employment discrimination laws. Although layoffs may be easier to justify when times get tight, employers are wise to evaluate the necessity and scope of any termination or layoff decision. In other words, while tough economic times make it hard for a laid-off employee to challenge an employer’s decision, he may still challenge the selection criteria or methodology as being discriminatory or retaliatory.

You need only examine the statistics from the Equal Employment Opportunity Commission (EEOC) for a sobering reminder that despite the economic hardships facing many employers, discrimination claims are by no means diminishing. In fact, the number of claims filed jumped in 2008. According to the EEOC, 82,792 discrimination charges were filed in 2007. In 2008, that number jumped to 95,402, an increase of approximately 15 percent.

With respect to discrimination claims filed under the Americans with Disabilities Act (ADA), 19,453 charges were filed in 2008 — roughly 10 percent higher than 2007’s figures. Moreover, the 2008 figures reflect the highest number of discrimination charges filed in the last 10 years. It’s likely that the number of claims filed in the first quarter of 2009 will reflect another significant increase.

Although a filed charge doesn’t necessarily lead to prosecution by the EEOC, many employers know that the cost to defend even a baseless claim doesn’t come cheap. Thus, you shouldn’t use the current economic downturn as a convenient excuse to terminate an employee for improper reasons.

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ADA requirements
Under the ADA and the ADA Amendments Act of 2008 (ADAAA), a “disabled” person (1) has “a physical or mental impairment that substantially limits one or more major life activities,” (2) has a record of such an impairment, or (3) is regarded as having an impairment. However, under the ADAAA, the “regarded as” prong of the definition has been modified to require only that the individual be regarded as having an impairment — whether the impairment limits a major life activity doesn’t matter.

Further, it is unclear if the impairment must be regarded as “substantially” limiting or if being regarded as having an impairment that isn’t “minor” or “transitory” is sufficient. Until the ambiguity is cleared up, the safe bet is to apply the broader interpretation. As a result, an employee may be regarded as disabled unless the impairment is “minor” (a term that is still undefined) or “transitory” (i.e., lasting less than six months).

The ADA requires employers to “reasonably accommodate” the known physical or mental limitations of an “otherwise qualified individual” unless doing so would impose an undue hardship on their business operations. An “otherwise qualified individual” is an employee who can perform the “essential functions” of the relevant position, with or without a reasonable accommodation.

Absent direct evidence of discrimination, the initial analysis of a disability discrimination claim is the same as that of any other employment discrimination matter. The employee must show that he (1) is disabled, (2) suffered an adverse employment action, such as termination, and (3) is qualified to perform the job or, depending on the type of claim being asserted, that nondisabled employees weren’t subjected to the same adverse employment action.

Remember, discrimination laws do not prevent employers from firing a disabled employee. They simply require that employers have a legitimate nondiscriminatory reason for the termination. “Nondiscriminatory” means you have terminated similarly situated employees for the same reason and haven’t discriminated on the basis of protected group status. “Legitimate” means a nonpretexual reason. Thus, when deciding which employees will be laid off, be sure that your organization’s selection process will withstand scrutiny. Your pretermination actions — and especially your documentation — must support, not detract from, your stated legitimate reason for termination.

Americans with Disablities (ADA) Compliance Manual

Terminating a disabled employee: required analysis
If terminating a disabled employee becomes necessary because of the downturn in the economy, employers should take the following points into consideration:

What documentation is needed to show a legitimate nondiscriminatory motive when terminating a disabled employee? If you have knowledge of the employee’s disability, your legitimate nondiscriminatory reason should be unrelated to the disability or serious health condition.

In our example, the part-time employee is clearly disabled. The employer points to budget cuts and lack of work as its legitimate nondiscriminatory reason for the termination. The company’s financial records should support a decrease in available funds and expenditures. Further, the employer should be able to demonstrate that other employees have also been affected by lack of work. That can be accomplished by presenting documentation reflecting reduced hours or reductions in pay.

If the reasons for termination are budget cuts and lack of work, will other employees also be affected? If you cite budget cuts as the reason for having to terminate a part-time disabled employee but no additional employees are affected (i.e., a layoff of at least one other employee), then you must be particularly careful. While a layoff of only one employee is permissible, it’s also risky, and the evidence of your nondiscriminatory selection criteria should be rock solid. An alternative may be to delay the one-person layoff. Consider making the layoff part of a long-term plan of cost-cutting measures that will affect many employees (albeit in different ways) instead of just a single employee.

Who will assume the job duties of the terminated disabled employee? Another critical step employers should take before terminating a disabled worker is to evaluate how the company will transfer or absorb his job duties. For example, you should determine whether his tasks will be outsourced, delegated to another employee, or divided among several employees.

If the position or tasks are outsourced, you must be able to support the business reason for that decision (e.g., efficiency, cost, and specialization). However, if the tasks are delegated to another employee (i.e., employee B), you should consider what other tasks, if any, employee B already performs and whether the disabled employee could have performed those tasks as well. For example, employee B may already be performing certain filing duties and could perform the additional task of stuffing envelopes (previously done by the disabled employee).

If only employee B is qualified to continue his own set of tasks, including taking over the duties of the disabled employee, then you have strong support that the disabled employee’s termination was based on legitimate nondiscriminatory reasons. However, if the disabled employee had the ability to assume the tasks of employee B (i.e., the filing duties), then your reason for terminating him falls into question. A careful review of the relative skills and knowledge of the involved employees is critical. It’s often advisable to seek the involved employees’ participation in the process because relying exclusively on a supervisor’s knowledge of a particular worker’s skills and abilities can be risky.

Does your state have a disability discrimination law? Find the answer in 50 Employment Laws in 50 States

Are there alternatives to termination? In the scenario we’ve presented, it appears that the disabled employee not only works part-time, but he also works in a menial and low-paying position. Therefore, terminating him may not result in significant cost savings or substantial risk because the tasks can easily be performed by almost anyone. However, in more complicated situations, employers should evaluate whether terminating the disabled employee will truly result in cost savings.

If the answer is no or the numbers aren’t that significant, you may want to consider other cost-reducing steps as an alternative to terminating the disabled employee. For example, would it be possible to temporarily reduce the number of hours worked or make additional reductions to the wages paid? Taking the time to evaluate alternatives will further reduce your exposure to an employment discrimination charge.

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Bottom line
Terminating a disabled employee can be a stressful proposition in light of the laws protecting the rights of disabled workers. But in this economic climate, employers may face the need to take such a step. To ensure that your decision does not run afoul of the law, take the time to objectively analyze the pros and cons of the termination. Analyzing your decision from the various angles set forth will reduce your exposure to a charge of discrimination and better prepare you to defend against such a claim.