Ferrara Fiorenza P.C.

Can an Employee on FMLA Leave be Laid Off?

CLIENT QUESTION: We have an employee who is out of work due to his own serious health condition under the Family Medical Leave Act (FMLA). Due to a slow down in business, we are planning on laying off a number of our workers.  If the employee taking FMLA leave were still here, he would be a part of that layoff.  Are we prevented from laying off this employee because he is on FMLA leave?

We receive this question frequently.  Many employers mistakenly believe that once an employee is on FMLA leave, the employee cannot be laid off or otherwise terminated.  This is not the case. 

Unfortunately, based on this mistaken belief, many employers will implement a reduction in force (RIF) that should have included an employee on FMLA leave but choose to exclude him/her from the RIF.  Then, when the employee is ready to return to work, the employer is confronted with a dilemma: do I find a job (or “make work”) for the individual now or do I risk laying him/her off immediately upon his/her return to work?  Neither choice is desirable.  The first choice creates obvious business problems and the second almost guarantees a lawsuit based on FMLA discrimination. 

This dilemma can be avoided by understanding the requirements of the FMLA and taking a few simple precautionary steps when conducting a RIF.  The FMLA regulations specifically state that: 

An employee has no greater right to reinstatement or to other benefits and conditions of employment than if the employee had been continuously employed during the FMLA leave period. An employer must be able to show that an employee would not otherwise have been employed at the time reinstatement is requested in order to deny restoration to employment.

For example: 

 … If an employee is laid off during the course of taking FMLA leave and employment is terminated, the employer’s responsibility to continue FMLA leave, maintain group health plan benefits and restore the employee cease at the time the employee is laid off, provided the employer has no continuing obligations under a collective bargaining agreement or otherwise. 29 C.F.R. §825.216. 

However, the regulations go on to say that: 

An employer would have the burden of proving that an employee would have been laid off during the FMLA leave period and, therefore, would not be entitled to restoration. Id. 

This means that an employer’s RIF decision will be under close scrutiny by investigators from the Equal Employment Opportunity Commission (EEOC) and/or the state anti-discrimination agency (like New York’s Division of Human Rights), should the affected employee file a claim.  Generally speaking, an employer is more likely to convince an investigator that the employee “would not otherwise have been employed at the time reinstatement”, if he/she were a part of a mass layoff, for example, than if the layoff only effected the employee who was on FMLA leave. 

In order to meet its “burden of proof” in this regard, the employer should be prepared to produce evidence that the layoff was necessitated by legitimate business concerns completely separate from the fact that the employee was on leave.  Since investigators tend to be more convinced by documentary evidence, we generally recommend that employers carefully document the reasons for the layoff and why the layoff needs to include the employee on leave. 

For example, if your company has decided for business reasons to discontinue making widgets and the employee on FMLA leave worked in the widget manufacturing department, his/her layoff along with everyone else in that department would likely withstand the investigator’s scrutiny.  By contrast, if the employee on leave is the only employee laid off in his/her department and his/her duties are either redistributed to other remaining employees (or given to a newly-hired employee), the EEOC or state agency will be less likely to believe that the layoff decision was motivated by reasons other than the employee’s absence. 

In either case, the employer should be documenting the legitimate reasons for the layoff in the form of intra-office memos, emails, sales reports, etc. to prove the need for the employment action.  Using the earlier example, if the company can produce sales figures showing a downturn in the widget market, production cost figures showing that the company is losing money by manufacturing widgets and written layoff notices to everyone in the widget manufacturing department, the employee on FMLA leave would have a very difficult time maintaining a claim that his/her layoff was improper. 

The bottom line is that employers canlay off employees on FMLA, if the decision is motivated by legitimate business factors.  Remember that you will have to prove that your layoff decision was properly motivated, thus you will need to document accordingly. 

Should you need assistance in analyzing and/or implementing a RIF that will effect an employee(s) on FMLA, please contact us at 315-437-7600 or 716-875-1406. 


Excerpted from the January 2011 edition of "Employment Law Matters".  To view the entire newsletter, please click here.