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DEALING WITH EMPLOYEE ABSENCE AND ACCOMMODATION: THE FMLA, AMENDED ADA, WORKERS' COMPENSATION AND REDA IN NORTH

CAROLINA

2012 N.C. Society for Human Resource Management Conference Wilmington Convention Center Wilmington, North Carolina September 20, 2012

By: William Joseph Austin, Jr. Ward and Smith, P.A. Post Office Box 33009 Raleigh, NC 27636-3009 Telephone: (919) 277-9100 Facsimile: (919) 277-9177 E-mail: wja@wardandsmith.com

ASHEVILLE

GREENVILLE

NEW BERN

RALEIGH

WILMINGTON
800.998.1102

www.wardandsmith.com

Introduction The At-Will Rule gave shelter to employers for decades. It was an ironclad defense against almost almost - any claim for wrongful discharge: Where a contract of employment does not fix a definite term, it is terminable at the will of either party, with or without cause, except in those instances in which the employee is protected from discharge by statute. Still v. Lance, 279 N.C. 254, 259, 182 S.E.2d 403, 406 (1965) (emphasis supplied). Yes, please especially note the exception. Yet for many years, "This is an At-Will State," could have been the state motto. At one level it stood for the employer's explicit right to terminate employees at will for almost any reason at all, good or bad, if no fixed period of employment were established by contract. Almost. More powerful was the derivative authority to impose the programme of work. If the employee objected to poor pay, long hours, or unsafe conditions, his redress was the right to quit at will. If he complained while still in the traces there was no such thing as a prohibition against retaliation either. With impunity the employer could replace him with someone less vexing. In the Sixties, the almost exception"those instances in which the employee is protected from discharge by statute"grew teeth and began to swallow the rule. The mantra of bygone days gave way to the incredulous, "I thought North Carolina was an At-Will State," typically delivered in kill-the-messenger tonality, reaction to the revelation that the At-Will Rule has been steadily eroded over the course of the past 90 years by waves of labor and employment legislation. In the Twenties and Thirties it was the rising tide of regulatory statutes that protected employees with workers' compensation coverage, regulation of wages and hours, and other labor laws that shielded collective action and concerted activity. Then beginning in the Sixties came another wave of legislation that protected employees from discharge and discrimination based on suspect traits and classifications. By no means a dead letter, the At-Will Rule has nevertheless shifted and retreated much like our barrier islands. Nowhere in the law of North Carolina is the At-Will Rule now more awash than at the intersection of the Americans with Disabilities Act (ADA), Family and Medical Leave Act

(FMLA), workers' compensation, and the North Carolina Retaliatory Employment Discrimination Act (REDA). The universe of rights, remedies, and procedures available to the injured worker under workers' compensation has rapidly expanded over the course of the past quarter century in North Carolina, complemented by REDA and its predecessor. The ADA and FMLA, relative latecomers to federal labor and employment law, in 1990 and 1993 respectively, have created additional mediation between the employer otherwise invested with at-will power and the employee dealing with disability, incapacity, or compelling need to be absent from work. Together, workers compensation, REDA, FMLA and ADA lay deep and abiding constraints on the employer's discretion to dictate both the programme of work and the term of employment on the employee in the State of North Carolina. Employers must now navigate treacherous cross-currents.

II.

Disability Law: A Primer (Sort Of) As yet there is no unified Law of Disability, however. The laws already

mentioned address the many aspects of disability in diverse terminology, a state of affairs that makes sense, in the abstract at least, in light of two factors: (1) there are different sources for incapacity, as well as different kinds and different degrees of inability to work in the real world; and (2) the myriad laws dealing with these issues have evolved in fits and starts. They "just growed" like Topsy. The challenge to management and human resource professionals is how to make sense of the bewildering array in application. A typical false start begins with a review of each law one-by-one, hoping for a miracle that the eventual train wreck will not occur. We will in fact take a step that way, listing definitions of the nemesis "Disability" and its proxies. A move in the wrong direction perhaps, but we hope to make a point and then a right turn. Under the North Carolina Workers' Compensation Act, N.C. Gen. Stat. 97-1, et seq. ("the Act"), the term "disability" is initially defined as "incapacity because of injury to earn the wages which the employee was receiving at the time of injury in the same or any other employment." N.C. Gen. Stat. 97-2(9). When the Act segues to occupational disease, the additional term "disablement" comes into play, which is "treated as the happening of an injury by accident within the meaning of the North Carolina Workers' Compensation Act." Id. at -52. That term leads to a split in G.S. 97-54, where in the case of asbestosis or silicosis disablement

means "the event of becoming actually incapacitated because of asbestosis or silicosis to earn, in the same or any other employment, the wages which the employee was receiving at the time of his last injurious exposure to asbestosis or silicosis." Id. at -54. In all other cases of occupational disease, the term "disablement" is made "equivalent to 'disability' as defined in G.S. 97-2(9)." Id. Coming full circle, in G.S. 97-55, it is said, "The term 'disability' as used in this Article means the state of being incapacitated as the term is used in defining 'disablement' in G.S. 97-54." Id. at -55. By the way, under the Act there are different types and degrees of disability. Provisions for compensating temporary total, partial, permanent partial, and permanent total disability add to the complexity. Under Title I of the Americans with Disabilities Act ("ADA"), the term "disability" is given a three-part definition: physical or mental impairment that substantially limits one or more of the major life activities of an individual; a record of such impairment; or being regarded as having such an impairment. 42 U.S.C. 12102(2). The important phrases "impairment," "substantially limits" and "major life activities," of course, are also defined terms which are discussed in subsequent parts of this paper. Under the Family and Medical Leave Act ("FMLA"), 29 U.S.C. 2601, et seq., the concept of disability morphs into a "serious health condition," which is defined to mean a physical or mental illness, injury, or condition that either involves inpatient care or that involves continuing treatment by a healthcare provider. Because a three-day incapacity for work is also a requirement, it will likely qualify as disability under the Workers' Compensation Act, but may or may not be a disability under the ADA. Social Security disability may also become a factor from time to time. There the phrase is defined as the "inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months." 42 U.S.C. 423(d)(l)(A). The "[d]etermination of eligibility for social security benefits involves a five-step inquiry," Walls v. Barnhart, 296 F.3d 287, 290 (4th Cir. 2002), which asks: whether (1) the claimant is engaged in substantial gainful activity; (2) the claimant has a medical impairment (or combination of impairments) that are severe; (3) the

claimant's medical impairment meets or exceeds the severity of one of the impairments listed in Appendix I of 20 C.F.R. Part 404, subpart P; (4) the claimant can perform her past relevant work; and (5) the claimant can perform other specified types of work. Johnson v. Barnhart, 434 F.3d 650, 654 n.1 (4th Cir. 2005), citing 20 C.F.R. 404.1520 (2005). Social Security On-line explains it more succinctly: "Disability" under Social Security is based on your inability to work. We consider you disabled under Social Security rules if: You cannot do work that you did before. We decide that you cannot adjust to other work because of your medical condition(s); and Your disability has lasted or is expected to last for at least one year or to result in death.

This is a strict definition of disability. [Emphasis supplied.] There is nothing like Wikitude or Panoramio to show the way to the magic touchstone for determining disability in all of these permutations. We do suggest that taking up each law one at a time is not the best way to go in the context of workplace injury and illness. We have tried it both as presenter and consumer and reached a conclusion, there must be a better way. The following section at least offers a different approach.

III. Navigating Workers' Compensation, FMLA, ADA & REDA: An Algorithmic Course Rather than marching through each statute seriatim, we will focus instead on a single workplace injury or illness, backing and filling our way to a logical end. So, we consider the case of an employee who has been employed for over 12 months and recently sustained a disabling injury in the course and scope of employment. Prior to going out of work (OOW) for three-plus consecutive calendar days, the employee worked in excess of 1,250 hours during the 12-month period preceding commencement of the leave. The employee's condition does require continuing treatment by a health care provider at least to a point of maximum medical improvement which occurs sooner and later over the course of the variations on our theme.

The employer does business in the private sector and has employed in excess of 50 employees for each working day during each of 20 or more calendar workweeks in the current (or preceding) year, all within a 75-mile radius of the facility where the employee worked. The case will be treated in light of the following laws: The Family and Medical Leave Act (FMLA), the federal law which provides that just such an eligible employee may take up to 12 weeks of unpaid leave over a 12-month period for the employee's own serious health condition (inter alia); Americans with Disabilities Act (ADA), the federal law which prohibits employers from discriminating against a disabled employee with respect to all terms, conditions and privileges of employment; and, Retaliatory Employment Discrimination Act (REDA), the state law which, in pertinent part, prohibits an employer from discriminating or taking any retaliatory action against an employee who in good faith files a claim under the North Carolina Workers' Compensation Act.

Basic elements of workers' compensation law are worked into the analysis as well. The following set of variables will be used to create several variations for purposes of discussion and illumination of important points: (i) length of time the employee remains out of work (OOW); (ii) whether or not the employee actually returns to work (RTW); (iii) whether the employee is placed under any work restrictions by the doctor; and (iv) whether work is available. Section IV below provides a refresher on the REDA law of North Carolina. A review of this synopsis may be helpful in advance, but otherwise the reader is invited to dive in. VARIATIONS 1. Cleared to RTW - unrestricted - OOW for 12 weeks or less - RTW.

(a) FMLA: The given facts establish FMLA coverage on the employer and eligibility for up to 12 weeks of unpaid leave to the employee. Except for certain highly compensated (key) employees, an employee returning to work from FMLA leave in such a case must be reinstated to the same position or to an equivalent position with equivalent benefits, pay, and all other terms and conditions of employment. The law does allow the employer to have a nondiscriminatory policy that requires an employee on FMLA leave to report periodically on the employee's status and intent to return to work. If the workplace injury or illness is one of accepted liability under the Workers' Compensation Act then after a seven-day waiting period the employee will be entitled to draw temporary total disability benefits under N.C. Gen. Stat. 97-29. If the claim is contested, i.e., no worker's comp is paid until liability is established, the employee may elect to substitute paid leave for the unpaid leave. The employer may also require the employee to

substitute paid leave for any part of the 12 weeks of leave to which the employee is entitled under FMLA, again so long as this measure is consistent with a nondiscriminatory policy. Rules may not be created as-you-go. In any situation where the employee elects or the employer requires the substitution of paid leave for an FMLA qualifying purpose, the employer may designate the leave as FMLA leave and count the leave as running concurrently for purposes of both paid leave and the FMLA leave entitlement. The regulations require the employer to designate in writing that the leave is FMLA within five business days of the employer's knowledge that the leave is FMLA qualifying. The employer also may require concurrent exhaustion of FMLA leave in the case of a workers' compensation absence. Sidebar: Workers' Compensation and FMLA An FMLA "serious medical condition" under 29 U.S.C. 2612(a)(1)(D) may result from accidental injury in the course and scope of employment, thus coinciding with a "disability" under N.C. Gen. Stat. 97-2(9). The employer in that case can and should designate the time out of work as FMLA leave, running concurrently with the workers' compensation absence. See 29 C.F.R. 825.207(d)(2) & 825.208. Otherwise, an eligible employee would retain the FMLA eligibility (and the reinstatement rights that go along with it) even after significant absence due to temporary total disability under the Workers' Compensation Act. The alert employer will then designate a time of temporary total disability as concurrent FMLA leave. Frequently, the employee will protest, saying that FMLA leave was not requested, the time out of work is due to work-related injury, etc. Still, the regulation allows the employer to take this action, and it is certainly a good business practice to do so if the employer desires to maintain some regularity and predictability in attendance at work. So what if the employee is cleared to return to work but in a light duty or reduced schedule capacity? Does the employer have to reinstate him to his former position or one with equivalent pay and benefits? The FMLA does not require the employee to accept light duty if it is something less than the same or equivalent job that is being protected, but the employee may jeopardize worker's compensation benefits by refusing light duty. The quandary is mitigated if not mooted in North Carolina by the availability of temporary partial disability under N.C. Gen. Stat. 97-30. This benefit ("tpd") serves to offset the difference in pay between what the employee would have made if there had been no disability and what the employee is actually paid in wages or salary. The tpd is two-thirds the difference, paid tax-free. The employee still

has reinstatement rights to the same or equivalent job but only until the end of the twelve-month period the employer uses to calculate FMLA leave. 29 CFR 825.220.

During the FMLA leave period, the employer must maintain the employee's coverage under any group health plan at the level and under the conditions of coverage which would have been provided if the employee continued in employment for the duration of the leave. Employees must continue to pay the same share of health insurance premiums as they paid prior to taking FMLA leave. Even if coverage terminates due to missed premium payments by the employee, the employee upon reinstatement must be restored to the same coverage the employee would have had if leave had not been taken. To preclude a termination of coverage, an employer may decide to pay the employee's share of any premium payments the employee has missed. If it does so, the employer is permitted to recover those payments. In the event that leave extends past 12 weeks, than the reduction in hours (presumably down to zero) is a qualifying event under COBRA so the employer does not have to continue to carry the employee in the group health plan. (b) ADA: This law applies to employers who have 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year. The law prohibits discrimination against an individual who has a physical or mental impairment that substantially limits one or more of the major life activities; or has a record of such an impairment; or is regarded as having such an impairment. Under Variation No. 1, no ADA issue appears to be ripe as the period of disability is finite, relatively short, and ends with clearance to return to unrestricted work. (c) REDA: The employee having returned to work under Variation No. 1, there is no apparent REDA issue. 2. available. (a) FMLA: Employer has a defense if it can prove that the employee would have been separated from employment during the leave period regardless of the FMLA leave. The facts might suggest that an RIF has occurred while the employee was OOW. Also, an employer may deny job restoration to a salaried "key employee" who is among the highest paid 10% of all employees (salaried and non-salaried) within 75 miles of the employee's worksite. The determination of whether a salaried employee falls within the highest paid 10% is made at the time the employee gives notice of the need for leave. To take advantage of this exception, an employer must show that substantial and grievous economic injury would result from the key employee's reinstatement, not from the employee's absence. Key employees cannot be denied FMLA leave. Rather, they can be denied job restoration following the leave provided that due notice has been given to the employee. (b) ADA: Under the facts of Variation No. 2, in particular clearance to return to unrestricted work, it is unlikely that the employee would be considered to have a "disability" as defined in the Act. Furthermore, based on the hypothetical facts the employer can Cleared to RTW - unrestricted - OOW for 12 weeks or less - no work

raise the defense of business necessity. These issues will receive considerably greater treatment under Variation No. 11, a fact situation that can result in major disputes.

(c) REDA: The employer may raise the statutory defense that it would have taken the same unfavorable action in the absence of the employee's protected activity (i.e., filing the worker's compensation claim). REDA does not require employers to find positions for returning employees, but forbids retaliation for filing workers' compensation claims. 3. does not RTW. Cleared to RTW - unrestricted - OOW for 12 weeks or less - employee

(a) FMLA: If an employee gives unequivocal notice of intent not to return to work, the employer's obligation under the FMLA to maintain health benefits ceases (subject to COBRA requirements), and the obligation to reinstate the employee to an equivalent position ends. If the employee is granted reinstatement but does not return to work, the employer can recoup the cost of health care premiums paid to maintain coverage during the period of unpaid leave. (b) (c) 4. ADA: No issue likely. REDA: No issue likely.

Cleared to RTW - with restrictions - OOW for 12 weeks or less - RTW.

(a) FMLA: The common denominator of the first three variations was clearance to return to unrestricted work. The next three variations involve return-to-work with restrictions and the attendant issues. To say the least, interesting cases happen in this fact pattern. The light duty quandary discussed in the first sidebar definitely comes into play under this variation. Fitness for duty clearance is another issue confronted here. When an employee has taken leave because of his or her own serious health condition, the employer may require certification from the health care provider that the employee is able to resume work. This requirement must be a uniformly applied policy or practice, not one selectively applied to a particular employee on FMLA leave. Furthermore, return-to-work physicals must be job-related and consistent with business necessity. An employer is required to notify employees if a fitnessfor-duty report is required for a return to work. Only if proper notice is provided may the employer deny job restoration until the employee submits the fitness-for-duty report. If the employee is still limited because of a physical or mental condition, including continuation of the serious health condition, not only is the ADA implicated (see 4(b) below), but the FMLA will also govern whether the employer must allow intermittent leave or a reduced schedule.

Sidebar: Reduced Schedule and Intermittent Leave We have to face up to reality, reduced schedule and intermittent leave are available under the FMLA if based on medical certification. As a result, the employer may have to cope with unpredictable absences, or the parties may settle into a hybrid relationship in which the employee has a four-day work week plus the benefits of full time employment. Relax. Everybody has to deal with it. There is no silver bullet. The issues are manifold, so we will hit some highlights with the following bullet points: Exempt status under the Fair Labor Standards Act will not be lost when the employer docks the employee's salary in proportion to the lost time. If the leave is for scheduled medical treatment, the employee may be temporarily transferred to an available alternative position that better accommodates the absences or part-time employment, so long as the employee receives the same rate of pay and benefits in the alternative position. If the intermittent leave has to do with scheduled medical treatment, the employer may not require the employee to schedule the treatments outside normal work hours when scheduling treatment during work hours will not "unduly disrupt" operations. The shortest leave increment can be no more than one hour, so even if the employer's payroll system accounts for absences by half days or by blocks of two hours, ect., the employer must still allow employees to take leave in increments of one hour or less. Leave entitlement is not based on a standard 40-hour workweek, but on the individual's "normal workweek," whether greater than, less than, or equal to 40 hours per week. Employees do not have to be completely incapacitated to take intermittent leave, so they are not precluded from participating in other life activities, such as shopping, eating lunch, or visiting bars while on intermittent leave.

And so on.

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(b) ADA: If the restrictions are such that the individual is substantially limited in one or more of the "major life activities," including functions such as caring for one's self, performing manual tasks, walking, seeing, hearing, speaking, breathing, sleeping, eating, reaching, lifting, bending, reading, concentrating, thinking, communicating, interacting with others, learning, and working, or in the operation of a major bodily function, then the ADA will govern the employer's obligations, viz. to provide the employee with a reasonable accommodation that will enable the individual to perform the essential functions of his or her position. Individualized assessment must take place. The determination of accommodation (or not) must be based on an interactive process between the employer and employee. (More on these issues under Variation No. 11.) (c) REDA: No interesting issues yet. Again, the availability of tpd under the Workers' Compensation Act is ameliorative, and the employer's (well, the insurance company's) desire to wean the employee from disability is a catalyst for return-to-work in any capacity. For those who serve as the in-house workers' compensation trouble-shooter, beware the yin and yang of "make work" vs. "suitable employment" here. 5. Cleared to RTW - with restrictions - OOW for 12 weeks or less - no work available within restrictions. (a) FMLA: Protected leave continues for up to 12 weeks (at least). Under Variation 11 below we will address the possibility of extending the leave beyond the FMLA 12 weeks as an ADA accommodation. If the employer paid the cost of health care premiums to maintain coverage during a period of unpaid leave, the employee fails to return to work because of the continuation, recurrence, or onset of a serious health condition within the meaning of the statute, or because of other circumstances beyond the employee's control, the employer may not recoup the expense. If the failure to return to work is due to a serious health condition, the employer can require medical certification if the employee is unable to perform the functions of his or her job. (b) ADA: Non-restoration may be justified by business necessity (reinstatement cannot be accomplished by reasonable accommodations); or if the individual poses a direct threat to the health or safety of the individual or to others. The determination of whether an individual poses such a threat must be based upon an individualized assessment, not stereotypes or speculation about the risk of harm. Some self-interrogation and careful analysis is required in this fact pattern. (More on extension of leave as a reasonable accommodation is discussed in detail under Variation 11 below.)

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Sidebar: "100%" Policies Some employers still maintain a policy or practice that refuses to allow an injured employee to return to work until he is "100%" or "cleared for full duty." Courts have held that such a policy violates the ADA, see McGregor v. National Railroad Passenger Corp., 187 F.3d 1113, 1116, (9th Cir. 1999). The holding does seem to beg the question, that the individual is actually disabled under the ADA, but with the additional ADA provision protecting individuals who may be "regarded as" disabled the point has to be well-taken. In any event, the ADA requires individualized assessment and an interactive process to determine if an accommodation can be made, and the so-called "quick fix" working out minor accommodations to keep a person productive even if ADA coverage remains an open question is a tried and true practice itself. Consequently, keeping people out of work until they are "cleared for full duty" is an invitation for trouble under the ADA.

(c) REDA: Same defense may apply here as in Variation No. 2(c). However, the case of an employee ready and willing to return to work notwithstanding limitations is a dangerous one for the employer under REDA. REDA exposure is particularly high if the employer summarily dismisses the notion of letting the employee attempt to RTW. 6. RTW. (a) (b) (c) 7. FMLA: See Variation Nos. 3(a) and 5(a). ADA: No issue likely. REDA: No issue likely. Cleared to RTW - with restrictions - OOW for 12 weeks or less - does not

Cleared to RTW - unrestricted - OOW for more than 12 weeks - RTW.

(a) FMLA: The employee's leave rights as well as the right to job restoration expire 12 weeks and a day following commencement of the leave ("the eighty-fifth day"). The employee who desires to return to work after the passage of 12 weeks may be placed in whatever available position he or she has capacity for, but has no legal right to it. (b) ADA: That the employee returned to work without restrictions reduces the likelihood of any ADA claim.

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(c) REDA: What could be the case under Variation No. 7 is that the employee drew temporary total disability benefits under the Workers' Compensation Act during a period of convalescence, was released by the doctor, and then returned to work without further incident. This probably does happen from time to time. It is at least possible. 8. available. (a) FMLA: Assuming that the employer has taken all timely action, the employee has no further FMLA rights. (b) ADA: Being medically unrestricted, there is less likelihood that the employee would be considered an "individual with a disability." (c) REDA: Same defense may apply here as in Variation No. 2(c). REDA does not prohibit all discharges of employees who are involved in workers' compensation claims, it only prohibits discrimination and retaliation against the employee because he or she exercised the right. However, the caveats of Variation No. 5(c) will also apply. 9. RTW. (a) (b) (c) 10. RTW. (a) FMLA: After the passage of 12 weeks, the employee may be placed in whatever available position he or she has capacity for, but has no legal right to it. Suppose we change the facts, however. Suppose the employer was asleep at the switch to begin with and failed to make the FMLA call at the beginning of the absence. FMLA: No additional issues. ADA: No additional issues. REDA: No additional issues. Cleared to RTW - unrestricted - OOW for more than 12 weeks - does not Cleared to RTW - unrestricted - OOW for more than 12 weeks - no work

Cleared to RTW - with restrictions - OOW for more than 12 weeks -

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Sidebar: Mulligans Allowed, Conforming to Ragsdale Pertinent to employer notice rules, the FMLA regulations conform with the United States Supreme Court's decision in Ragsdale v. Wolverine World Wide, Inc., 535 U.S. 81 (2002). Fortunately, it is now not a case of one false move and you get your head blown off. In Ragsdale, the Court struck down the Department of Labor's so-called "categorical" penalty which effectively prohibited retroactive designation of FMLA leave by an employer. The regulations remove the automatic penalty. A late call may be made by the employer, but the employer may still be liable to the employee, for example, for interference with or wrongful denial of FMLA leave if the employee does suffer individual harm. So, retroactive designation may be proper in the absence of individual harm, 29 C.F.R. 301(d) & (e), but what type of individual harm could there be? For example, the employee may contend that if the FMLA notice had been timely given by the employer he would have sought reduced schedule leave at some point, and now his FMLA leave time is exhausted and his reinstatement rights have expired. (b) ADA: If the individual is a "qualified individual with a disability" then he or she is entitled to reasonable accommodation. (c) REDA: Similar to Variation No. 7(c), plus there may have been some rating by the doctor and a payment of ppd on these facts. Nevertheless, it appears that the employee returned to work without a hitch. 11. Cleared to RTW - with restrictions - OOW for more than 12 weeks - no work available within restrictions. (a) FMLA: No additional issues.

(b) ADA: This variation is fraught with danger for the employer under the ADA. The restrictions may be severe enough to give the employee standing as a "qualified individual with a disability," and the avowed unavailability of work may mask unwillingness to make a reasonable accommodation. (Yes, we take liberties with the stated assumptions, even ascribing ulterior motives to the employer but only to illustrate a point.) The ADA defines "disability" as (1) a physical or mental impairment that substantially limits one or more major life activities, (2) a record of such impairment, or (3) being regarded as having such an impairment. Working is a major life activity. To be disabled for working, an individual is considered "substantially limited" if, because of a physical impairment, he is limited in performing "a type of work," including the job he was performing

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prior to injury. Case law that was much more favorable to the employer has been abrogated by the ADAAA and the Regulations. The ADA protects and defines "qualified individual with a disability" as an individual with a disability who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires. The EEOC has defined the term "essential" to include a fundamental not marginal function of a job, i.e., (1) the reason the position exists is to perform that function, or (2) there are a limited number of employees to whom the performance of that function can be distributed, or (3) the function is highly specialized. To establish a prima facie case of failure to accommodate under the ADA a plaintiff must show that: (1) he was an individual with a disability within the meaning of the statute, (2) the employer had notice of his disability, (3) with a reasonable accommodation he could have performed the essential functions of the job and (4) the employer refused to make such accommodations. The ADA requires employers to make "reasonable accommodations" to the known physical or mental limitation of the qualified individual, subject to exception for "undue hardship" upon the employer. Reasonable accommodations include making facilities accessible, job restructuring, modifying work schedules, reassignments, and auxiliary aids. However, an employer is not required to undertake an accommodation that creates an "undue hardship." That phrase would include those which are unduly costly, extensive, substantial, or disruptive. The concept is not limited to financial difficulty, but also refers to any accommodation that would fundamentally alter the nature of the business.

Sidebar: Extension of Leave as an Accommodation A policy that creates a 12-week cliff for the convalescing employee is probably a bad idea. Although the FMLA only guarantees 12 weeks of leave, and being there should be considered an essential function of most if not all jobs, hair trigger termination on the eighty-fifth day after the beginning of FMLA leave may be viewed as a violation of the ADA under some circumstances. Some extension of leave past 12 weeks may have to be on the table as a reasonable ADA accommodation. Indefinite leave is not a reasonable accommodation, Myers v. Hose, 50 F.3d 278 (4th Cir. 1995), but how much additional leave is reasonable will be a function of the employer's personnel requirements, such as the need to fill the job with a qualified long term replacement, and the expected additional time the disabled incumbent may remain out of work. The gray area, somewhere between a day or two and three more months, will necessitate the exercise of sound business judgment.

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(c) 12. not RTW. (a) (b) (c) 13.

REDA: See Variations Nos. 2(c), 5(c), and 8(c).

Cleared to RTW - with restrictions - OOW for more than 12 weeks - does No additional issues. No additional issues. No additional issues.

Not cleared - OOW greater than 12 weeks.

Employers sometimes freeze in the case of an employee on workers' compensation whose prognosis for a return-to-work is uncertain. The employer may have a vague notion that the employee is protected from termination while drawing disability under workers compensation. Weeks of disability turn into months and sometimes even years. In such a case, the FMLA is no longer a factor. The question does arise, does the employer have to continue health insurance? The employee is still on the roll of employees. However, the reduction of hours (down to zero) is a COBRA qualifying event, so after FMLA has been complied with, the individual should be given COBRA notification. Neither the Workers' Compensation Act nor REDA contains any guarantee of a reinstatement. The Workers' Compensation Act provides for benefits to the injured employee which can literally last a lifetime, and REDA only prohibits discrimination and retaliatory action, that is, a culpable pay back for making the worker's compensation claim. Unfortunately, the latter is a state of mind that may be ascribed to the employer with little or no basis, and there is no safe harbor or set of facts in which there is absolutely no risk of the claim being made by a disappointed (or opportunistic) employee. Businesses, on the other hand, have to plan to remain profitable, and not knowing if and when an employee will return to work is antithetical to that interest. Some businesses have promulgated an across-the-board rule that employees who remain away from work for a specified period of time will be terminated. A previous North Carolina Commissioner of Labor took the position that such a rule was a per se violation of REDA if it was applied to someone OOW on worker's compensation disability. Under the current Commissioner of Labor that position has been reversed, and at least one court has held that when such a rule is applied without variance, not only to those who are out of work on workers' compensation but also to individuals absent for any other reason, then the employer successfully established the statutory affirmative defense under REDA. In order for the defense to be successful, the rule has to be applied relentlessly. One exception potentially creates the comparator for a case of alleged REDA discrimination. What we have not mentioned under this variation is the ADA. Intuitively, we might say that since the employee is totally disabled, albeit "temporary" in terms of the Workers' Compensation Act, he is not qualified. However, in 2010 Sears Roebuck & Company paid $6.2 16

million to individuals terminated under an inflexible leave exhaustion policy. After six months of disability, workers' compensation claimants who were still OOW were terminated under the Sears' policy. The EEOC sued Sears in 2004, and nearly six years later entered into the record-setting settlement with Sears. The case never worked its way out of the United States District Court in Illinois, so there is no binding precedent elsewhere. However, the case surely signifies the EEOC's intent to apply its ADA interpretation to inflexible leave exhaustion policies, and, therefore, potential trouble ahead for employers who have such a policy on the books. In many cases employees will have applied for Social Security disability. Our intuitive reaction then is that the employer is in the clear if the employee himself has apparently written off returning to work in the foreseeable future. Not so fast. Sidebar: Social Security Disability and ADA An individual who has sustained injury or illness and experiences problems re-entering the active workforce may seek a remedy under the ADA while contemporaneously pursuing a claim for Social Security disability. But are the two mutually exclusive? Does profession of total disability within the SSDI program preclude the same individual's claim that he is able to perform the essential functions of the job for which he also seeks remedy under the ADA? The United States Supreme Court held that there is no estoppel against a plaintiff who makes both claims. Cleveland v. Policy Management Systems Corp., 526 U.S. 795 (1999). The burden does rest on the ADA plaintiff to offer "sufficient explanation" for the "apparent contradiction." Id. at 806. The plaintiff must explain how, notwithstanding the claim of total disability in pursuit of Social Security disability, he is nevertheless able to perform the essential functions of the job in question with or without reasonable accommodation. Id. at 807. In a case on point, Payne v. Fairfax County, No. 1:05cv1446, slip opinion, 2006 WL 3196545 (E.D. Va. filed Nov. 1, 2006), the plaintiff successfully argued that statements made for the purpose of obtaining Social Security disability benefits did not mean he was unable to work with reasonable accommodation. In his ADA claim, the plaintiff was contending that he could have done the job for the defendant if reasonably accommodated. In the absence of reasonable accommodation, he could not work, and, therefore, would be eligible to receive Social Security disability benefits. The Social Security claim per se did not cancel the argument that he was a qualified person with a disability.

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IV.

Coda: Retaliatory Employment Discrimination Act (REDA) The Retaliatory Employment Discrimination Act ("REDA"), N.C. Gen. Stat.

95-240, et seq., creates liability for unlawful retaliation. Not a disability law per se, it does protect those who seek or draw disability compensation under the North Carolina Workers' Compensation Act. Thus, it plays a prominent role as a law that preserves rights to disability under the Act. In pertinent part, REDA states that "[n]o person shall discriminate or take any retaliatory action against an employee because the employee in good faith does or threatens to do any of the following: file a claim or complaint, initiate any inquiry, investigation, inspection, proceeding or other action, or testify or provide information to any person" under the Workers Compensation Act. N.C. Gen. Stat. 95-241(a)(1)a. It should be noted that this statutory language is not limited to protecting the employee from retaliation for only filing the claim. Temporal proximity of the filing of the claim and the alleged retaliatory action are not necessary because N.C. Gen. Stat. 95-241 covers all aspects of a workers' compensation proceeding. See Lilly v. Mastec North America, Inc., 302 F. Supp. 2d 471, 481-82 (M.D.N.C. 2004) (negotiating a workers' compensation settlement falls within the protection of REDA). In short, REDA protects the employee from retaliation for filing the claim or exercising any right related to the process, including receipt of disability payments for a lost time claim. The ability of an employer to chill an employee's exercise of his rights under the Workers' Compensation Act through retaliatory discharge or demotion is what motivated the General Assembly to enact N.C. Gen. Stat. 97-6.1, the predecessor to REDA. See Henderson v. Traditional Log Homes, 70 N.C. App 303, 319 S.E.2d 290 (1984). The purpose of the statute is to promote an open environment in which employees can pursue their workers' compensation remedies without fear of retaliation. Abels v. Renfro Corp., 108 N.C. App. 135, 140, 423 S.E.2d 479, 482 (1992). The administrative scheme governing REDA claims is similar to those that apply to discrimination claims based on federal laws. The plaintiff alleging a REDA violation must file a written complaint with the Commissioner of Labor, who will then decide whether there is reasonable cause for the allegation. The Commissioner issues the plaintiff a right-to-sue letter, which enables the plaintiff to bring a civil action in Superior Court. N.C. Gen. Stat. 95-242(a).

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A civil action filed under REDA must "be commenced by an employee within 90 days of the date upon which the right-to-sue letter was issued." N.C. Gen. Stat. 95-243(b). The North Carolina Supreme Court has recognized that federal decisions offer guidance in establishing evidentiary standards in employment discrimination cases. Abels v. Renfro Corp., 335 N.C. 209, 218, 436 S.E. 2d 822, 827 (1993). Under the federal evidentiary schema, a plaintiff can demonstrate retaliatory discharge with either direct evidence or the inferential burden-shifting model often called the "McDonnell Douglas scheme." Wiley v. UPS, 102 F. Supp. 2d 643, 650 (M.D.N.C. 1999). To make out a prima facie case of REDA retaliation through burden-shifting, a plaintiff must demonstrate (1) defendant was aware that the plaintiff was engaged in a protected activity; (2) plaintiff suffered an adverse employment action; and (3) the protected activity and adverse action were causally related. Wiley, 102 F. Supp. at 650. If the plaintiff presents a prima facie case, the burden then shifts to the employer to articulate a legitimate, nonretaliatory reason for the employment action, which shifts the burden back to the plaintiff to demonstrate that the given reason was a pretext for retaliation. Id. Burden-shifting is used more frequently because employees often do not have direct evidence of discrimination. However, if the employee has direct evidence of discrimination, the employee need not resort to burden-shifting. See Lilly, 302 F. Supp. 2d at 483-84 (direct evidence of notes and comments suggesting employer's reasons for termination, along with temporal proximity of termination to settlement of employee's workers' compensation claim, was sufficient to overcome summary judgment). The Lilly case is a cautionary tale itself. After a long period of job-related disability, Mr. Lilly expressed the desire to return to work. The insurance company for the employer, however, sought a resignation and release as part of the final worker's compensation settlement, a common practice to this day. Mr. Lilly refused to sign the resignation, and soon after the Industrial Commission approved the clincher agreement settling the worker's compensation claim the employer fired him. The Court held that these facts made out a sufficient REDA case to go to trial. REDA does not provide the employee with an absolute right simply because the employee filed a workers' compensation claim. The North Carolina Court of Appeals has expressly stated that " 'the statute does not prohibit all discharges of employees who are involved

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in a workers' compensation claim, it only prohibits those discharges made because the employee exercises his compensation rights.' " Salter v. E&J Healthcare, Inc., 155 N.C. App. 685, 691, 575 S.E.2d 46, 50 (2003) (emphasis in original) (quoting Johnson v. Trs. of Durham Tech. Cmty. Coll., 139 N.C. App. 676, 681-82, 535 S.E.2d 357, 361 (2000)). Thus, the burden is on the plaintiff to demonstrate that retaliatory motive was a substantial factor in the adverse employment action. Johnson v. Friends of Weymouth, Inc., 120 N.C. App. 255, 259, 461 S.E. 2d 801, 804 (1995). Conclusion We must deal with interpretations of a growing body of already voluminous law and regulations not well harmonized in the law books. Another subtext of modern Labor and Employment Law is that a growing part of the American workforce either suffers from disability of some sort or degree, or is preemptively distracted from work by family matters only some of which are covered by the FMLA. Even prior to these historic times there were signs and symptoms of a wounded and weary workforce. Protracted hard times have accentuated these conditions. Solution to the problems that propel the deep currents may come eventually. In the meantime the practical effects in the workplace are ever more a challenging fact of life for management and human resource professionals.

2012 Ward and Smith, P.A.


William Joseph Austin, Jr. practices in the Labor and Employment Practice Group of Ward and Smith, P.A. where he concentrates his practice in labor and employment law, workers' compensation, and employee benefits. Comments or questions may be sent to wja@wardandsmith.com.

ND: 4813-8067-7904, v. 1

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