Can an employer terminate an employee when FMLA leave has been exhausted if the employee is on workers' compensation or has a disability covered under the ADA and is unable to return to work?

There is no absolute right to continued employment provided under either workers' compensation or the ADA for an employee whose FMLA leave is exhausted and who cannot return to work. However, an employer would want to consider options other than termination and seek advice of legal counsel before terminating the employee under this circumstance.     

Two FMLA regulations address this situation. FMLA Regulation 825.216(c) states: "If the employee is unable to perform an essential function of the position because of a physical or mental condition, including the continuation of a serious health condition or an injury or illness also covered by workers' compensation, the employee has no right to restoration to another position under the FMLA. The employer's obligations may, however, be governed by the Americans with Disabilities Act (ADA), as amended, state leave laws or workers' compensation laws." 

FMLA Regulations 825.702(c)(4) and (d)(2) address the interplay of the FMLA with workers' compensation and the ADA. Although the FMLA does not provide additional rights to workers who have filed a workers' compensation claim, employers are well advised to proceed very carefully when considering termination. Many states have laws that forbid terminations in retaliation for filing a workers' compensation claim. While terminating on the basis of simply filing a workers' compensation claim would likely be prohibited in many states, it is possible—in certain instances—for an employer to terminate an employee for reasons other than filing a workers' compensation claim. For example, many employers have a consistently applied policy wherein all workers who are off work for more than a certain number of weeks are terminated. It would then be difficult for a terminated employee to establish a causal relationship between the filing of the workers' compensation claim and the termination. 

Under the Americans with Disabilities Act (ADA), termination is much more problematic. Employees with disabilities are entitled to whatever forms of leave the employer generally provides to its employees. This means that when an employee with a disability seeks leave under an employer's regular leave policies, he or she must meet any eligibility requirements for the leave that are imposed on all employees (e.g., only employees who have completed a probation program can be granted advance leave). Similarly, employers must provide employees with disabilities equal access to programs granting flexible work schedules and modified schedules.

Example: An employee requests a nine-month leave of absence because of a disability. Although the employer has a policy of granting unpaid medical leave for one year, it denies this employee's request and terminates her instead. If the employer's policy is to grant employees up to one year of medical leave, with no other conditions, denying this benefit because an employee has a disability would violate the ADA.

If an employee with a disability needs leave or a modified schedule beyond what is provided for under an employer's benefits program, the employer may have to grant the request as a reasonable accommodation if there is no undue hardship.