Liberal Leave Policy Backfires:  State jobless agency is confused by employer's terminology

by Larry Clark

Have you ever found yourself arguing that you didn't mean what you said?  This employer's entire unemployment case depended upon our ability to prove that the leave of absence that they granted an employee wasn't really a leave of absence!  A genuine leave of absence, as viewed by most state unemployment agencies, promises a job when the employee returns.  Unfortunately, our client referred to this type of leave as a leave of absence in all their documentation.  This documentation (which included a leave of absence form signed by the worker) led the state unemployment agency to conclude that the claimant was replaced during a leave.

Prior to filing a claim for unemployment insurance benefits, Susan had been a social service worker with over ten years of seniority with a regional hospital.  She requested a six week leave of absence to join her spouse who was stationed outside the United States.

According to the hospital's personal leave of absence policy, when a leave exceeds six weeks, the employer will not guarantee the worker's employment.  Granting any personal leave of absence depended on the circumstances of the request and the employer's ability to allow the time off.

The hospital denied the claimant's request because they did not have sufficient staff to cover her position for such a long period.  Surprisingly, while the hospital policy did not provide for a personal leave beyond six weeks which guaranteed her position upon return, it did allow for a much longer leave if the hospital was not obligated to return her to the same or comparable job when she returned.  Because the claimant's children were having emotional problems with the separation from their father, the claimant was willing to accept a long term "leave of absence," even though there was no assurance of employment when she returned.  Under this arrangement, she would be allowed to retain her seniority, and she would receive first consideration if work became available when she returned; the claimant's job, however, would be filled in her absence.  The claimant agreed to these conditions.

The hospital was forced to fill Susan's position after she left the country.  When she returned several months later, there was no work immediately available, so she filed a claim for unemployment benefits.

The state agency's eligibility determination was predictable:  They ruled that because the employer had replaced her during her leave of absence, they had laid her off due to lack of work.

We filed an appeal.  At the hearing, we argued that Susan's separation should have been adjudicated as a voluntary quit rather than a layoff.  Since she knew that her job would be filled in her absence, she, rather than the hospital, should be viewed as the moving party to the separation.  The party who moves first to end an employment relationship has the burden of proving that their reason for ending the relationship was compelling.

Fortunately, prior to her leaving, the hospital had asked the claimant to sign a statement which read, in part, as follows: "Susan understands that due to the length of her leave of absence it is necessary to replace her position."  From this document, it was possible to convince the administrative law judge that the separation occurred at the time she left rather than on the date when the employer hired someone to take her position.  The judge ruled that she voluntarily quit without good cause.

Leaves of absence can help employers retain valuable employees, even when they do not promise a job upon return.  In addition, bona fide leaves of absence can often prevent unemployment claim charges.  For example, if a worker quits without requesting an available leave of absence, and if such a leave would have solved the problem that caused the separation, the employee will often be disqualified from unemployment benefits.  Employers should have a well defined and well communicated leave of absence policy which includes a specific process for requesting, maintain­ing and/or extending leaves.

Improve your odds of successfully defending your leave policy:  Have a supervisor witness the leave of absence conference between the manager and the employee.  This will give you the possibility of a second witness for the employer if an unemployment hearing is scheduled months later.

Employers should become familiar with federal and state laws.  For example, the Family Medical Leave Act (FMLA) as well as the Uniformed Services Employment and Reemployment Rights Act (USERRA) require not only that you grant leaves but also that you return qualified employees to the same or comparable positions.  Under FMLA, if you have fifty or more workers within a seventy-five mile radius of the work site, you are required to grant up to twelve weeks of unpaid leave to workers with twelve months or more of seniority who can show either compelling medical or compelling family medical reasons.  USERRA protects the jobs of members of the National Guard, Armed Forces Reservists and/or veterans returning from military duty.

If the worker still has compelling reasons to be absent at the expiration of the leave, you may want your leave policy to give your organization the flexibility to consider extending the leave.  Extending the leave puts the responsibility upon the employee to maintain the employment relationship.

If the reason given for requesting the leave is not compelling, and you will not have sufficient staff to cover the vacancy, consider denying the leave.  If the worker decides to quit, it will usually be ruled by the state jobless agency as a quit without good cause.

If you are unable to guarantee the worker the same or a comparable job after the leave, consider doing what the hospital in this case did.  While granting a leave which does not protect the employee's job may not be deemed a bona fide leave of absence by the state, it could still help you retain a valuable employee.  If you elect to go this route, be sure to have the employee sign a statement that they understand that it will be necessary to fill their position during their leave.  Obviously, you can't use this strategy for FMLA or USERRA leaves, which require you to protect the workers' jobs.

If you are forced to fill an individual's position while they are on a bona fide leave of absence, consider hiring a temporary replacement that will be subject to layoff when/if the regular employee returns.  However, remember that the replacement worker's employment creates some unemployment claim liability.  Fortunately, the replacement person's wages (if they cover three months or less) will usually not be in the base period of an unemployment claim that may be filed at the end of the assignment.  If you want to totally avoid all possible unemployment claim liability on the replacement employee, consider hiring the replacement through a temporary employment agency where the worker is on the staffing agency's payroll.

As stated above, permanently replacing an individual on a bona fide leave will generally make him/her eligible for jobless benefits.  Nevertheless, there may be times when your organization is tempted or forced to layoff an employee during a leave.  If your leave of absence promises a job upon return, and/or if the person still has serious medical problems at the time you permanently replace them, your actions may be viewed as unfairly depriving a worker of legal rights.  This could lead to legal action against your company, in the form of a costly wrongful discharge suit.  For this reason, it is important that you review applicable workers' compensation, Americans with Disabilities Act (ADA), USERRA, FMLA or other applicable legal implications with your lawyer before you elect to discharge people on job protected leaves, whether or not they are still sick, injured or disabled.

Larry Clark is a principle member of Employer Advocates LLC, and has been in the unemployment cost control industry for 35 years.

Disclaimer:  The information contained in the examples given on this page is general in nature and is not intended as legal advice.  There are no guarantees that a particular state unemployment adjudicator will rule as others have in the cited examples.  Individuals seeking legal advice concerning the handling of similar matters should consult with their attorney, rather than relying upon the information given.

The purpose of this document is to educate clients and potential clients about unemployment compensation. While some effort has been made to address the many differences in laws and procedures in the 53 different jurisdictions (each of the fifty states plus Puerto Rico, Washington D.C. and the Virgin Islands), the primary purpose of this presentation is to review some basic principles shared by many jurisdictions.