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Termination of employees when STD expires


Guest N Rigsby
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Guest N Rigsby

Many of our employees our covered by an STD plan that lasts 52 weeks. When these STD benefits end, we are unsure of how we should handle these employees. Can we legally terminate them, or must we continue to keep them as employees?

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Hi,

In my experience, companies that treat benefits eligibility separately from employment are the most successful. In other words, as long as a person satisfies the plan's definition of disability, the person may be entitled to a disability benefit (short or long term) irrespective of their employment status.

Said another way, a disabled employee may be terminated well before their disabling condition is resolved, without loss of their disability benefits entitlement. The conditions under which employers can & do terminate disabled employees varies based on firm size, situs, and applicable state/federal statutes, but disablement is not a job-entitling condition.

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Guest Charlie Stevens

I agree with Greg. In fact, there have been cases in which employees, as they run out of disability benefits, "recover" enough to work, with accommodations that they demand under the ADA. In most cases, the employer would have been well-advised to pay attention to when and if the employee can return to work well before disability benefits run out. The laws that potentially limit an employer's ability to terminate a disabled employee are the Family and Medical Leave Act, the Americans with Disabilities Act and Workers Compensation. Provided the employee's 12 weeks of FMLA has expired and the employee is incapable of working into the forseeable near future and provided that the employee's injury is either non-work-related or he has reached his healing plateau, there is a chance that the employee can be terminated and will continue to receive disability benefits after termination. It may not be as simple as it sounds, however. The ADA does require at least a dialogue with the employee concerning possible accommodations. If you have other questions, please email me at cpstevens@mbf-law.com.

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Charlie Stevens

Michael Best & Friedrich LLP

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  • 1 month later...
  • 1 month later...

I'm the employee, not employer... I was put on disability leave (inactive salary) after spinal injuries in a auto crash. I left active salary with these benefits: 1) Continuing medical coverage and seniority until age 65. 2) The right to return to my job when I am able, until age 65.

My company was purchased by a foriegn conglomerate (200 billion in assets) and they just sent me a letter saying all disabled employees are to be terminated 12/31/99 along with all benefits (I can't replace my medical coverage). The legal wording of the controlling plan document says the company or any successor can amend, terminate, or change the plan any way they choose... but no such amendment or termination of the plan can reduce any benefits incurred PRIOR to those changes. The company is so big, I have only been able to get up to the department heads of the emp. ben. office, and they say it doesen't matter what the other company said, I am losing it all 12/31/99. After they sent that letter, they shut down the company and paid all my co-workers the severance package, but told me I don't get any of that either. PS: This company has never paid me a dime of salary or disability income. What would you do if this was happening to you??? Thanks a million. JB

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JB

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  • 11 months later...
Originally posted by Greg Judd

Hi,

In my experience, companies that treat benefits eligibility separately from employment are the most successful. In other words, as long as a person satisfies the plan's definition of disability, the person may be entitled to a disability benefit (short or long term) irrespective of their employment status.

Said another way, a disabled employee may be terminated well before their disabling condition is resolved, without loss of their disability benefits entitlement. The conditions under which employers can & do terminate disabled employees varies based on firm size, situs, and applicable state/federal statutes, but disablement is not a job-entitling condition.

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  • 1 year later...
Guest Samantha

Hello,

I realize this is an old message; however, I just found the site and need clarification on this issue.

An employee is currently receiving STD benefits and received notification of her job being eliminated. She is entitled to severance benefits. The severance plan states that the employee must be actively seeking employment during the severance period. In this case, shouldn't the severance NOT begin until the STD payments end or the employee is released for work, whichever occurs first?

If the job description for the present position is very definitive, is the employee entitled to apply for LTD until able to meet the same requirements with another employer? And, yes, there will be complete recovery, just a long time coming, to make this person a viable candidate for a similar position elsewhere.

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The employee should touch base with her employer with respect to the wording in the severence letter. Obviously if she is deemed disabled by an insurance carrier, she should not be required to be looking for another job. Also, she will be eligible for LTD benefits once she satisfies the elimination period.

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Guest Samantha

This situation only gets more confusing. The employer wants to run the severance benefits concurrent with the STD, which would reduce the disability payment by the severance amount. My feeling is that this cannot/should not be done. I see it as they are dealing with two separate defined plans. If the above is done, they are, in effect, actually denying the employee income due her. The severance benefit is funded through the Corporation. The STD is paid from an insurance company; also the option was offered for the employee to contribute to the premium in order to receive a 10% higher benefit if a claim was filed and approved. Yes, she take the option! Bottom line is that I believe the Company must wait until the STD runs out, or the employee is released for work THEN start the severance clock.

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If the company wants to go ahead and offer her severance while on STD and for the payments to run concurrent with her disability payments, that's probably not going to be a problem. Just because a person is on disability doesn't mean the employer can't term him or her. Obviously the carrier doesn't want the employee to receive severance payments on top of the disability payments or else she's definitely going to be out as long as possible. Shoot me an email if you would like to discuss further.

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