Monthly Archives: June 2014

June 30, 2014

Hobby Lobby Decision: Closely Held Corporations Not Required to Provide Contraceptive Methods that Violate Owners’ Sincere Religious Beliefs

Hudson_RBy Rebecca Hudson 

In a 5-4 decision, the U.S. Supreme Court ruled today that the contraceptive mandate under the Affordable Care Act (ACA) substantially burdens the exercise of religion and violates the Religious Freedom Restoration Act (RFRA) as applied to closely held for-profit corporations, such as Hobby Lobby.  Burwell v. Hobby Lobby Stores, Inc., 573 U.S. ___ (2014).  The Court found that even if guaranteeing cost-free access to contraceptive methods is a compelling governmental interest, the Government failed to show that the contraceptive mandate is the least restrictive means of achieving that interest.  To narrow the effect of its decision, the Court states that its holding should not be read as invalidating all insurance-coverage mandates or as giving employers authority to illegally discriminate against individuals as a religious practice. 

ACA Contraception Coverage At Issue 

Under the ACA, employers’ group health plans must furnish no-cost preventive care and screenings for women.  The Department of Health and Human Services (HHS) was tasked with specifying which types of preventive care must be covered under that provision.  In its regulations, the HHS generally requires nonexempt employers to provide coverage for 20 contraceptive methods that are approved by the Food and Drug Administration.  Religious employers, such as churches and religious nonprofit organizations with religious objections to providing contraceptive coverage are exempt from the contraceptive mandate.  For such entities, the insurance issuer must exclude contraceptive coverage from the employer’s group health plan and instead, pay plan participants separately for contraceptive coverage. 

The owners of Hobby Lobby Stores, Inc., a closely held for-profit corporation, sued HHS and other federal officials and agencies on grounds that providing four contraceptive methods under its health plan violates its sincere religious beliefs that life begins at conception.  They, as well as the owners of two other closely held for-profit corporations, sought an injunction that would prevent them from having to comply with the regulations mandating they provide those four contraceptive methods to participants through their group health plan.  In particular, they alleged that the HHS mandate violated the RFRA, which prohibits the federal government from placing a substantial burden on the exercise of religion unless its action constitutes the least restrictive means of serving a compelling government interest, and the Free Exercise Clause.  After lower courts denied each company a preliminary injunction, the companies appealed in their respective jurisdictions.  In one case, the Third Circuit affirmed the denial of the injunction while in the Hobby Lobby case, the Tenth Circuit reversed.  The Supreme Court agreed to hear the combined cases to resolve the disputed results. 

RFRA Applies to Closely Held For-Profit Corporations 

HHS argued that a for-profit corporation could not “engage in religious exercise” and therefore, was not protected by the RFRA or the Free Exercise Clause.  The majority of the Supreme Court disagreed.  It ruled that the RFRA provides broad protection for religious liberty and that owners of closely held companies do not lose that protection when they choose to organize their businesses as corporations rather than sole proprietorships or general partnerships.  The RFRA’s definition of “persons” covered by the Act includes corporations.  The majority stated that protecting the free exercise rights of corporations like Hobby Lobby protects the religious freedom of the people who own and control such companies.  

The Court declined to decide whether the RFRA would apply to publicly traded corporations, such as IBM or General Electric.  It stated that the cases before the Court involved only closely held corporations, each of which was owned and controlled by members of a single family with undisputed religious beliefs.  The majority discussed, however, that it seemed unlikely that corporate giants would assert RFRA claims as it was unlikely that unrelated shareholders would agree to run a corporation under one set of religious beliefs. 

Contraceptive Mandate “Substantially Burdens” the Exercise of Religion 

After determining that the RFRA applied to closely held for-profit corporations, the Court examined whether the HHS contraceptive mandate “substantially burdens” the exercise of religion.  The majority had “little trouble concluding that it does.”  The Court found that the HHS mandate forces these companies to provide methods of birth control that may result in the destruction of an embryo, in violation of the owners’ sincere religious beliefs.  The companies would face millions in fines if they offered group health plans that did not comply with the contraceptive mandate and dropping coverage altogether could subject them to severe penalties as well.  Consequently, the mandate imposes a substantial burden on the owners’ exercise of religion.  

Mandate Is Not Least Restrictive Means of Guaranteeing Cost-Free Contraception 

The Court assumed that the government’s interest in guaranteeing cost-free access to the four challenged contraceptive methods was a compelling government interest but it ruled that the government failed to show that the contraceptive mandate was the least restrictive means of achieving that goal.  The Court pointed to alternative means of accomplishing the goal, such as the government paying the cost of providing the four contraceptive methods to women who were unable to obtain coverage due to their employers’ religious objections, or extending the HHS accommodation that already applies to employees of non-profit employers with religious objections to the contraceptive mandate.  Given other options that might meet the governmental interest with less restrictions on religious freedoms, the Court held that the HHS mandate violated the RFRA.  In so ruling, the Court did not need to reach the Free Exercise Clause argument. 

Will This Decision Open the Door to Discrimination As a Religious Practice? 

The principal dissenting opinion, written by Justice Ginsburg, argued that the majority’s ruling would open the flood gates to employers seeking to avoid other insurance-coverage mandates or would result in discrimination against individuals on the basis of religious objections to existing laws.  The majority, however, countered that argument by writing that its decision “provides no such shield” to employers who cloak discrimination as a religious practice” to escape legal sanction.”  It also made clear that the decision concerned only the contraceptive mandate and “should not be understood to hold that an insurance-coverage mandate must necessarily fall if it conflicts with an employer’s religious beliefs.”  Coverage for vaccines or blood transfusions, for example, may be supported by different compelling interests and involve different arguments related to the least restrictive means of meeting such interests.  Therefore, the majority believes that fears of a wholesale objection to legal obligations on religious grounds is unfounded. Although it is unclear how the decision will extend to entities dissimilar to the closely held corporations, an employer must show it has a sincere religious belief in order to avail itself of the HHS contraceptive mandate.   Further guidance is welcome to determine the manner in which employers can claim such an accommodation.

The majority opinion was written by Justice Alito who was joined by Chief Justice Roberts and Justices Scalia, Kennedy and Thomas.  Justice Ginsburg was joined in her principal dissent by Justice Sotomayor and in most part, by Justices Breyer and Kagan, who also filed a separate dissent.

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June 27, 2014

U.S. Supreme Court Eliminates Fiduciary Protection for Employer Stock Investment

By Brenda Berg

On June 25, 2014, the U.S. Supreme Court issued its unanimous opinion that retirement plan fiduciaries are not entitled to a presumption of prudence with respect to the plan's investment in employer stock. Fifth Third Bancorp v. Dudenhoeffer, U.S., No. 12-751, 6/25/14. Instead, the fiduciaries are subject to the same duty of prudence that applies to all investment decisions made by ERISA fiduciaries. The rejection of the presumption of prudence might result in an increase in litigation involving employer stock. However, the Court also ruled that the ERISA duty of prudence does not require violating securities laws by disclosing insider information or otherwise taking action that could be in violation of securities laws, and the Court articulated a high pleadings standard for overcoming a motion to dismiss on that point.

Presumption of Prudence

Retirement plan fiduciaries have a duty to act prudently: with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity would act. Many federal circuit courts had adopted a rule that if the governing plan document requires an employer stock investment option, especially where such portion of the plan is designated as an ESOP, then there is a presumption that the fiduciary duty of prudence is met. This presumption is often referred to as the Moench presumption, after the case that first articulated it.

Fiduciaries also have a duty to follow the terms of the plan documents, unless doing so would be contrary to ERISA. The Moench presumption of prudence was an attempt to balance the duty or prudence with the duty to follow plan documents, considering Congress's intent to encourage employee ownership through ESOPs. Under the presumption, fiduciaries have a duty to follow plan documents that require an employer stock investment option, unless the employer is in such "dire" circumstances, such as an employer's bankruptcy, that would likely make the employer go out of business.

In the Dudenhoeffer case, the plaintiffs, who were participants in the plan, alleged that the fiduciaries had violated the duty of prudence by permitting participants to invest in employer stock, and that in July 2007, the fiduciaries knew or should have known that the stock was overvalued. From July 2007 to September 2009, when the complaint was filed, the Fifth Third stock price fell 74%. Although the District Court had dismissed the case based on the presumption of prudence, the Sixth Circuit Court of Appeals reversed and held that the presumption of prudence did not apply at the pleading stage, but only at the evidentiary stage. The U.S. Supreme Court rejected that as well, since the Court held the presumption of prudence does not apply at all. The Court found the presumption was not supported by the statutory language, which provides an ESOP exception from ERISA's duty to diversify but not from the duty of prudence – and Congress's intent to encourage ESOP investments does not override that. In addition, even where the plan document requires an employer stock investment, the regular duty of prudence applies rather than a requirement that only "dire" circumstances can override the plan language.

Conflict with Insider Trading Laws

The Court acknowledged that potential for conflict with the insider trading laws is a legitimate concern. In publicly traded companies, plan fiduciaries are often corporate insiders as well. However, the Court held that a presumption of prudence "is an ill-fitting means" of addressing the concern. The Court also recognized that lack of a presumption may put the fiduciary between a rock and a hard place, in that the fiduciary could be sued for failing to divest the stock, or could be sued for failing to allow the stock as an investment option where the plan documents require it. Again, though, the Court held that the presumption of prudence is not the proper way to address this concern; rather, a motion to dismiss for failure to state a claim is the proper mechanism.

Ultimately, the Court vacated the judgment of the Court of Appeals and remanded the case to consider whether the pleadings were sufficient to overcome a motion to dismiss. The Court referred to its previous guidance of considerations on the insider trading issue. As a general rule, where a stock is publicly traded, it would not be sufficient to claim that the fiduciary should have recognized the stock was overvalued based on publicly available information unless the plaintiffs could point to special circumstances affecting the reliability of the market price. With respect to nonpublic information available to the fiduciaries as company insiders, the Court said the plaintiffs must allege an alternative action that the fiduciaries could have taken that would have been consistent with the securities laws and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund (for example, by driving the price down in a sell-off) than to help it.

Note that the case involved publicly traded employer stock, and does not provide much guidance for fiduciaries of ESOPs with non-publicly traded stock.

Next Steps for Plan Fiduciaries

In light of the Court's Dudenhoeffer decision, fiduciaries of retirement plans that allow investments in employer stock should reevaluate whether employer stock is a prudent plan investment. Fiduciaries can no longer rely on the Moench presumption that the investment would be prudent as long as the documents required the employer stock and the employer was not experiencing "dire" or other extreme circumstances. Instead, fiduciaries must evaluate all of the circumstances of the employer, within the confines of securities laws, and determine on that basis whether employer stock is a prudent investment under the plan. In other words, fiduciaries must treat an employer stock investment just like every other investment offered under the plan. If the fiduciaries determine that employer stock should no longer be offered under the plan, the removal of the stock should be undertaken carefully in order to best protect fiduciaries from participant claims for the removal of the stock.

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June 26, 2014

Recess Appointments to NLRB Invalid, Rules U.S. Supreme Court in Noel Canning Opinion

Mumaugh_BrianBy Brian Mumaugh 

In a unanimous decision, the U.S. Supreme Court ruled today that President Obama lacked the authority to make three recess appointments to the National Labor Relations Board (NLRB) while the Senate was in pro forma session in early January 2012.  While affirming the decision of the D.C. Circuit that the appointments fell outside the scope of the Recess Appointments Clause, the Supreme Court came to that conclusion on different grounds.  NLRB v. Noel Canning, No. 12-1281 (June 26, 2014). The decision effectively invalidates the rulings made by the three NLRB members who were improperly appointed via recess appointment. 

Recess Appointments Clause 

The Recess Appointments Clause gives the President the power “to fill up all Vacancies that may happen during the Recess of the Senate.”  This power essentially allows the President to fill vacant federal positions without obtaining Senate confirmation of the appointments and is intended to ensure the continued functioning of the government at those times when the Senate is not in session.  

At issue in the Noel Canning case was whether President Obama’s appointment of three members of the NLRB while the Senate was on a three-day intra-session break in which the Senate was in pro forma session fell within his authority under the Recess Appointments Clause.  The Supreme Court said no. 

Vacancies May Be Filled During Intra-Session and Inter-Session Recesses 

Unlike the D.C. Circuit, the Supreme Court ruled that the Recess Appointments Clause applies during intra-session recesses (breaks in the midst of a formal Senate session) as well as during inter-session recesses (breaks between formal sessions of the Senate).  The Court stated that the Senate is equally away and unavailable to conduct business during both types of breaks.  The Court also looked carefully at the history of recess appointments and found that Presidents have made intra-session recess appointments going all the way back to President Andrew Johnson in 1867.  During that time, the Senate has never taken any formal action to deny the validity of intra-session recess appointments.  Accordingly, the Court gave great weight to the long-standing practice of allowing recess appointments during both intra- and inter-session recesses. 

Recess Must Be Of Sufficient Length 

Although the Recess Appointments Clause does not establish how long a recess must be in order to trigger the President’s recess appointment power, the Court held that the Senate’s recess must be of sufficient duration as to be a significant interruption of legislative business.  Noting that the government’s attorney conceded that a three-day recess would be too short and that throughout history, no recess appointments had been made during an intra-session recess of less than ten days, the Court wrote that a recess of more than three days but less than ten days is presumptively too short to fall within the Clause. 

Vacancies Filled As Recess Appointments Need Not Arise During the Recess 

The Court interpreted the Recess Appointments Clause to allow the President to fill vacancies that existed prior to the start of the Senate’s recess.  The D.C. Circuit had interpreted the Clause differently, applying only to vacancies that first come into existence during a recess.  The Supreme Court chose a broader interpretation to ensure that offices that need to be filled can be filled, even if the vacancy arose before the Senate went into recess.  Again, the Court looked at historical practices and found that nearly every President since James Buchanan (term: 1857-1861) has made recess appointments to pre-existing vacancies.  Unwilling to counter this long-accepted practice, the Court ruled that any vacancy, whether pre-existing or one that arises during the recess, may be filled under the Recess Appointments Clause. 

Applying the Clause to the 2012 NLRB Recess Appointments 

The Court ruled that the President lacked the authority to appoint the three members of the NLRB in early 2012 because the Senate was still in session during that time.  Although the Senate was meeting just every three days in pro forma sessions, it retained the power to conduct business.  Consequently, because the Senate was in session and the three-days between its pro forma sessions was too short of a break to bring it within the scope of the Recess Appointments Clause, the President lacked the authority to make the three NLRB member appointments in January of 2012. 

Big Picture – Effect of Noel Canning  

There are two primary effects that will come out of today’s Noel Canning decision.  First, the NLRB rulings that were made by the improperly appointed members will need to be revisited.  Numerous challenges have already been made in some of the affected cases and the current NLRB, which now has five Senate-confirmed members, may need to revisit those rulings. 

Second, the future of Presidential recess appointments will hinge on the length of a Senate recess.  Political analysts are already stating that both the House and Senate have mechanisms to force the Senate out of a recess into a pro forma session so if those mechanisms are exercised, Congress could limit or block a President’s ability to make recess appointments.  We will likely learn a great deal about the scheduling powers of Congress in the days to come.

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June 16, 2014

Sexual Orientation Discrimination By Federal Contractors To Be Prohibited, According to News Reports

Cave_BradBy Brad Cave 

Major news sources are reporting that President Barack Obama plans to issue an executive order prohibiting federal contractors from discriminating against employees based on sexual orientation and gender identity.  The specific details of the executive order have not been finalized and the signing date is not yet known.  The planned order was revealed by administration officials on Monday, June 16, 2014, just before the President attends a lesbian, gay, bisexual and transgender (LGBT) event sponsored by the Democratic National Committee in New York City on Tuesday. 

For twenty years, various federal lawmakers have introduced and tried to pass ENDA, the Employment Non-Discrimination Act, which would prohibit employment discrimination on the basis of sexual orientation by all employers with 15 or more employees.  The most recent ENDA bill passed in the Senate but is dead in the House, as House Speaker John Boehner reportedly has said he will not allow the bill to come to a vote.  Like it has done with its minimum wage and other pay initiatives that stalled in Congress, the White House is furthering its goals for U.S. workers outside the legislative process by issuing an executive order.  Although the executive order applies only to federal contractors, many of whom already have policies prohibiting discrimination based on sexual orientation, the prohibition for contractors on this basis is seen as a step toward protection for LGBT workers in all work contexts. 

Hearing word of the impending executive order, lawmakers and various groups appear to be urging the administration to include an exemption for religious reasons.  That is unlikely to happen with the executive order but until we see the final order, it is unclear if any federal contractors and subcontractors will be exempt.  We will keep you posted as this unfolds.

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June 13, 2014

Forced “Onionhead” Practices At Work Result in EEOC Religious Discrimination Lawsuit

CaveBrad_070609_NMBy Brad Cave 

“I love you, man.”  Appropriate for beer commercials but perhaps not for the workplace. A New York employer who allegedly required employees to participate in prayer circles, thank God for their job and say “I love you” to managers and co-workers faces a religious discrimination lawsuit filed recently by the Equal Employment Opportunity Commission (EEOC).  The EEOC seeks compensatory and punitive damages on behalf of three employees who were fired, allegedly for opposing the required “Onionhead” practices, and a class of similarly harmed individuals.  EEOC v. United Health Programs of America, No. 14-cv-3673 (E.D.N.Y. filed June 11, 2014). 

Company Required “Harnessing Happiness” or “Onionhead” Practices 

According to the EEOC complaint, three former employees of United Health Programs of America filed charges alleging religious discrimination in violation of Title VII because the company required employees to engage in practices under a belief system called “Harnessing Happiness” or “Onionhead.” According to the Harnessing Happiness website, Onionhead is an “incredibly pure, wise and adorable character” who “wants everyone to know how they feel and then know what to do with those feelings.”  The three women claim that the company required them to participate in various Onionhead-related activities on a daily and weekly basis, including praying, reading spiritual texts, burning candles, keeping lights at work very dim, thanking God for their employment and saying “I love you” to colleagues and managers.  They assert that every day, employees were asked to select Onionhead-related cards to keep next to their computers and to wear Onionhead-related pins.  In addition, one of the company’s upper managers and the aunt of the company owner, “Denali,” was the leader of the Onionhead practices and allegedly would require employees to attend one-on-one sessions with her in order to read and discuss books about “divine plans,” “moral codes” and “enlightenment.”  

Fired – Allegedly for Opposing Onionhead Practices 

Each of the three Charging Parties, Elizabeth Ontaneda, Francine Pennisi and Faith Pabon, were allegedly fired for objecting to the Onionhead practices.  Pennisi, an Account Manager and IT Project Manager, spoke up at a managers’ meeting in July 2010, stating that she was Catholic and did not want to participate in the Onionhead activities.  Ontaneda, a Senior Accounting Manager for Customer Service, also spoke up at the meeting, saying she felt the same way.  A few weeks later, both women were relocated to work in an open area on the customer service floor, rather than in their offices, and their duties were changed to require answering phones.  Denali placed a large statue of Buddha in Pennisi’s empty office.  Denali also spoke of “demons” in connection with Ontaneda’s and Pennisi’s resistance to Onionhead practices.  The day after losing their offices, the women called in sick and were terminated by the company owner by phone and voicemail. 

Pabon, a Customer Care Consultant, attended a spa weekend in Connecticut with Denali and about 20 other customer service employees.  Pabon alleges that Denali stated that the purpose of the trip was spiritual enlightenment and that they were to be together at all times, holding hands, praying and chanting.  Pabon refused to participate in some of the group activities and on Monday following the spa weekend, Denali fired Pabon for “insubordination.” 

Hostile Work Environment, Failure to Accommodate and Retaliation 

The EEOC asserts numerous religious discrimination claims against the company, including creating a hostile work environment based on religion, failure to accommodate the employees’ own religious beliefs or lack thereof, terminating employees based on religion and retaliating against employees for opposing the required Onionhead practices in the workplace.  The EEOC also alleges that some employees were constructively discharged when they felt compelled to leave the company to avoid participating in the required Onionhead activities.  

Reports suggest that the company denies any merit to the lawsuit and that they expect it to be dismissed.  We don’t yet know the basis of their defense and must remember that at present, the allegations are unproven.  It will be an interesting case to follow.  We will keep you posted as it proceeds through the court

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June 2, 2014

Disabled Employee Not Entitled to Additional Leave as Reasonable Accommodation

Biggs_JBy Jude Biggs 

After Kansas State University denied her request to extend a leave of absence for longer than six months, assistant professor Grace Hwang, who suffers from cancer, filed suit against the University alleging disability discrimination and retaliation under the Rehabilitation Act.  The Tenth Circuit Court of Appeals ruled that the University had not violated the Rehabilitation Act because Ms. Hwang could not show that she was able to perform the essential functions of her job.   In addition, the Tenth Circuit held that requiring the University to extend the six-month’s leave was not a reasonable accommodation.  Hwang v. Kansas State Univ., No. 13-2070 (10th Cir. May 29, 2014). 

Policy Provided Six-Month’s Paid Leave of Absence 

Ms. Hwang was set to teach classes at Kansas State University under a one-year contract that covered all three academic terms — fall, spring and summer.  Before the fall term, Ms. Hwang was diagnosed with cancer. She asked for a leave of absence to seek medical treatment.  The University granted her a paid six-month leave under its regular policy which capped the length of a leave at six months.  

As the six-month leave was coming to an end, Ms. Hwang’s doctor advised her to seek more time off of work.  She asked the University to extend her leave through the end of the spring semester, intending to return before the summer term.  The University refused to extend her leave but instead arranged for Ms. Hwang to receive long-term disability benefits, effectively ending her employment with the University. 

Ms. Hwang sued the University in federal court alleging that the University’s denial of her request for extended leave constituted disability discrimination under the Rehabilitation Act.  The Rehabilitation Act prohibits disability discrimination by entities that receive federal funds, such as Kansas State.  29 U.S.C. § 794(a).  The federal district court dismissed her lawsuit on a motion to dismiss (before any discovery was done), and Ms. Hwang appealed to the Tenth Circuit Court of Appeals, which covers the states of Colorado, Utah, Wyoming, Kansas, Oklahoma and New Mexico. 

Extended Leave Not A Reasonable Accommodation Under Rehabilitation Act  

The University did not dispute that Ms. Hwang was a capable teacher and that her cancer rendered her disabled as defined by the Rehabilitation Act.  The central issue in the appeal was whether the University was required to ignore the six-month time limit in its leave policy to extend Ms. Hwang’s leave of absence beyond six months. The Court said no.  Because Ms. Hwang wasn’t able to work for an extended period of time, she was not capable of performing the essential functions of her job.  In addition, requiring the University to keep her job open for that extended period of time did not qualify as a reasonable accommodation.  The Court wrote: “[a]fter all, reasonable accommodations – typically things like adding ramps or allowing more flexible working hours – are all about enabling employees to work, not to not work.” 

The Court noted that a “brief absence from work” for medical care may be required as a reasonable accommodation, as it likely allows the employee to continue to perform the essential functions of the job.  Determining how long employers must provide for leave as a reasonable accommodation depends on factors such as the duties essential to the job in question, the nature and length of the leave sought and the impact of the leave on co-workers.  That said, the Court stated that it would be difficult to find a six-month leave of absence in which the employee performs no work (e.g., no part-time hours or work from home) reasonable in any job in the national economy today.  Ms. Hwang’s terrible problem, in the Court’s view, was one other forms of social security aim to address.  In addition, the Court noted that the aim of the Rehabilitation Act is to prevent employers from denying reasonable accommodations that would allow disabled employees to work, not to turn employers into a “safety net” for those who cannot work. 

“Inflexible” Six-Month Leave Policy Not Inherently Discriminatory 

Ms. Hwang asserted that the University’s “inflexible” sick leave policy that capped the maximum length of sick leave at six months violated the Act.  She cited the EEOC’s guidance manual which states that if a disabled employee needs additional unpaid leave as a reasonable accommodation, the employer must modify its “no-fault” leave policy to provide the additional leave, unless the employer can show that there is another effective accommodation that would allow the individual to perform the essential functions of her job, or that granting additional leave would cause the employer an undue hardship.  The Court, however, pointed to another section of the EEOC’s guidance manual to counter Ms. Hwang’s argument, as the EEOC manual states “ . . . six months is beyond a reasonable amount of time.”  In fact, the Court stated that an “inflexible” leave policy can actually help protect the rights of disabled employees rather than discriminate against them because such a policy does not permit individual requests for leave to be singled out for discriminatory treatment. 

Not all leave policies will past muster, however.  The Court stated that policies that provide an unreasonably short sick leave period may not provide enough accommodation for a disabled employee who would be capable of performing his or her job with just a bit more time off.  Alternatively, policies that are applied inconsistently, such as where some employees are allowed more time off and others are held to a strict time limit, could be discriminatory.  In this case, however, the Court found that Ms. Hwang did not allege any facts to support a claim that she was treated differently than other similarly situated employees. 

Retaliation Claim Fails As Well 

Ms. Hwang also asserted that she was unlawfully retaliated against for reporting disability discrimination.  In particular, she based her claims on two theories : (1) the University failed to explain her COBRA health benefits before or immediately after her termination; and (2) she wasn’t hired for two other positions at the University that she applied for after losing her teaching job.  The Court easily dispensed with both theories. 

First, COBRA allows thirty days for an employer to provide separating employees with a COBRA notice.  Consequently, the University was not required to provide Ms. Hwang with notice of her COBRA benefits before or immediately after her termination of employment.  Second, although Ms. Hwang alleged that she was not hired for two other University positions for which she applied, she failed to allege any facts suggesting that the University’s decision not to hire her was because she had engaged in legally protected opposition to discrimination.  She not only failed to provide facts showing that she was qualified for the two jobs, but she also failed to offer facts suggesting that the University officials who decided not to hire her knew about her disability and her complaint about disability discrimination.  Without such allegations, the Court ruled that Ms. Hwang’s retaliation claim failed. 

ADA Application 

Although this case alleged a violation of the Rehabilitation Act, courts typically analyze such claims similarly to those alleging a violation of the Americans With Disabilities Act (ADA).  Consequently, this case may prove helpful to employers defending ADA claims where the employer denies an employee’s request for an extended leave of absence.  Employers should heed the Court’s warning about leave policies that may be discriminatory if they provide an unreasonably short leave or are inconsistently applied.  However, lengthy leaves of six months or more, or leaves of an unlimited duration in which the disabled employee provides no work, will likely not be considered a reasonable accommodation.

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