A lawsuit recently filed by the Equal Employment Opportunity Commission (EEOC) against United Parcel Service, Inc. (UPS) demonstrates the risk of the Americans with Disabilities Act (ADA) discrimination claims when employers have inflexible termination policies. In EEOC v. UPS, a former UPS employee took a 12-month leave of absence after she began having symptoms that were later diagnosed as multiple sclerosis. UPS had a policy allowing employees to take up to 12 months off for medical leave. When the employee exhausted this medical leave, the EEOC alleges the employee requested an additional two weeks of leave and that she was capable of returning to her job after those two weeks. Instead of allowing the alleged request, UPS terminated her employment.

The lawsuit alleges that UPS’s 12-month medical leave policy violates the ADA because it is too stringent and does not accommodate employees with disabilities. The EEOC is seeking a permanent injunction enjoining UPS from continuing its allegedly inflexible termination practices; damages for the terminated employee, as well as for a class of all employees affected by the discriminatory policy, for past and future monetary losses, including back pay and job-search expenses; financial damages for pain and suffering; and punitive damages.

The ADA requires that a covered employer provide reasonable accommodations to qualified employees with disabilities, provided those accommodations do not present an undue burden to the employer. In some cases, an additional period of unpaid leave after the exhaustion of the employer’s standard medical leave period, or a leave period required by the Family and Medical Leave Act, may be a reasonable accommodation. In general, these additional leave periods need not be indefinite and may be limited to a finite period of time, after which the employee is expected to be able to perform the essential functions of his or her job. EEOC v. UPS shows that employers who fail to consider allowing additional unpaid leave face the risk of expensive litigation and the multitude of damages available for ADA violations.

Another recent case against UPS shows how employers might minimize or avoid liability for adverse employment actions by promptly correcting their actions. In Jackson v. UPS, 548 F.3d 1137 (8th Cir. 2008), UPS demoted a black female employee after she caused an accident her first day on the job. The court ruled that the employee failed to make out Title VII race and gender discrimination claims because UPS promptly reinstated her to her former position and paid her full back pay. The court held that “a demotion or denial of a promotion, even when accompanied by a loss in pay, is not an adverse employment action when it is corrected in a timely manner.”

Reversing an adverse employment action will not always shield an employer from liability because it “would permit employers to escape Title VII liability merely by correcting their discriminatory acts after a significant amount of time has passed or only when litigation has been threatened.” UPS avoided liability, however, because it quickly recognized its mistake and took corrective action by reinstating the employee with full back pay and no loss of seniority.

These two cases provide important lessons for employers on dealing with day-to-day personnel decisions. Employers should be wary of inflexible termination policies and the ADA risks they present. Employers should also be attentive to potentially illegal adverse employment actions and take steps to quickly remedy these situations to minimize or avoid liability under Title VII.