Nationwide department store to pay $2 million to settle sick leave policy claims

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Dilliard’s Inc. and the Equal Employment Opportunity Commission announced a settlement December 18, requiring the department store to pay $2 million to employees who were fired for refusing to disclose confidential medical information as part of the company’s sick-leave policy.

Under the policy, employees seeking excused absences were asked to bring in a doctor’s note, specifying both “the nature of the absence (such as migraine, high blood pressure, etc…)” and “the condition being treated.” The EEOC filed a class action lawsuit against the company in 2008, on behalf of an estimated 60 people who were allegedly fired for refusing to disclose the additional information beyond a doctor’s note.

The EEOC brought the claim under the Americans with Disabilities Act, which prohibits employers from inquiring into the disabilities of their employees.

Dilliar’s argued that the policy was necessary to protect its interest in ensuring the legitimacy of excused absences and to protect its other employees. The U.S. District Court for the Southern District disagreed and dismissed the company’s motion for summary judgment in February 2012.

“Such policy invites intrusive questioning into the employee’s medical condition, and tends to elicit information regarding an actual or perceived disability,” the court stated. “Absent a showing that the policy was job-related and consistent with business necessity, it violates (the ADA).”

The court relied on a decision from 2003 by the U.S. Court of Appeals for the Second Circuit, which rejected a similar medical leave policy. The court in that decision stated that even an inquiry into a “’general diagnosis’ may tend to reveal a disability” and that “even where a diagnosis alone is not sufficient to establish that an employee is disabled, the diagnosis may give rise to the perception of a disability.” The only other appeals court to rule on a similar policy, the 11th Circuit, went the other way in 2011 in upholding a similar policy.

Dilliard’s eliminated its policy in 2009.

In addition to the $2 million Dilliard’s must pay to victims of the policy, the settlement, which will be under the court’s jurisdiction for 3 years, requires that the company hire an ADA consultant to review company policies, publicize the settlement information, implement training on ADA requirements and develop procedures to track the company’s internal compliance with the settlement.