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Employee Rights Update: Medical Leave and Outside Employment

Imagine the following scenario: You are working for a company. Before you were hired, you signed an agreement in which you agreed to submit any disputes arising out of your employment to arbitration. You also received an employment manual that explicitly stated that you could not hold outside employment while out on approved sick leave (CFRA). Your employer also has a company policy that is generally understood to prohibit outside employment of any kind, including self employment while being out on approved leave.

Nonetheless, several years into your employment you start working on your own business. You buy equipment, sign a lease for a business space, and market the business while still working at your full time job. Your supervisors find out about your side business and meet with you because they are concerned about your attendance and work performance. A few months later you are injured at your full time job. Your doctor informs your employer that you cannot work for medical reasons. You are placed on medical leave, and it is extended several times.

While on medical leave, you continue to work on your business. The company sends you a letter stating that you cannot hold outside employment while out on medical leave. You ignore it. The company then sends an employee to observe you at your business who alleges that you performed different physical activities. You agree that you did some work, but argue that you were acting within your doctor’s orders.

The company then terminates you while you are still on medical leave. The termination letter states that you are being dismissed for violating company policy by engaging in outside employment while on a leave of absence. Your medical leave would have expired about a month after your termination.

Can your company lawfully terminate you while you are on medical leave? In California, the medical leave law, CFRA, allows employees to take a leave of up to 12 weeks in any 12 month period to care for a family member or to take care of the employee’s own medical condition, and be reinstated to the same, or a comparable job position, at the end of the leave. The right to reinstatement cannot be waived, but it is not absolute. An employee does not have a right to be reinstated unless he or she would have been continuously employed during the CFRA leave period.

The California Supreme Court recently held in Richey v. AutoNation that the arbitrator in a case with identical facts correctly ruled against the employee when he found that the employee was fired for violating company policy against self-employment during his medical leave. The Court focused on the evidence and did not address a key issue of law involving honest, but possibly mistaken, belief by an employer that an employee violates company policy while on medical leave.

Has your employer denied you medical leave? Call Stephen Danz & Associates for a free consultation.