That is what today’s edition of the Wall Street Journal is reporting in an article by Joseph Pereira entitled: “To Save on Health-Care Costs, Firms Fire Disabled Workers: Policy Shift at Polaroid Leads to Scrimping, New Worries for Extremely Sick Employees.” (Subscription required.) The article contains some heart-wrenching stories of how the disabled have been impacted by what the Journal says is a trend among companies of dismissing the disabled to cut costs. The article refers to a Mercer Human Resource Consulting study last year which found that 27% of the 723 companies surveyed dismiss employees as soon as they go on long-term disability and that 24% dismiss them at a set time thereafter, usually six to 12 months, with only 15% of companies keeping the disabled on as employees with benefits until age 65. The article also refers to DOL statistics which show that there has been a 62% increase in those on long term disability since 1992 and suggests an “aging work force” could be the cause.
All of this is further complicated by the Ninth Circuit case last year “Lessard v. Applied Risk Management” in which the court held that a buyer and a seller in a corporate transaction violated Section 510 of ERISA where the buyer (in an asset sale) did not hire seller’s employees who were on extended leave of absence. Section 510 of ERISA provides:
It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan, this subchapter, section 1201 of this title, or the Welfare and Pension Plans Disclosure Act [29 U.S.C. 301 et seq.], or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, this subchapter, or the Welfare and Pension Plans Disclosure Act.
You can read about the case in an article by BenefitNews.com and in an article by White & Case LLP. The Journal reports a lawsuit having been filed last week against Polaroid on the issue in federal court in Boston.