Let's assume that an employer terminates a disabled employee, altruistically. That is, the employer truly believes that the layoff will allow the employee to put her health before everything else.
Could this possibly be legal?
Probably not. An employer's sympathy is not a defense to terminating an employee with a disability who can perform the essential functions of the job.
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Under the ADA, a disabled employee who is able to perform the essential functions of the job with or without a reasonable accommodation is a qualified individual and, thus, entitled to the protections that the ADA affords. Thus, if we assume that the employee could perform the essential job functions with or without an accommodation (apparently, that decision was made for the employee), then the termination violates the ADA.
(The same holds true for a company that requires a pregnant employee to take time off from work — even if it's out of genuine concern for the health of the employee or her baby. That would violate Title VII).
So, if you have an employee with cancer, go ahead and express sympathy. Go ahead and do what you can to help that employee by providing a reasonable accommodation. But, don't force that employee to take time off — unless that's a reasonable accommodation required to perform the essential functions of the job.
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