Legally, an employer just can’t take the insurance company’s word for it. Employers need the information directly from their employee’s doctor (or a doctor they hire). It works in reverse too, if the insurer said “the employee is good to return to work”…but the employee and their doctor disagree…then the employer could not just rely on the insurer’s opinion, to force the employee back to work.
Severance in these situations is an open area of the law. There are two views:
There is one view (supported by a long line of judicial decisions) that a person, who is permanently disabled from all work, does not have a right to ongoing employment. In those situations the employer can simply dismiss the employee for cause – the cause being frustration of the employment contract. This is called the common law doctrine of frustration. In this situation, no severance is owed.
On the other hand, there is emerging law – not as well supported, but still there – that says in some situations, the doctrine of frustration cannot apply, even if the employee is permanently disabled from all work. In those situations, the employee would have the right to remain as an employee on permanent medical leave and receiving LTD benefits. In this situation, the employer would need to give reasonable notice of termination or pay severance.
So, what we see is that many employers do not take the hard line position as describe in 1. – that they can dismiss an employee disabled from all work – with no reasonable notice or severance owed. Most will offer reasonable severance as a way to avoid legal fights or human rights complaints related to 2.
Whenever you accept a severance package it is important to have it reviewed by a lawyer who is familair with both LTD and Employment laws. Often these severance packages will include things related to your future rights to appeal or sue the LTD insurer if they ever closed your claim in the future.
Even though an insurer says that they believe you are disabled from any occupation…they can and sometimes do change their minds later, so you want to make sure you have the right to sue the insurer if you need to, even though not likely to happen.
Disability Lawyer with Resolute Legal
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