JCPenney Settles EEOC Lawsuit Over Firing of Worker with Breast Cancer: $99K Payout

When employers outsource leave administration to a third-party administrator (TPA), legal responsibility remains with the employer – as a recent settlement out of Atlanta shows.

The case stems from an EEOC lawsuit and highlights that employers are accountable for Americans with Disabilities Act (ADA) compliance even when a third party manages accommodation requests.

Employee Seeks Time Off for Cancer Treatment 

According to the EEOC’s lawsuit, a JCPenney warehouse associate in Georgia was diagnosed with breast cancer and requested time off for treatment. She sought time off through her employer’s TPA, but JCPenney denied her leave request.

“In this case, the employee followed all of JCPenney’s requirements to obtain an accommodation, including submitting medical documentation, but JCPenney still denied her request for leave and assessed her points against its attendance policy,” said Marcus G. Keegan, regional attorney for the EEOC’s Atlanta District Office.

Eventually, the employee’s medical absences exceeded the number of points allowed under the attendance policy. As a result, JCPenney terminated her employment on July 3, 2023, the agency claimed.

EEOC Lawsuit Alleges Disability Discrimination

The EEOC alleged the actions violated the ADA, which generally requires employers to provide reasonable accommodations to qualified employees with disabilities unless doing so would create an undue hardship. The law also prohibits employers from firing an employee because of their disability or because they engaged in protected activity. 

After attempting to reach a pre-litigation settlement through its conciliation process, the EEOC filed a lawsuit on the employee’s behalf.

Settlement Includes $99K Payment – Plus Additional Relief

Ultimately, JCPenney agreed to settle the case rather than proceeding to trial. Under the consent decree settling the lawsuit, JCPenney must:

• Pay $99,000 to the former employee
• Post a notice informing employees about the settlement and their rights
• Submit periodic reports on how it handles future accommodation requests, including any instances where an accommodation was not provided, and
• Train relevant managers about their responsibilities under the ADA with an emphasis on determining whether an employee is entitled to an accommodation.

On top of those obligations, JCPenney will also implement a new process for monitoring how its TPA handles requests for accommodation under the ADA. It must provide training to managers on this new process. Further, the company will implement a review procedure before firing employees who may have pending disability accommodation requests.

“Employers’ use of third-party administrators to handle reasonable accommodations can be inherently problematic, especially when not effectively monitored,” Keegan said. “The resolution of this case not only compensates the employee who was wrongly discharged but institutes a new process to ensure that future accommodation requests are handled properly.”

Earlier this year, a federal case out of Wisconsin showed how lax TPA oversight led to FMLA interference and retaliation claims. Together, the cases reinforce that outsourcing leave administration doesn’t shift legal responsibility away from the employer.