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With just 8 employees, the only law that applies it the Fair Employment & Housing Act. FEHA requires employers to engage in a good faith interactive process with disabled employees to determine what, if any, "reasonable accommodations" they can offer that will allow the employee to keep their job. Allowing an employee to take time off can be a form of accommodation, but again, that accomodation must be "reasonable" meaning it does not impose undue hardship on the company. So, if you can prove that an extended leave of absence would impose undue hardship that you are not required to keep the employee employed. Generally, when a leave request is simply "open ended" and the employer is not given any idea when the employee will return it would not be reasonable to keep them employed during that time. but remember, you have to engage in a good faith interactive process with them to determine if that is the case. All of that should be carefully documented.
Another thing you can do is request medical verification of the employee's need to miss work. You cannot ask about the underlying medical CONDITION, but you can ask if the employee is disabled, and if so disabled from performing what tasks specifically. If the employee cannot supply proof that she is actually disabled, you are under no obligation to hold their position under FEHA simply because they themselves have reached that conclusion.
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