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It is not "illegal" in general to use the word "illness", but in performance reviews or any employment decisions, referring to any medical condition of an employee or referring use of any legally protected leave will be grounds to open the employer up to discrimination
claims under either FMLA or the Americans with Disabilities Act.
An employer cannot use the use of FMLA leave or protection under the ADA
or refer to any use of such in any type of employment determination about the employee, which includes performance evaluations. So in that regard, an employer should not in any way reference anything regarding any illness or disability or use of FMLA or any reasonable accommodation an employee has in any type of employment action or that would be basis for a discrimination/retaliation
As far as the work schedule issues, if the employee has a disability or medical issues, you should not mention anything about it in your evaluation. If you think they should restrict themselves to projects that can be completed in the same day, you can say that without qualifying why specifically, but to refer to their attendance due to an FMLA condition or ADA accommodation can put the employer in a position of being sued for violations of those acts.
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