In the first year of employment the employee has 20 days of unplanned time off working in a semiconductor wafer fab with chemicals. 

The first intervention was coaching and clarification of expectations after the first 3 unplanned time off events.  The next event was followed up with a "verbal discussion", the first step in the company formal corrective action process. 

When the employee had another string of absences in the first six months of employment he requested a medical leave which was granted. (the employee was not eligible for FMLA).  Upon his return with temporary restrictions he finds himself unable to do the work and requests an extension of the medical leave which is granted. 

Three weeks later he returns to work with temporary restrictions but continues the pattern of unplanned time off and leaving before the end of shift.  Finally a written performance plan, the second step in formal corrective action, is created and discussed with the employee who requests a transfer to another area.

Within hours of working in the new area the employee claims his lungs are damaged by the chemicals and begins a workers comp case.

The workers comp doctor and industrial hygenist find the employee had a preexisting asthema and there was no chemical exposure - the claim was denied by WC and the WC doctor stated:     "He / p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:""; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:Arial; mso-fareast-font-family:"Times New Roman"; mso-bidi-font-family:"Times New Roman";} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.25in 1is now and always has been fully fit to carry out his usual job duties without restriction". 

The employee and is doctor now claims he is disabled under ADA and expects an accommodation.  The employee's doctor disagrees with the WC doctor.

The company has no positions for his skill set where chemical exposure is not a possibility.

The supervisor is empathetic towards the employee with a health problem and is concerned about personal liability of assigning the person to a job that causes injury.  He is also concerned about safety of other employees during an asthma attack in a work environment full of hazards where alertness is an essential function.

HR is telling the supervisor to ignore the ADA claim, return the employee to work in the same area as before and manage the time off problem terminating him if he continues to have unplanned time off.  The very nature of the health problem will require unplanned time off.  The supervisor feels this is a setup to fail on two counts - it puts the employee in an unsafe work environment given the condition and the employee is not capable of meeting the time off expectation.

The employee is telling the supervisor that he is concerned for his health being exposed to chemicals and cannot work in the environment.  He already feels the environment has made his condition worse.

What advice do you give this supervisor?

the conservative approach is for the company to begin the interactive reasonable accommodation process (because the employee has asked for a reasonable accommodation and has provided documentation from a doctor that he has a disability). the job accommodation network is a great service that includes sample accommodations (some cover chemical sensitivity). you can also contact JAN for free and confidential consulting services.

The Company does not have to blindly accept the employee's HCP's disability finding.  It sounds like HR has already made up their mind, hopefully AFTER entering into an interactive discussion and simply rejecting the HCP's finding and the supervisor is merely balking out of concern for personal liabliity.

I would advise the supervisor to request the direction to put the employee back to work in their regular position in writing from HR or, at least, verbally with a credible, trusted, management employee witness.  I don't think he has a personal liability issue here but I would need to check deeper into ADA and OSHA to be sure and I don't have time right now.

RegDunlop's mentions the most conservative approach but it sounds like (A) there is no accomodation except perhaps SCBA equipment or piped air, which may not be reasonable, and (B) HR may already have had that discussion and simply rejected the claim of a disability.

Because you are dealing with two issues here - a WC claim as well as an ADA accomodation request, I think it is time to get corporate counsel involved.  I agree with TX that I hope HR is making these decisions after doing many steps.  No matter what it sounds like this could turn into a nightmare and I think following the advice of a corporate counsel would be a good move here.