FMLA Insights - Guidance & Solutions for Employers

When making difficult decisions about eliminating jobs, senior management surely may disagree as to "who" is cut and how it's done.  However, after the decision is made, it is critical that management collectively support the decision and refrain from public dissension.  When that dissension is shared publicly or with the affected employee, it can spell disaster. 

Take a situation involving Laura Makowski.  Makowski was employed as Marketing Director by SmithAmundsen LLC, a Chicago-based law firm.  In December 2007, during the massive economic downturn, Makowski took maternity leave.  One month later, during a firm retreat in January 2008, the firm's executive team decided to eliminate the positions held by Makowski as well as the firm's IT Director.  The Executive Committee charged Molly O'Gara, Director of Human Resources, with the task of consulting outside counsel on the termination decision.  O'Gara considered herself the "boss" with respect to HR policies and compliance and was regularly consulted on termination decisions. 

According to Makowski, when she returned to pick up her belongings in early February after being terminated, O'Gara met her at the elevator.  Shockingly, Makowski claims that O'Gara told her that she "was let go because of the fact that [Makowski] was pregnant and took medical leave" and that Makowski was one of several at the firm who were let go because they were pregnant or took medical leave.  O'Gara allegedly didn't stop there, suggesting that Makowski should consult with an attorney, since there "might be the possibility of a class action."

Ouch.

You know how the rest of this story goes.  Last week, a federal appellate court in Chicago ruled that Makowski's FMLA interference and retaliation claims (as well as a pregnancy discrimination claim) would not be dismissed, and that a jury must determine whether O'Gara's comments help establish that the firm interfered with Makowski's FMLA leave and ultimately terminated her because of her pregnancy and the use of FMLA leave.  Makowski v. SmithAmundsen (pdf)

Insights for Employers

A few lessons to be learned:

1. Whenever possible, involve senior management in RIFs and other employment terminations.  This should include your senior HR executive.  It is unclear from the case whether O'Gara was involved in the actual decision to terminate (or whether her sole task was obtaining employment counsel's blessing).  However, when senior executives are not consulted on significant business decisions, it can breed resentment.  Resentment manifests itself in a variety of ways, such as a manager who blows off steam about the decision in public or to the affected employee.
2. Loose lips sink ships.  After the debate has ceased and management has made the personnel decision, it is critical that any dissenters support the decision of the whole or that of the decisionmaker.  The public front should be collective, and the message consistent.  Clearly, we don't know all of the facts at issue in Makowski's situation.  However, if O'Gara's comments are true, she obviously allowed her personal opinion to become public.  In turn, it created a tremendous risk of liability for the firm, a decision that now will be placed in the precarious hands of a jury.
3. A no-brainer reminder to HR professionals: Be exceedingly careful when discussing with the employee the reasons for his/her termination, as this conversation will be dissected over and over again and used by the employee's attorney as evidence of alleged discrimination or retaliation.  Whenever possible, seek the guidance of employment counsel in framing the reasons communicated to the employee so that you ultimately reduce the risk of liability.   

For several weeks now, attorneys and legal academics across the country have dissected the U.S. Supreme Court's Wal-Mart v. Dukes (pdf) decision, which shut the door to a 1.5 million class of current and former female Wal-Mart employees who are claiming that they were denied pay increases and promotions because of their gender.  In striking down class certification, the Supremes held that there was no commonality among the member of the class, that is, no "glue" that tied all of their discrimination claims together.

The Wal-Mart decision underscores the heavy burden plaintiffs have when pursuing a case on behalf of others in a class action.  Surely, employers will use the Wal-Mart decision to fight class certification on the basis that the members of the proposed class lacks commonality.  In a post-Wal-Mart era, plaintiffs seeking to advance a class action will be forced to narrow the scope of the class and focus on policies and practices that are specific and clearly establish a discriminatory effect on a class of individuals. 

Might an employer's FMLA practices provide just what a plaintiff needs to withstand the scrutiny of the Supreme Court's exacting standards for class certification?  Unlike many other statutes, the FMLA requires employers to adhere to a multitude of exacting rules, any one of which can trap an employer.  If an employer's FMLA administration runs afoul of the FMLA, it could prove to be the "glue" that the Supreme Court insists is required to tie together the claims of an entire class.  Whereas the Wal-Mart class was rejected because the plaintiffs pointed to rather amorphous, vague policies of discrimination as the basis for their class action, it seems that a class of plaintiffs may have an easier time attacking a specific FMLA policy or practice whose effect creates harm across an entire group of employees.

Two recently filed proposed class actions suggest that at least some plaintiff-side employment attorneys are thinking the same thing: 

• Last week, two former AT&T employees filed a proposed FMLA class action in federal court in San Francisco, alleging that AT&T maintains a "total absence policy," whereby FMLA-protected absences are counted against an employee just like any other absence.  In Beard and Guerrero v. AT&T (pdf), Andre Beard and Gloribel Guerrero allege that AT&T "blacklists" employees when they reach the bottom 30% of the Company's monthly absence calculations.  Thereafter, the plaintiffs claim that employees in this category are harassed, denied promotional opportunities and "targeted" for termination.  Perhaps taking a cue from the Wal-Mart holding, the plaintiffs propose a narrowly-defined class: non-managerial and first-level managers at the Company's call and collection centers who took FMLA leave and were in the bottom 30%. 
• Earlier this year, a proposed class of current and former Sysco employees filed suit in federal court in Chicago, claiming that the Company (through its third-party administrator, Work & Well) has continuously violated the FMLA by insisting that employees provide more medical information than is legally required in the FMLA medical certification and clarification process. In Arango v. Sysco Chicago, Inc. and Work & Well, Inc. (pdf), the plaintiffs claim that Sysco requires its employees to provide medical information such as their prescribed medications, dates of upcoming doctor appointments and detailed information regarding any medical procedures performed.  When employees do not provide the requisite information, the plaintiffs claim that Sysco denies FMLA leave, designates the related absence as unexcused and subjects the employees to a variety of adverse employment actions, up to and typically including termination.  Discovery in this case has just begun.

I share these lawsuits not to suggest that they have any merit or that they are even worthy of class certification.  It's much too early to tell.  Moreover, the employers in these cases have plenty of good arguments to make, and the discovery process will bear that out.  However, these lawsuits simply illustrate the potential for a surge in FMLA class actions as plaintiffs' attorneys get their hands around the Wal-Mart mandate. 

Insights for Employers

So, what is an employer to do?  Several suggestions come to mind:

1. It is imperative that employers consider whether (and how) their FMLA policies and procedures expose them to claims that can be advanced by a group or class of employees.  Strongly consider conducting a comprehensive audit of your entire FMLA administration to ensure your procedures do not violate the regulations and expose potential class claims.  A couple questions might help to guide your analysis:
   • Does your leave request form elicit necessary information without delving beyond the medical condition at issue?
   • Are you requesting more medical information than allowed through the FMLA's medical certification form or the regulations?
   • Are you using the clarification/authentication process as a tool to convince the employee's health care provider that an employee's serious health condition is not valid or not as severe as stated in the medical certification? 
   • Do you require blanket authorization to communicate with the employee's health care provider before medical certification is due or before the employee has the opportunity to cure deficient certification?
   • What medical information do you require upon an employee's return to work?  Does your practice comport with the FMLA's return-to-work rules?
   • As to those employees who have taken FMLA leave, are there a disproportionate number who have been denied promotional opportunities or terminated (for unexplained reasons)?
   • How does your FMLA policy mesh with your attendance and other leave policies?  Are there inconsistencies?
2. Closely analyze your relationship with any third-party administrator that conducts FMLA administration on your behalf.  Do you know how your TPA handles the questions above?  If not, find out.  Keep in mind that the employer ultimately is on the hook for the TPA's FMLA administration.  Thus, the lines of communication between employer and TPA must constantly remain open so that you are able to obtain information, as necessary, and that you are partnering with the TPA on particularly difficult FMLA scenarios.
3. I know I sound like a broken record, but ensure that your managers are properly trained on their responsibilities in FMLA administration.  Although front-line managers may play little to no role in the FMLA process, they are your eyes and ears of potential FMLA abuse.  Conversely, their inappropriate comments or poor handling of an FMLA situation may create significant liability.

Last month, the Supreme Court ruled in Staub v. Proctor Hospital(pdf) that an employer in an employment discrimination case can be liable for the discriminatory animus of an employee who influences, but does not make, the ultimate employment decision at issue.  Known as the “cat’s paw” theory, it already is having an impact on claims brought under the Family and Medical Leave Act. 

As the folks at the Ohio Employer's Law Blog point out, just days after the Staub decision, the reach of the Supreme Court's ruling already has impacted an FMLA case.  In Blount v. Ohio Bell Telephone Co., the employer maintained a "performance management system" that disciplined employees for failing to meet certain goals.  Managers were given wide discretion to decide whether to issue discipline when an employee did not meet set goals.  In Blount, two employees who had recently taken FMLA leave sued after they were terminated for failing to meet certain goals under the performance management system.  In short, the employees claimed they had been treated differently than other employees who failed to meet the same goals but were not terminated.

In defending the claim, the telephone company claimed that the decision to terminate the employees came from top-level management, not the employee's direct supervisors.  Thus, the employer claimed that any alleged biased from the lower-level managers had no bearing on the ultimate termination decision.  The Court disagreed:

Even if the decision to punish and terminate resided higher in the supervisory chain, . . . the animus of the Center Sales Managers can be inferred upwards where it had the effect of coloring the various adverse employment actions in this suit. See Staub (discriminatory animus can be inferred upwards where the employee who makes the ultimate decision to punish does so in reliance upon assessments or reports prepared by supervisors who possess such animus).

As a result, the Court allowed the employees' FMLA retaliation claims to be considered by a jury.

Insights for Employers

The Blount decision serves as a reminder to employers that employee allegations of illegal bias by managers should be independently investigated, regardless of when and at what point in the discipline process the allegations are raised.  Clearly, a senior-level officer generally can and should rely on the recommendations of lower-level managers when deciding whether to issue discipline or terminate an employee.

However, an employer must tread carefully where there are claims of bias against a manager recommending discipline.  Might the result have been different had the telephone company investigated the claims of bias before terminating the employees?  In doing so, the telephone company could have tested the accuracy of the claims and determined whether the employees' terminations were independently justified and not tainted by any bias.  Such an investigation also would have made for a better record for the company to defend in litigation. 

The decision also is a gentle reminder that training of managers and supervisors is vitally important to combat litigation.  A dollar spent now on training will save a whole lot more later.  Be sure to include some space in your 2011 budget for training.

When an employee's request for medical leave is vague or is unclear, the Family and Medical Leave Act regulations specifically allow (in fact, they require) the employer to question the employee further to determine whether the absence potentially qualifies under the FMLA.  When the employee fails to respond to these reasonable inquiries, the employee may lose the right to FMLA protection. 

Such was the case for Robert Righi.  In a fantastic opinion for employers, a federal appellate court recently upheld the dismissal of Mr. Righi's FMLA claim because he failed to respond to his supervisor's telephone calls inquiring about his need for a leave of absence.  Righi v. SMC Corporation of America

The Facts

Righi, a salesman for SMC Corp., was the primary caretaker for his mother, who regularly suffered complications from diabetes.  As a result, Righi often took FMLA leave to care for her.  On the occasion at issue, however, he asked for time off after his mother accidentally overdosed on her medication. 

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An employee enrolled in an addiction treatment program need not be under a doctor's care or actually staying at a rehab institution to qualify for FMLA leave, according to a federal court in Texas.  Picarazzi v. John Crane, Inc. (pdf)

The Facts

Plaintiff Perry Picarazzi, a customer service representative for John Crane, Inc.(JCI), had a history of alcoholism, and his alcohol problems clearly led to absenteeism problems in March 2008.  As a result, he was issued a number of "points" under JCI's attendance policies, which led to progressive discipline.  However, JCI failed to issue this course of discipline until the day it also issued a final warning to Picarazzi, which occurred mere days before his termination in late June 2008.

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Yesterday, the U.S. Supreme Court ruled that an employee allegedly fired in retaliation for a a sex discrimination charge filed by his fiancée could sue his employer under Title VII of the Civil Rights Act of 1964. Because the Court's reasoning could arguably be extended to retaliation claims under the FMLA, covered employers should take note. Thompson v. North American Stainless (.pdf).

The Decision

Eric Thompson and his fiancée, Miriam Regalado, both worked for North American Stainless ("NAS"). In February 2003, the EEOC notified NAS that Regalado had filed a charge alleging sex discrimination. NAS fired Thompson three weeks later. Thompson then filed his own EEOC charge and later filed suit in U.S. District Court, alleging that NAS had fired him in order to retaliate against Regalado for filing her charge with the EEOC. The District Court dismissed the case, holding that "Title VII does not permit third-party retaliation claims." Thompson appealed. A three-judge panel of the Sixth Circuit Court of Appeals reversed the District Court, but after rehearing the full court voted to affirm the District Court's ruling by a vote of 10 to 6. The majority reasoned that Thompson could not sue for retaliation because he did not engage in any activity protected by Title VII. Thompson then appealed to the Supreme Court.

In an 8-0 decision (Justice Kagan did not participate), the Supreme Court reversed the Sixth Circuit's ruling. In an opinion by Justice Scalia, the Court observed that Title VII's anti-retaliation provision is broader than the statute's substantive anti-discrimination provisions. Title VII prohibits discrimination on the basis of race, color, religion, sex, and national origin "with respect to ... compensation, terms, conditions, or privileges of employment" and discriminatory practices that would "deprive any individual of employment opportunities or otherwise adversely affect his status as an employee." In contrast, the anti-retaliation provision prohibits an employer from "discriminating against any of his employees" for engaging in protected conduct, without further specifying what acts are prohibited.

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According to a recent ruling by the 9th Circuit Court of Appeals, an employee may have a valid wrongful discharge claim under the FMLA even if she fails to actually request FMLA leave, based upon evidence that her employer was aware that she had cancer and discussed whether she had taken FMLA leave shortly before her termination. Kinney v. Holiday Companies.

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Suppose a retailer declares bankruptcy. Several of its leases are sold off to another retail chain, which then remodels the stores, stocks them with its own merchandise, and opens them under its own name. If this retailer hires some of the bankrupt company's employees, are those employees new hires under the FMLA, or might they have the right to take FMLA leave immediately, without waiting 12 months or working 1250 hours for the new company? 

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When an employee remains absent even after her doctor provides a medical certification confirming that she can return to work, it might seem reasonable for an employer to deny the employee any further FMLA leave and, if the employee fails to return, to terminate her employment. However, if the employer has not specifically informed the employee of the need to provide a medical certification in writing, relying on the "negative certification" may violate the FMLA, according to a recent decision of the Sixth Circuit Court of Appeals. Branham v. Gannett Satellite Information Network, Inc.

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Under the FMLA, an employer's obligation to provide leave arises only after an employee gives notice that he or she needs FMLA leave. However, it is well-established that an employee need not explicitly mention the FMLA when requesting leave. Rather, an employee's notice is sufficient if it gives the employer enough information to reasonably conclude that the employee may need leave for an FMLA-qualifying reason. Determining whether an employee's request for leave meets this requirement is a difficult proposition, particularly when the employee appears to be using the request to avoid instructions or shield himself from discipline. A recent decision of the 6th Circuit Court of Appeals sheds some light on the subject, and affirms that an employee cannot avoid discharge for insubordination merely by claiming that he had a headache and needed to go home. Gipson v. Vought Aircraft Industries, Inc. (.pdf).

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The Department of Labor's recent Administrative Interpretation regarding FMLA leave for those acting in loco parentis to a child placed the spotlight on the application of FMLA leave to same-sex couples with children. However, the ruling did not address how the FMLA applies to situations where an employee seeks FMLA leave to provide care not for a child, but for a same-sex partner or spouse. However, two recent ruling by a federal court in Massachusetts may redefine the term "spouse" for purposes of FMLA leave, at least in states that recognize same-sex marriages. 

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Two recent federal appeals court decisions highlight the importance of providing employees with clear, accurate information about their FMLA rights. First, the U.S. Court of Appeals for the Eighth Circuit recently held in Kobus v. The College of St. Scholastica, Inc. that a painter employed by the college could not prevail on his FMLA claims because he failed to return a completed medical certification form confirming that he had a serious medical condition. The court focused on the fact that the college's policies and the plaintiff's supervisor clearly advised the plaintiff of the certification requirement. 

On the other hand, the U.S. Court of Appeals for the D.C. Circuit ruled in McFadden v. Ballard Spahr Andrews & Ingersoll, LLP (.pdf) that a plaintiff could proceed on her claim that her employer interfered with her FMLA rights by giving her incorrect information about the amount of FMLA leave she had used. 

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If the need to keep careful track of FMLA paperwork was not already obvious, a recent decision from a federal district court in Ohio emphasizes the perils of misplacing an employee's FMLA certification. Wellman v. Sutphen Corp.

Read on to find out how to avoid the same mistakes.

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