New Decision Roundup – Cat’s Paws, Investigations and Comp Time

I usually devote each post to one decision or some part of recently introduced legislation. Several court decisions were released last week but none, in its own right (especially in light of my prior blog posts) justifies my usual (too-involved) devotion. That said, I thought I would just give a short description of the decisions and say why each merits some short attention.

Proctor Hospital fired a reservist (for "insubordination, shirking, and attitude problems) who the sued it under USERRA, claiming his military service was the real reason for his firing. A jury agreed with him but the court of appeals in Chicago set the verdict aside because the court improperly admitted "anti-military" evidence that was not shown to have influenced the final firing decision. The decision has some excellent legal points for employment defense lawyers about whether the judge or the jury determines whether statements should be admitted but for employers (especially for those who read this blog), the message should be familiar. The issue here was whether the decision-maker was free of the anti-military statements made by the subordinate because the decision-maker conducted an "independent investigation" by "look[ing] beyond" the reports of misconduct from the biased supervisors and determined, based upon the employee's poor employment history with the hospital. Interestingly, while the Seventh Circuit essentially coined the "cat's paw" phrase in the discrimination context and other courts have used the phrase, the Seventh Circuit's approach to it is pretty demanding as compared to the Sixth Circuits. Under the Seventh Circuit decisions (and other courts as well), the decision-maker must truly rubber stamp the biased decision of a subordinate. The court says the standard requires the employee to show the decision-maker was blindly reliant on the report. The standard on this issue in the Sixth Circuit is far less clear but for the reasons I've given in prior posts, employers won't err by conducting in-depth investigations.

The Sixth Circuit has brought some needed clarity to what evidence is required before an employee can show the employer's reason for firing is so unreasonable as to be pretextual. One of the Home Depots in Nashville fired an assistant store manager ("ASM") because, on two occasions, she violated the company "no-self-service" policy that prohibits employees from ringing up their personal transactions. The ASM knew of the policy and its purpose (preventing employee theft) but had not been disciplined between the first and second infractions. Home Depot – wait for it – conducted an investigation, met with the ASM, reviewed security camera footage of the infraction and the decision to fire the employee was consistent with its practice in 18 other similar situations. This isn't a "cat's paw" case, however, because there was no evidence that any manager had made sex-based comments. The ASM's argument was that her firing was "unreasonable." While the "fairness" of a firing decision is not the issue in a discrimination claim, pretext can be shown under Sixth Circuit decisions where the firing is so unreasonable that it tends to show the employer was not being honest about its reasons. Prior decisions have, however, muddied the water somewhat giving the ASM the opportunity to argue that firing her for only two violations was so extreme it was unreasonable. That argument failed here, the court said, because Home Depot's "overly strict interpretation" of its "no-self-service" policy was not alone enough to show pretext. What had to be shown was that the ASM's interpretation of Home Depot's rule was "far superior" to how Home Depot interpreted it. In other words, Home Depot might not have won if its interpretation was a pretty-good stretch under terms of its policy; an example of this appears in Mickey v. Zeidler Tool & Die Co., 516 F.3d 516, 527 (6^th Cir. 2008). It also helped, the court said, that Home Depot conducted a "reasonable investigation prior to [the ASM's] termination, which strongly supports the view that it made an honest rather than a pretextual decision when it relied on the self-service rule to terminate her." So, aside from the obvious help the investigation made, before terminating someone based upon a policy violation, be sure the policy language can be reasonably interpreted to prohibit the conduct for which you are going to terminate the employee. This case shows the policy doesn't have to explicitly prohibit the conduct but your interpretation of the policy must still be reasonable.

Turning to a completely different subject, the Seventh Circuit has clarified the DOL Wage and Hour rules on how cities must grant requests to use compensatory time ("comp time) for police officers under the FLSA. The dispute concerned Chicago taking the position that it, not the police officers, was entitled to name the date and time the officers could use their comp time. The officers, Chicago said, could only submit requests and the police department simply needed to offer some leave within a reasonable time of the request. It left the decision as to what was a reasonable time to the shift supervisors. The DOL regulation, 29 C.F.R. §553.25, says employee who request using comp time must be permitted to use the time off within a reasonable period after making the request unless that would unduly disrupt operations. Unlike other courts, the seventh circuit rejected Chicago's attack on the regulation and held that Chicago had improperly denied leave requests. The proper method, the court said, is that the "employer must ask whether leave on the date and time requested would produce undue disruption, and only if the answer is yes may the employer defer the leave—and then only for a 'reasonable time.'" Governmental employers should note that the DOL has proposed amendments to § 553.25 (among other things) which would no longer require employer to grant the leave on the date requested (you can keep up with the status and read comments about the proposed regulations at regulations.gov). Instead, the regulations as proposed would not require a public agency to allow the use of compensatory time on the day specifically requested, but only requires that the agency permit the use of the time within a reasonable period after the employee makes the request, unless the use would unduly disrupt the agency's operations. The lesson to be learned, whatever the new regulations say, is don't refuse comp time leave requests if they are inconvenient. There is a process that must be followed.

Firing an Employee on His Return from FMLA Leave

As lawyers, we sometimes have a non-practical view of the workplace. For example, to us the FMLA is about "leave" when in reality, the more fundamental point of the FMLA is to project the employee's job when the need for leave ends. The right to medical leave would be worthless without the right to reinstatement, a point the Sixth Circuit made last August.

A court of appeals decision last week, however, addressed a situation where the employer discovered performance problems while the employee is on FMLA leave. Mr. Cracco worked as a Service Center Manager for Vitran Express, a trucking company, at one of its Illinois terminals. He took approved leave for a medical condition and Vitran hired "several replacements" to cover his job while he was gone. The replacements discovered numerous problems, disorganization, not following of procedures, freight sitting on the dock, damaged fright hidden, safety concerns, customers complaining, overtime not being handled properly, and discrepancies in freight records. Based on these reports, the company launched an investigation, determining that Cracco had not simply made mistakes but had engaged in "deliberate attempts to disguise late and damaged deliveries." For that reason, Vitran then fired Cracco the day he returned from FMLA leave.

Cracco sued, claiming retaliation and interference under the FMLA. The court rejected all of his arguments. On the retaliation claim, the court held that the FMLA did not per se prohibit an employer from terminating an employee because, while the employee was on leave, the employer learned of misconduct. Notice the "but for" connection here. If the employee had not gone on medical leave, the employer might never have learned of the faked records. But that is not enough in itself to show legal causation under the FMLA.

Cracco's FMLA inference claim foundered because of that portion of the FMLA which provides that an employee's right to reinstatement is not absolute and the employee is not entitled to "any right, benefit, or position of employment other than any right, benefit, or position to which the employee would have been entitled had the employee not taken the leave." 29 U.S.C. § 2614(a)(3)(B). So, an employee is not entitled to reinstatement if the employer can "present evidence to show that the employee would not have been entitled to his position even if he had not taken leave." Now here is the important point about Cracco v. Vitran.

Vitran presented "substantial evidence" that Cracco had faked records, of its investigation and how it learned of the misconduct in the first place. In contrast, the employee presented "no evidence" that the reports were not made or that Vitran's investigation was not an honest attempt to ascertain the accuracy of the allegations.

There's no question that an employer may take employment action against an employee for what the employer discovers while the employee is on FMLA leave. The real issue is what is behind the discovery. Honest investigations, as I have stressed elsewhere, are the key. Even on the interference claim, the issue in this case wasn't whether or not the misfeasance had occurred but whether or not the employer honestly believed it occurred. The employer showed this by conducting a thorough investigation – though oddly enough, the court never mentioned whether or not the employee had been interviewed as part of the investigation. (There would have been good reasons for not interviewing the employee: he was on medical leave and the performance issues were self-evidence in the delivery records). There was also a lack of evidence regarding how the employer had treated similarly situated employees and this evidence can be quite crucial in any discrimination lawsuit.

A word to the wise. Because the taking of FMLA leave is itself protected, the timing of any employment action is going to look bad so a smart employer will be extra-careful in documenting the investigation, the basis for the decision and whether any other remotely similar incidents are distinguishable or not.

The Dangers of Quantifying Performance

Last week, the Sixth Circuit affirmed a six million dollar compensatory damages award (most of which was back pay and front pay) in an age discrimination claim case against New York Life. (The court awarded an additional $6 million in punitive damages but I will focus only on the merits of the age discrimination claim).

I've written on a related topic in a prior post, involving an appeal of another age discrimination claim where Sears terminated a store manager for poor performance. That store manager argued she was treated worse than other younger store managers but Sears relied upon two key facts, that the fired store manager was truly the worst performer of the lot and that the comparisons the fired store manager drew were mixed, in the sense that she tried to cherry-picked the comparators.

Contrast that with what happened in the New York Life ("NYL") case. NYL also quantified its managers' performance. Instead of relying, as Sears did, on store sales metrics (that is, figures that were largely objective), NYL's metrics were a mix of subjective and objective factors. NYL used "an index that it calls Growth Profitably and Accountability ("GPA") as one means of measuring a manager's performance." (The GPA scores could range from 0 to 4.) I won't go into how GPAs were derived, it is enough to say that when NYL fired the plaintiff, it said it was because he missed reaching a goal (hiring a certain number of sales employees), a goal he missed hitting by one (debatable) point. So, (a) comparatively low GPA + (b) missing a goal by one point = (c) termination of employment.

Aside from attacking the accuracy of his GPA, the fired manager presented strong evidence that NYL had deviated from applying its "normal rules" (remedial action procedures for when a manager has a low GPA) to other, younger managers, without doing the same for him. Unfortunately for NYL, the GPA calculations made it easy for the plaintiff to demonstrate the favoritism of younger managers. The court devoted several pages to discussing how the younger managers (in other geographic areas) had GPA's similar to the fired manager but received promotions or were not put on "performance warnings" and were not terminated. Of course, NYL argued the fired manager's comparisons were invalid but the court of appeals rejected that argument out of hand (perhaps too readily, I would argue) largely because the GPAs for the younger managers were every bit as bad as the fired managers' GPA. They were, in reality, so stark, NYL's attempt to explain them away them fell flat.

I wanted to write about this decision to make several points.

First, consistency is crucial. If there are reasons to make distinctions, make sure to document them clearly in the appropriate document.

Second, if you are going to quantify performance, don't try to quantify subjective factors and then make fine distinctions between close numbers. That is, if the numbers you use are going to be relatively close together (say 12 versus 13 on a 20 point scale), that distinction isn't going to come across all that well when a court looks at the raw numeric score. (Recall Sears not only used objective figures –poor store sales – it also included several anecdotes which demonstrated why the fired store manager didn't have a clue how to effectively manage a store.) When the numbers are close – or when the employee misses a goal by a small amount – quantification makes it much easier for the employee to effectively argue that the employer failed to accurately evaluate the employee's performance.

Third, don't fall into the trap of thinking that putting numbers on an employee's performance necessarily makes that performance assessment "objective" or easier to defend. Neither is true, unless you are perfectly entirely consistent (an almost impossible outcome). Don't get me wrong, if the numbers are based on objective factors (or even largely objective factors), they can be quite useful (as long as you treat similarly situated employees the same). But when employers try to turn subjective factors into objective-seeming figures, they simply change the focus of the argument from the accuracy of the performance assessment to whether the individual's performance "factors" were properly scored vis-à-vis the other employees. Simply put, I would much rather defend a detailed explanation of an employee's performance written in plain English than one where the employer has developed 12 different performance factors and put a number next to each factor for each employee.

Job Reassignments and Reasonable Accommodations

One of the more controversial topics under the ADA is to what extent is an employer obligated, as a reasonable accommodation, to transfer an employee to another (vacant) job. It is controversial because, by definition, reassignment only comes into consideration when the employee (the EEOC says), because of a disability, "can no longer perform the essential functions of his/her current position, with or without reasonable accommodation" or undue hardship. It doesn't help that the EEOC takes the position that "The employee does not need to be the best qualified individual for the position in order to obtain it as a reassignment" leading some courts to disagree with the EEOC.

With passage of the 2008 amendments to the ADA, employers are going to find themselves having to address many more requests for accommodations, a good number of which are going to be job transfer requests. I'm not going to go into all of the rules and considerations that go into whether to accommodate such a request. If you want a refresher, the EEOC's Enforcement Guidance on Reassignments, gets close enough.

What I want to talk about is some of the reasons why, not too long ago, Liberty Mutual Insurance Company found itself on the losing end of a failure to reasonably accommodate ruling by the United States Court of Appeals for the First Circuit (governing primarily the New England States) and will, it looks like, have to pay a former insurance salesman more than $1.3 million in damages (attorney fees will be additional). Of course, what I know of the case is based solely on what is written in the court's decision.

Kevin Tobin worked for Liberty Mutual selling insurance for nearly thirty-seven years. Mr. Tobin has bi-polar disorder, diagnosed several years before his termination, and it ultimately appears to have prevented Tobin from performing up to standards in his current sales position. In fact, the court of appeals, in an earlier ruling, upheld Liberty Mutual's decision to terminate Tobin because of his "longstanding performance difficulties" but ordered a trial on Tobin's accommodation claim. At the trial, Tobin argued a reasonable accommodation would have been to assign him to manage "mass marketing" accounts, accounts that are group insurance programs offered to businesses and other institutions in which employees or members are able to purchase insurance policies at a discount. These "MM" accounts are highly sought-after because of the volume and ease at which some can be managed. Liberty Mutual refused, saying that Tobin's sales record made him ineligible for the MM assignments because they were awarded as perks to the best performing agents and that Tobin, because of his disability, could not have handled the stress of the MM accounts in any event. (Stress, the evidence showed, tended to worsen Tobin's mental problems.)

Where Liberty Mutual's case fell apart was in asserting reasons that were not supported by the facts.

It may be true that MM accounts were largely (or even overwhelmingly) assigned as perks for the best performers. There was evidence, including from Tobin's former manager and other sales employees, that MM accounts were not uniformly so assigned. So, while it is true that uniformly applied seniority rules do not have to be ignored in making an accommodation, US Airways, Inc. v. Barnett, 535 U.S. 391, 404-05 (2002), the catch is that where "one more departure [from the practice] will not likely make a difference," the employee may be able to show a deserved accommodation was wrongly denied.

So in deciding whether or not to transfer an employee with a disability to a vacant job, never look to what you think the transfer standards should be. You must look at your actual past practice in filing the position before denying the accommodation.

Liberty Mutual's other argument – that Tobin's disorder rendered him incapable of handling some of the MM accounts – also fell flat. Sure, the court acknowledged, Liberty Mutual could point to MM accounts that Tobin probably could not handle due to the pressure but that didn't mean, the court said, Tobin could not manage any MM account. There was testimony that some MM accounts were "easy" to manage. Again, the thoroughness of the evaluation at the time was what hung out to dry Liberty Mutual.

Reading between the lines, my take on this case is that Liberty Mutual finally ran out of patience with Mr. Tobin. The court said Liberty Mutual had engaged in the "interactive process" and made other accommodations than the ones at issue in this lawsuit. The provided accommodations, it appears, were geared toward helping the employee perform his old job, there was no indication, Liberty Mutual offered any other accommodation (in this instance, some other vacant job Tobin could have performed). Remember, once an employer offers an accommodation that is reasonable, the employee cannot reject it and demand the employer provide a preferred accommodation.

An employer does not always have to have the patience of Job (it helps, of course) but just a little more patience – in the form of giving Tobin at least the opportunity to fail in working on the MM accounts (or some other job) - could have possibly avoided the outcome in this case.

One of the best services an employment attorney can provide a client is to say when the client is about to make a mistake. It isn't easy or fun to give that message (there is an art to the delivery) but it often saves the client years of heartache, worry, significant money and the risk inherent in litigation. A good defense lawyer also knows how important it is to ask probing and "difficult" questions in rendering advice. So too must an HR manager. If you are going to bet the farm on a position, don't simply ask, "what is the rule," also ask, "what exceptions have been made to that rule." (And take it as a given that no rule is without some exception, even if only a potential one.)

Not every exception or potential exception will require you to grant the accommodation request, however. Under Barnett, the test is whether "one more exception" would make a difference. To determine that, you must examine all the facts, not simply those that might fit the desired outcome.