When Investigations Go Wrong

Just as a housekeeping matter, on July 27, 2010, the Home Depot decision I discussed in this post was vacated by the court of appeals and the lawsuit was dismissed.  (They even took down the reported decision so the link below doesn't work.)  This happens, most likely, when the parties reach a settlement, as one legal journal has reported.  It means that as legal precedent, the decision is no longer binding. Of course, the cost of taking the case all the way to court of appeals before settling it was significant so I hope employers will learn from Home Depot's experience.

I am returning to one of my frequent topics, how an employer can avoid liability by conducting an independent investigation.

I've emphasized that employers need to make sure to conduct a fair investigation. This means, as one post emphasized, that employers need to listen to the employee and form an opinion only after hearing the employee's version of events. It also means, as a minimal standard, looking into how similarly situated employees have acted without being disciplined.

An appeals court decision involving Home Depot managers from Florida and Alabama provides additional fodder for employer investigatory mistakes. Two Home Depot store managers were fired after complaining about sexual harassment by a regional HR Manager. The store managers lost the harassment claim but persuaded the appeals court to reverse the retaliation claim.

Home Depot deserves some criticism for the manner in which it terminated the store managers. They didn't produce a written policy (about personal use of a company cell phone) and did not have very strong evidence that the store managers gave out discounts to vendors beyond what other store managers had done. Worse still, there was some evidence that some of the "illegal" discounts were actually authorized by district managers; the discount policy was not put into evidence as an exhibit.

It is never good when the court's discussion of the investigation starts by saying that it was "riddled with inconsistencies and contradictions." Perhaps no adequate investigation could have rescued Home Depot - but that is an issue for a trial. For employers that want to avoid a jury trial in a termination case, however, the decision points to several problems to avoid in conducting an investigation into employee misconduct.

Timing is everything. Home Depot maintained it fired the store managers because it began investigating improper discounts in "late Spring of 2005." The earliest documentation in the investigatory file, however, was dated late September 2005. Also some of the documents that were purportedly relied to make the termination decisions were dated after the store managers were fired. (Even so, one decision-maker testified she reviewed these documents before she decided to fire the store managers.)

Conduct an even-handed investigation. Home Depot maintained that the investigation into improper discounts was district wide. Yet, the investigator's notes about the two store managers who were fired was "far more detailed" than for any other store manager. The investigator maintained he was "never particularly focused" on the two fired store managers. No doubt, it is natural to see an increase in detail when the violation might lead to firing an employee. The important point here is that in any investigation, the same type of information should be retrieved for everyone, not just the ones who are ultimately fired.

Firewall the accused. The whole point of an investigation is to provide the employer with a non-discriminatory motive. That point is lost where, as here, there was evidence that the person accused of harassment is not obviously excluded from the investigation (in any investigatory capacity). Home Depot maintained otherwise (it appears the decision-makers were never told about the allegation of harassment) but when the termination notice is signed by the accused harasser (among others), and the accused harasser delivers the bad news, the employer is not making it easy for the court to see that the investigation is fair and above board. (It didn't help that the accused harasser bragged, allegedly, about getting the store managers fired.)

Follow company policy. The court of appeals roundly criticized Home Depot because "no specific policy violations" were listed on the termination notices even though the forms said to specify the policy that had been violated. The problem was particularly acute here because the store managers maintained that there was no policy. Strictly speaking, this last point wasn't a failing of the investigation itself but the court found this failure called into question the legitimacy of the investigation. It is a good practice point. Any investigation should, at a minimum, identify the exact policy that governs the situation.

Does Gross Require an Employee to Prove Age was the Sole Cause?

Today's Wall Street Journal (online) includes an article entitled: Age Bias at Work Is Harder to Prove. I don't read the WSJ but came across the link in a blog I do read. The Supreme Court Blog uncritically characterized the WSJ article as saying that Gross v. FBL Financial Services, "requires plaintiffs alleging age discrimination to establish that their age was the sole cause of the employer’s action." Sure enough, the WSJ article quotes a "senior attorney" with the AARP as saying that the "but-for cause" standard elected in Gross is "widely interpreted as meaning the 'sole cause.'"

That infuriated me. I can understand the AARP's motives for saying this but they are wrong (more on this in a minute). The WSJ and certainly ScotusBlog should have questioned this statement by an AARP attorney (an organization that "supports the rights of older workers" by filing briefs arguing for "vigourous enforcement" of the ADEA). That is sloppy journalism.
Shortly after it was released, I wrote about what Gross means for employers. I won't repeat those statements here. I cautioned that, despite what the publicity said, the decision doesn't make it easier to discriminate against older workers. It merely simplifies the way an age claim is analyzed by a court. While it ostensibly distinguishes between a "motivating factor" and a "but for" factor most humans (including Supreme Court justices) aren't capable of making such fine distinctions about human motivation. Gross makes a meaningful difference for employers only in very close cases.

The AARP attorney is dead wrong for two reasons. "But for" does not mean "sole cause." The opinion in Gross said as much by quoting a well-known treatise on tort causation: "An act or omission is not regarded as a cause of an event if the particular event would have occurred without it.” In short, if you take away the improper motivation, would the decision have been the same. That is simply not a "sole cause" analysis. Better yet, two decades earlier two members of the majority in Gross flatly stated that "because of" (i.e., "but for") does not mean that the illegal motive "must be the sole cause of a decision before there is a Title VII violation." Price Waterhouse v. Hopkins, 490 U.S. 228, 284 (1989) (Kennedy & Scalia, dissenting).

So, employers that want to fire an older worker because they can prove some legitimate reason could be in for a costly and unpleasant litigation experience.

But the AARP attorney is actually quoted as saying that Gross was "widely interpreted" as imposing a "sole cause" standard. Assuming he was accurately quoted, that is also dead wrong. The only accurate measure of how Gross has been interpreted is by the court decisions. No court of appeals has held Gross requires a showing of "sole cause." I found several district court decisions that expressly rejected the proposition. Only one decision seems to have said that "but for" means "sole cause" in an age case. The decision, however, wasn't close so the causal standard made no difference. Under any standard, one non-precedent-setting court decision does not constitute a widely accepted interpretation.

So why did the AARP attorney argue against the interests of its members (and conversely, why am I, an employers' attorney, arguing for a less strenuous causation standard)? The AARP is engaging in fear mongering so that Congress will legislatively overturn Gross. At least one such bill has been introduced. It is a terrible bill for employers. This bill would not just apply to age claims but almost every type of discrimination or retaliation claim. Under this bill, these claims would essentially be analyzed as Title VII claims are now.

As I said before, I could care less about the supposed difference between a "but for" and "motivating factor" causation standard. I don't think there is one.

What bothers me is the mess that would be created in turning every discrimination and retaliation claim into a "mixed motive" case. Even now, some 18 years after Congress added the mixed motive claim for Title VII purposes, it continues to confuse and confound the courts and jurors. Even worse, merely saying (as the introduced bill would do) that an employee in an age case can recover when age was a "motivating factor" even if the employer would have made the same decision anyway creates a potentially irreconcilable contradiction with the numerous statutory provisions and rules relating to pension and other benefits which expressly permit age to be a factor under certain circumstances.

Employers simply do not need more uncertainty.

Glimpses – Three Recent Sixth Circuit Employment Decisions

The unpublished decisions I'll mention here do not warrant separate (or much) discussion so I'll just summarize the important parts.

One decision, Stimpson v. United Parcel Service, upheld UPS' firing of an employee over the employee's FMLA objections. The employee had been in a bike/car accident and had phoned UPS. The court held the employee had given adequate initial notice of his condition but ultimately rejected the argument that the employee's firing violated the FMLA. The court concluded that the employee had not shown he had a "serious health condition." The employee's medical records showed he had "suffered only contusions and mild to moderate back pain." The return to work forms the employee presented simply said he could not work "for medical reasons." This fell "far short" the court held, of establishing "(1) the date on which the serious health condition began, (2) the probable duration of the condition, (3) the appropriate medical facts within the health care provider's knowledge, and (4) a statement that the employee is unable to perform [his] job duties" as required by prior court decisions. Because the employee failed to show that "his back pain significantly limited his movement or lifting ability, particularly when treated with the prescription [the employee] refused to take", the employee could not establish he had a serious health condition.

The second decision, Johnson v. Interstate Brands Corp., upheld the firing of an employee for fighting. Fighting, of course, requires two (or more) employees and employers often draw pretty fine distinctions in the discipline imposed depending on who started the fight, who escalated it, whether blows were thrown (or made contact) and even the consequences of the fight. This decision is no different. Two female employees fought in the break room. The facts as to who did what were disputed including among the witnesses. One employee (who was not fired) threw water on the fired employee. The fired employee raised her arm to block the water and made contact with the other employee's arm. The employer decided to fire her because she made physical contact but its past disciplinary practices (these were union employees) would not have justified firing the employee who "merely" threw the water on the fired employee. The court upheld this distinction. Flinging water was not, the court said, the same as physically striking someone.

The final one, Harps v. TRW Automotive U.S. LLC, concerns an employer's change to retiree health care benefits. A lot could be written about this area of employment law. It is enough to say generally that when an employer agrees in a collective bargaining agreement to pay health care benefits to retirees, it must do so very carefully. Sixth Circuit law all but creates an irrefutable presumption that the retiree benefits (when established in a CBA) cannot be cancelled after the term of the CBA. Oddly, ERISA does not require retiree health benefits to be "vested." Employers, however, can do so by agreement and that is where the litigation battle occurs. Sixth Circuit caselaw on when language in a CBA will "vest" retiree health benefits is extremely favorable to retirees. So much so that unions and retirees file these kind of lawsuits in the Sixth Circuit even if none of the work was performed within Ohio, Tennessee, Kentucky or Michigan, the States that comprise the Sixth Circuit. These kind of lawsuits can be won, however. In this case, the Sixth Circuit held that the CBA unambiguously disclaimed the employer's obligation to provide retiree medical benefits beyond the term of the CBA. The CBA provision which governed the payment of retiree medical benefits concluded by saying "[t]his clause shall not be construed to convey any rights to those beyond the term of this agreement." I will caution that this level of contract drafting is not for the inexperienced. The costs of providing vested retiree medical benefits can be enormous and there are subtle wording issues that have cost employers significant amounts of money. I mention the Harps case simply because it is relatively rare when the employer wins one of these cases.

Why Consistent and Accurate Explanations for Firing are Crucial

A decision out of New York last week illustrates why employers should provide consistent and accurate explanations for their decisions.

Cornell University taught industrial and labor relations to working practitioners at various locations around New York State. One of the instructors was Margaret Leibowitz, who was hired on a contract basis. When the University refused to renew her contract, she sued for age and sex discrimination (and several other claims which I will ignore).

Ms. Leibowitz's job required her to travel from New York City to Ithaca regularly and the funds the University paid her for travel were a regular source of friction. The Dean described Leibowitz requests as "forceful," "demanding," and "pushy." (There was also some hint that male employees also regularly asked for increases in their travel expenses without having problems or being fired.) The Dean also asserted that Leibowitz had "burned bridges" and had "bad blood" with other University personnel, though there was some question about whether these personality conflicts were too old and whether similar conflicts with male employees had been overlooked.

So when it came down to whether to renew Leibowitz contract, the University decided it could not afford her. Ms. Leibowitz was not fired immediately but was told she would not be back after the end of the following school year.

Perhaps the University could have built a case for refusing to renew her contract because of the friction she seemed to generate, but instead, the University defended the non-renewal by saying that their budget couldn't afford her and her travel expense demans. Having made that decision, the University then refused to permit her to move into another position, going so far, the court said, as to fire a Director who made a "not valid" offer of employment to Ms. Leibowitz.

Several things sunk the University's decision. Overall, however, the University's fundamental problem seems to have been that it tried to shoe-horn what could and perhaps should have been a justifiable "termination" into a reduction-in-force mold.

First, while the University demonstrated that it non-renewed Leibowitz due to real "budgetary issues" the evidence also showed that the budget concerns significantly diminished during her final school year and that the University had funding to hire 12 new employees during this time. When I do talks about reductions in force, one of the first things I tell folks is to accurately and consistently explain the reason why a reduction is needed. (I also caution employers about hiring into positions that impacted employees could perform.) Of course, courts don't ordinarily question why a RIF is necessary but the court will examine evidence showing that the employer's actions were not really consistent with budgetary issues.

Second, unwise statements in an e-mail didn't help the University's case. Shortly before the University told Leibowitz it was not renewing her contract, she met with an associate dean about the travel expenses issue. After the meeting, the associate dean sent an e-mail which said "Other than my mention of budget problems, I did not offer any inklings of what is yet to come! Good luck on that one; will be a tough meeting, but will be a good investment." The problem was that the Dean maintained he was still evaluating whether the university could afford to retain Leibowitz. So, the e-mail, which was unwise to begin with, became concrete evidence of inconsistencies that the plaintiff could exploit in getting the appeals court to reverse summary judgment.

The final (major) problem was that while the University characterized its decision as a layoff, it then prevented Leibowitz from finding other work within the University system (at other satellite locations). Firing the director who made a "not valid" offer of a job to Leibowitz was pretty heavy handed, but it was not all that smart to justify refusing to transfer Leibowitz because of perceived personality conflicts that were arguably stale and did not seem to matter when male employees were transferred.

Of course, it is well settled that an employer has no duty to transfer an employee to another position in a reduction in force. But it is not smart for an employer to take action to prevent an impacted employee from obtaining another available position.

There was no real doubt that the University had real budget issues. Its problem was that it used those real budget issues to fire an employee it perceived as a problem rather than relying upon a methodical selection process that accurately evaluated which employees should be laid-off. In short, if an employee is truly a problem, deal with the problem. Don't seize upon "budget issues" as a shortcut to getting rid of a headache.

Quantifying the Cost of a Reasonable Accommodation

I am something of an oral argument junkie. I read Supreme Court oral argument transcripts and listen to oral arguments when the Oyez Project updates its archive. One court of appeals, the Seventh Circuit, makes it easy to listen to arguments as they release oral argument recordings to as a podcast (including to iTunes) the same day of the argument. Other federal courts of appeals (1st, 3rd, 5th, 9th and Federal Circuits) release online oral argument recordings, the Eighth Circuit also releases a podcast (including on iTunes). Unfortunately, the Sixth Circuit (and several others, including the Fourth Circuit and D.C. Circuit) keeps its oral argument recordings to itself, requiring counsel to request the recording "in writing" and even then only releasing the recording upon the payment of a $26 fee.

When I am not working, I'll listen to the "latest" in oral arguments. (I get a lot of eye-rolls and a few jaw drops when I admit I listen to these arguments.) Of course, the arguments are most interesting (or should that be, "less dull") when the judges on the panel ask informed questions. It gets downright entertaining when the judges ask questions the lawyers can't (or won't) answer. (Clients may be dismayed to know that this happens a lot more than they might think.)

One such case, Ekstrand v School District of Somerset, was argued before the Seventh Circuit in September; the decision was issued today. I remember the argument because the judges on the panel (judges who are not considered to be "liberal" judges by any means) cut straight to the most problematic aspect of the School District's case. But I am getting ahead of myself.

Ms. Ekstrand taught first grade and kindergarten (successfully for 5 years) until she was assigned a classroom with no windows. Ms. Ekstrand, it seems, has "seasonal affective disorder" (a form of depression) and natural light helps alleviate the symptoms; artificial light, in turn, causes her difficulty. (The court found she at least arguably met the definition of disability but I'll omit any discussion of the issue given the 2008 ADA Amendments). Before the 2005-06 school year, Ekstrand asked (repeatedly) for a "natural light" room. There were two available (one teacher was willing to move and the other vacant one was being held anticipating that the school might add another third grade class). The School District worked with Ekstrand a good bit (she complained of other aspects of the inside room) but did not move her to an outside room.

Ekstrand's symptoms (fatigue, anxiety, hypervigilance, tearfulness, racing thoughts, and trouble organizing tasks) increased after the school year began; she sought medical attention, and continued to press for an outside room. After going on medical leave, she presented the school (through its "workers' compensation representative") with a note from her physician which explained that it was important for individuals who had seasonal affective disorder to have natural light and that the current episode of depression was likely caused by being in the windowless room. Ms. Ekstrand eventually quit (the court rejected her assertion that she was constructively discharged).

At argument (the lower court had dismissed the case), the court wanted to know why the school didn't move Ms. Ekstrand to the classroom so she could get natural light. The judges pressed the School District to explain what it would have cost them to move her. The School District's counsel didn't (and wouldn't) say, preferring instead to focus on what the School District had done for her instead.

Now, in fairness to the School District's counsel, there is a good bit of stress put on how the employer and employee must engage in an "interactive process." In addition, Ms. Ekstrand had already left work on medical leave more than a month before she submitted the note from her physician. By that time, there wasn't a lot of "interactive process" to be had.

The court, however, viewed the School District as arguing that the "interactive process" means the "when we get around to it" process. The move, it turns out, would have cost nothing and the disruption would have been minimal (recall that at least one teacher was willing to trade classrooms). So why didn't, the court wanted to know, the School District agree to it?

The bottom line message this decision sends is that it is a mistake to equate the "interactive process" with a "reasonable accommodation." The interactive process isn't an end result; it is a means to an end. The interactive process would have allowed the school to have proposed other "less expensive" accommodation "so long as it is sufficient to meet the job-related needs of the individual being accommodated." (29 C.F.R Part 1630 Appendix to 1630.9)

The School District thought its initial efforts met this requirement but it turns out their "good faith" steps (as even the court described them) fell short of the ultimate mandate. They were not, after all, effective in alleviating Ekstrand's condition and, when she presented the medical explanation, the School District backed itself into the corner of trying to explain how some other effective accommodation would be "less expensive" than an accommodation that doesn't cost anything to begin with.

One other important point concerns the court's holding about when the accommodation should have been made. The court didn't hold that the School District should have immediately moved the teacher upon her initial (before the school year) request. Instead, because the accommodation she requested wasn't "so widely known as a necessary treatment for seasonal affective disorder that it should have been obvious to the school district," the court held the School District acted reasonably in not moving her until she submitted the physician's note. The EEOC's Appendix to § 1630.9 permits the employer to require documentation "when the need for an accommodation is not obvious" and the court held "an employer may not be obligated to provide a specifically requested modest accommodation unless the employer is made aware of its medical necessity to the employee." (Some common sense is required here, of course.)

But, once Ekstrand submitted the physician's note, "the school district was obligated to provide Ekstrand's specifically requested, medically necessary accommodation unless it 'would impose an undue hardship' on the school district." Similarly, the EEOC emphasizes that when a request is made the employer "should act promptly to provide the reasonable accommodation" (Q&A # 10) or at least engage in the interactive process "as quickly as possible." (Id.) The simpler the requested accommodation the quicker the employer will be required to provide it. (The EEOC lists several other factors at footnote 38 of its Enforcement Guidance).

Decisions like this one are going to be more common now that the 2008 ADA Amendments have effectively changed the focus of ADA litigation from arguing over whether an employee has a disability to whether the employer accommodated the disability. Smart employers will (they should have done so already) refresh their understanding of the ADA Accommodation requirements.

EEOC's Proposed Rule on the 2008 ADA Amendments

The Federal Register version of the EEOC's proposed rule on the ADA Amendments of 2008 is now available. As with any proposed rule, anyone is entitled to comment.

One of the easiest ways to comment is through www.regulations.gov (docket EEOC-2009-0012). The nice thing about regulations.gov is that it is not just a way to submit comments, users can also pull up other comments.

As of now, the final comment date is November 23, 2009 (this is sometimes but not always extended). Comments complaining about the changes Congress made will fall on deaf ears. The EEOC has no authority (or inclination) to overrule Congress' decision to broaden the scope of coverage under the ADA by legislatively overruling supreme court decisions.

On the other hand, showing how the proposed regulations will impact (adversely or positively) your business is always fair game. Pointing out ambiguities in the wording is also fair and important.

A later post will address some of the EEOC's proposals.

EEOC Issues Notice of Proposed Rules under 2008 ADA Amendments

Today, shortly before lunch, the EEOC announced that it would issue a "notice of proposed rulemaking" (NRPM) that will conform the existing ADA to the changes made by the ADA Amendments Act of 2008.

I previously posted on most of the ADA amendments and on the "regarded as" changes.

The NPRM should be formally issued next week. I'll post a link to the formal notice in the federal register then.

The EEOC posted a Q and A section on its website. The EEOC Announcement about the NPRM is also available. The Q and A illuminates some of the issues but doesn't say much more than what is in the statute. One key question was how would the EEOC define when an impairment substantially limits a major life activity. The Q and A simply (and unhelpfully) states that the

determination of whether an individual is experiencing a substantial limitation in performing a major life activity is a common-sense assessment based on comparing an individual’s ability to perform a specific major life activity (which could be a major bodily function) with that of most people in the general population.

Communicating without Referring to Age

I'm working on the paper I'll give for Kramer Rayson LLP's Labor and Employment Seminar on October 1, 2009. I came across a recent age discrimination decision from the federal court of appeals in St. Louis (the Eighth Circuit) that caused my jaw to drop.

The employee was the director of an assisted living center and, when she was terminated, she attributed it to her age. She alleged, the decision stated, that the CEO said in meetings that the assisted living facility should:

be a "youth oriented company." He stated that "there was no room for dead wood," that Silver Oak was a "young company" that "enjoy[s] hiring energetic people," and that "if you can't keep up, you're going to get left behind." He also remarked that Silver Oak was "missing the boat by not hiring more younger, vibrant people because they would last longer and they would have more energy and be willing to work more hours," and that employees "should start looking over applications better and try to consider hiring younger people."

There were more similar statements alleged but you get the picture.

The point the court made, which is important, was that some of these statements were "open to interpretation." Specifically, a "'desire to rid the company of "dead wood' could be a legitimate preference to terminate unproductive workers regardless of age" but when uttered by the same manager who made other, overtly ageist statements, the court had to assume even the "open to interpretation" statements referred to an employee's age.

Of course, the court of appeals was deciding whether the age claim should be dismissed prior to a jury trial so it had to resolve any factual disputes in the employee's favor. For all we know the CEO will flatly deny making the ageist statements but would admit to saying the "dead wood" comment. Still, the point is that employers should be careful to never combine references to age (including relative age) with otherwise legitimate assessments of an employee's performance or the needs of the company.

Glimpses - Taxing Settlements

It won't change anything for employers but today's (9/15/09) federal register includes a notice from the IRS that it is amending the regulations that govern taxation of damages received on account of personal physical injuries or physical sickness. It only took the IRS thirteen years.

Before 1996, there was an argument, weakened by United States v. Burke, 504 U.S. 229 (1992), that settlements (and jury awards) in employment discrimination claims were not taxable. Burke held that a back pay award under the pre-1991 version of Title VII of the 1964 Civil Rights Act was not excluded from income but rested its conclusion on the type of damages that could be awarded in a Title VII suit (at that time). The decision caused more confusion than it resolved leading to later Court decisions and, ultimately, led Congress to close the discrimination "loophole" in 1996. Now, to be excluded from gross income, the settlement must be for personal physical injuries or physical sickness, emphasizing the "new" (as of 1996) changes. That exclusion (from income) effectively includes most every amount paid to settle a discrimination or retaliation claim. The IRS is now getting around to eliminating language from its regulation that was obsolete in 1996.

Most employers probably don't care whether the amount paid to an employee is taxable income to the employee. Be assured that employees do. Virtually every time I settle a discrimination or retaliation claim, the other lawyer asks me whether the settlement amount is taxable. Most have caught on that it is but they just want to make sure they haven't missed any recent change on this front.

They have good reason to ask, I suppose. Every Congress since 2001, has had introduced a bill that would permit parts of a discrimination settlement to be excluded from income. H.R. 3035 is the current iteration. It would exclude emotional distress damages in discrimination but would still tax back pay and punitive damages. It would permit employees to average the back pay damages over the period covered by the lawsuit or settlement.

Short Post - Proving Pretext in Comparing Physical Restrictions

Friday, the Seventh Circuit issued an interesting decision involving a Title VII race-based challenge to an employer's decision to terminate an employee who returned to work with a 25 pound lifting restriction.

The employee didn't seriously challenge the decision under the Americans with Disabilities Act. Instead, he claimed the termination was wrong because other white employees with supposedly lesser restrictions were given jobs he felt he should have been awarded. The argument failed because the employee's evidence failed to provide enough details about the restrictions on the other two employees. That was enough to sink the lawsuit.

The decision, however, is a good reminder for employers that the ADA is not the only means employees have of challenging an employer's decision that it cannot accommodate an employee's restriction. Even here, the court emphasized, race discrimination is not established merely because the imposed restriction was not accurate.

Managing Sick Leave Abuse under the FMLA

I've been pondering the Sixth Circuit's decision in Allen v. Butler County ever since the court issued it in mid-August. The decision held that the employer did not violate the FMLA when it fired the employee because he failed to comply with a daily call-in requirement while he was on leave and had not provided the employer with a doctor's statement saying when the employee was expected to return to work.

I'm bothered by the decision. I'm not bothered by the holding. I'm bothered by the complexity of the court's reasoning in reaching the conclusion. Expecting employees who are on leave and who have not said when they will (or expect to) return to keep in daily contact with the employer doesn't seem to be onerous. The employee isn't being denied FMLA leave – just being told the conditions expected of him to make sure the leave is valid. Yet, the decision was unpublished, a 2 to 1 split, and the 2-judge majority seemed to say the employer could not fire the employee for having not called-in while on FMLA leave but it could fire him for not calling in while the employee was on sick-leave that ran concurrent with the FMLA leave.

I'll simplify the facts to eliminate some that are unimportant. The employer/county had a sick leave policy that ran concurrent with its FMLA leave. The sick leave policy (which was set forth in the county's union contract) required employees to contact the employer every day they were absent unless the employee was hospitalized or had provided a written doctor's statement saying when the employee was expected to return to work. The employee – who had a history of absences and was on a last chance agreement for other issues - missed work, failed to provide a doctor's note and failed to comply with the daily call-in requirement. He was conditionally certified for FMLA at the time he was fired.

The district court granted summary judgment for the employee reasoning that the county's daily call-in requirement while on sick-leave interfered with the employee's FMLA rights. The court submitted the case to a jury to determine damages. The jury, however, ruled for the county, saying the employee was not entitled to any damages because the employer would have fired the employee anyway, as the employee had failed to comply with a last chance agreement that had nothing to do with his leave. Both sides appealed.

The Sixth Circuit reversed the district court's ruling that the county's call-in policy violated the FMLA. The majority held the daily call-in requirement did not violate the FMLA because the "procedure 'merely sets forth obligations of employees who are on leave, regardless of whether the leave is pursuant to the FMLA.'" Quoting Callison v. City of Philadelphia, 430 F.3d 117, 120 (3d Cir. 2005). The court also cited with approval the holding Gilliam v. U.P.S., 233 F.3d 969 (7th Cir. 2000), that "nothing in the FMLA or the implementing regulations prevents an employer from enforcing a rule requiring employees on FMLA leave to keep the employer informed about the employee's plans."

One judge dissented. While the judge agreed with the majority's decision to reverse summary judgment for the employee, he felt the jury should have decided whether the firing was motivated by the taking of FMLA leave. To this judge, the FMLA and sick leave issues had to be kept separate. There is a question of motive, it seems the judge was saying, anytime an employer does anything more than refuse to grant paid sick leave benefits when the employee does not satisfy the requirements for sick leave.

What tripped up the court were several prior court decisions which had held that, as long as the reason is "unrelated to the employee's exercise of FMLA rights," the employer may refuse to reinstate (or take other adverse action against) an employee who has taken FMLA leave. One illustration of this rule (though by no means the easiest to understand) occurred in a decision I recounted last March, where the employer fired the employee because of misconduct that the employer learned about when the employee had taken FMLA leave. But when the employee fails to comply with reasonable (more on what that means in a moment) notice requirements, it only needlessly complicates things to insist that the reason for firing must be "unrelated" to the exercise of leave. That is splitting a fat hair too finely.

Of course, the FMLA prohibits employers "from discriminating against employees or prospective employees who have used FMLA leave." 29 C.F.R. § 825.220(c). This, the regulation explains, requires equivalent treatment of employees on FMLA leave and other types of leave: "if an employee on leave without pay would otherwise be entitled to full benefits (other than health benefits), the same benefits would be required to be provided to an employee on unpaid FMLA leave." Id. In this context, the regulation simply means that employers cannot impose more onerous notice conditions on employees for taking FMLA leave than it imposes on other types of leave. So it shouldn't matter that the call-in requirement is part of the sick leave requirement but not part of the FMLA leave requirement; all that should matter is that the conditions for leave do not discriminate against FMLA takers.

The confusion also seems to have been caused by the FMLA regulation that permits paid leave to run concurrent with unpaid leave. Simply, this regulation provided (and still provides in the 2009 FMLA amendments) that the employer may deny paid leave if the employee fails to comply with the "additional requirements" for obtaining paid leave but the employee is still entitled to unpaid FMLA leave. 29 C.F.R. § 825.207(a).

Now, as to the court's decision, it didn't ultimately make a difference that the call-in requirement was an "additional requirement." The county's denial of paid leave was valid and so too was firing the employee for violating the sick-leave requirements (as the court held). What troubles me is whether the call-in requirement was really an "additional requirement" in the first place. If not, then there is no reason to worry about the employer's motive.

Suppose, for the sake of argument, an employer has no "sick leave" policy (paid or unpaid); all it does is fully comply with FMLA requirements. Like Butler County, the employer requires employees to call-in every day until the employee provides a medical note that includes an expected return to work date. To carry the court's reasoning to its logical conclusion, the employer probably violated the FMLA because it would not be able to show its decision was "unrelated" the exercise of FMLA rights. There would be no violation, however, if only the employer had created a piece of paper (identical in substance to its FMLA policy) entitled "Sick Leave Policy." That borders on the ridiculous (to be polite).

What complicates matters is another Sixth Circuit decision, Cavin v. Honda, 346 F.3d 713 (6th Cir. 2003). Honda fired an employee because he did not comply with Honda's leave notification requirements when he missed work for medical reasons. The employee had called in to security (every day) but not to Honda's leave compliance department. The court of appeals invalidated Honda's notice requirement entirely, saying that "employers cannot deny FMLA relief for failure to comply with their internal notice requirements." Under the reasoning in Cavin, any notice requirement other than that allowed by the FMLA regulations (which at the time did not say what notice can be required) would seem to be an "additional requirement." Maybe Honda's notice requirements were too onerous under the circumstances – maybe Honda should have been more flexible and treated the employee's calls to security as adequate notice. That wasn't what the court addressed, however.

Fortunately, the 2009 FMLA regulations change the result in Cavin. Explaining the purpose of the rule change (to 29 C.F.R. § 825.303) the DOL recognized that "call-in procedures are a routine part of many workplaces and are critical to an employer's ability to manage its work force. Adherence to such policies is even more critical when the need for leave is unforeseen." 73 Fed.Reg. 68009 (Nov. 17, 2008). Thus, the "final rule in § 825.303(d) includes the provision that FMLA-protected leave may be delayed or denied when an employee does not comply with the employer's usual notice and procedural requirements and no unusual circumstances justify the failure to comply." This makes the rule on notice for unforeseen leave consistent with the requirements for foreseeable leave. See 29 C.F.R. § 825.302(d).

This doesn't mean that it is open season to create new and onerous requirements or to deny FMLA leave whenever there is a non-compliance. The DOL expects employer policies to be consistent with the principle that when the need for leave is unforeseen, the notice will be provided "as soon as practicable" under the circumstances.

Now that the FMLA regulations permit employers to expect compliance with their usual and customary notice requirements, employers can impose reasonable notice requirements as part of their FMLA without running afoul of the FMLA. Being reasonable and taking into account the individual circumstances ("no unusual circumstances") is the key. If you go overboard in policy or practice you are asking for it.

The same should be true for reasonable "call-in" requirements that take into account the individual circumstances (though this can't be guaranteed as it can take some persuading of even good judges to get them to discard past court holdings). It is one thing to expect to be told (if possible) an expected date the employee should be able to return. But treating every employee who needs FMLA (but has not yet provided medical certification) as if the employee must wear a GPS tracked ankle bracelet is probably not a good idea (exceptional circumstances aside).

Of course, remember that policies (and practices) must not impose more onerous prerequisites for taking FMLA leave than for non-FMLA leave. There are other complications (in the new FMLA regulations) I've not mentioned here so, as always, but especially where the FMLA is involved, consult with qualified counsel before betting the farm.

The Importance of Clear Documentation in Post-IRIF Re-hiring Decisions

Yesterday, the Sixth Circuit issued a decision in an involuntary reduction in force (IRIF), failure to rehire lawsuit involving the Wellmont Hospital in Kingsport. The hospital did a lot of things right when it eliminated the job of a 54-year-old physical therapy technician ("PTT") in 2003. Being something less than a heartless employer, the hospital tried to work with displaced employees to find them other jobs within the hospital. The hospital even offered to interview the PTT for a position at the same pay grade but the PTT didn't show for the interview or express any other interest in that position. The hospital later offered the PTT a different job (same pay grade) but she turned it down because (apparently) she would have to work three 12-hour shifts instead of five 8-hour shifts. Later, the PTT claimed to have expressed an interest in a job but someone else was hired for it. This last failure to rehire claim was the only claim that the court of appeals sent back for a trial. The IRIF aspect of the decision is unremarkable – the plaintiff lost because there was no evidence of age bias and she could not support her pretext argument with record evidence.

The reason the appeals court held a trial was necessary on the failure to rehire provides a good lesson for Tennessee employers.

Of course, "[w]here an employer reduces his workforce for economic reasons, it incurs no duty to transfer an employee to another position within the company." Ridenour v. Lawson Co., 791 F.2d 52, 57 (6th Cir. 1986). As this decision shows, the same rule applies to failure to rehire previously laidoff employees. Owens v. Wellmont Inc., ____ Fed.Appx. ___ (6th Cir. 2009).

Unfortunately, the Sixth Circuit's decision is yet another example of the well-settled rule that no good deed goes unpunished. The PTT never formally applied for the position. That did not justify dismissal, the court of appeals held, because the PTT specifically identified to the employer the position she wanted and, critically, the hospital "had offered [the PTT] positions in the past without a formal application."

Not requiring some formal application was one thing. What really sunk the employer's argument was that it did not unambiguously establish the minimum selection criteria for the position before announcing the vacancy. The hospital argued the PTT did not have the license it preferred for the job but the court held the evidence did not clearly establish whether this requirement was imposed before the position was filled. Also, the hospital did not have unambiguous records showing when the vacancy opened, when the vacancy ended, whether the position was filled, or the identity of the person filled it (and her qualifications).

The lesson the case presents is pretty clear. It is not that employers should be heartless and make no effort to find other jobs for impacted employees. It is not heartless, however, to require impacted employees (or even former employees) to submit some type of formal written application for other vacant positions. While using a signup lists is a better practice than requiring nothing, I also recommend against these as well because it is far too easy for impacted employees to walk around the room (or log onto a computer) and express an interest in every vacancy without regard to whether they have the minimal training and experience for the position. The process should not, of course, be too onerous but it should, at least, put some burden on impacted employees to demonstrate why their training and experience makes them minimally qualified for the position.

IRIF decisions are tough enough; employers don't need to complicate things by overlooking what happens after the IRIF has been implemented. So, Tennessee employers who are hiring or transferring impacted employees after conducting an IRIF should (at a minimum):

• be unambiguous in requiring a formal application for every vacant position
  
• make sure the minimum selection criteria for the position have been established, in writing, before the vacancy is announced
  
• set clear dates for when the job is "vacant"
  
• document when the job is filled and by whom
  
• send all unsuccessful applicants something (even if it is just an e-mail) that tells them they were not selected for the position.
  

The last point is important not just because it is a courteous thing to do but primarily because it removes any doubt about when the statute of limitations begins to run. It is not necessarily required, see Cline v. BWXT Y-12, LLC, 521 F.3d 507, 512 (6th Cir. 2008), as the limitations period starts to run "as soon as a potential plaintiff either is aware, or should be aware after a sufficient degree of diligence, of the existence and source of an actual injury," but giving a clear notice to unsuccessful applicants can make it much easier to establish that the lawsuit (or charge) was untimely.

FMLA - Court Holds Requiring Employee to Return a Doctor's Note Doesn't Violate FMLA

Wow, a month without a post. Sorry about that. Its a combination of being busy and something of a summer lull in employment law developments.

Today, however, the Sixth Circuit made a point in an FMLA decision that bears comment.

The employee told his employer he wanted to take a personal day and when that request was denied, demanded to be permitted a day of FMLA leave. The employer told the employee (according to the court) that "he would incur an attendance 'occurrence' if he did not come to work." The employer also explained, however, that the employee "would receive a violation only if he did not produce a doctor’s note explaining his absence." As the court explained it, "that statement’s logical implication is that Anderson would not incur a violation if he did produce a doctor’s note."

The employee, however, chose to work the day he wanted off because he thought he had accumulated too many unexcused absences and would be fired at the next one. He brought in a physician's note after the fact.

The employer's demand for medical proof was perfectly fine, even if not phrased in the best matter, because the "request for a doctor’s note was within an employer’s right “to determine whether [the] absence [was] potentially FMLA-qualifying.” 29 C.F.R. § 825.303(b). The employee, who had diverticulitis over two years before the incident, could have submitted FMLA certification but didn't.

(Shortly afterward, the employer fired the employee for an altercation. The employer prevailed on that claim as well.)

The point is rather simple. There's no question that an employer has the right to require some type of medical justification for any FMLA absence. The issue here was whether the employer did something improper by implying that the absence would be unexcused if the employee failed to submit a medical justification.

But explaining what might happen if certification is not provided isn't just a good practice, one that saved this employer from an FMLA interference claim, it is mandated by the FMLA regulations. Under 29 C.F.R. 825.305(d), when the employer requests certification from the employee, "the employer must also advise an employee of the anticipated consequences of an employee’s failure to provide adequate certification."

Medical justification is, of course, different from requiring adequate notice of the need for FMLA leave. The employee here had given ample notice about the need for leave, even accusing the employer of violating the FMLA by refusing his leave request. The employer stuck to its guns, rightly so, and insisted on receiving adequate medical justification.