Category Archives: Family/Medical Leave (FMLA)

October 19, 2016

Firing Employee On FMLA Leave Is Risky, But Not Always Unlawful

By Mark Wiletsky6a013486823d73970c01b8d1dc5d4a970c-120wi

Terminating an employee out on Family and Medical Leave Act (FMLA) leave is risky business. After all, the major tenet behind the FMLA is to permit employees to take job-protected time off when serious health or family concerns arise.

But does that mean that an employer may never terminate an employee out on leave? No, but you better have well-supported business reasons for your termination decision, and be prepared to defend your decision in court. A recent decision by Tenth Circuit Court of Appeals offers a useful look at how a Colorado employer did it right and avoided liability for an FMLA-interference lawsuit.

Twelve-Year Employee Struggles After Promotion

Hired in 2002, Kris Olson began working for Penske Logistics, LLC as a dispatcher. Over the next ten years, he was promoted three times, including his 2013 promotion to Operations Manager of Penske’s Denver warehouse. In that role, Olson supervised over 30 employees and was responsible for hiring, financial records, moving and tracking inventory, conducting regular inventory audits, and other managerial tasks.

In his first year as Operations Manager, Olson appeared to be performing adequately, but not exceptionally, scoring mostly “2” and “3” grades on a 5-point scale on his 2013 performance review. He was told he needed to continue to train in his position. In January 2014, however, Penske issued a written warning to Olson for failing to fire an employee who had violated safety rules. Olson was told that any future failure to follow procedures would result in more severe discipline, up to and including termination. In June (about five months later), Olson’s supervisor, Rick Elliott, put Olson on a 60-day “action plan” that instructed Olson to hire more workers, process inventory more quickly, and respond promptly to phone calls and emails. The “action plan” concluded with a warning that failure to meet all requirements would result in Olson’s immediate termination. Olson appeared to follow the instructions in his “action plan.”

On July 9, 2014, Olson requested FMLA leave, which was approved. Olson’s last day at the warehouse before going out on leave was Friday, July 18, 2014.

Employer Discovers Employee’s Misconduct

July 18th proved to be a pivotal day for Olson. On that day, Elliott received a monthly grade that primary client, Whirlpool, gave the warehouse for June – a “D.” With Olson out on leave, Elliott asked a supervisor at another Penske warehouse, Nicki Brurs, to come to Denver to investigate why Whirlpool rated the Denver warehouse so low. Brurs found that there were at least 152 discrepancies between the warehouse’s inventory records and its actual inventory. In addition, Brurs learned that the warehouse was 567 audits behind schedule, having done only 37 random audits over the preceding few months.

At that same time, Elliott also discovered that over the previous few months, Olson had not billed Whirlpool for extra work performed by the warehouse. Earlier, Elliott had asked Olson why he had not billed Whirlpool for extra work and Olson answered that there had not been any extra work for which to bill. On July 28, however, Elliott learned that there had been several instances of extra work for Whirlpool, meaning Olson had lied to him.

By August 1, Elliott had made up his mind that Olson had to go. He sent a report to human resources summarizing the problems he had discovered with Olson, including his dishonesty. He detailed that Olson had hidden inventory losses by creating records for an imaginary storage location – a “ghost stow” – that allowed Olson to hide inventory losses for four years. He also reported that Olson had instructed his staff not to tell Whirlpool when inventory was missing, but instead, to report the missing units as damages. Elliott told HR that he wanted to bring in a temporary replacement as Operations Manager while Olson was out on FMLA leave and fire Olson on his first day back to work. HR agreed that Olson should be fired.

Despite its decision, Penske continued its investigation into Olson’s misconduct. Over the next couple of weeks, Penske discovered additional inventory errors and “ghost stows,” resulting in more than $120,000 of errors in the warehouse’s records. It also concluded that Olson had failed to train his employees, failed to enforce attendance policies, failed to return damaged items, and other lesser performance issues. Read more >>

March 8, 2016

Paid Sick Leave Requirements For Federal Contractors: What To Expect

Wiletsky_MBy Mark Wiletsky

An estimated 437,000 workers who do not currently receive paid sick leave will become eligible for up to seven days of annual paid sick leave under recently released proposed regulations from the Department of Labor (DOL). Last fall, President Obama issued Executive Order 13706 to require federal contractors to provide paid sick leave to employees who work on covered contracts. If you are or expect to be a federal contractor, here is what you’ll need to know about the proposed rules.

Accrual of Paid Sick Time

For every 30 hours worked on, or in connection with, a covered contract, employees must accrue a minimum of one hour of paid sick leave, with a maximum cap of at least 56 hours. Contractors must calculate each employee’s accrual at the conclusion of each workweek. Alternatively, if a contractor does not want the trouble of calculating accruals, the proposed rules allow a contractor to provide an employee with at least 56 hours of paid sick leave at the beginning of each accrual year.

Contractors must provide written notification to covered employees about the amount of paid sick leave that the employee has accrued but not used. Notifications are required at the following times:

  • at least monthly
  • each time the employee requests to use paid sick leave
  • upon separation of employment
  • upon reinstatement of paid sick leave, and
  • whenever the employee asks for this information (but no more than once a week).

Notifications of sick leave benefits that accompany paychecks or are accessible online will generally satisfy this requirement.

Use of Paid Sick Leave

Under the proposed rules, an employee may use paid sick leave for an absence resulting from any of the following:

  • the employee’s medical condition, illness or injury (physical or mental)
  • for the employee to obtain diagnosis, care, or preventive care from a health care provider for the above conditions
  • caring for the employee’s child, parent, spouse, domestic partner, or another individual in a close relationship with the employee (by blood or affinity) who has a medical condition, illness or injury (physical or mental) or the need to obtain diagnosis, care, or preventive care for the same
  • domestic violence, sexual assault, or stalking, that results in a medical condition, illness or injury (physical or mental), or causes the need to obtain additional counseling, seek relocation or assistance from a victim services organization, take legal action, or assist an individual in engaging in any of these activities.

Definitions for these terms are included in the proposed regulations. Contractors must permit employees to use their accrued paid sick leave in increments of no greater than one hour.

Leave Requests and Medical Certifications

Employees must be permitted to make a verbal or written request to use paid sick leave. If leave is foreseeable, the request must be made at least seven calendar days in advance. When not foreseeable, the request must be made as soon as practicable. Any denial of leave must be provided in writing to the employee, with an explanation for the denial.

Contractors may only require a medical certification issued by a health care provider (or other documentation related to domestic violence) if the employee is absent for three or more consecutive full workdays.

Carryover and Reinstatement Of Unused Leave

Contractors are permitted to cap the amount of paid sick leave that employees may accrue to 56 hours each year. But, contractors must carry over unused, accrued paid sick leave from one year to the next, with a cap of at least 56 hours of accrued paid sick leave at any one time. In addition, under the proposed regulations, contractors must reinstate an employee’s unused, accrued paid sick leave if the employee is rehired by the same contractor or a successor contractor within 12 months after a job separation. Contractors will not be required to pay out any unused, accrued paid sick time at the termination of employment.

Interaction With FMLA and Existing Company PTO Policies

Paid sick leave under these regulations may run concurrently with Family and Medical Leave Act (FMLA) leave but it does not otherwise change a contractor’s obligations to comply with the FMLA. In other words, if an employee is eligible for time off under the FMLA, the contractor must meet FMLA requirements for notices and certifications regardless of whether the employee is eligible to use accrued paid sick leave.

For contractors with an existing paid time off (PTO) policy, the policy will meet the requirements of the proposed regulations if the paid time off policy satisfies all the obligations under the proposed rules. But, if it does not meet all of the requirements under the regulations, such as not permitting an employee to use paid time off for reasons related to domestic violence, sexual assault, or stalking, then the PTO policy would not suffice. In such cases, the contractor would have to either amend its PTO policy to make it compliant, or separately provide paid sick leave under the proposed regulations in addition to its PTO.

Covered Contracts and Employees

The Executive Order applies to new contracts and replacements for expiring contracts with the federal government that result from solicitations (or awards outside the solicitation process) issued on or after January 1, 2017. It essentially applies to four major categories of contracts:

  • procurement contracts for construction covered by the Davis-Bacon Act
  • service contracts covered by the McNamara-O-Hara Service Contract Act
  • concessions contracts, and
  • contracts in connection with federal property or lands and relating to offering services for federal employees, their dependents, or the general public.

Employees covered by the Executive Order, and therefore entitled to paid sick leave, include any person performing work on, or in connection with, a covered contract. There is a narrow exclusion for employees who perform work “in connection with” covered contracts but who spend less than 20 percent of their hours in a particular workweek in connection with such contract work.

Next Steps

Interested parties and the general public may submit comments on the proposed regulations on or before March 28, 2016. The DOL then will review the comments and decide whether to make any revisions before issuing a final rule sometime before the end of this year.

As you can see, many of the requirements of these proposed regulations differ from what we typically see in an employer’s sick leave or PTO policy. Consequently, employers who expect to seek or renew federal contracts after January 1, 2017 should review their existing sick leave and/or PTO policies to determine what changes may be required in order to comply with the proposed regulations.  The devil is in the details on this one so don’t wait until the last minute to get your policies and procedures in place.

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October 12, 2015

FMLA Leave Is Not The Time To Reevaluate Employee’s Position

Vilos_JBy Joanna Vilos 

An employee’s extended FMLA leave can often reveal interesting business realities. Perhaps the employee wasn’t performing as well as you previously thought. Or maybe the work can easily be done by others. Despite what you learn, reevaluating the employee’s position while he or she is out on leave is risky business. 

When Leave Opens Your Eyes 

A well-performing employee is severely injured in a car accident. You provide time off for his serious health condition under the Family and Medical Leave Act (FMLA). However, while he is out on leave, you decide that his department functions just fine (or better!) without him. Perhaps you realize that his position really isn’t needed at all. What can you do? May you eliminate his position? Does it matter that you had considered restructuring his position prior to his leave? The Tenth Circuit Court of Appeals (whose decisions apply to Wyoming, Colorado, Utah, New Mexico, Kansas and Oklahoma) addressed this scenario, offering insight into how to address these difficult business decisions. Janczak v. Tulsa Winch, Inc., No. 14-5071 (10th Cir. July 20, 2015). 

FMLA Job Restoration 

The FMLA provides unpaid, job-protected leave for certain qualifying reasons, including a serious health condition that makes the employee unable to perform the functions of his or her position. When an employee returns from FMLA leave, he or she must be returned to the same job or an equivalent job that is virtually identical to the original job in terms of pay, benefits, shift, location and other conditions. 

Employers can find themselves liable for violating the FMLA if they interfere with an employee’s exercise of his or her FMLA rights or otherwise deny the rights, benefits or protections provided under the FMLA. Employers also risk an FMLA claim if they retaliate against an employee who has taken FMLA leave. 

Interference Claims 

Does the FMLA prevent you from taking any adverse employment actions that affect an employee who went out on FMLA leave? What if the employee was earmarked for a demotion or termination prior to going out on leave? Or perhaps your company loses a big contract while the employee is out on leave, necessitating a reduction in force. Will you be liable then? 

To establish an FMLA interference claim, the employee must show three things: (1) the employee was entitled to FMLA leave; (2) that the employer took some adverse action that interfered with the employee’s right to take FMLA leave; and (3) the employer’s action was related to the exercise or attempted exercise of the employee’s FMLA rights. An employer defending against an interference claim has the burden of proving that it would have taken the adverse employment action regardless of the employee’s FMLA leave. 

Case In Point 

In the recent Tenth Circuit case, Paul Janczak had served as Tulsa Winch’s General Manager of its Canadian operation for two years before he needed to use FMLA leave to recover from a vehicle accident. At the start of his leave, company leadership did not tell Janczak that his position might be eliminated and in fact, had recently indicated that it was looking forward to seeing him demonstrate his leadership skills after the departure of Janczak’s boss. Tulsa Winch’s president wrote an email stating that he planned to “further evaluate Paul’s ability to provide the necessary leadership” after his return from FMLA leave. He also announced that two new hires would report directly to the General Manager in Canada (suggesting the GM position would continue to exist) and that Janczak would likely return to work and be able to travel that September. 

The company claimed, however, that it had already begun discussing whether there was a need for a General Manager in Canada prior to Janczak’s leave and that it came to the decision to eliminate the position and terminate his employment while he was still out on leave. It pointed to its development of a matrix reporting structure that allowed most of the Canadian department heads to report directly to the executives at corporate headquarters in Oklahoma. Though an email from the company’s director of human resources identified “supporting Paul (upon his return)” as an agenda item, other meeting notes included entries such as “Rowland as next GM,” “Spurgeon vs Janczak,” “phase PZ out,” and “what is plan for Paul – eliminate position.” 

Tulsa Winch terminated Janczak immediately upon his return from FMLA leave. It also fired its longtime Canadian Controller, due to the matrix restructuring. 

Janczak filed both interference and retaliation claims against Tulsa Winch. The company argued that it would have fired Janczak even if he had not taken FMLA leave so Janczak’s claims must fail. The district court in Oklahoma agreed, granting summary judgment to Tulsa Winch. Janczak appealed to the Tenth Circuit Court of Appeals which reversed on his interference claim, finding that a reasonable jury could find that Tulsa Winch interfered with Janczak’s FMLA leave. 

Contemplating Adverse Action Not Enough  

The Tenth Circuit made it clear that simply considering the elimination of Janczak’s GM position before he took FMLA leave was not sufficient to permit summary judgment. Instead, to avoid a trial on the interference claim, the employer needs to show that termination would certainly have occurred regardless of the leave. 

Circumstances where employers have successfully established that the company would have definitively taken the adverse employment action regardless of the employee’s request for FMLA leave include: 

  • employee failed to comply with a direct and legitimate order from her supervisors;
  • overwhelming evidence of performance issues that predated the leave;
  • employee who had repeatedly been tardy and did not comply with absence policy on the date she was terminated;
  • employee who, prior to leave, had been tardy, absent from her desk and failed to timely pay invoices or update a list of services received from vendors; and
  • the decision to institute a reduction in force had already been made before the employee took leave. 

Proving that these decisions were unrelated to the employee’s leave requires that the evidence be well documented and undisputed. As stated in the court’s opinion, the question is not whether a reasonable jury could find in favor of the employer, “but rather whether the evidence is so one-sided that submission to a jury is not required.” That means that if the evidence supporting the employer’s claim that the employee was fired for reasons unrelated to the leave is disputed or shows that the company was merely uncertain about the employee’s future, the interference claim will not be dismissed at the summary judgment stage and instead, will go to a jury to decide. 

In Janczak’s case, the Tenth Circuit found that there was conflicting evidence as to when the decision was made to terminate him, concluding that a jury could determine that the decision to eliminate Janczak’s position was related to his medical condition and his exercise of FMLA leave. The court stated: 

Though taking advantage of Janczak’s absence to reevaluate the value of his contributions to the company might appear a prudent economic decision in the abstract, protecting ill or caregiving employees from the effects of such a decision is precisely the purpose of the FMLA. 

Retaliation Claim Failed Where Employee Not Restored to Job 

The Tenth Circuit rejected Janczak’s retaliation claim, finding that he failed to show that Tulsa Winch’s reasons for terminating him (i.e., the general reorganization of managerial responsibilities) was pretext for retaliation based on his taking FMLA leave. The court noted that in a typical FMLA retaliation claim, the employee has been restored to his or her prior employment status and then suffers an adverse employment action based on incidents after the return to work. Here, Janczak was never restored to his prior employment status, leaving the court to conclude that it fits into an interference theory rather than a retaliation theory. 

To further explain the difference between FMLA interference and retaliation claims, the court said this: 

Resolving the interference claim involves a fundamentally causal inquiry: whether Janczak’s taking FMLA leave was causally connected to his termination. In contrast, resolving the retaliation claim involves an inquiry into motivation: whether [Tulsa Winch’s] proffered rationale for terminating Janczak was mere pretext for its true, retaliatory motivation. Though causation and motivation frequently align, the difference between interference and retaliation claims illustrates that such alignment is not always necessary. 

Practical Lessons Learned 

Deciding to impose an adverse employment action on an employee who has exercised their FMLA rights is fraught with potential risk of liability. But you should not feel hamstrung to keep an employee who would have been terminated had he or she not taken FMLA leave. 

Before taking such action, talk to the decision-makers to ensure everyone is on the same page about the reasons for the termination. Ask the tough questions, including whether you would indeed make the same decision if the employee had not gone out on leave. Make sure you are treating this employee the same as other similarly situated employees who have not taken FMLA leave. And review your documentation to make sure it supports your decision. Remember, merely contemplating an action, such as eliminating the employee’s position or terminating for poor performance, prior to the employee’s leave will not be sufficient to establish that you did not interfere with the employee’s FMLA rights, sending the claim to a jury.

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June 22, 2015

New FMLA Certification Forms Include GINA Safe Harbor Notice

Biggs_JBy Jude Biggs 

The U.S. Department of Labor (DOL) unceremoniously published new FMLA forms with an expiration date of May 2018. The only significant revision is the addition of a notice to employees and health care providers on the medical certification forms informing them not to reveal genetic information in violation of the Genetic Information Nondiscrimination Act (GINA). 

Genetic Information Off-Limits to Employers 

GINA, which went into effect in late 2009, applies to employers with 15 or more employees. It not only makes it unlawful for employers to discriminate or retaliate against employees and applicants because of their genetic information, but it also prohibits employers from requesting, requiring, purchasing or disclosing genetic information. 

Genetic information is defined to include information about an individual’s genetic tests and the genetic tests of an individual’s family members, genetic services and an individual’s family medical history. Family medical history is included because it often reveals whether someone has an increased risk of getting a disease, disorder or condition in the future. 

FMLA and GINA Intersect 

Under the FMLA, employers may require that an employee requesting leave for his or her own serious health condition or to care for a family member with a serious health condition provide a medical certification form completed by a health care provider. Through the medical certification form, health care providers provide medical facts about the condition, such as the expected duration, the nature of treatments, and whether the employee is unable to perform his or her job functions as well as information about the amount of leave needed. In some circumstances, responses by health care providers may reveal genetic information that is protected by GINA. 

Because of this intersection of the FMLA and GINA, the regulations implementing GINA offer suggested language that covered employers may use to specify that no genetic information should be provided when medical information is offered to support a request for FMLA leave. By utilizing this safe harbor language and advising the employee and the health care provider not to provide genetic information when completing the FMLA medical certification form, the inadvertent receipt of genetic information by the employer will not be deemed a violation of GINA. 

In the past, the DOL’s model FMLA certification forms lacked this GINA safe harbor language. Consequently, employers had to offer it separately or utilize their own FMLA forms in order to take advantage of GINA’s safe harbor provision. Now, the DOL has included the following language in its model FMLA certification forms: 

Do not provide information about genetic tests, as defined in 29 C.F.R. § 1635.3(f), or genetic services, as defined in 29 C.F.R. § 1635.3(e). 

The certification form for an employee’s own serious health condition includes a statement that no information about the manifestation of disease or disorder in the employee’s family members, 29 C.F.R. § 1635.3(b), should be provided. 

Use New FMLA Forms Or Update Your Own Forms 

The new FMLA model forms, with fillable form fields, are linked here: 

Take steps now to update your FMLA practices to use the new DOL forms, or if you use your own FMLA forms, update them to reflect the added recommended language.

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May 21, 2015

FMLA Self-Audit: Are You in Compliance?

Ritchie_JBy Jason Ritchie 

Despite being enacted over 20 years ago, the federal Family and Medical Leave Act (FMLA) continues to trip up even the most experienced human resource professionals. If you have 50 or more employees, use this checklist to review your FMLA practices and ensure you are in compliance. 

Review Your FMLA Policy 

The FMLA has been updated numerous times over the past few years. Most recently, the Department of Labor (DOL) amended the definition of “spouse” to recognize same sex and common law spouses based on the place of celebration, rather than on the place of residence. (Note: at the time of this writing, enforcement of this amendment is on hold in the states of Texas, Arkansas, Louisiana and Nebraska due to a federal court injunction.) In 2013, the DOL issued new regulations that affected qualifying exigency leave for military-related activities, caregiver leave for service members, minimum increments of leave and other provisions. 

If you have not conducted an in-depth review of your FMLA policy in the last two years, you may find that your policy is out-of-date. Check that your policy addresses the following: 

  • Eligibility requirements
  • Spouse definition
  • Designation of year for counting purposes
  • Leave requests, certifications and designation requirements
  • Benefits during leave
  • Pay substitutions during leave
  • Intermittent leave
  • Fitness for duty upon return from leave
  • Moonlighting policies/rules 

FMLA Practices, Procedures and Recordkeeping 

A thorough FMLA policy is great but it does you no good if you fail to implement proper procedures and recordkeeping. Review your practices for the following areas that tend to trip up leave administrators: 

  • How do you handle requests for leave and certifications?
  • Are you properly tracking leave – especially intermittent leave – and communicating with employees regarding leave remaining?
  • Are you designating leave as FMLA leave in a timely manner?
  • Are fitness for duty certifications being received and kept?
  • Are you keeping FMLA records for at least 3 years, including:
    • Dates of FMLA leave and requests
    • Hours of FMLA leave
    • Copies of all notices to and from employee
    • Employer policies and benefit information (e.g., employee benefit election)
    • Records of disputes
    • Denials of leave
    • Medical documentation, certifications and fitness for duty
    • Where are you keeping these records? 

Forms and Posters 

The DOL provides sample certification and designation forms for use by employers. The latest FMLA forms have an expiration date of May 31, 2018. The FMLA poster provided by the DOL has a revision date of February 2013. Make certain that your forms are the latest available and that you have complied with your posting requirements by checking: 

  • Are you using the most updated poster from 2013?
  • Is the poster prominently located in a conspicuous place in all locations?
  • Is the poster available in all languages spoken by your employees?
  • Are you using up-to-date forms with a May 31, 2018 expiration date? 

FMLA Training 

Once again, the best efforts by human resources will not save your organization from liability if your front line supervisors and managers are mucking things up. Be sure to provide in-depth FMLA training to all new managers and supervisors and update everyone on the latest changes. In particular, check on the following: 

  • Are your managers and supervisors trained on employee rights and your company’s responsibilities under the FMLA?
  • Can they explain your FMLA policy?
  • Do they understand the FMLA leave procedures?
  • Do they understand FMLA’s confidentiality rules?
  • Do they understand proper call-in procedures for intermittent leave?
  • Are they trained not to retaliate against employees who have requested or used FMLA leave? 

Conduct this self-audit to check for any FMLA compliance issues and to make sure your organization is up-to-date with the latest FMLA developments. If you have questions or concerns, be sure to check with your employment counsel.

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March 27, 2015

FMLA Same-Sex Spouse Rule On Hold

Vilos_JBy Joanna Vilos 

A federal judge in Texas has temporarily put on hold the new rule expanding the definition of “spouse” under the Family and Medical Leave Act (FMLA). Set to go into effect today, the final rule changes recognition of same-sex and common law marriages from the state of residence to the state of celebration. 

States Argue New FMLA “Spouse” Rule Violates Full Faith and Credit Statute 

Four states that do not recognize same-sex marriages challenged the Department of Labor’s revised definition of “spouse” which would require employers in all states to extend FMLA leave for care of same-sex or common law spouses as long as the marriage was legal in the state in which it took place. Texas, Louisiana, Arkansas and Nebraska filed suit in federal court seeking to block this revised rule, arguing that compliance with the federal rule results in violation of the state’s prohibition on recognition of same-sex marriages. 

The states claim that imposing the new FMLA rule violates the Full Faith and Credit Statute which provides that no state “shall be required to give effect to any public act, record, or judicial proceeding of any other State . . . respecting a relationship between persons of the same sex that is treated as a marriage under the laws of such other State.” This provision, section two of the federal Defense of Marriage Act (DOMA), was not at issue in the 2014 Supreme Court case of United States v. Windsor, which struck down the definition of marriage as between one man and one woman. Because that section still remains in effect, these four states assert that it prevents enforcement of the new FMLA rule requiring them to recognize same-sex marriages legally performed and recognized in other states. 

FMLA Final Rule Temporarily Blocked 

Finding that the states had shown a substantial likelihood that they would prevail in their arguments, Texas federal judge Reed O’Connor ordered that the Department of Labor stay application of its FMLA final rule pending a full determination of the matter. The judge wrote that he will hold a hearing on the issue on April 13th, if the parties so request. He also explained that the Supreme Court may ultimately resolve the issue when it decides the constitutionality of state law bans on same-sex marriages in the Obergefell v. Hodges case, which will be decided before July. 

Next Steps 

A great deal of uncertainty surrounds this final rule with additional court rulings expected in the coming months. In the meantime, if you are covered by the FMLA, prepare for the changes proposed in the expanded definition of “spouse” so that if the stay on the rule’s application is lifted, you will be prepared to comply.Stay tuned for further developments.

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March 23, 2015

FMLA and FLSA Lawsuits Are Increasing

Wiletsky_MBy Mark Wiletsky 

The U.S. federal courts saw a whopping 26.3 percent increase in the number of Family and Medical Leave Act (FMLA) lawsuits filed last year over the prior fiscal year, according to statistics recently released by the Administrative Office of the U.S. Courts. Wage and hour lawsuits alleging a violation of the Fair Labor Standards Act (FLSA) were up a significant 8.8 percent. These filings are the highest they’ve been in the past 20 years of annual statistics reported by the courts. 

The increasing numbers of lawsuits brought under those two employment laws may reflect how difficult it is to understand and administer wage and hour and leave laws. The increase also may be due to the heightened awareness by workers of their rights and benefits under these laws. Regardless of the cause of the increase, the numbers suggest that it is worthwhile for employers to focus their compliance efforts in these two areas. 

Self-Audit Your Pay and Leave Practices 

Before you find yourself defending a lawsuit, take the time to review your payroll and FMLA policies and practices, including these often tricky issues: 

  • Classifying workers as exempt versus non-exempt from minimum wage and overtime pay requirements
  • Calculating each non-exempt employee’s regular rate of pay and overtime rate
  • Rounding time at the beginning and end of shifts
  • Automatic deductions for meal periods
  • Treating workers as independent contractors rather than employees
  • Tracking time worked remotely or “off-the-clock”
  • Providing FMLA notices within required time period
  • Calculating FMLA leave for workers with irregular schedules
  • Administering intermittent FMLA leave
  • Not penalizing employees who have taken FMLA leave 

If your self-audit reveals any irregularities, take steps to revise your policies and practices to bring them into compliance with the applicable laws. Don’t forget state and local laws that may impose additional requirements related to pay and leave administration. If in doubt, don’t hesitate to consult with your legal counsel so that you don’t become one of next year’s statistics.

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February 23, 2015

Exempt Employee Salary Deductions for a Reduced Schedule

Brad CaveBy Brad Cave

Classifying an employee as exempt under the Fair Labor Standards Act (FLSA) comes with a trade-off.  Most employers know that exempt employees are not entitled to overtime.  But, in exchange for that benefit, the FLSA limits employers’ ability to reduce the exempt employee’s salary, even when they are not coming to work.  However, exempt employees are not immune from needing time off of work to recover from a medical condition, to settle an aging parent into an assisting living arrangement or to handle a long-term behavioral issue with a child. If an employee seeks some time off each week to take care of such matters, you may agree to allow the employee to work a reduced work schedule for a period of time. But when payday rolls around, must you pay the employee his or her full weekly salary or can you deduct pay to reflect the reduced work schedule? Missing this answer can have significant ramifications for the employee’s exempt status.

FLSA Salary Basis

Under the Fair Labor Standards Act, exempt employees’ pay must meet the salary basis test, which means that the employee must receive a predetermined amount of salary for each workweek, without reductions because of variations in the quality or quantity of work during the week. Thus, deductions from salary for reduced working hours is generally not permitted under the salary basis test. Deducting pay for the missed time could result in the loss of the employee’s exempt status. However, two exceptions may apply to your employee.

FMLA Leave Can Result in Pay Deduction

If the employee’s reduced schedule constitutes unpaid leave under the Family and Medical Leave Act (FMLA), the FLSA regulations permit employers to “pay a proportionate part of the full salary for time actually worked” without risk to the exempt status. This means that if your employee is missing work for an FMLA-qualifying reason, you may deduct pay from their weekly salary to reflect the unpaid FMLA leave time.

PTO, Sick Leave or Other Paid Leaves

If the employee has accrued PTO, sick leave or another type of company-provided paid leave, you can require that the employee use such paid leave to cover the partial day absences, as long as the employee continues to receive the full amount of their weekly salary. And, once the employee uses up all of their accrued paid leave, you can make salary deductions for full-day, but not partial-day, absences.

Saved Wages Vs. Loss of Exempt Status

Deductions from an exempt employee’s salary should be made only after careful consideration of the potential consequences. After all, the salary you save now for missed time may seem trivial if you lose the exempt status of this and all similarly-situated employees and owe them overtime for the past two years.

September 23, 2014

Cheyenne Jury Awards $1,481,000+ On FMLA Retaliation Claim

Cave_BBy Brad Cave

The series of large verdicts for Wyoming employees seems to be marching forward.  The most recent example occurred recently when a Cheyenne jury awarded over $740,000 to a trona miner after deciding that he was fired because he took FMLA leave.  With liquidated damages available in an FMLA case, the Wyoming court entered judgment in an amount in excess of $1.48 million in favor of the employee. This case stands as yet another example about the importance of supervisor training and careful, well-documented and consistent decision making. 

Long Term Employee With A Pain in the Neck.  We first told you about this case in March of this year, when the Tenth Circuit Court of Appeals sent the case back to Wyoming for trial after reversing the trial court’s dismissal of the case.  (Safety Violation or Too Much Intermittent FMLA Leave?). Here is a short recap of the facts. 

Steven Smothers had been employed by Solvay Chemical for 18 years when his employment was terminated.  Smothers had experienced back problems since 1994 resulting in three surgeries on his neck and other medical procedures, and an extended course of medical treatment by specialists.  Over the years, Smothers took intermittent FMLA leave for his medical appointments and when he was unable to work due to the pain.  The amount of FMLA leave he took did not go unnoticed.  He was pressured by the production superintendent to change shifts to lessen the additional overtime cost caused by his absences, but such a change would have cost him about $7,000 per year in shift differential pay.   Solvay also gave Smothers a negative rating on his performance evaluation because of his absences, and he was told that he was rejected for a promotion because of the leave. 

Smothers’ Safety Rule Violation.    In August 2008, Smothers and his coworkers were performing an acid wash, which Solvay did every six months to clean residual trona out of the equipment.   When Smothers noticed that a damaged spool piece had caused a leak, he began to fix it without obtaining a line break permit which was required by Solvay safety rules.  Smothers and a co-worker, Mahaffey, argued about whether the permit was necessary, and after Smothers removed the spool piece without first getting the permit, Mahaffey immediately reported Smothers’ actions to a supervisor. 

Solvay terminated Smothers’ employment on August 28, 2008, based on a joint decision of six Solvay managers.   Five of the six decision makers testified that the argument between Smothers and Mahaffey weighed heavily in the group’s decision to fire Smothers. Although the trial court originally dismissed the case, the Tenth Circuit believed that Smothers had presented enough evidence to create doubt about the real reasons for Smothers’ termination.   So, the case was sent back to the trial court for trial. 

What’s the Real Reason for Smothers’ termination? Like all retaliation cases, the jury in this trial was asked to decide whether Smothers was fired for a safety rule violation, as the employer contended, or because his employer retaliated against him for using intermittent FMLA leave or discriminated against him because of his disability.   We don’t have a transcript of the trial, so we cannot tell you what evidence the jury heard or what facts persuaded the jury.  We do know that the Tenth Circuit reasoned that the jury could disbelieve Solvay’s reasons because: 

  • Supervisors criticized Smothers informally and in his performance evaluation for taking FMLA-protected leave, and rejected him for a promotion because of his time off;
  • Solvay did not give Smothers an opportunity to describe or explain his side of the argument with Mahaffey, even though the argument was a central reason for the decision to terminate Smothers’ employment;
  • Other Solvay employees who committed safety rule violations were not terminated. 

And the Jury Returns.The jury found in favor of Smothers on his FMLA claim, and awarded Smothers the amount of $740,535 for his lost wages and benefits from the date of his termination, August 27, 2008, through the date of trial.  But the potential damages don’t stop with the lost wages.  Under the FMLA, the successful employee may be entitled to an additional amount equivalent to the jury’s award for liquidated damages – in other words, a penalty against the employer for the violation.  As a result, the court has entered judgment against Solvay in the total amount of $1,481,070, twice the amount of the jury’s verdict, plus interest since the date of termination.  The trial court declined to award Smothers any future lost wages.  However, Smothers is entitled to an additional judgment for his reasonable attorneys’ fees and costs, which could add hundreds of thousands of dollars to the total. 

Bottom Line.  Regardless of the final number after adding prejudgment interest and attorneys’ fees, this is one of the largest judgments ever entered against a Wyoming employer.  We cannot speculate about what evidence led the jury to its verdict, but we can share some lessons, with the benefit of twenty-twenty hindsight, that will help any employer avoid this kind of result: 

  • Managers and supervisors must be trained and committed to the fact that taking FMLA leave is protected by federal law, and must not be the reason for formal criticism, denied opportunities, or informal complaining.  FMLA-protected leave cannot be held against an employee for any reason whatsoever.  Any comment or suggestion to the contrary can be used as evidence of pretext.
  • Investigations must be thorough and even-handed.  While we don’t know all the evidence in this case, the jury may have heard that Solvay spent much more time asking Mahaffey about the argument with Smothers, while never asking Smothers for his side of the argument.  Everybody should get the same opportunity to tell their side of the story.   An inadequate investigation can be used as evidence of pretext.
  • Employees must be treated consistently.  Smothers had evidence that other Solvay employees intentionally violated safety rules without being terminated.  Employers need to mete out comparable discipline for comparable violations, or have a compelling reason why an employee gets tougher punishment.
  • Employers must respect long years of service.  Of course, keeping a job for eighteen years does nothing to technically change the legal relationship or create any new rights or protection for the employee.  But, after that length of time with a good performance record, it becomes difficult for a jury to believe that termination is an appropriate response for one incident. 

Wyoming juries have delivered substantial employee verdicts over the last few years.  Employers should pay attention. 

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July 10, 2014

FMLA Regulations To Be Revised to Include Same-Sex Spouses Based on Place of Celebration

BRitchie_Jy Jason Ritchie 

When the U.S. Supreme Court struck down a portion of the Defense of Marriage Act last year in United States v. Windsor, federal agencies scrambled to revise regulations and guidelines so that “marriage” and “spouse” were no longer defined to exclude same-sex marriages.  Initially, the Department of Labor (DOL) issued a public guidance document to clarify that the definition of spouse under the Family and Medical Leave Act (FMLA) covers same-sex spouses residing in states that recognize same-sex marriages.  Now, almost a year later, the DOL is updating its regulations to change the definition of spouse so that it applies to any legal same-sex marriage, regardless of whether the employee resides in a state that recognizes such marriages. 

Place of Celebration to Govern 

Under the current FMLA regulations, the definition of spouse is based on the state where the employee resides, not on the state where the employee was married.  Under this so-called “state of residence” rule, an employee who was legally married in a state that recognizes same-sex marriages but who lives in a state that does not recognize such marriages is unable to use FMLA leave to care for his or her same-sex spouse.  Under this notice of proposed rulemaking, the DOL changes the FMLA definition of spouse from a “state of residence” rule to a “place of celebration” rule based on where the marriage was entered into.  By utilizing the “place of celebration” rule, all legally married couples, whether opposite or same-sex, or whether married in a ceremony or by virtue of common law, will be entitled to FMLA rights regardless of where they live. 

FMLA To Apply in Additional Circumstances 

The proposed change in the FMLA regulations defining a spouse expands the circumstances under which eligible employees will be entitled to FMLA leave, including: 

  • FMLA leave to care for a same-sex spouse with a serious health condition;
  • Qualifying exigency leave related to a same-sex spouse’s covered military service;
  • Military caregiver leave related to a same-sex spouse’s military injury or illness;
  • FMLA leave to care for a stepchild who is the child of the same-sex spouse, even when the employee does not stand in loco parentis; and
  • FMLA leave to care for a stepparent who is the parent of the same-sex spouse, even when the stepparent never stood in loco parentis to the employee. 

Despite this expansion in coverage, the practical effect of this change will likely be minimal for most employers.  Employers in states that recognize same-sex marriages are already obligated to provide FMLA leave in the above-mentioned situations.  Therefore, the only expansion of FMLA coverage is for those employers with employees who reside in states that do not recognize same-sex or common law marriages who soon will be entitled to use FMLA in these circumstances under the amended definition.  The proposed amendment would not extend FMLA rights to an employee’s partner in a civil union as civil unions for both opposite-sex and same-sex couples are not considered marriages under the FMLA. 

Employers May Request Documentation 

Employers may continue to request a marriage license or other reasonable documentation or statement of a family relationship as long as that requirement is applied in a non-discriminatory manner.  In other words, employers may ask for supporting marriage or familial documentation from employees in same-sex relationships if they also ask for such documentation from employees in opposite-sex relationships. 

Comment Period Closes August 11, 2014 

Interested parties may submit comments regarding the proposed changes to the DOL no later than August 11, 2014.  Additional information may be found on the DOL’s website.

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