HIGHLIGHTS FOR THE MONTH OF MAY 2009

By: Darryl G. McCallum

RECENT DEVELOPMENTS

Employer's Threat To Terminate Employee Upon Expiration Of FMLA Leave Can Be Evidence Of FMLA Interference And Retaliation.

A federal district ruled recently that a supervisor who asked an employee (who had previously taken FMLA leave) if she would be taking “another three months off” and followed up with a letter threatening termination if her leave extended beyond her FMLA entitlement was engaging in conduct that could constitute unlawful interference and retaliation under the FMLA.

Facts of the Case: In Almeida v. Athena Health Care Assocs., the plaintiff had taken FMLA leave in prior years without any objection. When she told her director that she needed additional time off for surgery, the director allegedly asked, “Does this mean you’re going to take another three months off?” The next day, the director sent the plaintiff a letter summarizing the fact that plaintiff had taken FMLA leave for various reasons in prior years, identified the most recent FMLA leave event and the balance of FMLA leave that remained available, and concluded that any leave taken beyond the remaining balance “will result in loss of benefits and termination of employment under the law.” Four days later, before even completing additional FMLA paperwork, she was terminated. She sued, alleging FMLA interference and retaliation.

The Court’s Ruling: On summary judgment, the employer argued that the employee was terminated for her “chronic negative attitude toward her job,” and not her attempt to exercise her FMLA rights. The District Court disagreed with the employer, however, and ruled that there was a factual dispute as to whether the plaintiff’s alleged attitude problem was the real reason for her termination. The Court noted that on her most recent employment evaluation, the employee had received a rating of meets or exceeds performance standards in all categories and her supervisor had written the comment, “Attitude much improved,” suggesting that the employer’s stated reason could be pretextual. This written praise, combined with the employee’s termination just a few days after stating her intent to take more FMLA leave, could permit a jury to conclude that the employee was terminated in retaliation for exercising her FMLA rights, rather than for an attitude problem.

Lessons Learned: The lessons of this case are threefold. First, supervisors who fail to document performance deficiencies adequately (typically to avoid a debate with a difficult employee) expose companies to liability. When misconduct leads to an adverse action (and a lawsuit), the mismatch between the written words and the supervisor’s rationale gives rise to a jury issue. Second, employers must scrupulously avoid making disparaging remarks about an employee’s use of FMLA leave, particularly when responding to a leave request. Such statements can, as this case demonstrates, be used to bolster interference and retaliation claims. Third and finally, although leave in excess of twelve weeks is not FMLA protected, threatening immediate termination once FMLA leave is exhausted is ill advised. It may suggest that the employer’s actions are rooted in impatience with the employee’s use of protected leave (which can create legal liability). It also could give rise to a claim under the Americans with Disabilities Act if the FMLA “serious health condition” is also an ADA “disability.” Reasonable amounts of additional leave may be required as an ADA accommodation.

TAKE NOTE

Pregnancy Discrimination. In a ruling that applies only to the pension benefits of women who became pregnant before the Pregnancy Discrimination Act (“PDA”) took effect in 1979, the U.S. Supreme Court held that a company was not liable under the PDA for paying pension benefits calculated using a pre-PDA accrual rule. This accrual rule, which was in effect before the PDA was passed, gave less credited service time to women who took maternity leave than to employees on disability leave for other reasons. In AT&T v. Hulteen, four female plaintiffs each took pregnancy leave between 1968 and 1976. At the time the plaintiffs took their leave, the company treated pregnancy-related absences as personal leave, thereby giving pay and retirement credit only for the first 30 days, whereas leave for non-pregnancy leave was credited more favorably. After the PDA took effect, the company amended its policies to treat maternity leave the same as other forms of paid disability leave. After the plaintiffs retired, they argued that their pensions were negatively impacted by the rule in violation of the PDA. The Supreme Court rejected this challenge and held that AT&T’s pension system did not violate the PDA because its benefit calculations were based on a bona fide seniority system that was legal at the time and corrected to conform to the PDA when that law became effective. The Court also addressed whether the Lilly Ledbetter Fair Pay Act, which was enacted in January 2009 while the case was pending, might salvage the plaintiffs’ claim. As we explained in a prior E-Update, under the Ledbetter Act, past discrimination that has a present impact on compensation is actionable regardless of how long ago the discriminatory decision was made. The pension checks plaintiffs received were, they argued, adversely impacted by the lesser credit given for pregnancy leave. The Court ruled that because the decisions were lawful at the time made, the plaintiffs were not affected by application of a discriminatory compensation decision or other practice.

Sarbanes-Oxley Act. In Tice v. Bristol-Myers Squibb Co., the U.S. Court of Appeals for the Third Circuit (covering New Jersey, Pennsylvania, Delaware, and the U.S. Virgin Islands) held that an employee, who unsuccessfully brought a claim against her employer under the Sarbanes-Oxley Act (“SOX”), could not later bring a Title VII claim based on the same set of facts. The plaintiff filed a SOX claim with the Occupational Safety and Health Administration (OSHA) (the agency charged with receiving and investigating such claims), alleging that she was terminated for reporting illegal corporate activity. The company defended, claiming she was terminated for falsifying sales reports and failing to properly account for her inventory of sample medications. The SOX claim was tried before an Administrative Law Judge (ALJ) and the plaintiff lost. The employee did not appeal the ALJ’s decision but, instead, filed a claim in federal court alleging that she was terminated because of her age and gender, in violation of Title VII and the ADEA. The district court ruled that the plaintiff could not bring a discrimination claim based on the same facts she pursued in her SOX claim because the factual issues upon which she sued had already been decided against her in the administrative proceeding and the employee had not appealed. In affirming the district court, the Third Circuit agreed that the ALJ’s findings were entitled to deference and could not be subject to litigation under another legal theory in court. Thus, at least in the Third Circuit, employers that have successfully defended their reasons for an adverse action in a fully litigated and final SOX proceeding are not subject to additional legal challenges over the same decision.

Mental Health Parity Act. The U.S. Departments of Labor, Treasury and Health and Human Services received public comments this month on proposed regulations defining obligations for group health plans under the Mental Health Parity Act. The Act will apply to plans beginning in the first plan coverage year that is one year after the date of the Act’s enactment. For most plans, this means the effective date will be January 1, 2010. As explained in our October 2008 E-Update, the Mental Health Parity Act applies to employers with more than fifty employees. Where such companies provide coverage for both physical and mental conditions, they must ensure that limits on the frequency of treatment, days of coverage, number of visits, and other similar items are not more restrictive for mental health conditions than they are for physical conditions. Employers and insurers should prepare now by reviewing their plans to ensure that deductibles, co-pays, cost sharing, out of pocket limits, treatment limits and similar items are the same for any behavioral disorders as for physical conditions. The Act does not require plans to provide coverage for mental health or substance abuse disorders but does mandate that these conditions be afforded treatment equivalent to other medical conditions if the benefits are provided.

Paid Sick Leave Bill Introduced in Congress. A bill has been introduced in the U.S. House of Representatives that would for the first time mandate that employees be provided with paid sick leave for certain uses. The Healthy Families Act, introduced on May 18, 2009 would require all employers with fifteen (15) or more employees to provide up to seven (7) paid sick days each year. Such paid sick leave could be used by employees for their own medical conditions (including obtaining preventive medical care), to care for ill children, parents, spouse or “any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.” In addition, paid sick time could be used for absences related to domestic violence, sexual assault or stalking, including time used for obtaining medical attention, seeking counseling or pursuing legal action. The Department of Labor would be charged with enforcing the Act. The bill provides employees with a private right of action to sue employers for liquidated damages, equitable relief, and reasonable attorneys’ fees and costs. Similar laws are in effect in San Francisco and the District of Columbia.

The "Protecting America's Workers Act" Reintroduced in Congress. The Protecting America’s Workers Act (PAWA), which has failed to pass in prior Congressional sessions, was reintroduced in April 2009. The bill would amend the Occupational Safety and Health Act of 1970 (OSH Act), to expand coverage to additional workers, to increase protections for whistleblowers, and to increase penalties for certain violations. PAWA would increase substantially penalties for civil and criminal violations of the OSH Act, and provides for inflation adjustments at least once every four years. With respect to criminal penalties, felony prosecution would be permissible in cases involving an employer’s repeated and willful violations which result in an employee fatality or serious bodily injury. Currently, a workplace fatality must occur before criminal charges may be filed. Maximum incarceration time would increase from six months to ten years for a first offense and from a maximum of one year to twenty years for repeat offenses. If a willful violation results in serious bodily injury, but not death, criminal penalties could include incarceration for up to five years for a first offense, and ten years for a repeat violation. PAWA would also: (1) protect from retaliation any employee who reports an injury, illness or unsafe condition to the employer, agent of the employer, safety and health committee, or employee safety and health representative; and (2) prohibit an employer from terminating or discriminating against an employee who refuses to perform the employee’s duties if the employee has a reasonable apprehension that performing the duties would result in serious injury, or serious impairment of health, to the employee or to other employees. Finally, PAWA would permit employees or their union representatives to contest OSHA’s failure to issue citations, the classification of a citation, and the proposed penalties, and to object to a withdrawal or modification of a citation or proposed penalty agreed to by OSHA and the involved employer. What makes this year’s attempt to pass PAWA different from the past failed attempts is, of course, the OSH Act-friendly Administration now in place and the Democratically controlled Congress. Indeed, President Obama and Vice President Biden previously were Senate co-sponsors of PAWA.

TOP TIP

Avoiding Claims Of Discrimination Against Workers With Caregiving Responsibilities

This month, the EEOC issued a “best practices” guidance to assist employers in reducing the chance of unlawful discrimination against workers with caregiving responsibilities. This is an area in which we expect the EEOC to actively pursue cases in the coming years. The recently issued EEOC guidance builds on its Enforcement Guidance (issued in 2007) that proposed that discrimination against individuals based on their caregiving responsibilities (caring for children, parents, and older family members) could give rise to discrimination claims. For example, treating men who assume these responsibilities less favorably than women would be one form of discrimination. Refusing to hire or promote women based on the assumption that their commitment to work will be diminished by care-giving responsibilities is another potential form of discrimination. Some of the EEOC’s “best practices” suggestions to avoid such claims are:

• Train managers and supervisors as to their EEO responsibilities and of their need to make employment decisions without any bias against employees with caregiving responsibilities. Employers should respond to and investigate promptly any complaint by an employee of discrimination based on caregiving responsibilities and take appropriate corrective action where necessary.
• Review policies and practices (especially those relating to hiring, promotion, pay, benefits, attendance and leave) to ensure that they are consistently applied and do not disadvantage workers with caregiving responsibilities.
• Consider adopting “family friendly” policies that permit employees to balance work and personal responsibilities. Such policies could include flextime programs, compressed work weeks, telecommuting or work-at-home options, part-time opportunities and job-sharing.

The EEOC Guidance also suggests that employers go beyond the requirements of the FMLA in providing reasonable personal or sick leave to employees engaging in caregiving responsibilities and for employers to consider reassigning duties that employees are unable to perform because of pregnancy or caregiving responsibilities.

While the EEOC’s Guidance does not constitute a legal mandate (and, indeed, many of its recommendations seem to exceed its legal mandate), the agency’s continued focus on this area signals that the EEOC will be closely scrutinizing allegations of discrimination based on caregiving responsibilities to determine whether there is any evidence of discrimination based on a protected characteristic. Employers need to be mindful that while caregiving may not be a protected characteristic in and of itself, it cuts across areas of sex, race and disability discrimination, and could lead to potential liability.

For greater clarification of any of these issues, you may contact any Shawe Rosenthal attorney.