Defending the FMLA Restoration Case – Is Your Legitimate Business Reason Air-tight?

A recent decision from the Court of Appeals in the Sixth Circuit underscores the point that employers who scheme to avoid their FMLA obligations can face serious consequences. A document showing that the employer was looking for ways to terminate the plaintiff while she was on FMLA leave made the Court in Grace v. USCAR, et al., __ F.3d __ (6^th Cir. March 26, 2008) suspect that the employer eliminated the plaintiff's job not for economic reasons, but rather to unlawfully interfere with the plaintiff's right to be restored to her job following FMLA leave.

The plaintiff in Grace spent eight years working at USCAR as an employee of the employment agency Bartech. During this time, the plaintiff developed a serious asthmatic condition and was hospitalized for nine days in November 2004. She informed Bartech that she planned to return to work in early January 2005. Just days before she was scheduled to return to work, Bartech informed the plaintiff that USCAR had decided to outsource the department in which she worked and had eliminated her position. The plaintiff sued both Bartech and USCAR for, among other things, interfering with her FMLA rights.

The plaintiff alleged that USCAR and Bartech, who were joint employers under the FMLA regulations, violated the FMLA by failing to allow her to return to her position or to an equivalent position. Employers are liable for such failure unless they can establish that the employee would not have continued to be employed had she not taken the FMLA leave. In other words, if the employer can show that it has a legitimate business reason for eliminating the position regardless of the employee's FMLA status, then the employee is not entitled to be restored to his or her job.

USCAR argued that it had a legitimate business reason for eliminating the plaintiff's position. It had outsourced the department in which the plaintiff had worked, and the tasks that the plaintiff had performed were now being performed by a part-time contractor. The Court nevertheless held that the plaintiff was entitled to take her FMLA claim to trial. First, the conversion of the full-time position into a part-time position might have been a ruse. Though the plaintiff's replacement (another Bartech employee) worked part-time, he made more money per hour than she had made in the full-time position. Second, other evidence raised doubt about USCAR's true motivation. The discovery process unearthed notes about the company's restructuring, which included this inquiry: "Can lawyers construct a way to make [the plaintiff's termination] doable?" According to the Court: "This statement alone is a smoking gun and raises a genuine issue of material fact, subject to a jury determination, as to whether the restructuring would have occurred had she not taken leave due to her disability."

The Grace case is a solemn reminder to employers to be cognizant of their obligation under the FMLA to restore employees to the same or equivalent position following FMLA leave. In addition, as a general rule, employers should avoid speculating about legal matters outside the context of an attorney-client communication. Involving counsel in employment decisions can help protect such communications from disclosure in the discovery process. More importantly, counsel can help guide the employer to ensure that its actions comply with the law – one way to avoid possible liability.

Germaine Winnick Willett is of counsel in the Firm's Labor and Employment Practice Group. She practices primarily in Ice Miller's employment litigation area focusing on employment discrimination and other employment-related litigation. Germaine also has experience litigating products liability and general tort cases.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.