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Termination while employee on FMLA?

November 2, 2016

By Kristen Cifolelli, courtesy of SBAM Approved Partner ASE

One of the biggest headaches for HR professionals is to discover performance issues when an employee is out on FMLA leave. As we all know, the FMLA makes it unlawful for employers to interfere with, restrain, or deny the exercise of or the attempt to exercise any right provided by the FMLA.  Employers may not discriminate against employees for using FMLA or use it as a negative factor in employment decisions such as hiring, firing, promotions, etc.  Therefore, when performance issues are discovered when an employee is out on leave, most employers are hesitant to take action for fear that it will look like the employee’s use of FMLA was the motivating reason for the discipline or termination.  But in certain cases, it is possible.

Despite employee rights provided by FMLA, there are limitations to its protections and rights that are afforded for employers.  An employee on FMLA leave is not protected from actions that would have affected him or her if the employee had been continuously employed during the FMLA leave period (29 C.F.R. 825.216).  This means that employers can exercise their right to discipline or terminate an employee, regardless of their FMLA status, as long as it is for legitimate, non-discriminatory reasons unrelated to the FMLA leave.  This includes discipline and termination for poor performance, fraud or other prohibited conduct that may come to the employer’s attention during the leave.  

Kris Olson was hired by Penske Logistics, LLC as a dispatcher in 2002.  During his tenure he performed well and was promoted three times including his last one in 2013 to Operations Manager of Penske’s Denver warehouse.  He was responsible for supervising over 30 employees and his job duties included hiring, financial records, moving and tracking inventory, conducting regular inventory audits and other managerial tasks.

When Olson first moved into his new role, he was receiving passing reviews of “2’s” and “3’s” on a 5 point scale, but he was informed that he needed additional training to help him improve.  In 2014, he received a written warning for failing to terminate one of his subordinates who violated safety reviews.  Olson was notified that future failures to follow procedures would result in additional discipline, up to and including termination.  In June 2014, approximately five months following his warning, Olson’s supervisor Rick Elliott placed Olson on a 60-day “action plan” that included several deliverables that Olson had to meet.  Failure to meet the “action plan” performance requirements would result in Olson’s termination.  From this point, it appeared that Olson was working to get his performance on track and was following the conditions of the “action plan.”

On July 9, 2014, Olson requested FMLA leave which was approved by his employer, and his last day worked was Friday, July 18, 2014.  On Olson’s last day before his leave began, he received a monthly grade of “D” for warehouse performance from his primary client Whirlpool.  Immediately after Olson went out on leave, another Penske warehouse supervisor, Niki Brurs, was asked to investigate why Whirlpool provided such a low review for the Denver location.

During her investigation, she discovered that there were at least 152 discrepancies between the warehouse’s inventory records and the actual inventory.  In addition, she discovered the warehouse was 567 audits behind schedule and had only performed 37 random audits over the past few months. Prior to Olson’s leave, his supervisor had inquired why Whirlpool hadn’t been billed for extra work that had been performed.  Olson responded that there was no extra work to be billed.  During Olson’s leave, Elliott discovered several instances of extra work that had been completed showing Olson had been dishonest.

In addition, it was found that Olson had been hiding inventory losses for four years by creating records for an imaginary storage location called a “ghost stow.”  He also instructed his subordinates to not report any missing inventory to Whirlpool but instead to report the missing units as damages.  The investigation determined that Olson failed to train his employees, failed to enforce attendance policies, failed to return damaged items along with other performance issues.

As a result of these performance issues uncovered in the investigation, Elliott had reached the conclusion that Olson needed to be terminated.  Penske sent Olson a termination letter despite the fact he was out on FMLA leave.  He was informed that he was terminated due to severe performance issues and policy violations though he was not provided any detail regarding those performance issues nor was he afforded a chance to defend himself.  

Olson subsequently sued Penske for unlawfully interfering with his FMLA rights.  His argument was that because he had been terminated while on leave, he was never given the opportunity to defend himself which might have saved his job. He argued that this established the required casual connection between his use of leave and his termination.  Ultimately the Tenth Circuit Courts of Appeals agreed with the Colorado district court in granting summary judgment to Penske citing there was no evidence, only speculation, to support a connection between Olson’s use of FMLA leave and his later termination.  

The moral of the story for HR is what ultimately helped Penske to be successfully in defending this claim was their solid documentation of Olson’s poor performance.  Despite an employer’s right to take action for performance issues, the optics of such action while an employee is on leave will not look favorable and resulting litigation may be likely.  Even in Penske’s case with overwhelming evidence of performance issues and fraud, they had to defend themselves in both district court and later on appeal.  Should you find yourself in a similar situation, be sure you have proper documentation to defend your actions if necessary.

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