An Ounce of Prevention: Preventing Liability under the FMLA
Even where an employer is not guilty of disability discrimination, the employer may be liable for substantial damages to a former employee if the employer has failed to comply with the detailed requirements of the federal Family Medical Leave Act (“FMLA”). That is the lesson America West Airlines learned in Bachelder v. Am. W. Airlines, Inc. (9th Cir. 2001) __ F.3d __, 2001 U.S.App.LEXIS 17691. In explaining the basis for its decision, the Ninth Circuit panel provided a road map by which a well-advised employer may avoid liability under the FMLA. The same road map, of course, alerts the plaintiff’s lawyer to the many traps this statute contains for the unwary. After setting forth the basic facts of the case and briefly describing the lawsuit, this article identifies these signposts as a series of rules for employers. The ounce of prevention taken well before the employer has to act can avoid heavy and complex problems thereafter.
- The Facts
Penny Bachelder was a passenger service supervisor at the Phoenix Sky Harbor Airport for America West Airlines. From 1994-1996, Bachelder was absent from work frequently for personal and family illness, including three months of maternity leave in 1995. In January of 1996, a superior formally warned Bachelder about her high rate of absenteeism. Bachelder was absent for three weeks the following month, submitting two doctor’s notes explaining her diagnosis and expected return date. After having perfect attendance in March, Bachelder called in sick one day in April to care for her ill baby. A few days later, she was fired. America West cited Bachelder’s 16 days of absence since her formal counseling as the primary reason she was being fired. The two other admittedly minor reasons given for her termination were her inadequate administration of the Employee-of-the-Month program and having a subpar on-time performance both personally and for the section she supervised.
- The Lawsuit
Bachelder sued the airline under Arizona and federal disability discrimination laws as well as the FMLA. The trial court granted summary judgment in favor of America West as to all of these claims. Bachelder appealed only the ruling dismissing her FMLA claim. The FMLA, enacted in 1993, requires employers with 50 or more employees generally to give their employees unpaid leave for up to twelve weeks every twelve months for the employee’s personal illness, family illness, or to care for new babies. (29 U.S.C. § 2612.) The U.S. Court of Appeals for the Ninth Circuit, which covers nine states including California, reversed the lower court. The Court of Appeals directed the district court to find America West liable for violating the FMLA by firing Bachelder for taking FMLA leave and sent the case back to the trial court for a determination of Bachelder’s damages alone. Embedded in the Court of Appeals’ opinion is a guide for employers to avoid similar liability.
- The Rules
- Your Company Should Define the “Leave Year” for Purposes of the FMLA If It Hasn’t Already
The FMLA gives eligible employees the right “to a total of 12 workweeks of leave during any 12-month period for” personal or family illness or child related care. (29 U.S.C. § 2612(a)(1).) The Department of Labor regulations implementing the FMLA, however, give employers four ways to define the “leave year” for purposes of the FMLA: (1) the calendar year; (2) any fixed 12-month “leave year” such as a fiscal year or one starting with the employee’s anniversary date; (3) the 12-month period measured forward from the date the employee’s first FMLA leave begins; (4) a “rolling” 12-month period measured backward from the date an employee uses any FMLA leave. (29 C.F.R. § 825.200(b).) These options give the employer flexibility to define its “leave year” in a way that best suits its particular operation. As the Bachelder court noted, however, if the employer has failed to select a uniform means of calculating a leave year in advance, the method “that provides the most beneficial outcome for the employee will be used.” (29 C.F.R. § 825.200(e).) “By preventing employers from calculating FMLA leave eligibility in their own favor on an ad hoc, employee-by-employee basis, the ‘leave year’ regulation encourages the employer to choose its calculating method prospectively.” (Bachelder, p. *26.) To illustrate how each of the four options would work, suppose employee X takes two weeks of FMLA leave from December 1 to December 15, 2001. X works for an employer that has a fiscal year that begins July 1. The four options would work in the following way given these facts:
- If the employer chose the first option, to define its leave year as a calendar year, employee X would have a right to up to 12 new weeks of FMLA leave on January 1, 2002.
- If the employer decided, according to the second option, to base its leave year on its own fiscal year, employee X would have the right to take up to 10 more weeks of FMLA leave through June 30, 2002. The employee would have the right to 12 new weeks of FMLA leave on July 1, 2001.
- If the employer decided to define the leave period from the date the employee firsttakes his or her FMLA leave, option number three, each employee would have a unique FMLA leave year. Employee X’s leave year would thereafter be from December 1 to November 30.
- If the employer chose the fourth option, the rolling period, employee X’s 12-week annual entitlement would expire on November 30, 2002 and would begin again the next time he chose to take FMLA leave.
- The key is that the method must be decided in advance and must be applied to all employees. If an employer decides to change the method, he must give his employees 60 days notice. (29 C.F.R. § 825.200(d)(1).) The 60-day rule also applies to the employer’s initial selection of a “leave year.” (29 C.F.R. § 825.200(e).) That brings us to rule number two which is:
- Give Your Employees Clear Written Notice of the Method Your Company Has Chosen of Calculating the Leave Year.
In Bachelder, the Ninth Circuit interpreted the FMLA regulations to require that “an initial selection of calculating the leave year must be an open - not a secret - one before it can be applied to an employee’s disadvantage.” (Id., p. *34.) Where an employer has an employee handbook or provides “written guidance to employees concerning employee benefits or leave rights” in another form, the employer must include in that written material information about the employer’s policies regarding the FMLA. (29 C.F.R. § 825.301(a)(1).) As Bachelder illustrates, the employer must state the method it has chosen to calculate its leave year unambiguously. It is not enough for the employer to post the sample poster provided by the Department of Labor, which generally informs workers of their rights under the FMLA. (Id., p. *31, note 15.) America West’s employee handbook had a provision that “employees are entitled to up to twelve calendar weeks of unpaid [FMLA] leave within any twelve month period.” The company argued that the provision gave its employees notice that it had chosen the “rolling method” of calculating the leave year. While the trial court agreed, the Court of Appeals did not. “This statement from the America West handbook does nothing more than parrot the language of the Act. . . . Because the statute can reasonably be read to allow the four different methods spelled out [in the regulations], merely parroting the statutory language cannot possibly inform employees of the method the employer has chosen.” (Id., pp. *34, 36.) The Court reached this conclusion while acknowledging that the Department of Labor had noted that “the rolling method ‘most literally tracks’ the Act’s language.” (Id., p. *36, citing 60 Fed. Reg. at 2200.) To avoid this problem, the employer may wish to include an illustration of the operation of the method chosen to remove any question about the leave year method that will apply. The difference in the method year chosen—and whether the employer has made an effective choice—can determine whether the employer is liable for violating the FMLA or not in a particular case. Had the “rolling year” applied in Penny Bachelder’s case, America West would have been within its rights to fire her for exceeding the absences allowed under the FMLA. Because the Court of Appeals held that America West’s statement of the leave year was ambiguous, it ruled that the employees had not been given the required open notice. (Id., p. *37.) Since America West had not given effective notice, Bachelder’s leave was treated as though America West had made no selection among the methods of calculating leave year available. Consequently, the method most favorable to Bachelder was applied. The leave which led to Bachelder’s termination was in February, making the calendar year the most advantageous method of calculating the leave year to her. Under that method, Bachelder started with a fresh “bank” of FMLA leave on January 1 which had not been nearly exhausted at the time of her termination. The violation of Bachelder’s FMLA leave made America West liable to her regardless of whether the reasons for her termination were pretextual because rule number three is:
- The Employer Must Not Use FMLA Leave As A Basis To Punish or Fire An Employee Even If the Employer Complies with Disability Discrimination Laws
America West was liable to Penny Bachelder, not because the company discriminated against her because she suffered from disabilities requiring time off, but because it interfered with her right to take time off for reasons falling under the FMLA by firing her for doing so. The FMLA makes it illegal for an employer to “interfere with, restrain, or deny the exercise of or the attempt to exercise, any right provided” by the Act. (Bachelder, p. *13, quoting 29 U.S.C. § 2615(a)(1).) The implementing regulations accordingly prohibit the employer from using the “taking of FMLA leave as a negative factor in employment action, such as hiring, promotions or disciplinary actions. . . .” (29 C.F.R. § 825.220(c).) Therefore, to establish her claim, “Bachelder need only prove by a preponderance of the evidence that her taking of FMLA-protected leave constituted a negative factor in the decision to terminate her.” (Bachelder, p. *22.) At least in California, then, FMLA claims are not treated the same way that discrimination claims are but are treated the way claims alleging interference with other worker rights such as the right to organize. (Bachelder, pp. *15-16.) The employee need only show that the employer violated the statute and that she suffered damages, not that the employer’s proffered reason for punishing the employee was a pretext to discriminate against her on the basis of any disability. That does not mean, of course, that an employee who has taken FMLA leave is immune from termination for other valid reasons. America West claimed that it could avoid liability because both the company and Bachelder had a good faith belief that she had exceeded her available FMLA leave at the time of her termination. That did not eliminate the company’s exposure under the FMLA because rule number 4 is:
- If the Employee Alerts Her Employer to Circumstances Implicating FMLA Leave, the Employer Must Determine Whether the Employee Is Eligible To Take FMLA Leave
America West argued that Bachelder could not have been fired for exercising her FMLA rights because, at the time of her termination, Bachelder and America West both believed that she had exceeded her available time under the FMLA. The Court of Appeals rejected that contention as a basis for avoiding liability under the FMLA entirely. “[T]he employer’s good faith or lack of knowledge that its conduct violated the Act is, as a general matter, pertinent only to the question of damages under the FMLA, not to liability.” (Id., p. *38.) An employer which acts with a good faith lack of knowledge that it is violating the FMLA is still liable at minimum for the employee’s actual damages as a result of the violation. That includes lost wages and any other actual damages plus interest. (29 U.S.C. § 2617(a)(1)(A).) An employer which cannot prove that it violated the FMLA in good faith is also liable for an additional amount equal to the employee’s actual damages. (29 U.S.C. § 2617(a)(1)(A)(iii).) Such liquidated damages may also be awarded, in the discretion of the trial court, even where the court finds the employer acted in good faith. (29 U.S.C. § 2617(a)(1)(A)(iii).) Whether the employer has acted in good faith or not, if it is found to have violated the FMLA it is also liable for the employee’s attorneys’ fees and costs which may well substantially exceed the employee’s actual damages. (29 U.S.C. § 2617(a)(3).) Nor did it matter that Bachelder did not specifically invoke the FMLA in requesting the leave that resulted in her termination or that she herself also believed that she had exhausted her available FMLA leave. “[I]t is the employer’s responsibility, not the employee’s, to determine whether a leave request is likely to be covered by the Act.” (Id., p. *40) “The employee need not expressly assert rights under the FMLA or even mention the FMLA, but may only state that leave is needed for [a qualifying reason]. The employer should inquire further of the employee if it is necessary to have more information about whether FMLA leave is being sought by the employee, and obtain the necessary details of the leave to be taken.” (Id., quoting 29 C.F.R. § 825.302(c).) Only where the employee fails to give the employer notice that she is absent for a potentially qualifying reason - such as where she is AWOL - is the absence unprotected under the FMLA. (Id., p. *41, note 20, citing cases.) The company’s responsibility when put on notice of the employee’s potential FMLA-related absence is similar to responsibilities imposed on employers under California and federal disabilities law. Under both the California Fair Employment and Housing Act (“FEHA”) and the Americans with Disabilities Act, where an employer knows of an employee’s disability, the employer must initiate a dialogue with the employee about possible accommodations of that disability. “[T]his obligation is triggered by an employee or an employee’s representative giving notice of the employee’s disability and the desire for accommodation. In circumstances in which an employee is unable to make such a request, if the company knows of the employee’s disability, the employer must assist in initiating the interactive process.” (Barnett v. U.S. Air, Inc. (9th Cir. 2000) 228 F.3d 1105, 1114. See also Prilliman v. United Airlines, Inc. (1997) 53 Cal.App.4th 935, 950 (same).) Since Bachelder had given America West two doctor’s notes regarding the February absences which contributed to her termination, the company was “placed on notice that the leave might be covered by the FMLA, and could have inquired further to determine whether the absences were likely to qualify for FMLA protection.” (Id., p. 42.) The company may be placed on notice of at least the need to make further inquiry even if the employee does not initially present a doctor’s note, but instead simply calls the company to say that the employee is taking a medically related leave. (Id., p. 42, note 21.)
Bachelder was an unwelcome result to employers in California and the other states covered by the Ninth Circuit. The case reminds employers of their potential liability under the FMLA even where they comply with state and federal disability discrimination statutes. On the other hand, the Court gave lucid guidelines to employers wishing to avoid liability under the Family Medical Leave Act. Employers nonetheless would be well advised to consult counsel to ensure its compliance with these and other employment laws, especially when considering termination or discipline of an employee. An ounce of prevention is worth the ton of litigation potentially avoided.