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Double Damages Ordered for an Unlawful FMLA Firing

By Randi Klein Hyatt

In January of 2009, the Eastern District of Pennsylvania doubled a jury’s award of damages to an employee who had been terminated unlawfully under the Family and Medical Leave Act of 1993 (FMLA). This decision confirms for companies, in more ways than one, that making assumptions is not the proper strategy when terminating an employee.


In Brown v. Nutrition Management Services Co., [1] the plaintiff, Melissa Brown, had worked as a food service director at a nursing home since 2002. In August 2004, the nursing home had contracted with the defendant—Nutrition Management Services Company—for it to provide food services for the nursing home. Nutrition Management hired Ms. Brown to continue on as food service director. In October 2004, Nutrition Management terminated Ms. Brown after learning she was pregnant.


Ms. Brown then filed a civil action against Nutrition Management, arguing, among other things, that her termination was an unlawful interference with her FMLA rights. Nutrition Management argued that it did not violate the FMLA, or otherwise unlawfully interfere with Ms. Brown’s FMLA rights, because Ms. Brown was not eligible for FMLA leave, having only worked a few months for the company. The jury disagreed with the company, found for Ms. Brown, and awarded her $74,000 in back pay and damages under the FMLA. The jury concluded that Nutrition Management was a successor in interest to Ms. Brown’s prior employer (the nursing home which was an FMLA-covered employer), and therefore, the length of time worked and hours worked for the nursing home made her eligible for FMLA leave.


Subsequently, Ms. Brown filed a motion seeking approximately $81,000 in liquidated damages. The FMLA permits a prevailing party to recover liquidated damages equal to the amount of damages awarded for lost compensation, plus interest, unless the defendant can prove that it had acted in good faith in believing that its act or omission was not a violation of the FMLA. [2] If an employer proves that it acted “in good faith and that the employer had reasonable grounds for believing that the act or omission was not a violation of [the FMLA]," then the court may reduce the damages. [3] "The employer must therefore show both good faith and reasonable grounds for the act or omission." [4] Because the FMLA does not define good faith, courts have looked to the standard developed under the Fair Labor Standards Act (FLSA), which has nearly identical language as the FMLA and requires a defendant to take “affirmative steps to ascertain the requirements of the law.” [5]


Nutrition Management argued that it had acted on the good faith belief that Ms. Brown was not eligible for FMLA leave because she was a new employee who had not worked for the company for at least 12 months. The court, however, required more of the company than merely offering that explanation. Looking to Third Circuit precedent interpreting the FLSA’s good faith standard, the trial court determined that “[r]easonable good faith requires a defendant to take affirmative steps to ascertain the requirements of the law.” [6] As such, the trial court stated that the company’s good faith belief that Ms. Brown was not eligible for FMLA leave would be based on reasonable grounds only if the company took some affirmative steps to ascertain the legal effect of her new hire status.


In finding that the company did not act in good faith, the court was particularly critical of the human resources director’s (an attorney by training who also had general knowledge of employment law) effortless determination that it was “okay” to terminate Ms. Brown because she was not eligible for FMLA and she was “a brand new employee.” The court found that the company’s reliance on this cursory review was an inadequate attempt to determine whether Ms. Brown’s prior employer was covered by the FMLA, and if so, whether Nutrition Management was a successor-in-interest. [7]


Specifically, the court wrote: “Nutrition Management presented no evidence that it researched the requirements of the FMLA or was otherwise aware of the factors governing whether the FMLA would apply to Brown’s request for leave. Nutrition Management, having made no legal inquiry into the requirements of the FMLA, had no reasonable grounds to believe Brown’s termination was not a violation.” [8] As a result, the court awarded Ms. Brown liquidated damages in the amount of $80,655.82 ($74,000 in back pay and $6655.82 in pre-judgment interest). [9]


Although there are few cases discussing the FMLA’s liquidated damages provision in detail, those that have been issued signal that the Nutrition Management decision is not surprising. Indeed, trial courts pay very close attention to how much research the employer undertakes to determine whether its actions are going to be legally defensible under the FMLA (as they have done so within FLSA cases). [10]


Trial courts are likely to impose liquidated damages where, as in the Nutrition Management case, the employer understood the requirements of the FMLA but failed to take reasonable steps to ensure it was in compliance with it. This case is a perfect reminder of why employers must check and review all aspects of a personnel decision, even those that seem obvious. Relying on a human resource’s director’s general knowledge of employment law rather than researching the requirements and implications of the FMLA cost the company an additional $80,000 (not to mention the attorney fees of both parties). Because double damages are the norm under the FMLA, [11] an employer will need to be able to testify truthfully that it made a reasonable inquiry into the requirements of the FMLA. Reviewing and reading the regulations implicated by the particular termination (or other adverse decision) at issue is the best place to begin that inquiry. Consulting with qualified employment counsel would also be wise.

Randi Klein Hyatt is a partner with Shawe Rosenthal, LLP in Baltimore, Maryland.

This article appears in the Fall 2009 issue of In-House Litigator.

 

End Notes


  1. 2009 WL 281118, No. 06-2034 (E.D. Pa. Jan. 21, 2009).
  2. See 29 U.S.C. § 2617(a)(iii).
  3. Id.
  4. Chandler v. Specialty Tires of America, Inc., 283 F.3d 818, 827 (6th Cir. 2002) (emphasis in original).
  5. “To establish 'good faith,’ a defendant must produce ‘plain and substantial evidence of at least an honest intention to ascertain what the Act requires and to comply with it.’” Reich v. Southern New England Telecomms. Corp., 121 F.3d 58, 71 (2d Cir.1997), quoting Brock v. Wilamowsky, 833 F.2d 11, 19 (2d Cir.1987) (discussing the liquidated damages provision under the FLSA). “‘Good faith’ in this context requires more than ignorance of the prevailing law or uncertainty about its development. It requires that an employer first take active steps to ascertain the dictates of [the law] and then move to comply with them.” Id. at 71. In addition, the reasonableness requirement “imposes an objective standard by which to judge the employer's conduct.” Martin v. Cooper Elec. Supply Co., 940 F.2d 896, 907–08 (3rd Cir. 1991) (discussing the liquidated damages provision under the FLSA).
  6. Brown, 2009 WL 28118, at *5 (citing Martin v. Cooper Electric Supply Co., 940 F.2d 896, 908–09 (3rd Cir. 1991).
  7. Interestingly, less than two years ago, another trial court faced with the almost identical issue as in Nutrition Management, found to the contrary. In Cobb v. Contract Transport, Inc., 2007 WL 1810482 (E. D. Ky. June 21, 2007), the company for which the plaintiff worked as a truck driver lost its contract with the U.S. Postal Service after it was underbid by the defendant company. The plaintiff then began working for the defendant company, where he was terminated after an unexcused health absence. The defendant claimed that the employee was not entitled to FMLA coverage because he had worked for the defendant for less than twelve months. The plaintiff claimed that the three years he worked for the defendant's predecessor counted toward his FMLA eligibility, under the theory of successor liability. Cobb v. Contract Transport, Inc., 452 F.3d 543, 547 (6th Cir. 2006). The district court ultimately concluded that liquidated damages were not appropriate because “no court in the country had found FMLA liability” under similar circumstances, and because the court’s own grant of summary judgment in favor of the defendant (finding no successor liability) was overturned by the Sixth Circuit in a case of first impression. 2007 WL 1810482, at *2.
  8. Brown, 2009 WL 281118, at *3.
  9. In a separate opinion, the court also awarded Ms. Brown approximately $158,000 in attorney fees and costs.
  10. E.g. Persky v. Cendant Corp., 547 F. Supp. 2d 152, 161, 163 (D. Conn. 2008) (“The question in this case is whether Defendant, who understood the requirements of the [FMLA] statute, took reasonable steps to comply with it. . . . Based upon Defendant’s failure to adequately investigate the circumstances surrounding the sale of [the company], including Plaintiff’s and [another employee’s] respective duties, and the transition agreement, the answer is no. . . . Here, Defendant unreasonably determined that Plaintiff was not entitled to reinstatement because it failed to make a reasonable factual inquiry into whether or not her position had been eliminated, not because it misunderstood the requirements of the statute and the scope of an employee’s right to restoration. . . .Where [the company] undertook a minimal investigation and dismissed Plaintiff's protestations that her position had not been eliminated as mere ‘posturing,’ it cannot make such a claim.”).
  11. Martin v. Cooper Electric Supply Co., 940 F.2d 896, 908–09 (3rd Cir. 1991).

 

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