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While the Family and Medical Leave Act permits employees to take up to 12 weeks of unpaid leave for a “serious health condition,” and requires that employers reinstate a person on FMLA leave at the conclusion of the leave, the act is not a job guarantee. An employee on FMLA leave is to be treated as if he or she had not taken leave. If there is a layoff or the employee was scheduled to be terminated, transferred or demoted prior to his or her leave, the FMLA offers no protection against what the employee may perceive to be an “adverse employment action.” But what if an employee’s deficiencies are exposed by the fact that he or she has taken a leave of absence? Can the employer use this newly discovered evidence to terminate the employee while he or she is on leave or to deny reinstatement at the end of the leave? Two federal decisions illustrate the perils of terminating an employee based on information learned during an FMLA leave. TERMINATION FOR POOR TRAINING VIOLATED FMLA In Smith v. Diffee Ford-Lincoln-Mercury, Inc.,Nos. 00-6362, 00-6363 (10th Cir. 2002), Diantha Smith was employed as a “warranty clerk” for Diffee, responsible for submitting warranty claims from the dealership to Ford. Although Smith was generally a good employee, she had been told for over three years that she needed to do a better job of training junior employees in performing the warranty claims submission process. Smith agreed that this was not the strongest part of her job, but noted that “training employees” was never part of her job description. Smith learned she had breast cancer in April 1997 and required a medical leave for approximately seven weeks for treatment. This was granted. During Smith’s absence, however, the warranty claims submission process (which was a major profit center for Diffee) faltered because, in Diffee’s estimation, Smith had not adequately trained anyone else to do this part of the job. Diffee then fired Smith five weeks into her leave, for failure to train the junior employees in warranty submissions. The case went to trial and a jury awarded backpay to Smith, which was doubled by the judge under the FMLA’s liquidated damages provision. Diffee then appealed the trial court’s denial of its motion for judgment as a matter of law. The 10th U.S. Circuit Court of Appeals affirmed the lower court’s denial of Diffee’s motion. The court recognized that “an employee may be dismissed [while on FMLA leave], preventing [him or] her from exercising her statutory right to FMLA leave — but only if the dismissal would have occurred regardless of the employee’s request for or taking of FMLA leave.” The court noted that the denial of FMLA rights (either denial of leave or denial of reinstatement) violates the act regardless of motivation. That is, Smith did not need to prove that she was retaliated against, only that her right to leave had been violated. DISCIPLINE AND DOCUMENT Most importantly, this case highlights the need for employers to discipline employees for poor performance and, just as importantly, to document the discipline. While Diffee argued that Smith had been told for years that she needed to better train the junior employees, she had received just one formal reprimand for this failure. As such, Smith was able to argue that she had never been “seriously” disciplined, that there had been no formal emphasis on the importance of training and that there had been no progress reports on her training efforts since the formal reprimand. These failures, in addition to the timing of Smith’s termination, supported the denial of Diffee’s motion for judgment. The court held that “the jury could reasonably infer that, had Smith been healthy, Diffee would have permitted her to continue indefinitely at her job without training anyone.” TERMINATION FOR PRE-LEAVE EMBEZZLEMENT UPHELD The Smithcase contrasts with a recent decision by the 7th U.S. Circuit Court of Appeals in Kohls v. Beverly Enterprises Wisconsin, Inc., 259 F.3d 799 (7th Cir. 2001). In this case, Beverly Enterprises owned and operated Maple Manor Healthcare, a residential nursing home and rehabilitation facility. Amy Kohls worked as the Manor’s activities director and was generally responsible for planning and implementing activities for the Manor’s residents. Her employment prior to her FMLA leave was rated as average to above-average. During Kohls’ leave, her temporary replacement made numerous changes to the Manor’s activities that were well-received by residents and staff. The Manor’s executive director commented numerous times that she wished the temporary replacement could be the Manor’s permanent activities director. On the date of Kohls’ return from her leave, the executive director met with her and informed her that she had received complaints about her performance from residents and their families. She also accused Kohls of embezzlement, based upon a discrepancy of $70.86 between her department’s checkbook and the bank balances. The discrepancy was discovered during Kohls’ leave. Kohls was terminated at this meeting. The district court granted summary judgment in favor of Kohls and the circuit court affirmed, finding that “nothing in the record indicates that [the Manor] preferred [Kohls' replacement] for any reason related to Kohls’ taking of leave.” While the court acknowledged that Kohls may have been disciplined less severely had there not been another employee ready to take her place, the court found that its role was not “to tell employers how to discipline employees; rather, it is to ensure that the process is not discriminatory. [T]he fact that the leave permitted the employer to discover the problems cannot logically be a bar to the employer’s ability to fire the deficient employee.” When an employee on FMLA leave is considered for discipline, the employer should question “would this decision be made if the employee was not on leave?” If, as in Kohls, the employee’s pre-leave theft is discovered while he or she is on leave, then the answer will likely by “yes.” In Kohls, it can be presumed that the alleged embezzlement would have lead to termination, regardless of when it was discovered. In contrast, in the Smithcase, Smith’s poor training had been tolerated, with only a slap on the wrist, for years. If Diffee genuinely believed that Smith’s lacked of training was worthy of termination, then it should also have been worthy of formal discipline, specific goals and monitoring. As in many cases where there is a finding against an employer, Diffee’s failure to “lay the ground work” for Smith’s termination in the months and years preceding the termination doomed its defense when the termination actually occurred. Sidney R. Steinberg is a shareholder in the business law and litigation department of Post & Schell, www.postschell.com. He concentrates his national litigation and consulting practice in the field of employment and employee relations law and may be reached at [email protected].

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