For the week of September 15, 2008
Under the Family and Medical Leave Act (FMLA), eligible employees are entitled to up to 12 weeks of unpaid leave during a 12-month period. The FMLA specifically prohibits employers from interfering with an employee’s attempt to exercise his or her rights under that Act. In order to exercise those rights on the basis of an employee’s own "serious medical condition," the employee must provide notice to the employer of the seriousness of the health condition that forms the basis of the leave request. Recently, the 7th U.S. Circuit Court of Appeals found that calling in sick, without providing additional information, does not provide sufficient notice of a "serious health condition" under the FMLA. De la Rama v. Illinois Dept. of Human Services, No. 07-1156 (7th Cir., Sept. 2, 2008).
Elizabeth de la Rama, a Filipino-American, worked as a registered nurse at a Mental Health Center, run by the Illinois Department of Human Services for mentally ill adults. Under the Center’s leave policy, de la Rama was entitled to 12 sick days each year, accrued at a rate of one per month. In 2004, de la Rama called in sick for the period from July 19 through August 19. At one point during that period, she verbally informed her supervisor that she was suffering from back pain, and needed to take a week off. On July 27, she provided a doctor’s note that stated that she was under a doctor’s care and could not return to work until August 10. At that point, her employer explained that in order to request medical leave, de la Rama would have to submit a written request and complete certain written forms. Although de la Rama continued to submit doctor’s notes requesting time off, those notes did not state her medical condition, nor describe its severity, and de la Rama did not complete the required forms requesting medical leave during this period. In addition, although she was diagnosed with fibromyalgia in early August, de la Rama did not inform her employer of that diagnosis.
On October 4, 2004, de la Rama submitted the required forms, explaining that she suffered from fibromyalgia and a herniated disk. The Center retroactively granted FMLA leave to de la Rama, beginning on September 2. De la Rama returned to work on January 3, 2005, after 17 weeks of medical leave. At that point, de la Rama’s record reflected 24 days of "unauthorized absence" (UA) for July and August, and future absences would have triggered a disciplinary proceeding against her.
De la Rama pursued a grievance in order to remove the UAs from her employment record. At a hearing, management and the union agreed that the UAs would remain on de la Rama’s record, but that those absences never would be used in any disciplinary proceedings against her. De la Rama subsequently filed a lawsuit, including a claim of interference with her FMLA rights. The district court granted summary judgment to the defendants, and the Seventh Circuit affirmed that decision.
The appellate court found that de la Rama had provided insufficient notice to alert her employer of a "serious medical condition" until October 2004, when the leave was granted. When de la Rama called in sick in July and August, she did not indicate that she suffered from a condition that would require an extended leave, and did not provide documentation of the fibromyalgia until October. The fact that the leave was granted once documentation of the serious medical condition was provided undercut de la Rama’s argument that her employer interfered with her ability to exercise her rights under the FMLA.
An employee may be excused from expressing the need for medical leave when circumstances themselves provide the employer with sufficient notice of the need for extended leave, for instance, when an employee’s family calls from the emergency room to inform employer of a serious auto accident. But – in the words of the Seventh Circuit - the FMLA "does not require employers to play Sherlock Holmes, scanning an employee’s work history for clues as to the undisclosed, true reason for an employee’s absence." Employers should not interpret this case as license to step outside of the parameters of the FMLA, which requires them to review medical information provided by employees, and to grant leave when appropriate. But it reminds employers that they are entitled to certain information from employees in order to make a full and fair decision with respect to the leave requested.
Wednesday, September 17, 2008
Third Circuit clarifies the “faltering company” exception to notice requirements of the WARN Act
For the week of September 8, 2008
The purpose of the Worker Adjustment and Retraining Notification (WARN) Act is to protect workers by requiring advance notice of plant closings. Such notice allows workers some time to adjust to the prospective loss of employment, and to seek other jobs or retraining. The WARN Act requires generally 60 days’ written notice before a closing or mass layoff by covered employers (typically, those with at least 100 full-time employees at a site). Companies that violate the Act are liable for back pay and benefits for each day that the required notice is not provided, up to the 60 day maximum.
The WARN Act includes three specific affirmative defenses to the 60-day notice requirement: the "business circumstances" exception, the "natural disaster" exception, and the "faltering company" exception. Recently the 3d U.S. Circuit Court of Appeals reversed summary judgment on behalf of an employer that had relied on the "faltering company" exception as an explanation for failure to provide more than a week’s notice before a total shut-down of the company. In Re: APA Transport Corp. Consolidated Litigation, 3d Cir., No. 07-1050, 07-1051, 07-1052, August 29, 2008.
In that case, APA Trucking Corporation (APA) entered a Loan Agreement with Transamerica Business Capital Corporation in 1996, which allowed APA the use of a revolving line of credit in the amount of $40 million secured by real property, equipment, and accounts receivable. After entering into the Agreement, APA suffered continuous losses and, in October 2001, began a series of meetings, requested by Transamerica, to discuss APA’s financial future. The Loan Agreement was set to expire on February 28, 2002, at which time the entire loan amount would become due. That Loan Agreement required a 60 day notice from APA to Transamerica for requests to extend the loan. As of the end of 2001, APA had not made a timely request to extend or renew the Loan Agreement.
However, during the month of January 2002, APA sent two separate letters to Transamerica, each requesting additional financing. Neither letter was followed by any action on the part of APA to support the requests, and Transamerica did not provide a credit memorandum or credit approval in response to either letter. Transamerica then formally notified APA that the Loan Agreement would terminate on February 28, 2002, pursuant to its terms. Unable to function without financing, APA notified its employees, in a letter received by the president of the local union on February 14, that the company would permanently close its Philadelphia terminal effective on February 20. APA asserted that it had provided the "shortened" notice because it had been "actively seeking financial assistance to alleviate its severe economic problems."
A number of lawsuits were filed against APA, including one by the company’s employees, who alleged a WARN Act violation. APA asserted a "faltering company" defense to that claim. In order to succeed under that theory, a company must show that it was actively seeking capital or business at the time that the 60-day WARN Act notice would have been required, that it had a realistic opportunity to obtain that financing, that the capital would have been sufficient to avoid the shutdown, and that sending the required 60-day notice would have precluded it from obtaining the financing.
The district court granted summary judgment to the company, based on the faltering company defense. On appeal, however, the Third Circuit reversed, and found in favor of the employees on that issue. First, the court held that the faltering company exception is to be construed narrowly, and that it requires proof that the company was "actively seeking" financing at the time that the 60-day notice was required to have been given to employees. APA was unable to provide that proof. On the date 60 days prior to the February 20 terminal closing, the company had made no formal request for financing from Transamerica or any other financial backer. In addition, the court held that the words "actively seeking" should be construed literally, and found that meetings called by Transamerica to discuss loan status, and correspondence without follow-up were insufficient to demonstrate that level of engagement. In spite of the fact that APA knew that the Loan Agreement was to expire on February 28, 2002, it made no formal request for extension, nor did it take other steps to secure financing. The court characterized APA’s efforts as "waiting for Transamerica to offer additional financing," and found that action to be insufficient to meet the interpretation of the term "actively seeking" financing.
In these difficult financial times, companies contemplating plant shut-downs or large lay-offs should have a clear recognition of the pre-conditions and requirements set forth in the WARN Act. Companies seeking to assert an available exception or defense to the requirements of the Act should work closely with legal counsel, human resource personnel, and funding sources in order to avoid the financial penalties associated with violation of that Act.
The purpose of the Worker Adjustment and Retraining Notification (WARN) Act is to protect workers by requiring advance notice of plant closings. Such notice allows workers some time to adjust to the prospective loss of employment, and to seek other jobs or retraining. The WARN Act requires generally 60 days’ written notice before a closing or mass layoff by covered employers (typically, those with at least 100 full-time employees at a site). Companies that violate the Act are liable for back pay and benefits for each day that the required notice is not provided, up to the 60 day maximum.
The WARN Act includes three specific affirmative defenses to the 60-day notice requirement: the "business circumstances" exception, the "natural disaster" exception, and the "faltering company" exception. Recently the 3d U.S. Circuit Court of Appeals reversed summary judgment on behalf of an employer that had relied on the "faltering company" exception as an explanation for failure to provide more than a week’s notice before a total shut-down of the company. In Re: APA Transport Corp. Consolidated Litigation, 3d Cir., No. 07-1050, 07-1051, 07-1052, August 29, 2008.
In that case, APA Trucking Corporation (APA) entered a Loan Agreement with Transamerica Business Capital Corporation in 1996, which allowed APA the use of a revolving line of credit in the amount of $40 million secured by real property, equipment, and accounts receivable. After entering into the Agreement, APA suffered continuous losses and, in October 2001, began a series of meetings, requested by Transamerica, to discuss APA’s financial future. The Loan Agreement was set to expire on February 28, 2002, at which time the entire loan amount would become due. That Loan Agreement required a 60 day notice from APA to Transamerica for requests to extend the loan. As of the end of 2001, APA had not made a timely request to extend or renew the Loan Agreement.
However, during the month of January 2002, APA sent two separate letters to Transamerica, each requesting additional financing. Neither letter was followed by any action on the part of APA to support the requests, and Transamerica did not provide a credit memorandum or credit approval in response to either letter. Transamerica then formally notified APA that the Loan Agreement would terminate on February 28, 2002, pursuant to its terms. Unable to function without financing, APA notified its employees, in a letter received by the president of the local union on February 14, that the company would permanently close its Philadelphia terminal effective on February 20. APA asserted that it had provided the "shortened" notice because it had been "actively seeking financial assistance to alleviate its severe economic problems."
A number of lawsuits were filed against APA, including one by the company’s employees, who alleged a WARN Act violation. APA asserted a "faltering company" defense to that claim. In order to succeed under that theory, a company must show that it was actively seeking capital or business at the time that the 60-day WARN Act notice would have been required, that it had a realistic opportunity to obtain that financing, that the capital would have been sufficient to avoid the shutdown, and that sending the required 60-day notice would have precluded it from obtaining the financing.
The district court granted summary judgment to the company, based on the faltering company defense. On appeal, however, the Third Circuit reversed, and found in favor of the employees on that issue. First, the court held that the faltering company exception is to be construed narrowly, and that it requires proof that the company was "actively seeking" financing at the time that the 60-day notice was required to have been given to employees. APA was unable to provide that proof. On the date 60 days prior to the February 20 terminal closing, the company had made no formal request for financing from Transamerica or any other financial backer. In addition, the court held that the words "actively seeking" should be construed literally, and found that meetings called by Transamerica to discuss loan status, and correspondence without follow-up were insufficient to demonstrate that level of engagement. In spite of the fact that APA knew that the Loan Agreement was to expire on February 28, 2002, it made no formal request for extension, nor did it take other steps to secure financing. The court characterized APA’s efforts as "waiting for Transamerica to offer additional financing," and found that action to be insufficient to meet the interpretation of the term "actively seeking" financing.
In these difficult financial times, companies contemplating plant shut-downs or large lay-offs should have a clear recognition of the pre-conditions and requirements set forth in the WARN Act. Companies seeking to assert an available exception or defense to the requirements of the Act should work closely with legal counsel, human resource personnel, and funding sources in order to avoid the financial penalties associated with violation of that Act.
Monday, September 8, 2008
Issue: Employer’s directive for inpatient alcohol treatment does not violate ADA
For the week of September 1, 2008
An employee may be entitled to the protections of the Americans with Disabilities Act if he is "regarded as" disabled by his employer. An employer regards an employee as disabled when it mistakenly believes that the employee’s impairment substantially limits his ability to work. The "regarded as" provision of the ADA was meant to combat erroneous views related to impaired individuals, and to keep employers from basing employment-related decisions on myths or stereotypes.
Recently, the 8th U.S. Circuit Court of Appeals upheld judgment in favor of an employer who terminated an individual’s employment after the employee refused to enter an in-patient alcohol treatment program recommended by a psychologist. Although the employee claimed that the termination was based upon a "perceived" disability in violation of the ADA, the Eighth Circuit found that because the mandatory inpatient treatment was based upon the recommendation of a qualified medical provider and not upon myths or stereotypes about the disabled, it did not establish a perception of disability and, therefore, was not a violation of the ADA. Kozisek v. County of Seward, Nebraska, 8th Cir., No. 07-3682, Aug.,27, 2008.
In 1994, after 13 years of employment with Seward County, Nebraska as a weed control officer, Fredrick Kozisek applied for and obtained the position of County Veterans Service Officer (CVSO), which included work related to veterans’ issues. However, the job was considered to be a "multi-position" that also included Building and Grounds supervisor and General Assistance Administrator. During his tenure as CVSO, Kozisek and the County disagreed on the nature of the job, with Kozisek arguing to devote more time to veterans’ issues, and less to the other two portions of the position. Kozisek himself is a Vietnam veteran, and suffers from Post Traumatic Stress Disorder, for which he regularly took medication. Kozisek did not inform his employer of his PTSD.
One evening in July 2005, having failed to take his prescribed medication for a number of days, Kozisek left work early and began drinking. Under the influence of alcohol he then shot a number of his family’s farm animals, including the family dog, and subsequently threatened his wife. He was arrested the next morning by the County Sheriff. Based on the incidents, the County and Kozisek agreed that Kozisek would get a psychological/substance abuse evaluation. After a meeting with Kozisek, a mental health practitioner from the Veterans Administration recommended that Kozisek complete inpatient alcohol treatment. Kozisek did not want to undergo inpatient treatment, and informed the County that he would prefer outpatient counseling and AA meetings. The County then informed Kozisek that he had 10 days to enroll in an inpatient treatment or lose his job. Kozisek refused, and his employment ultimately was terminated.
Kozisek then filed a lawsuit claiming, in part, that he was fired because the County regarded him as disabled by alcoholism, as evidenced by its requirement that he complete inpatient treatment as a condition of his continuing employment. The lower court granted summary judgment in favor of the County. That decision was upheld on appeal by the Eighth Circuit, which found that the County’s decision was "not based upon misconceptions, myths or stereotypes" related to Kozisek’s drinking problem. Rather, it was based upon a licensed mental health therapist’s recommendation of inpatient treatment. According to the Court, the County’s insistence that Kozisek fulfill that recommendation does not violate the ADA’s prohibitions on regarding employees as disabled.
The "regarded as" provision of the ADA was meant to combat "archaic attitudes, erroneous perceptions, and myths" working to the disadvantage of the disabled or perceived disabled. According to the Court, then, "[i]f a restriction is based upon the recommendations of physicians, then it is not based upon myths or stereotypes about the disabled and does not establish a perception of disability." The County’s success in this case was based on the fact that it obtained an opinion from a mental health professional after an incident that involved a violation of law by Kozisek, and then acted upon that recommendation, without making independent judgments related to Kozisek’s impairment or to that impairment’s effect on his ability to function in any particular major life activity.
An employee may be entitled to the protections of the Americans with Disabilities Act if he is "regarded as" disabled by his employer. An employer regards an employee as disabled when it mistakenly believes that the employee’s impairment substantially limits his ability to work. The "regarded as" provision of the ADA was meant to combat erroneous views related to impaired individuals, and to keep employers from basing employment-related decisions on myths or stereotypes.
Recently, the 8th U.S. Circuit Court of Appeals upheld judgment in favor of an employer who terminated an individual’s employment after the employee refused to enter an in-patient alcohol treatment program recommended by a psychologist. Although the employee claimed that the termination was based upon a "perceived" disability in violation of the ADA, the Eighth Circuit found that because the mandatory inpatient treatment was based upon the recommendation of a qualified medical provider and not upon myths or stereotypes about the disabled, it did not establish a perception of disability and, therefore, was not a violation of the ADA. Kozisek v. County of Seward, Nebraska, 8th Cir., No. 07-3682, Aug.,27, 2008.
In 1994, after 13 years of employment with Seward County, Nebraska as a weed control officer, Fredrick Kozisek applied for and obtained the position of County Veterans Service Officer (CVSO), which included work related to veterans’ issues. However, the job was considered to be a "multi-position" that also included Building and Grounds supervisor and General Assistance Administrator. During his tenure as CVSO, Kozisek and the County disagreed on the nature of the job, with Kozisek arguing to devote more time to veterans’ issues, and less to the other two portions of the position. Kozisek himself is a Vietnam veteran, and suffers from Post Traumatic Stress Disorder, for which he regularly took medication. Kozisek did not inform his employer of his PTSD.
One evening in July 2005, having failed to take his prescribed medication for a number of days, Kozisek left work early and began drinking. Under the influence of alcohol he then shot a number of his family’s farm animals, including the family dog, and subsequently threatened his wife. He was arrested the next morning by the County Sheriff. Based on the incidents, the County and Kozisek agreed that Kozisek would get a psychological/substance abuse evaluation. After a meeting with Kozisek, a mental health practitioner from the Veterans Administration recommended that Kozisek complete inpatient alcohol treatment. Kozisek did not want to undergo inpatient treatment, and informed the County that he would prefer outpatient counseling and AA meetings. The County then informed Kozisek that he had 10 days to enroll in an inpatient treatment or lose his job. Kozisek refused, and his employment ultimately was terminated.
Kozisek then filed a lawsuit claiming, in part, that he was fired because the County regarded him as disabled by alcoholism, as evidenced by its requirement that he complete inpatient treatment as a condition of his continuing employment. The lower court granted summary judgment in favor of the County. That decision was upheld on appeal by the Eighth Circuit, which found that the County’s decision was "not based upon misconceptions, myths or stereotypes" related to Kozisek’s drinking problem. Rather, it was based upon a licensed mental health therapist’s recommendation of inpatient treatment. According to the Court, the County’s insistence that Kozisek fulfill that recommendation does not violate the ADA’s prohibitions on regarding employees as disabled.
The "regarded as" provision of the ADA was meant to combat "archaic attitudes, erroneous perceptions, and myths" working to the disadvantage of the disabled or perceived disabled. According to the Court, then, "[i]f a restriction is based upon the recommendations of physicians, then it is not based upon myths or stereotypes about the disabled and does not establish a perception of disability." The County’s success in this case was based on the fact that it obtained an opinion from a mental health professional after an incident that involved a violation of law by Kozisek, and then acted upon that recommendation, without making independent judgments related to Kozisek’s impairment or to that impairment’s effect on his ability to function in any particular major life activity.
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