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July 28, 2016 Top Story

Supervisors May Be Subject to Personal Liability under FMLA

Appellate court expands scope of FMLA liability to individual supervisors

Adam E. Lyons

Individual supervisors may now face personal liability under the Family Medical Leave Act (FMLA). Adopting an "economic reality" test, the U.S. Court of Appeals for the Second Circuit concluded that a supervisor exercising sufficient control over a worker may be considered an "employer" subject to personal liability under the FMLA. The appellate court addressed an issue of first impression, and the decision follows a trend of expanding the FMLA to include supervisory liability.

Plaintiff Terminated after Requests for FMLA Leave

In Graziadio v. Culinary Institute of America, plaintiff took two consecutive FMLA leaves of absence from work due to medical conditions of her minor children. At the end of the second leave, plaintiff sought to return to work on a reduced schedule. The employer, Culinary Institute of America (CIA), refused to allow her to return to work.

CIA justified its decision with plaintiff's purported failure to provide sufficient documentation. CIA, however, did not specify what additional documentation would be sufficient. Thereafter, in a series of "excruciating" exchanges, the parties failed to meaningfully discuss these issues, and then additionally failed to ever engage in a face-to-face meeting to discuss them. Instead, their communications went in circles, with CIA asking for a specific time to meet and plaintiff responding she was available at any time. After the parties failed to engage in any substantive discussion of the issues, CIA fired plaintiff for abandonment of her position.

Plaintiff sued her supervisor, CIA's director of human resources, and CIA for interference and retaliation in violation of the FMLA, and associational discrimination under the Americans with Disabilities Act. The district court granted summary judgment in favor of defendants on all claims.

Individual Liability Depends on an "Economic Reality" Test

On appeal, the Second Circuit vacated the district court's entry of judgment on the FMLA claims, including the individual claims against the director of human resources. Generally, FMLA liability extends to "employers," defined as "any person who acts, directly or indirectly, in the interest of an employer to any of the employees of such employer." The Second Circuit held that an individual could be deemed an "employer" under the FMLA. To determine when an individual qualified as an "employer," the appellate court followed precedent from other circuits, which applied an "economic reality" test used under the Fair Labor Standards Act (FLSA). The FLSA and FMLA use nearly identical definitions of "employer."

Under the economic reality test, the court considers "a nonexclusive and overlapping set of factors." In this case, those factors were (1) the power to hire and fire employees, (2) supervision and control of employment conditions, (3) determination of rate and method of payment, and (4) maintenance of employment records, though the standard would allow other factors as well.

The appellate court found the district court had overlooked "substantial evidence" that the director of human resources qualified as an "employer" subject to individual liability. Specifically, it found that the director played a substantial role in plaintiff's termination and exercised control over plaintiff's ability to return to work and conditions of return. The court noted that the director had reviewed plaintiff's FMLA paperwork, determined it was inadequate, and had sent almost all correspondence with plaintiff regarding her leave and termination. While the first two factors weighed in favor of the director as an employer—because the director had an authority as to FMLA decisions even if not over plaintiff generally—the third and fourth factors were not satisfied. The court held that the factors were "nonexclusive and overlapping" and overturned the decision below.

Advice for Employers and Their Counsel

"Often when a court adopts a totality of the circumstances test, it sounds the plaintiff's alarm," observes Brandon S. Smith, Atlanta, GA, cochair of the ABA Section of Litigation'sYoung Advocates Committee. The "factually intensive nature of the inquiry" can establish a standard that is hard to disprove as a matter of law, he suggests. Because it is unlikely that this exact fact pattern will exactly repeat itself again, under a fact-specific test "it is hard to extrapolate how this decision will apply elsewhere," notes Emily J. Kirk, St. Louis, MO, Web and Social Media Subcommittee chair for the Section of Litigation's Solo & Small Firm Committee.

That the Second Circuit is now following other circuits in applying this test to allow individual liability shows a trend. "This is not the first case to state that supervisors may be held individually liable under the FMLA. Nor will it likely be the last," according to Teresa R. Bult, Nashville, TN, cochair of the Section's Employment & Labor Relations Committee.

Accordingly, while Graziadio only found that the manager could be liable as a matter of law, not that liability in fact exists, "employers should expect these types of suits going forward," says Kirk. "From a plaintiff's perspective, you would always be looking at both the corporate entity and the individual" as possible defendants, she continued. That is because naming individuals "may create a conflict between a company and supervisor that requires separate attorneys to represent the different defendants [and] if there are questions as to a company's solvency, a plaintiff's only chance at recovering damages may involve suing a supervisor employer," all reasons that favor including the individual defendant, said Bult.

Section leaders disagree on how best to categorize the employer's acts in the case. The issue may have stemmed from "a series of miscommunications" that "could have easily been resolved without litigation if employer had taken the time to point out what was lacking in the plaintiff's medical certification and promptly replied to emails and phone calls," in Bult's analysis.

Another Section leader saw it differently, finding a "particularly egregious decision on the part of the employer," notes Kirk. Section leaders agree, however, that further action on the employer's behalf is required. In light of Graziadio and other circuits' similar decisions, employers should begin asking "how can we be more responsive in the future?" or, with a view to the likelihood of litigation, "how can we have a good record of responsiveness in the future?" says Smith.

Adam E. Lyons is a contributing editor Litigation News.

Keywords:  FMLA, employer, supervisor, medical leave

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