Do You Have to Ignore Misconduct Uncovered During FMLA Leave?

Friday, September 16, 2016

It’s an easy scenario to imagine: an employee goes out on leave and, when another employee takes on his work, she discovers performance deficiencies and maybe even misconduct. Is the employee’s job protected just because he is out on “job-protected” leave?

In Olson v. Penske Logistics, LLC, No. 15-1380 (Aug. 26, 2016), the 10th U.S. Circuit Court of Appeals held that employers do not need to turn a blind eye to misconduct that is uncovered during an employee’s leave of absence. It determined that employers are free to implement discipline—up to and including termination—against employees on job-protected leave in such circumstances.

Facts of the case

Kris Olson worked as a warehouse operations manager for Penske Logistics. He supervised about 30 employees and was responsible for hiring, moving and tracking inventory, inventory audits and more. During his tenure, he received mixed performance reviews and, on two occasions, was reprimanded for failing to follow procedures and instructions.

After 12 years with the company, he requested and received approval for FMLA leave. While he was out, however, his main client, Whirlpool, reported that a large amount of inventory was missing. Olson’s supervisor sent another warehouse manager to investigate and she uncovered what she deemed a “crisis.” She found that that Olson’s inventory report had many discrepancies, that he was 567 audits behind schedule and that his employees were not properly trained.

The employer investigated further and found that Olson had lied about extra work performed for Whirlpool and had hidden inventory losses in “ghost stows”—fake storage locations—for 4 years. He also told his staff to report missing items as damaged, Penske determined.

His supervisor and the human resources department agreed that Olson should be fired. Because of incorrect information provided by HR, his supervisor believed his FMLA leave had not been approved. Penske sent him a letter stating that because of the deficiencies and because of his unapproved leave of absence, it was firing him immediately.

Olson responded that his leave had been approved and when Penske heard about its mistake, it offered to postpone his termination until he had exhausted his FMLA entitlement. Olson did not accept the offer and filed suit.

Courts weigh in

Penske argued that Olson’s termination was unrelated to his FMLA leave and the U.S. District Court for the District of Colorado agreed, granting summary judgment for the employer.

Olson appealed, offering two arguments: (1) if he had not taken leave, he would have been present and able to defend his job performance and (2) Penske’s reason for his firing was pretext and he was actually fired for taking too much time off.

The appeals court, however, was not persuaded. While both of Olson’s arguments were plausible, they did not create a genuine issue of material fact, it said.

First, Olson offered no evidence that any defense he could have offered would have saved him from termination, the court explained. Second, no reasonable jury could conclude that Olson was fired for anything but the numerous and substantial instances of unsatisfactory performance that Penske outlined.

“There are no holes, no conflicting statements, simply nothing that indicates inaccuracies in Penske's story,” the 10th Circuit said. “No evidence suggests that Mr. Olson could possibly have kept his job once his misconduct was discovered.”

Employer takeaway

The 10th Circuit’s opinion in Olson is in agreement with several other appeals courts. Earlier this year, the 11th Circuit ruled that Dollar General did not interfere with an employee’s FMLA rights when it refused to reinstate her after her leave; the employer was able to show that she was fired because of newly discovered misconduct, for which it would have fired her even if she had not been on leave (Thomas v. Dolgencorp, No. 15-13399 (11th Cir. March 15, 2016)).

Other appeals courts have reached similar conclusions (see Mercer v. The Arc of Prince Georges County, 532 Fed. Appx. 392 (4th Cir. 2013) and Cracco v. Vitran Express, Inc., 559 F.3d 625 (7th Cir. 2009)).

Importantly, the FMLA does not protect an employee from adverse employment actions; rather, it protects an employee from adverse employment actions taken because she or he exercised his FMLA rights.

While employers must ensure that discipline is not implemented in retaliation for an employee’s leave or leave request, these rulings are clear: just because misconduct was discovered during leave, doesn’t mean that the resulting discipline was implemented because of the leave.

The 11th Circuit noted in an earlier opinion (Schaaf v. SmithKline Beecham Corp, d.b.a. GlaxoSmithKline, 602 F.3d 1236 (11th Cir. 2010)) that an opposite conclusion would yield an absurd result: an employee who had committed a transgression could seek leave under the FMLA and hope that the employer discovers his actions during the leave, thereby preventing it from ever disciplining him for the misconduct. “[T]he leave would always be the but-for cause of the discovery of that evidence,” the Schaaf court said. “Such a laughable result is not supported by policy, by common sense, or, most importantly, by the statute itself.”

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