Court rules employer’s no-fault attendance policy violates the Family and Medical Leave Act

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An automotive supplier will be required to revise its no-fault attendance policy after the United States Court of Appeals for the Sixth Circuit’s recent determination that an employee’s lawsuit challenging the attendance policy should go forward. The employee was terminated after accumulating more absences than allowed by the employer’s attendance “point” system. At issue here, however, was whether the employee is entitled to accrual of a perfect attendance benefit after taking leave under the Family and Medical Leave Act (FMLA). This case highlights the proposition that attaching any negative consequences to the exercise of protected rights under the FMLA may illegally interfere with an employee’s rights to take such leave.

Background

The automotive supplier utilized a common attendance policy that issued points to employees for certain types of absences. An employee may accrue eleven points, but without fail, at twelve points the employee was terminated. At issue in this case was a benefit under the point system where an employee could reduce attendance points by achieving perfect attendance for 30 days. Under the point-reduction system, employees who have perfect attendance for 30 days will have their total points reduced by one point. 

Taking leave for any one of several reasons listed in the employer’s manual—vacations, bereavement, jury duty, military duty, union leave and holidays—kept the 30-day clock running and allowed the employee to remain eligible for the perfect-attendance point reduction. In other words, the point reduction system counted such paid types of leave as days “worked.” In contrast, the point reduction system did not count FMLA leave, and other kinds of unpaid leave such as disability leave, as days “worked” toward the 30-day perfect attendance streak. Thus, every FMLA absence would restart an employee’s attendance clock. 

The employee who sued the automotive manufacturer suffered from migraines, requiring him to take intermittent FMLA leave. Each instance of intermittent FMLA leave did not count toward his attendance points, but did restart the 30-day perfect attendance clock; as a result, he was never able to gain the benefit of the perfect attendance point reduction. The automotive manufacturer terminated the employee after he accumulated twelve attendance points. The employee, located in Ohio, sued in federal court for damages. 

The federal court in Ohio granted the automotive manufacturer’s request for judgment (also known as a “motion for summary judgment”) by ruling that the withholding of the reduction in points was not a “benefit” as meant under the terms of the FMLA. For comparison, the court stated that “removing a point ‘is a benefit’ in approximately the same sense in which granting parole is a benefit to the parolee; it reduces a penalty.” The employee appealed the decision to the United States Court of Appeals for the Sixth Circuit.

Appellate Court’s Decision

On appeal, the appellate court analyzed the law behind the FMLA and what constitutes a breach of such law. The court summarized the law by stating: 

The FMLA enables employees covered by [FMLA] to take up to twelve weeks of leave per year for various purposes specified in the statute, including the employee’s own serious health condition that makes the employee unable to perform the functions of the position of such employee. At the expiration of the employee’s leave period, she must be reinstated to her position or to a position equivalent in pay, benefits, and other terms and conditions of employment. An employer is prohibited from interfering with, restraining, or denying the exercise of or the attempt to exercise, any right provided under the FMLA.

There are two theories by which an employee can seek to recover damages from an employer under the FMLA: (1) by the interference of a right under the FMLA; or (2) by retaliation or discrimination after an employee exercises some right under the FMLA. The employee in this case sued under the interference theory. 

Among the factors an employee must establish to prove interference of a right under the FMLA, the only one in dispute was whether the automotive manufacturer denied FMLA benefits to which the employee was entitled. It is considered interference for purposes of the FMLA for employers to use the taking of FMLA leave as a negative factor in employment actions. Therefore, to prevail on his FMLA interference claim, the employee had to show that his taking of FMLA-protected leave was used as a negative factor in the employer’s decision to terminate him.

In the court’s analysis, it relied on the plain language of the FMLA and Department of Labor (DOL) regulations to determine that the point reduction system could be viewed as a benefit, the accrual of which must be available to an employee upon return from leave. Department of Labor regulations state:

At the end of an employee’s FMLA leave, benefits must be resumed in the same manner and at the same levels as provided when the leave began. Whereas an employee is not entitled to accrue any additional benefits or seniority during unpaid FMLA leave, benefits accrued at the time leave began…must be available to an employee upon return from leave.

The FMLA defines “employment benefits” expansively to mean “all benefits provided or made available to employees by an employer, including…sick leave, and annual leave.” The court determined that point reduction fits within this definition because it is both a benefit afforded to the employees to flexibly manage their absences, and because the reduction of a point effectively awards an additional day of allowed absence, akin to awarding sick leave. In other words, the employee’s FMLA leave could freeze the accrual of attendance, but not reset it; upon returning, the employee was entitled to the days of attendance he had accrued when leave began.

This analysis is in accordance with two DOL opinion letters, which applied these same regulations to no-fault attendance and point-reduction policies and stated that accrual toward point-reduction policies must, at the very least, be frozen during FMLA leave.

Accordingly, the court ruled that restarting the 30-day period for eliminating one attendance demerit for intermittent FMLA leave punishes the employee for taking that leave in derogation of the FMLA. And by resetting the employee’s 30-day perfect attendance clock after he returned to work after taking FMLA leave, the employer failed to restore the employee’s accrued employment benefits as required by the FMLA.

Takeaway

This decision demonstrates the importance of analyzing all attendance and leave policies in relation to leave under the FMLA. It is wise for employers to adopt policies for which the taking of leave under the FMLA does not interfere with any term or condition of employment, and to keep in mind that the FMLA defines “employment benefits” expansively. It is also advisable to consult with experienced legal counsel to make sure that your policies are within the confines of the law. 

R. Eddie Wayland is a partner with the law firm of King & Ballow.  You may reach Mr. Wayland at (615) 726-5430 or at rew@kingballow.com.  The foregoing materials, discussion and comments have been abridged from laws, court decisions, and administrative rulings and should not be construed as legal advice on specific situations or subjects.