“Open” Might Not Mean Open: How FMLA May Affect a Position’s AvailabilityDoes a position that a company is holding for an employee out on FMLA leave an “open position” as contemplated by the Americans with Disabilities Act? In Maxwell v. Washington County, a Mississippi federal district court said the short answer is “no.”

Background

The FMLA requires a covered employer to return an eligible employee to his or her job after 12 weeks of leave (or 26 weeks if leave is taken to care for a family member who is, or was, in the military). To fulfill that obligation, most employers hold the job open during that leave period.

Under the ADA, an employer must make “reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability.” One accommodation an employer must consider is transferring a disabled employee to an open position for which he or she is qualified if the employee cannot be accommodated in the current position. An ADA plaintiff bears the burden of proving an open position existed for which he or she was qualified and that he or she could perform those duties. A position is not considered open if the employer has a legitimate reason, unrelated to the employee’s disability, for reserving the position.

Analysis

Marcus Maxwell worked for the Washington County Buildings and Grounds Department. He became disabled and requested, as a reasonable accommodation, to be moved to an apparently vacant position. The job, however, was only temporarily vacated because an employee, Walsh Wigfall, was on FMLA leave. While he was out on leave, Mr. Wigfall would not give a definite answer as to whether he intended to return to work after his leave expired. Additionally, Mr. Wigfall missed doctor’s appointments, which led county officials to the realization he was not returning once his leave expired. Mr. Maxwell argued that Mr. Wigfall’s job was open and the county’s refusal to transfer him to that job was an ADA violation.

The court found that, despite evidence it was unlikely Mr. Wigfall would return after his FMLA leave expired, his position was not open for purposes of the ADA vis-à-vis Mr. Maxwell. For the position to have been considered open, the county had to know Mr. Wigfall would not return from FMLA leave. In reaching that conclusion, the court noted that an employer “cannot be expected to preemptively terminate an employee” based on a possibility.

Takeaways

An employer may run afoul of the FMLA by preemptively terminating an employee on FMLA leave even though it has a reasonable belief the employee will not return from leave. Circumstances could change during the protected FMLA period, and an employee could unexpectedly return to work. Filling that job as another employee’s ADA accommodation could cause trouble. The employer must know the employee is not returning or face potential liability.

It is difficult to determine whether any employer has the requisite knowledge and information to terminate an employee during leave without violating the FMLA. An employer should consult legal counsel before doing so.

For Whom the Whistle Blows: Preventing Retaliation Is Serious BusinessVarious federal statutes contain whistleblower provisions that protect employees who raise or report concerns that range from workplace safety, securities laws violation, or false claims submitted to the federal government. Different activities are protected depending on the statute at issue. Generally, retaliation protection kicks in if the employee reports conduct that he or she reasonably believes violates the law, files a formal complaint about the violation, or testifies, assists, or participates in proceedings related to the violation. Depending upon the anti-retaliation statute, internal reporting of concerns to an employer may be a protected activity.

What Constitutes Retaliation?

Illegal retaliation can take many forms. In general, any adverse action taken against an employee because the employee raised concerns or otherwise took part in protected activity is prohibited. Adverse actions could include termination, demotion, disciplinary action, or the denial of overtime or promotions. However, the action need not hit the employee’s paycheck to qualify as retaliation. Any action that would discourage a reasonable person from complaining can be retaliation. For example, a shift change or treating the employee differently (i.e., isolating or mocking the employee) can qualify as retaliation.

Why You Should Implement Policies to Address Employee Concerns

Retaliation is not only against the law but is also bad for overall morale and business. For all of these reasons, companies should have programs in place that create a culture of compliance, both by encouraging the reporting of concerns but also prohibiting retaliation against employees who complain. Without such programs, employees may hesitate to report problems due to fear of retaliation or fear that the company will not take serious efforts to resolve the concerns. These policies and programs also allow companies to address problems before they become more difficult to correct.

How You Should Implement Policies to Address Employee Concerns

A company’s policies should make reporting easy (but also document each report), provide methods for timely investigating and evaluating complaints, and ensure no retaliation. In particular, the policies should provide clear information on how to report concerns, i.e., through Human Resources, supervisors/management, a hotline (that is regularly checked) or anonymous reporting. Employees, supervisors, and managers should be trained regularly on these policies to ensure that they understand their role and how they must comply. If an employee believes that he has suffered retaliation for submitting such a claim, the company should have independent mechanisms in place for reporting and investigating claims of retaliation.

Finally, employer policies must be crafted so as to not discourage employees from reporting violations to governmental agencies and to not require that such violations be reported to the employer first. You want to hear about a potential problem (and have a chance to address it) before the government opens an investigation.

McDonald’s Fries Franchise Workers’ Claims, Lands Whopper of a Ruling for FranchisorsIn an important wage-and-hour decision for franchisors, Salazar, et al. v. the McDonald’s Corp., et al., the Ninth Circuit Court of Appeals ruled that employees of one of the hamburger giant’s California-based franchisees were not jointly employed by McDonald’s Corp. and thus the franchisor, McDonald’s Corp., was not liable to the employees under California state wage- and-hour laws. Significantly, the court made this ruling even though it noted there was arguably evidence that the franchisor was aware that its franchisee might be  violating the law. Although the Court of Appeals addressed claims under California state law, the opinion touches on legal issues that may also benefit franchisors facing claims of joint employment under the Fair Labor Standards Act.

The Facts and How the Lower Court Ruled

Guadalupe Salazar and her coworkers filed a class action lawsuit alleging that they had been denied overtime premiums, meal and rest breaks, and other benefits guaranteed under the California Labor Code. These plaintiffs sued the owner of the restaurants at which they worked, the Haynes Family Limited Partnership, as well as the franchisor — McDonald’s Corp. and others. The district court granted summary judgment in the franchisor’s favor, ruling that the franchisor was not the employer, and the plaintiffs appealed.

How the Ninth Circuit Ruled

The Court of Appeals affirmed the lower court summary judgment ruling, holding that the district court properly ruled that McDonald’s Corp. is not an employer of the franchisee’s workers under the “control” definition, the “suffer or permit” definition or the “common law” definition of employer.

The Control Test.  The Appeals Court found that the plaintiffs were not employees under the control test. Under that test, an employer must exercise  “control over the wages, hours, or working conditions” of the workers. The court held that any direct control that McDonald’s asserts over franchisees’ workers is geared toward quality control and it  does not retain “a general right of control” over “day-to-day aspects” of work at the franchises.  The court noted that “franchisors like McDonald’s need the freedom to impose [their] comprehensive and meticulous standards for marketing [their] trademarked brand and operating [their] franchises in a uniform way.” The court went on to say that:

McDonald’s involvement in its franchises and with workers at the franchises is central to modern franchising and to the company’s ability to maintain brand standards, but does not represent control over wages, hours, or working conditions.

The Suffer or Permit Test.  In addressing the “suffer or permit” test, the Court of Appeals held that the plaintiffs improperly focused on McDonald’s responsibility for preventing the alleged wage-and-hour violations. The court noted that the correct test is whether the franchisor is one of the plaintiffs’ employers, not whether the franchisor caused the plaintiffs’ employer to violate wage-and-hour laws by allegedly giving the employer bad tools or bad advice as the plaintiffs had argued.

The Common Law Test.  Finally, the court found that McDonald’s Corp. was not a joint employer under the common law test. Under the common law test, the principal test of an employment relationship is the right to control the manner and means of accomplishing the desired result. On this issue, the court again held that the corporation’s exercise of control over the means and manner of work performed at its franchises is geared specifically toward quality control and maintenance of brand standards. Thus, McDonald’s cannot be classified as an employer of its franchisees’ workers under the common law definition.

 A Few Takeaways

At a time when the legal trend has been an expansion of the joint employment concept, this ruling, from a traditionally employee-friendly federal circuit court, provides some good news for franchisors. The opinion validates a franchisor’s ability to control general standards and operating procedures of franchisees without assuming responsibility for a franchisee’s employees.

The opinion also serves as a reminder for franchisors that there are limits to the role a franchisor can play in the business of its franchisees without assuming the unintended position of joint employer. Had McDonald’s Corp. controlled or directed daily employment activities or set wages or hours of work for the franchise workers, the ruling almost certainly would have been different.

Finally, the court commented, in a footnote, that it offered no opinion as to whether the franchisee in the case might have a legal action against the franchisor relating to the provision of advice or tools relating to employment. This footnote provides a reminder to both franchisors and franchisees of the need to address allocation of risk and responsibility in the franchise agreement.