NLRB Notice Posting Rule Is Finally Put to Rest for Most Employers

On Monday, January 6, 2014, the NLRB announced that it had decided not to appeal to the Supreme Court the decisions of the D.C. and Fourth Circuit Courts of Appeal invalidating its controversial proposed rule from August 2011 to require most private sector employers to post notices informing employees of their rights under the NLRA.  The Board’s deadline to appeal the court decisions had been January 2, so the announcement was not a complete surprise.  Notwithstanding this development, the Board continues to legally post the notice on its website for employees to view and has also created a free mobile app (for iphone and Android users).  Moreover, these court decisions (finding that the proposed rule violated employers’ free speech rights under the NLRA) do not affect the obligation of government contractors to post the same notice under Executive Order 13496 because that Order was not promulgated under the authority of the NLRA.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

NLRB Posting Rule Postponed Again

Yesterday, the United States Court of Appeals for the District of Columbia Circuit granted an emergency motion for an injunction pending appeal in the National Association of Manufacturers v. NLRB, No. 12-5068 and the NLRB announced that it will comply with the stay and file a cross-appeal. As reported here last month, the District Court had upheld the NLRB’s new requirement for most private sector employers to post a notice of employee rights under the National Labor Relations Act (NLRA), but simultaneously concluded that the enforcement actions which the NLRB intended to take to enforce the new requirement were outside its authority under the NLRA. The new posting requirement was to begin at the end of this month on April 30, 2012. An appeal was filed by the NAM and it sought to enjoin the new posting requirement pending the appeal. The NRLB objected to staying the posting requirement, while also indicating that it might appeal the portion of the decision denying its enforcement powers. (In the meantime, a federal court in South Carolina rejected the NLRB’s authority to require employers to post the notice). The Court of Appeals ultimately concluded that because the posting requirement had been stayed by the NLRB since August during the pendency of the district court litigation, staying it another six months or so while the appeal progressed was advisable to maintain the status quo.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

NLRB Delays New Posting Requirement Until 2012

[Editor's Note: Just in time for Xmas, the NLRB announced that the new requirement would be delayed yet again (at the request of a federal court hearing an employer challenge to the new rule) until April 30.]

Yesterday, the NLRB announced that it was delaying from November 14 until January 31, 2012 the new requirement for employers to post a notice explaining employees' rights under the National Labor Relations Act. The reason given is to give the NLRB time to reach out and educate small and medium sized employers as to who is and is not subject to the NLRA.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Franklin County Court of Appeals Helps Pro Se Plaintiff with FMLA Claim.

Last week, the Franklin County Court of Appeals partially reversed summary judgment against an employee on his FMLA claim. Randolph v. Grange Mutual Casualty Co., 2009-Ohio-6782 (12/22/09). The pro se plaintiff had been summarily fired after failing to report to or timely call off work on the last day of an attendance probation. He claimed that he had blacked out during an episode of depression, which he claimed was aggravated when he learned he had been fired after he finally woke up and started to drive to his doctor and call his supervisor. In his lawsuit, he claimed that the employer interfered with his right to take FMLA leave. The trial court found that he failed to notify the employer of his need for FMLA leave as soon as practicable and his absence was not encompassed by his earlier FMLA request for intermittent leave for “treatment.” However, the appellate court found that the employee’s depressive episode could arguably constitute a serious medical condition which would support new, unforeseeable FMLA leave and that a jury could conclude that he had notified the employer in sufficient time.

According to the Court’s opinion, the employer’s policy:

requires an employee to report any absence and the reason for it within a half-hour of the employee's scheduled start time and states that failure to report an absence may result in disciplinary action up to and including termination. Under the absenteeism policy, an employee with seven absences in a 12- month period is placed on "absence probation," during which the employee may have only one absence. More than one absence during the absence probation subjects an employee to termination.

The plaintiff had been placed on attendance probation on June 24 until December 5 for reasons unrelated to an FMLA leave he had taken the prior year. Nonetheless, the employer did not count against his probation his absences as excused by his physician for his depression or for an asthma attack which he admitted was not covered by FMLA.

On the last day of his probation, the plaintiff failed to report to or call off work within 30 minutes of the beginning of his shift. His supervisor claimed that she left him a voice mail near the end of the day terminating his employment for violating the terms of his probation. According to the plaintiff, he awoke from a blackout in the late afternoon, realized he needed immediate medical attention and when he began to call his supervisor while driving to the doctor, he checked his voice mail and learned he had already been fired. At this point, he claimed that he began to have a nervous breakdown and drove to his mother’s home instead of his physician. His mother then telephoned the supervisor that evening and attempted to explain the situation and how her son would probably be hospitalized. The plaintiff himself called his supervisor and human resources first thing in the morning and explained the same. Nonetheless, the employer refused to reconsider his termination.

While the Court agreed that the plaintiff’s FMLA rights had not been interfered with before December 5, it found a factual dispute as to whether he was entitled to new, unforeseeable FMLA leave beginning on December 5 even though he failed to call off work during his shift that day. The Court agreed that the plaintiff’s earlier FMLA certification only covered “treatment” and “recovery from treatment” and did not encompass the December 5 absence because he had not received any treatment that day. However, to the extent that his need for leave on December 5 was unforeseeable, the plaintiff was only required by both the earlier and current FMLA regulations to give notice of his need for leave “as soon as practicable.” This could be two days, or less, or more depending on the particular factual circumstances of the situation.

The employer argued that the plaintiff had admitted that the depressive episode began on November 30 and thus, plaintiff was on notice days earlier that he might need FMLA leave. However, the court found a reasonable jury could conclude that the plaintiff did not require time off work until he blacked out during the evening of December 4, and thus, he notified his employer as soon as practicable under the circumstances. In reaching this decision, the Court found it relevant that the employer summarily terminated the employee by voice mail and how this notice of his termination adversely affected his mental health, preventing him from calling his employer any earlier in the day under the circumstances.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Franklin County Court of Appeals Gets Tough with Unemployment Claimants

The Franklin County Court of Appeals issued two decisions yesterday denying unemployment compensation. In the first case, the employee was fired after not showing up for an investigatory interview that had been scheduled less than 24 hours earlier and even though he had been told by a Human Resources employee that she knew nothing about any such interview and there was a question whether the conduct underlying the investigation would have justified his termination. Williams v. Ohio Dept. of Jobs & Family Servs., 2009-Ohio-6328. In the second, an employee was fired for tardiness even though she admittedly only received one prior warning that her employer was dissatisfied with her timeliness and none about her general work performance. White v. DKS Group Inc., Proteam Staffing, 2009-Ohio-6329.

In Williams, the employee managed a group home for youths. After serving a two-week suspension for work issues, he was suspended again pending an investigation into additional allegations about his failure to take corrective action against a subordinate (which ultimately may have proved to be unfounded). He then filed a grievance against his two superiors and was placed on paid administrative leave pending an investigation of his grievance. Although the employer’s policy provided for resolving such grievances for two weeks, he heard nothing further from the employer for six weeks. The employer had attempted to contact him by mail, but the letters were returned by the Post Office. The employer also claimed to have left several voice mail messages, but the employee denied that. At that point, he received a telephone call that he was to meet with the employer’s attorney the following day, but was given no further details – such as a telephone number or location. He then called Human Resources, where an employee told him that no decision had been rendered on his grievance and she knew nothing about any meeting with the attorney. Therefore, he failed to attend the scheduled interview. Accordingly, the employer then terminated him for abandoning his job and he received notice the following month.

His unemployment compensation application was denied by the ALJ, the UCBR and the common pleas court. A divided Court of Appeals affirmed.

First, it was concluded that the employee failed to make reasonable efforts to maintain contact with his employer and ascertain the status of his grievance. He argued that he had been informed in writing and verbally to have no contact with his employer while on administrative leave, but the employer explained that this meant only his peers and subordinates – not HR or management. The Court found the employee’s testimony to be confusing on this point because he denied receiving the written instruction to not contact the employer and never claimed that he had been told not to contact HR. In fact, he contacted HR after receiving the telephone call and again three weeks later (when he learned he had been fired).

Second, it was concluded that the employee unreasonably failed to appear at the interview scheduled with the attorney. For reasons that were not explained in any detail, the Court concluded that it was unreasonable for the employee to rely on what he was told by HR and that, instead, he should have requested her to investigate further or to have requested more information – such as the attorney’s telephone number and email address so that he could independently confirm her information. It also found that if he found the short notice to be unreasonable, he should have requested the interview to be rescheduled instead of ignoring it altogether.

Third, the Court was unconcerned with the employee’s argument that the employer violated its own policy by not resolving his grievance within two weeks as called for in its policy because, among other things, the employee failed to introduce a copy of the policy into evidence. However, the dissent noted that the employee attempted to introduce the policy into the record, but the ALJ refused to accept it on the mistaken belief that it had been earlier admitted. The dissent also had difficulty affirming the denial of unemployment compensation to an employee who was terminated while on administrative leave pending a tardy resolution of his own grievance when there were no other grounds to support the termination and he had relied on incorrect information given to him by the employer’s HR employee and a direction to not contact any employee at the employer.

In White, the employee worked for a temporary staffing company, which claimed that she had been removed from 50% of her prior assignments for complaints about her poor work performance and from her last assignment because of tardiness. The employer “testified that [its] policy provided that, if an employee was tardy three or more times in a 30-day period, then discipline, including termination, could result. Upon learning from [the client] that [the employee] had attendance issues, and after reviewing [the employee’s client] timesheets, [the employer] concluded that [the employee] had violated the [company’s] attendance policy.”

In turn, the employee testified that no one had ever mentioned that her performance had been in any way unsatisfactory and that her temporary assignments had just ended as scheduled. However, the company did not produce the purchase orders she had subpoenaed to support her argument and her attorney failed to object to this to preserve the error. Instead, she testified that her last assignment had been scheduled to last another three months before she was fired. She also denied that her timeliness violated the client’s flex-time policy and that after it was first mentioned to her, she stopped using flex time. However, when confronted with copies of her time sheets, she admitted that she arrived after her scheduled start time on several occasions (because of, among other things, transportation issues) and sometimes failed to work 40 hours in a week.

The hearing officer reversed her grant of unemployment benefits, which was not reviewed by the Unemployment Compensation Board of Review and was affirmed by the common pleas court. On appeal, the Court found no error because of the evidence that the employee had been late on numerous occasions and sometimes failed to work 40 hours/week in violation of the policies of both her employer and its client. Further, it found insufficient evidence that missing evidence would have changed the result.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Dismisses FMLA Claim of Employee Hit By Car for Lack of Specific Medical Evidence Despite Employer’s Own FMLA Violation.

This morning, a divided federal Sixth Circuit Court of Appeals affirmed the dismissal of an FMLA claim, but on different grounds than the trial court. Stimpson v. UPS, 08-2263 (6th Cir. 11/3/09). The Court found that the employee did not qualify for FMLA leave because he failed to show that he suffered from a serious health condition even though he had been injured when his bicycle was hit by an automobile, visited an emergency room, was prescribed medication and produced statements from two different physicians that he was unable to work for several weeks. Rather, the Court was influenced by the plaintiff’s failure to fill the drug prescription given to him in the ER and the lack of specificity by his medical providers. Nonetheless, the Court also rejected the argument that the plaintiff failed to give sufficient notice of his need for FMLA leave and noted that the employer violated the FMLA when it only gave the employee 72 hours to produce a medical statement under the collective bargaining agreement because the FMLA gave the employee 15 days to produce such a statement. However, the employer’s violation did not save the employee’s FMLA claim because he failed to produce the requested medical statement within fifteen days.

As described by the Court, the plaintiff was riding his bicycle (while intoxicated) when it was struck by a car around 3:30 p.m. on April 29, 2006. The motorist was cited for following him too closely. He denied medical treatment at the scene, but later visited an ER where he was prescribed medication after complaining about lower back pain and the physicians noted extensive bruising where he had collided with the road pavement in the earlier accident. He was also diagnosed with an acute lumbar strain. He was discharged 2.5 hours after checking in. Even though he never filled the medical prescription, he returned to the ER the next day because of his back pain and was promptly discharged for failing to fill his earlier prescription. There was evidence that he also notified his supervisors at UPS about his accident, but he did not return to work for about three weeks, failed to call off daily under regular UPS procedures and failed to provide medical documentation of his inability to work before May 22. UPS claims that it verbally requested medical documentation and sent him a letter requesting medical documentation to be submitted within 72 hours (as required under the CBA). When the plaintiff failed to submit medical documentation before May 12 (because, as he claimed, he had moved and did not receive the UPS letter until May 22), he was terminated.

On May 23, the plaintiff filed a grievance with the union and submitted three medical statements that he could not work until May 20. When his grievance was denied, he filed an Unfair Labor Practice Charge with the NLRB on the grounds that he was being retaliated against for his prior union activities (in that he had previously been terminated by UPS for union activities and was reinstated by court order in September 2005 after an earlier ULP Charge he filed with the NLRB). However, unlike his prior ULP Charge, the NLRB dismissed this Charge. He then filed his FMLA lawsuit.

The District Court granted summary judgment to UPS because it concluded that the plaintiff was not eligible for FMLA leave in that -- even disregarding his earlier unlawful termination – he had not worked 1250 hours in the prior 12 months and had failed to give proper notice of his need for FMLA leave. In addition, the trial court questioned whether he suffered from a serious health condition under the circumstances.

The Court of Appeals agreed with the plaintiff that there was a material factual dispute about how many hours he would have worked in the prior 12 months if he had not previously been unlawfully terminated. Even though the NLRB only required payment of a certain amount of back pay (less than 1250 hours), it failed to address the plaintiff’s claim that he would have worked additional hours and such evidence had been submitted to the District Court. Accordingly, summary judgment on that issue was inappropriate.

The Court also found sufficient evidence that the plaintiff had properly notified UPS of his accident and potential need for FMLA leave. The Court also noted that UPS acted entirely properly by notifying the plaintiff in writing that it wanted more medical information before designating FMLA leave. The Court did not address the question of whether the plaintiff was required to call off each day as required by UPS internal procedures.

However, the Court found that UPS violated the FMLA by only giving the plaintiff 72 hours written notice of the need for medical documentation:

The regulations state that “[t]he employee must provide the requested certification to the employer within 15 calendar days after the employer’s request, unless it is not practicable under the particular circumstances to do so.” 29 C.F.R. § 825.305(b). While UPS argues that its labor agreement with the Teamsters allows it to provide a shorter time period of seventy-two hours, the FMLA expressly provides that no collective bargaining agreement, such as that UPS has with the Teamsters Union, may diminish any protection granted by the FMLA. 29 U.S.C. § 2652(b). The fifteen-day period expired on May 20, 2006, two days before [the plaintiff] submitted his medical information. However, UPS terminated [the plaintiff] on May 12, 2006, well before the expiration of the fifteen-day period. [The plaintiff] missed the deadline, but UPS had first terminated him under a mistaken understanding of the applicable deadline.

Section 2652(b) of the FMLA provides that: “The rights established for employees under this Act or any amendment made by this Act shall not be diminished by any collective bargaining agreement or any employment benefit program or plan.”

Ultimately, the Court majority concluded that UPS’s mistake was irrelevant because even if he had submitted the information within fifteen days, the plaintiff failed to show that he suffered from a serious health condition. The plaintiff had never been admitted as an inpatient. His failure to fill his ER prescription also meant that he could not show a regiment of continuing care. “For example, an outpatient procedure with a follow-up appointment is not a “regimen of continuing treatment.” See Morris v. Family Dollar Stores of Ohio, Inc., No. 07-3417, 2009 U.S. App. LEXIS 6852, at *17-18 (6th Cir. Mar. 31, 2009).”

Surprisingly, the Court also found the medical statements submitted by his physicians to be deficient:

While [the plaintiff] has produced three separate notes from physicians stating that he could not return to work, the most detailed notation given on the forms is that [the plaintiff] cannot work “for medical reasons.” These notes fall far short of the requirement that any doctor’s certification must contain at a minimum “(1) the date on which the serious health condition began, (2) the probable duration of the condition, (3) the appropriate medical facts within the health care provider’s knowledge, and (4) a statement that the employee is unable to perform [his] job duties” in order to be valid.

The Court was also influenced by the fact that the plaintiff failed to follow his physician’s treatment advice:

[The plaintiff] also has not provided any other medical evidence to counter the emergency treating physician’s final diagnosis of bruises and mild back pain. Importantly, none of the medical information [the plaintiff] has provided suggests that his back pain significantly limited his movement or lifting ability, particularly when treated with the prescription [the plaintiff] refused to take. Because [the plaintiff] cannot demonstrate that he suffered from a serious health condition, he is not eligible for FMLA leave.

In short, even though two different physicians indicated that the plaintiff should not return to work for three weeks and even though there was no contrary medical evidence offered by the employer, the Court disregarded their expert medical opinions of the treating physicians and focused, instead, on the particular diagnosis and the fact that the plaintiff failed to follow medical advice (which presumably lengthened his period of disability).

In contrast, the dissent concluded that UPS would be required to first notify the plaintiff why his medical certification was deficient before he could be terminated for failing to satisfy his burden of proof. The majority dismissed this concern on the grounds that the plaintiff failed to submit any medical documentation within fifteen days. Thus, only when medical certification has been timely submitted would an employer be required to permit an employee to cure a deficiency.

The dissent also noted that while bruises probably are not serious health conditions, an acute lumbar strain could be:

Symptoms vary depending on the severity of the strain, but “[t]ypically, the patient with a low back strain moves with care, particularly when sitting down or standing up.” Id. Treatment “includes patient reassurance, brief bed rest during the acute phase of low back pain, a firm mattress with a bed board, and the judicious use of analgesics or nonsteroidal anti-inflammatory drugs (NSAIDs).” Id. ¶ 15A.46. Additionally, “the patient should be instructed to avoid activities that intensify back pain.” Id. The recovery period depends upon the severity of the strain. Although “[t]he acute back strain patient generally experiences gradual improvement over a period lasting approximately two weeks,” patients with severe strains may not recover for up to three weeks. Id. ¶ 15A.47. Finally, there is a “significant likelihood of recurrence,” and “[w]hile the first episode of back pain is usually the briefest and least severe, the vast majority of such patients are at risk of developing another episode of back pain that will be more severe and longer lasting.” Id. Clearly, an acute lumbar strain can be a “serious health condition that makes the employee unable to perform the functions of [his] position.” 29 U.S.C. § 2612(a)(1)(D).

The majority dismissed this concern as merely hypothetical in light of the lack of evidence and specificity in the medical statements.

Insomniacs may read the full opinion at http://www.ca6.uscourts.gov/opinions.pdf/09a0712n-06.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

DOL Issues FMLA Opinion Letter Formally Killing 1995 Two-Day Rule for Employees to Give Notice of Need for FMLA Leave.

Yesterday, in Letter Opinion FMLA2009-1-A (1/6/09), the Department of Labor published on its website an Administrator Letter Opinion which formally withdrew Letter Opinion FMLA-101 from January 1999 which barred employer attendance policies that required employees taking intermittent FMLA leave to report within one hour after the start of their shift. The requesting employer complained that the 1999 Letter Opinion prevented employers from “applying internal call-in policies, disciplining employees under the no call/no show policies or disciplining employees who call in late, as long as the employees provide notice within two business days that the leave FMLA-qualifying, regardless of whether they could have practicably provided notice sooner.”

The FMLA itself requires employees to provide “such notice as is practicable” when the need for leave is not foreseeable 30 days in advance. However, the 1995 regulations essentially interpreted “as soon as practicable” to mean within two business days. This interpretation was formalized in the 1999 Letter Opinion. The DOL noted that the FMLA regulations were substantially revised in November 2008 and became final on January 16, 2009 because the “one to two business days time frame set forth in the 1995 regulations had been misinterpreted as permitting employees to business days from learning of their need for leave to provide notice to their employers regardless of whether it would have been practicable to provide notice more quickly.” In the Notice of Proposed Rulemaking, the DOL explained the proposed rule change because it “expected that it will be practicable for the employee to provide notice of the need for leave either the same day (if the employee becomes aware of the need for leaving during work hours) or the next business day (if the employee becomes aware of the need for leave after work hours.)” Thus, “absent unusual circumstances, employees may be required to follow established call-in procedures (except one that imposes amore stringent timing requirement than the regulations provide) and failure to properly notify employers of absences may cause a delay or denial of FMLA protection.”

In particular, “[i]t generally should be practicable for the employee to provide notice of leave that is unforeseeable within the time prescribed by the employer’s usual and customary notice requirements applicable to such leave. . . . In both situations, employees must comply with their employers’ usual and customary notice and procedural requirements for requesting leave, absent unusual circumstances.”

The Department recognizes that call-in procedures are routinely enforced in the workplace and are critical to an employer’s ability to ensure appropriate staffing levels. Such procedures frequently specify both when and to whom an employee is required to report an absence. The Department believes that employers should be able to enforce non-discriminatory call-in procedures, except where an employer’s call-in procedures are more stringent than the timing for FMLA notice . . . . In that situation, the employer may not enforce the more stringent timing requirement of its internal policy. Additionally, where unusual circumstances prevent an employee seeking FMLA-protected leave from complying with the procedures, the employee will be entitled to FMLA-protected leave so long as the employee complies with the policy as soon as he or she can practicably do so.

Therefore, “where an employer’s usual and customary notice and procedural requirements for requesting leave are consistent with what is practicable given the particular circumstances of the employee’s need for leave, the employer’s notice requirements can be enforced. . . . Thus, . . . [if] an employer policy require[es] employees to call in one hour prior to their shift to report absences and an employee who is absent on Tuesday and Wednesday, but does not call in on either day and instead provides notice of his need for FMLA leave when he returns to work on Thursday, it is our opinion that unless unusual circumstances prevented the employee from providing notice consistent with the employer’s policy, the employer may deny FMLA leave for the absence. “

Insomniacs can read the full opinion letter at http://www.dol.gov/esa/whd/opinion/FMLA/2009/2009_01_06_1A_FMLA.htm.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit: Union’s Waiver of 30-Year Retired Employee’s Benefits Without Notice or Consent Protected Assets of Bankrupt Employer.

Today, the Sixth Circuit issued a decision in which it held that the statutory and severance claims of a 30-year retired employee of bankrupt LTV Steel had been waived by the employee’s former union even though he received no notice of the waiver, never consented to it, and had been explicitly excluded from receiving compensation under the waiver agreement. McMillan v. LTV Steel, Inc., No. 07-4370. Although federal law is pretty clear that unions no longer represent retired employees in negotiations, the employee was deemed to have waived that compelling legal argument when he failed to raise it in support of his claims before the bankruptcy or district courts. The Sixth Circuit also refused to disturb the district court’s conclusion that the employee’s actual claim for pension and 401(k) benefits was with the Pension Benefit Guaranty Corporation (PBGC) since it had assumed control of the employer’s retirement benefits when it filed for bankruptcy.

According to the court’s opinion, the plaintiff retiree worked for 30 years in a UWSA unit for LTV Steel. The UWSA and LTV had negotiated both a defined contribution plan (i.e., a 401(k) plan to which both the employee and employer contributed) and a defined benefit plan (i.e., pension). In 1999, the UWSA and LTV reorganized the retirement benefits to eliminate future pension contributions (and limit future payouts to a $10,000 lump sum), and to transfer employer contributions from the 401(k) plan to the pension plan. About a year later, LTV filed for bankruptcy protection, issued a WARN notice a few months later and eventually permanently closed the retiree’s plant. The plaintiff retiree worked at reduced pay at other LTV plants, but remained out of work beginning in August 2001. Under a USWA negotiated agreement, he had the option to transfer (without seniority) to another plant, to remain on layoff status, to accept retirement or to take severance. The plaintiff elected to retire in December 2001 and take his $10,000 pension lump sum. While the opinion is ambiguous on this point, this amount was apparently never paid.

In the meantime, LTV eventually sold all of its assets in December 2001, but the sale proceeds were only sufficient to pay secured creditors and not to pay administrative claims or unsecured creditors, such as the plaintiff and other retirees. Accordingly, PBGC assumed LTV’s pension obligations. The UWSA then renegotiated the CBA with LTV and eliminated, among other things, the previously promised severance pay. Nonetheless, six months later, the USWA filed an administrative claim with the bankruptcy court for LTV’s failure to pay severance pay, WARN Act liability, retiree benefits, etc. The UWSA settled its claim with LTV in December 2003 for $15M, but the settlement expressly did not benefit retirees such as the plaintiff who worked at his original plant or were laid off prior to November 2001. In the 2003 settlement, UWSA waived any and all other claims it could make arising out of any bargaining agreement. The plaintiff received no notice of the USWA administrative claim and did not receive notice of, or consent to, the 2003 settlement.

Nonetheless, the plaintiff filed his own administrative claim against LTV in 2002 for over $300,000 (for unpaid wages, pension benefits and 401(k) payment) and it was denied by the bankruptcy court. The plaintiff eventually reached an unsecured settlement with Copperweld -- one of LTV’s subsidiaries -- for the full amount, but retained his right to pursue his claim against LTV. In 2004, he filed another administrative claim for over $40,000 for his unpaid 401(k) contributions, severance pay and other benefits.

The bankruptcy court found that the 401(k) contributions were transferred to the pension fund in 1999 and were now being administered by PBGC and not LTV. The Sixth Circuit agreed that the plaintiff should be limited to asserting a claim against the PBGC. In addition, the bankruptcy court found that collateral estoppel from the Copperweld settlement estopped the plaintiff from pursuing the same amount from LTV, despite his reservation of rights to pursue claims against LTV. The Sixth Circuit found that the plaintiff’s claims were not entitled to administrative priority status because the liability arose before LTV filed for bankruptcy and did not relate to retiree healthcare benefits.

Finally, his claim for severance benefits and WARN Act payments were deemed waived by the USWA in 2003 even though he received no proceeds from that $15M settlement, received no notice of the claim or settlement, and never consented to the settlement. Indeed, the law is clear that unions cannot negotiate on behalf of retirees because they are no longer union members. However, even though the bankruptcy court erroneously concluded that the USWA was acting as his agent, the plaintiff never raised the issue of agency to the bankruptcy or district courts, but rather, focused on his lack of notice and consent to the settlement. Therefore, the Sixth Circuit determined that he could not belatedly raise the agency argument even if the lower courts had erred. Moreover, if the UWSA had been his agent, it had authority to waive his WARN Act and severance pay claims on his behalf – even without notice or consent. Therefore, those claims were also dismissed.

Insomniacs can read the full court decision at http://www.ca6.uscourts.gov/opinions.pdf/09a0040p-06.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Appeals Court Reduces Non-Compete Period for Long-Time Tax Preparer Employee.

Last month, the Lucas County Court of Appeals reversed in part a summary judgment entered by the trial court in favor of a former employee and cut in half the non-compete period in the non-compete agreement. Murray v. Accounting Ctr. & Tax Servs., Inc., 2008-Ohio-5289 (10/10/08).

The plaintiff was forced by her employer to sign a non-compete agreement in 1999 in order to receive her paycheck that day. The agreement provided that she would not accept fees from any client of the employer for two years from the date her employment was terminated. In addition, the agreement provided that the agreement could be transferred to any successor employer upon merger or sale of the firm. In 2004, the firm was sold to the defendant employer, the non-compete agreement was assigned to the new company and the plaintiff continued working for the new company. In November 2006, the defendant employer presented her with a new Confidentiality and Non-Compete Agreement and asked her to sign it along with an agreement changing her compensation structure from hourly wages to commissions. When she refused to work on a commission basis, she was fired in January 2007. She continued to provide services to clients of the defendant employer and filed a declaratory judgment action testing the validity of the non-compete agreement which she signed in 1999. The trial court ruled that the agreement was unenforceable and ruled in favor of the plaintiff.

On appeal, the appeals court found that the 1999 non-compete agreement was properly assigned to the defendant employer over objections that no notice of the assignment was provided to the plaintiff employee.

The court did not address whether the 1999 agreement was supported by sufficient consideration – in that the undisputed evidence showed that the plaintiff was required to sign it in order to receive her current paycheck – which was to compensate her for services already rendered. The employer could not have legally withheld her wages if she had refused to sign the 1999 non-compete agreement without violating the FLSA or Ohio’s wage payment and collection law. On the other hand, the court may have considered her future employment to constitute valid consideration – but it does not address that obvious point at all.

Instead, the court focused on the reasonableness of the terms of the 1999 non-compete. "A covenant restraining an employee from competing with his former employer upon termination of employment is reasonable if the restraint is no greater than is required for the protection of the employer, does not impose undue hardship on the employee, and is not injurious to the public." The court then decided that the agreement was onerous in restricting the livelihood of a 16-year employee who supported herself by preparing tax returns for her employer and for herself. However, in balancing the interests of the employer in protecting its client base, the court narrowed the non-compete from two years to one year. The court also delayed the running of the one-year period to 60 days from the date of the court’s order. The court did not address the issue of liquidated damages presented in the 1999 agreement even though the plaintiff had admitted that she had provided services to clients of the defendant-employer.

Insomniacs can read the full decision at http://www.sconet.state.oh.us/rod/docs/pdf/6/2008/2008-ohio-5289.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit: Eligibility Determination for Intermittent Leave Begins With Each FMLA Year Regardless of When FMLA Absence Began.

Today, the Sixth Circuit affirmed dismissal on summary judgment of an FMLA claim where the employee began intermittent leave on December 13 for chronic depression and did not return to work until January 15. Davis v. Michigan Bell Telephone Co., 07-1512 (6th Cir. 9/29/08). Although the employee had been eligible for FMLA leave when she began her absence on December 13, she had not worked 1250 hours in 2004 and, thus, was ineligible for FMLA leave in 2005. When her therapist informed her employer that she was capable of returning to work on January 3, but she did not return until January 15 – despite a warning from her employer, the employer deemed her absence as unexcused and terminated her employment in February for the chronic poor attendance. Although another physician later certified in March that the plaintiff’s continuing absence was related to her chronic depression, the employer determined that she was ineligible under the FMLA because a new leave year began on January 1 and she had not worked 1250 hours in the preceding calendar year. The Court rejected the plaintiff’s claim that she was not given effective notice of her ineligibility.

According to the Court, “[w]hen an employee has a chronic health condition for which intermittent FMLA leave has been approved, the leave commences upon the occurrence of the first absence caused by that condition, and it extends to cover every other absence caused by that condition during the same twelve-month FMLA period.” Thus, once an employee is deemed eligible for FMLA leave, every period of intermittent leave taken during the rest of that FMLA leave year for the same medical condition is deemed to be covered – regardless of the intermittent periods of work and regardless of whether the employee had worked 1250 hours in the twelve months preceding each absence. “In other words, each absence subsequent to the first absence is not treated as a separate period of FMLA leave with its own commencement date. To hold otherwise would render the term “intermittent leave” meaningless and would effectively read it out of the FMLA since a period of intermittent leave “must, by definition, comprise periods . . . in which the employee is present at work.” Id. “Thus, a series of absences, separated by days during which the employee is at work, but all of which are taken for the same medical reason, subject to the same notice, and taken during the same twelve-month period, comprises one period of intermittent leave.”

On the other hand, that intermittent leave, “can only extend to the end of the twelve-month FMLA period in which it began. See id. at 681-83. Once a new twelve-month FMLA period begins, any additional absences caused by that same chronic condition would constitute a new period of intermittent FMLA leave. See id. at 681. Otherwise, there would be no point at which the initial period of intermittent FMLA leave ended and a new period commenced. Under that scenario, employees would never have to reestablish their eligibility for FMLA leave and would therefore be perpetually entitled to twelve weeks of FMLA leave per year based on a single eligibility determination . . . . a period of intermittent leave cannot last beyond the specific twelve-month FMLA period in which it begins. Therefore, absences caused by the same chronic condition, but occurring in different twelve-month FMLA periods, must constitute different periods of FMLA leave. And as different periods of leave, they must have different times of commencement. The clear consequence of this is that [plaintiff’s] unexcused absences
in January of 2005, if approved as FMLA leave, would have constituted a new period of FMLA leave that commenced in January of 2005. Therefore, [plaintiff’s] FMLA eligibility was appropriately reevaluated in January of 2005, and the defendant was correct in determining that [plaintiff] was not eligible for FMLA leave with respect to her unexcused absences.”

The Court rejected “the concept of intermittent leave . . . should be considered a single period of leave simply because it is a continuous period of absence. A period of intermittent leave, however, is not made up of a single continuous absence. As explained above, an employee does not begin a new period of leave with each new absence. An obvious corollary to this rule is that the simple act of returning from an absence does not itself terminate a period of intermittent leave. Since a period of intermittent leave is not terminated solely by the act of returning to work, there is no basis for saying that [plaintiff’s] intermittent leave terminated when she returned to work on January 15. But it is obvious that the period of intermittent leave that began in September of 2004 must end at some point. If the intermittent leave that began in September of 2004 instead ended upon the beginning of a new twelve-month FMLA period, then [plaintiff’s] request for FMLA leave in 2005, if approved, would have constituted a new period of FMLA leave commencing in January of 2005. Thus, the ultimate question presented by [plaintiff’s] argument is whether her intermittent leave in 2004 ended upon the occurrence of a new twelvemonth FMLA period, or whether it ended at some arbitrary point, such as her return to work on January 15. Since the act of returning to work itself does not terminate a period of intermittent leave, there is no principled reason to conclude that [her] intermittent leave should cover absences up to January 15, but not those occurring thereafter. There is, however, a logical basis for concluding that [her] intermittent leave terminated upon the beginning of a new twelve-month FMLA period. Because the FMLA speaks in terms of twelve-month periods, see 29 U.S.C. § 2612(a), the most reasonable conclusion is that a period of intermittent leave terminates when a new twelve-month FMLA period begins.”

The Court based its conclusion on a balancing of the needs of the employee with the needs of the employer. “It would be unduly burdensome on a business’s need to operate efficiently and profitably if the business were required to provide an employee with twelve weeks of intermittent leave per year perpetually based on the fact that the employee was eligible for FMLA benefits on a single day. In order to accommodate the reasonable interests of businesses, it must be possible to reevaluate employees’ eligibility at some point, and the only logical method of finding that point is to conclude that a new period of intermittent leave commences when a new twelve-month period begins.”

The Court also rejected the employee’s equitable estoppel and faulty notice arguments on the grounds that an ineligible employee is not entitled to FMLA leave even if the employer were late in notifying the employee of his or her eligibility.

Insomniacs can read the full opinion at http://www.ca6.uscourts.gov/opinions.pdf/08a0353p-06.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.