Summary of FCRA Rights Issued by CFPB for Amended Identity Theft Rights

In May, Congress amended the Fair Credit Reporting Act to, among other things, provide for a year-long credit freeze (and notice of consumer rights for a credit freeze) for victims of identity theft.   Earlier this month, the CFPB issued an interim final rule and new forms which consumer reporting agencies (CRAs) and employers should use, starting tomorrow, including a new Summary of Your Rights under the Fair Credit Reporting Act (the “Summary of Rights”).  The CFPB is giving CRAs and employers alternatives to complying with the amended FCRA and is asking for public comments on the new forms and interim rule.   While the new credit freeze rules do not apply to many consumer reports, including those obtained for employment and tenant background checks, many entities – including employers – are required to provide the Summary of Rights as amended by the statute.

The new statute – the Economic Growth, Regulatory Relief and Consumer Protection Act  --  requires CRAs to provide the summary of credit freeze rights to consumers who provide notice of identity theft.  However, it also requires the CFPB to amend the Summary of Rights, which has not been updated since 2012.   The Act does NOT require a credit freeze when the consumer report is requested in connection with employment or tenant, or background screening purposes.  15 U.S.C. §1681c-1(i)(4)(I).   Nonetheless, employers remain obligated to provide the Summary of Rights, as they have long been required, before making an adverse determination based on information from a consumer report.

The CFPB is permitting affected parties to continue using the 2012 forms as long as a new notice about credit freeze rights is also included or to begin using the new Summary of Rights form (which has incorporated the new credit freeze rights information).    Some management attorneys have asserted that employers are not required to use the new notice about credit freezes because the new statute only applies to CRAs and the freeze rights do not apply to consumer reports obtained for employment.  Nonetheless, they recognize that class action plaintiff attorneys are likely to bring suit against employers which do not use the new forms, making it cheaper to comply than to fight the new requirement.

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 be changed or 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: Employee Lawfully Terminated During FMLA Leave for Giving Doctor Inaccurate Information

On Tuesday, the Sixth Circuit affirmed an employer’s summary judgment on an FMLA claim where the employee was fired while on medical leave.  Hodnett v. Chardam Gear Co., Inc., No 18-1100 (6^th Cir. 9-11-18).   The employee’s doctor’s note indicated that he should be off work because he required light duty and the employer had refused to provide such work.  In fact, however, the employee had never spoken with anyone at the Company about whether he could have light duty work and just assumed that it would be denied.  When the employer received the note, it fired him because he had never formally requested medical leave and because he had never been denied light duty as indicated by his physician.   While the court found that his medical leave was protected under the FMLA, it also concluded that the employer was lawfully entitled to terminate the employee for misrepresenting his work status.

According to the Court’s opinion, the plaintiff was sent home early on August 21 because he claimed that he could not lift a part weighing four pounds.  On his way home, he was in a car accident.  Although medical tests found nothing broken, he was sent home with pain pills and told to take the next day off work.   However, he never returned to work.  He called off the following week for a variety of reasons.  On August 29, he requested a vacation day after Labor Day.  Claiming that he was suffering from pain, he sought additional medical treatment and lost wage compensation from his automobile insurance policy.    He informed the personnel clerk on October 3 and December 5 that he was off for a disability that started on August 22.

By mid-October, the plaintiff was examined by a physician who determined that he should not lift over 15 pounds.    The physician faxed a report to the employer indicating that the plaintiff should stay off work until November 18 and that the plaintiff had reported that he was not allowed to work with restrictions,  light/sedentary work.   The plaintiff’s doctor told the insurance company that he could return to work on October 18 with lifting restrictions which the employer would not provide.   Problem is, the plaintiff never spoke with anyone at the employer about whether he could work light duty and had not spoken with a supervisor at all since August 29.  He was fired on November 9.  When he protested being fired while on protected leave, the employer pointed out that he had never applied for leave and had given incorrect information to his physician about his working conditions because he had never spoken with anyone about light duty and had not even spoken with any supervisors since August 29. 

The Court found that the plaintiff’s medical leave was protected and the employer had failed to produce evidence of any policies showing otherwise.   Nonetheless, the employer had a legitimate reason for firing the plaintiff that was unrelated to his medical leave.

Chardam offered a legitimate reason for firing Hodnett, unrelated to the exercise of his FMLA rights.  Hodnett responded to Chardam’s November 7, 2014 termination letter by asserting that he had been on protected medical leave since August 22, 2014.  Chardam responded by letter, explaining that Hodnett’s employment relationship with Chardam had been terminated.  Chardam said:  “You provided incorrect information to your doctor about having restrictions, when you never discussed with anyone at the company about whether you could work with any restrictions.  You had no discussions with any supervisor at the company since your last day of work on August 29, 2014.”  This justification for firing Hodnett—that Hodnett had given false information to the doctor about his ability to return to work—satisfies Chardam’s burden to provide a legitimate reason, unrelated to the exercise of his FMLA rights, for terminating Hodnett’s employment.

Plaintiff admitted that he had not spoken with any supervisors since August 29, so he was unable to show that the employer’s reason was false, and thus, pretextual.   The Court rejected the plaintiff’s unsupported argument that he had been truthful – and accurate – that the employer would not have accommodated his lifting restrictions.  The plaintiff could not prove the accuracy of his belief because he had not confirmed it with the employer.  While the Court did not call it speculation, it could have.  Even under the ADA, the plaintiff employee is required to request an accommodation before an employer is liable for denying one.  The physician’s note provided to the employer did not indicate what restrictions the plaintiff required and so it could not constitute a request for an accommodation.

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 be changed or 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. 

What’s New with the FMLA

I was speaking at the Columbus Bar Association’s Labor & Employment Committee last week about complex medical leave issues (i.e., when the FMLA, ADA, Workers compensation and/or disability pay overlap).  In preparation, I learned that the DOL had issued two new Opinion Letters discussing the FMLA.  In addition, the DOL updated the FMLA medical certification forms, meaning that the current forms (which did not change at all, including keeping the last revised date as May 2015) will not expire until August 31, 2021.  To be sure that you are using the most current Medical Certification forms, download the forms from the DOL’s website and confirm that the August 31, 2021 date is in the upper right hand corner.

As for the Opinion Letters, the DOL WHD Acting Administrator confirmed that medical leave to have surgery to donate an organ is considered to be a serious health condition:

An organ donation can qualify as an impairment or physical condition that is a serious health condition under the FMLA when it involves either “inpatient care” under § 825.114 or “continuing treatment” under § 825.115.  Thus, as relevant to your letter, an organ donation would qualify as a serious medical condition whenever it results in an overnight stay in a hospital.  Of course, that is not the only means for organ donation to involve “inpatient care” or “continuing treatment.”  Organ-donation surgery, however, commonly requires overnight hospitalization, as you note in your letter, and that alone suffices for the surgery and the postsurgery recovery to qualify as a serious health condition.

In the other Opinion Letter,  the Acting Administrator agreed that an employer could suspend the no-fault attendance policy during an employee’s FMLA leave as long as it did not discriminate against the use of FMLA leave by permitting it to expire during other types of medical leaves.   In the employer’s question, the employer’s no fault attendance policy imposes points for non-FMLA absences and tardiness and automatically terminates employees who accrue 18 points within twelve months.  The points are frozen during FMLA leave and do not drop off while the employee is on FMLA leave.  The twelve month period is also extended by the duration of the FMLA leave.

The Acting Administrator noted that “‘[N]o-fault’ attendance policies [] do not necessarily violate the FMLA as long as points are not assessed for employees who are absent due to any FMLA qualifying reason.”  WHD Opinion Letter FMLA2003-4, 2003 WL 25739620, at *1.”  Moreover, FMLA leave does not entitle an employee to a superior position than employees who miss work for non-FMLA reasons.

An employee “may, but is not entitled to, accrue any additional benefits or seniority during unpaid FMLA leave.”  29 C.F.R. § 825.215(d)(2); see also WHD Opinion Letter FMLA-100, 1999 WL 1002428, at *2 (Jan. 12, 1999).  An employee is also not entitled to additional benefits or payments that are contingent on achieving a specified goal that the employee was unable to achieve because he or she took FMLA leave.  29 C.F.R. § 825.215(d)(5); see also Preamble to the Final Rule, 73 Fed. Reg. 67934, 67985 (Nov. 17, 2008).

The Opinion Letter interpreted the policy as rewarding employees for working by removing points, and therefore, missing work for FMLA leave meant that the employer was not required to reward the employee by removing non-protected attendance points.

Removal of absenteeism points is a reward for working and therefore an employment benefit under the FMLA.  Bailey v. Pregis Innovative Packaging, Inc., 600 F.3d 748, 750-51 (7th Cir. 2010); WHD Opinion Letter FMLA-100, 1999 WL 1002428, at *2 (Jan. 12, 1999).  As you describe in your letter, the number of accrued points remains effectively frozen during FMLA leave under your employer’s attendance policy.  An employee neither loses a benefit that accrued prior to taking the leave nor accrues any additional benefit to which he or she would not otherwise be entitled.  WHD’s longstanding position is that such practices do not violate the FMLA, as long as employees on equivalent types of leave receive the same treatment.  WHD Opinion Letter FMLA-100, 1999 WL 1002428, at *2 (Jan. 12, 1999) (stating that the FMLA would permit an employer to “neither count the FMLA leave period towards an attendance control policy for potential termination, nor credit the unpaid FMLA leave towards the recordable time for dropping such points,” as long as the employer treated other equivalent types of leave in the same manner).

If the employer, however, counts equivalent types of leave as “active service” under the no-fault attendance policy—meaning the employer counts such leave toward the twelve months necessary to remove points—then the employer may be unlawfully discriminating against employees who take FMLA leave.  29 C.F.R. § 825.220(c) (requiring that employees who take FMLA leave accrue the same benefits as employees who take equivalent non-FMLA leave). 

Because the employer treated workers compensation leaves the same as FMLA leave – i.e., employees do not accrue points and the points are frozen while the employee is absent on leave – there was no evidence of unlawful retaliation.

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 be changed or 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 Rejects Full-Time Work Schedule as Presumptive Essential Job Requirement Under the ADA

Last month, the Sixth Circuit reversed an employer’s summary judgment on a claim brought under the ADA, FMLA, and Pregnancy Discrimination Act on the grounds that the employer failed to prove that full time employment was an essential function of the position that precluded the plaintiff from working half-time for six more weeks while she recovered from post-partum depression.   Hostettler v. College of Wooster, No. 17-3406 ((6^th  Cir. 7-17-18).  The employer made a few hair-brained decisions:  denying a temporary extension of a requested medical leave (i.e., part-time schedule) right after giving the plaintiff a glowing performance evaluation.   It also failed to engage in the interactive process once it realized that her modified work schedule was more trouble than it was worth and that it questioned her need for leave.   Accordingly, as with another recent Sixth Circuit decision, the Court concluded that an employer’s rescission of a reasonable accommodation constitutes direct evidence of disability discrimination, making the McDonald-Douglas burden shifting analysis inappropriate.  “An employer cannot deny a modified work schedule as unreasonable unless the employer can show why the employee is needed on a full-time schedule; merely stating that anything less than full-time employment is per se unreasonable will not relieve an employer of its ADA responsibilities.” 

According to the Court’s opinion, the plaintiff was hired when she was four months pregnant and worked full time until she delivered.  She requested and was given more than twelve weeks of maternity leave, even though she did not qualify under the FMLA.  When her separation anxiety and post-partum depression precluded her from returning to work full-time, she was granted a reasonable accommodation of returning to a half-time schedule for approximately ten weeks.   She received a glowing performance evaluation in June.  In July, she submitted another certification indicating that she required approximately another six weeks of half-time work before she could return full-time. The next day, she offered to stay a couple hours later each day.  The day after that she was fired.   Although there was evidence that she had timely completed all of her assignments and had even been working a little from home, her boss was very stressed from picking up the slack and was concerned about work that was not getting done at all, like recruiting, lunch trainings, etc.  The plaintiff was not the only employee on medical leave and her boss was often the only person remaining in their small office.  The department was also starting a new online benefits enrollment system that month, which was taking the supervisor’s time as well.  However, a replacement was not hired until October – a month after the plaintiff likely would have returned to full-time work.

The employer argued that the employee only wanted to work part-time for the summer and that the only limitations she experienced with transitory and brief panic attacks.  However, the Court noted that she had been prescribed anti-depressants and had witnesses describe symptoms that went beyond the occasional brief panic attacks.

The “crux” of the case was whether the plaintiff was qualified for her position with or without a reasonable accommodation.

A job function is essential if its removal would fundamentally alter the position. . . . Put another way, essential functions are the core job duties, not the marginal ones . . . .

This analysis does not lend itself to categorical rules—it is “highly fact specific. . . . Although this court has stated that “[r]egular, in-person attendance is an essential function” of most jobs, EEOC v. Ford Motor Co., 782 F.3d 753, 762–63 (6th Cir. 2015) (en banc), it is not unconditionally so; courts must perform a fact-intensive analysis.  In determining what functions are essential, courts may consider as evidence—among other things—the amount of time spent on a particular function; the employer’s judgment; “written job descriptions prepared before advertising or interviewing” for the position; and the consequences of not requiring the employee to perform the particular function.  29 C.F.R. § 1630.2(n)(3).  Although the employer’s judgment receives some weight in this analysis, see Williams v. AT&T Mobility Servs., 847 F.3d 384, 391–92 (6th Cir. 2017), it is not the end-all—especially when an employee puts forth competing evidence.

The Court found that the plaintiff had created a factual dispute about whether full-time work was an essential function of her position.  A co-worker supplied an affidavit that there was no work within the department which was not being accomplished.  The plaintiff had just weeks earlier received a positive performance evaluation which confirmed that she was performing her job. Indeed, the plaintiff had never been criticized about her work.   (The Court seemed oblivious to the fact that no rational employer is going to criticize an employee for not performing work while on medical leave).  When asked, her boss could not identify a particular task which was not getting performed.

On its own, however, full-time presence at work is not an essential function.  An employer must tie time-and-presence requirements to some other job requirement.  To be sure, [the employer] cites language from this court’s cases that, when viewed independently from the facts of the cases, supports the college’s position.  But those cases nevertheless carried out a fact intensive analysis of actual job requirements.

The Court continued:

In sum, full-time presence at work is not an essential function of a job simply because an employer says that it is.  If it were otherwise, employers could refuse any accommodation that left an employee at work for fewer than 40 hours per week.  That could mean denying leave for doctor’s appointments, dialysis, therapy, or anything else that requires time away from work.  Aside from being antithetical to the purpose of the ADA, it also would allow employers to negate the regulation that reasonable accommodations include leave or telework.  29 C.F.R. § 1630.2(o)(2)(ii).   

[The employer] may have preferred that [the plaintiff] be in the office 40 hours a week.  And it may have been more efficient and easier on the department if she were.  But those are not the concerns of the ADA:  Congress decided that the benefits of gainful employment for individuals with disabilities—dignity, financial independence, and self-sufficiency, among others—outweigh simple calculations of ease or efficiency.  To that end, the ADA requires that employers  reasonably accommodate employees with disabilities, including allowing modified work schedules.  An employer cannot deny a modified work schedule as unreasonable unless the employer can show why the employee is needed on a full-time schedule; merely stating that anything less than full-time employment is per se unreasonable will not relieve an employer of its ADA responsibilities.  

The Court put limits on his holding:

[The plaintiff] never claimed, nor do we hold, that she had a right to perform her job on a part-time basis indefinitely.  If she had, we might be reviewing a closer case; one in which Wooster at least would have had the opportunity to show that such an accommodation was unreasonable.   . . . But that is not the case here.  Here, [the plaintiff] introduced sufficient evidence to create a dispute of fact over whether her moderate, time-limited accommodation allowed her to perform the essential functions of her position.

The Court also found a disputed issue of fact as to whether the employer had properly engaged in the interactive process. The trial court found it had by having four separate conversations with the plaintiff about the need for her to return to a full-time schedule, but the plaintiff asserted that it had only been discussed once and the employer never responded to her offer to work 6 hours/day.

The Court also reversed summary judgment on the plaintiff’s PDA claim because the trial court had concluded that the plaintiff’s refusal to work full-time was a legitimate and nondiscriminatory reason to discharge her that was not disproven as pretext.  However, the Court had already rejected the full-time work argument and found that the plaintiff had produced sufficient evidence of pretext by questioning whether that was the actual reason for her termination and showing disparate treatment by the longer medical leaves taken by two other employees for non-pregnancy reasons.

Notwithstanding the fact that no reasonable human resources employee could have believe that she was covered by the FMLA, the Court resurrected her FMLA claim by permitting her to pursue an equitable estoppel theory on the grounds that that the employer treated her leave as through she was covered by the FMLA even though she had only worked four months before she began her leave and had been given well more than 12 weeks off work before returning on a part-time basis.

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 be changed or 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. 

Divided Sixth Circuit Permits Rescission of Severance Agreement Release When Severance Pay Was Tendered Back A Few Weeks After Sex Discrimination Lawsuit Was Filed

Yesterday, a divided Sixth Circuit reversed an employer’s summary judgment on pregnancy and sex discrimination claims despite the fact that the plaintiff had signed a severance agreement and release in exchange for severance pay which she did not return until more than a year later -- after the EEOC investigation and a few weeks after she filed a lawsuit against her former employer.  McClellan v. Midwest Machining, Inc., No. 17-1992 (6^th Cir. 8-16-18).   The trial court found that the plaintiff’s release of claims had not been knowing and voluntary because she had been pressured to sign the release in the same meeting where she was terminated.  Although the trial court concluded that she had been required to tender back the severance pay before filing suit, the Sixth Circuit disagreed.  It found that, by returning the severance pay and revoking the agreement within weeks of when her attorney was informed of the agreement’s existence, she had satisfied the tender-back rule, if it even applied to bar federal discrimination claims.  Rather, the amount of severance could be deducted from any monetary award that she received during the litigation.

According to the Court’s opinion, the plaintiff had worked in inside sales for the defendant employer for eight years with no disciplinary actions.  In August, she announced that she was pregnant and her supervisor appeared annoyed when she missed work for pre-natal appointments.  In November, she was called into the president’s office, informed that she was being terminated and that she would only get severance pay if she signed the severance agreement and release that day.  Although the president reviewed the terms with her, he did so quickly and shot down her questions about the amount of her accrued vacation pay.  The Release apparently did not explicitly mention that it covered claims of discrimination because she testified that she thought that that it only applied to wage claims. 

She later filed an EEOC Charge and retained an attorney, who filed a complaint asserting claims for pregnancy discrimination, pay discrimination and a sex-segregated workplace.  When the employer notified her attorney about the severance agreement, the plaintiff sent a letter to the employer rescinding the agreement and enclosing a check in the full amount of the severance pay that she had received.   The employer returned her check on the grounds that there was no legal basis for rescinding the agreement. 

The trial court denied the employer’s motion for summary judgment on the grounds that there were disputed questions of fact as to whether the plaintiff’s signature on the severance agreement release had been knowing and voluntary in light of the economic and other pressure she felt to sign the agreement during the termination meeting and the lack of clarity about the release encompassing discrimination claims.    However, the trial court granted the employer’s summary judgment motion on the grounds that even if the severance agreement had been voidable on grounds of involuntariness or duress, the common law tender back doctrine required her to return the consideration that she received prior to filing her lawsuit, not after, or she would be found to have ratified the severance agreement by retaining the consideration.

The Sixth Circuit reversed.  In its only prior reported decision applying the tender-back doctrine to a federal employment discrimination release, the court held that the tender back doctrine did not apply to a release of age discrimination claims under ADEA.  Raczak v. Ameritech Corp., 103 F.3d 1257 (6th Cir. 1997) (relying on Supreme Court decision in Hogue under the FELA).  The Supreme Court later refused to enforce a defective ADEA waiver (which did not comply with the OWBPA) even though the plaintiff had similarly failed to tender back the consideration that he had received prior to filing his ADEA lawsuit.  Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998).   The only other Circuit to address the issue to a Title VII claim had likewise found that the tender-back doctrine would not bar a lawsuit.  The Sixth Circuit found the same policy considerations applied to prevent applying the tender-back rule to federal sex discrimination claims.

In sum, we conclude that the language and reasoning of Oubre and Hogue apply equally to claims brought under Title VII and the EPA.  In Oubre, the Supreme Court was worried about “tempt[ing] employers to risk noncompliance . . . knowing it will be difficult to repay the moneys and rely[] on ratification.”  522 U.S. at 427.  Similarly, we worry that requiring recently discharged employees to return their severance before they can bring claims under Title VII and the EPA would serve only to protect malfeasant employers at the expense of employees’ statutory protections at the very time that those employees are most economically vulnerable.  We therefore hold that the tender-back doctrine does not apply to claims brought under Title VII and the EPA.  Rather, as the Supreme Court said in Hogue, “it is more consistent with the objectives of the Act to hold . . . that . . . the sum paid shall be deducted from any award determined to be due to the injured employee.”  390 U.S. at 518.

In any event, the Court found that the plaintiff’s return of the $4,000 severance pay more than a year after she had been fired and only a few weeks after she filed her lawsuit was sufficient to rescind the severance agreement.  “[F]ederal law does not require that the tender back be before, or contemporaneous with, the filing of the original complaint.” 

The Oubre majority, however, held that the party “elect[ing] avoidance” may tender back any benefits received under the severance agreement not only before filing suit, but at any point “within a reasonable time after learning of her rights.”  522 U.S. at 425 (emphasis added).  This comports with the Restatement of Contracts, which provides that “[t]he power of a party to avoid a contract for . . . duress . . . is lost if, after the circumstances that made it voidable have ceased to exist, he does not within a reasonable time manifest to the other party his intention to avoid it.”  Restatement (Second) of Contracts § 381(1) (1981) (emphasis added).

Accordingly, even if Plaintiff were required to tender back the consideration, she was required to do so not before filing suit but within a “reasonable time” after she discovered that the severance agreement revoked her right to bring a discrimination claim.  And given the district court’s factual finding that Plaintiff “did not understand she had given up her right to sue for discrimination” until engaging counsel to represent her in this matter, (R. 33, Second S. J. Order, PageID # 231), and that her counsel drafted a complaint immediately after speaking with her, it stands to reason that Plaintiff’s offer to tender back the consideration fell “within a reasonable time after learning of her rights,” Oubre, 522 U.S. at 425.

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 be changed or 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.