Monthly Archives: October 2016

October 19, 2016

Firing Employee On FMLA Leave Is Risky, But Not Always Unlawful

Terminating an employee out on Family and Medical Leave Act (FMLA) leave is risky business. After all, the major tenet behind the FMLA is to permit employees to take job-protected time off when serious health or family concerns arise.

But does that mean that an employer may never terminate an employee out on leave? No, but you better have well-supported business reasons for your termination decision, and be prepared to defend your decision in court. A recent decision by Tenth Circuit Court of Appeals offers a useful look at how a Colorado employer did it right and avoided liability for an FMLA-interference lawsuit.

Twelve-Year Employee Struggles After Promotion

Hired in 2002, Kris Olson began working for Penske Logistics, LLC as a dispatcher. Over the next ten years, he was promoted three times, including his 2013 promotion to Operations Manager of Penske’s Denver warehouse. In that role, Olson supervised over 30 employees and was responsible for hiring, financial records, moving and tracking inventory, conducting regular inventory audits, and other managerial tasks.

In his first year as Operations Manager, Olson appeared to be performing adequately, but not exceptionally, scoring mostly “2” and “3” grades on a 5-point scale on his 2013 performance review. He was told he needed to continue to train in his position. In January 2014, however, Penske issued a written warning to Olson for failing to fire an employee who had violated safety rules. Olson was told that any future failure to follow procedures would result in more severe discipline, up to and including termination. In June (about five months later), Olson’s supervisor, Rick Elliott, put Olson on a 60-day “action plan” that instructed Olson to hire more workers, process inventory more quickly, and respond promptly to phone calls and emails. The “action plan” concluded with a warning that failure to meet all requirements would result in Olson’s immediate termination. Olson appeared to follow the instructions in his “action plan.”

On July 9, 2014, Olson requested FMLA leave, which was approved. Olson’s last day at the warehouse before going out on leave was Friday, July 18, 2014.

Employer Discovers Employee’s Misconduct

July 18th proved to be a pivotal day for Olson. On that day, Elliott received a monthly grade that primary client, Whirlpool, gave the warehouse for June – a “D.” With Olson out on leave, Elliott asked a supervisor at another Penske warehouse, Nicki Brurs, to come to Denver to investigate why Whirlpool rated the Denver warehouse so low. Brurs found that there were at least 152 discrepancies between the warehouse’s inventory records and its actual inventory. In addition, Brurs learned that the warehouse was 567 audits behind schedule, having done only 37 random audits over the preceding few months.

At that same time, Elliott also discovered that over the previous few months, Olson had not billed Whirlpool for extra work performed by the warehouse. Earlier, Elliott had asked Olson why he had not billed Whirlpool for extra work and Olson answered that there had not been any extra work for which to bill. On July 28, however, Elliott learned that there had been several instances of extra work for Whirlpool, meaning Olson had lied to him.

By August 1, Elliott had made up his mind that Olson had to go. He sent a report to human resources summarizing the problems he had discovered with Olson, including his dishonesty. He detailed that Olson had hidden inventory losses by creating records for an imaginary storage location – a “ghost stow” – that allowed Olson to hide inventory losses for four years. He also reported that Olson had instructed his staff not to tell Whirlpool when inventory was missing, but instead, to report the missing units as damages. Elliott told HR that he wanted to bring in a temporary replacement as Operations Manager while Olson was out on FMLA leave and fire Olson on his first day back to work. HR agreed that Olson should be fired.

Despite its decision, Penske continued its investigation into Olson’s misconduct. Over the next couple of weeks, Penske discovered additional inventory errors and “ghost stows,” resulting in more than $120,000 of errors in the warehouse’s records. It also concluded that Olson had failed to train his employees, failed to enforce attendance policies, failed to return damaged items, and other lesser performance issues. Read more >>

October 5, 2016

DOL Finalizes Paid Sick Leave Rule For Federal Contractors

By Mark Wiletsky

To implement President Obama’s September 2015 Executive Order, the U.S. Department of Labor (DOL) recently issued its final rule requiring certain federal contractors to provide up to seven days of paid sick leave per year to employees who work on covered contracts. Here are the essential requirements for contractors under this new rule.

Which Contractors and Employees Are Covered?

The final rule applies to new contracts with the federal government resulting from a solicitation that was issued, or contract that was awarded, on or after January 1, 2017. It includes contracts that are covered by the Davis-Bacon Act, the Service Contract Act, concessions contracts, and service contracts in connection with federal property or lands.

Not all employees of a federal contractor must be provided with this mandated paid sick time. Instead, employees must be allowed to accrue and use paid sick leave only while working on or in connection with a covered contract. Employees who perform work duties that are necessary to the performance of a covered contract but who are not directly engaged in performing the specific work called for by the contract, and who spend less than 20 percent of their work time in a particular workweek performing work in connection with such contracts, are exempt from the rule’s accrual requirements.

What Amount of Paid Sick Time Must Be Provided?

Contractors must allow employees to accrue one hour of paid sick leave for every 30 hours worked on or in connection with a covered contract, up to a maximum of 56 hours per year. In order to calculate that accrual, contractors may use an estimate of time their employees work in connected with (rather than on) a covered contract as long as the estimate is reasonable and based on verifiable information. As for employees for whom contractors are not required by law to keep records of hours worked, such as exempt employees under the Fair Labor Standards Act, it may be assumed that such employees work 40 hours each week.

If a contractor prefers not to calculate accrual amounts, the contractor may elect to provide an employee with at least 56 hours of paid sick leave at the beginning of each accrual year.

What If A Contractor Already Provides Paid Sick Time Off?

A contractor’s existing paid time off (PTO) policy may fulfill the paid sick leave requirement as long as it provides employees with at least the same rights and benefits required under the final rule. In other words, if the contractor’s existing policy provides at least 56 hours of PTO that can be used for any purpose, the contractor does not have to provide separate paid sick leave, even if an employee chooses to use all of his or her PTO for vacation. However, if the contractor’s policy does not meet all of the requirements under the final rule, such as not permitting an employee to use paid time off for reasons related to domestic violence, sexual assault, or stalking, then the existing PTO policy would not comply. In such cases, the contractor would have to either amend its PTO policy to make it compliant, or separately provide paid sick leave for the additional purposes under the final rule.

How Does An Employee Use This Paid Sick Leave?

An employee may use paid sick leave in increments as little as one hour for absences resulting from any of the following:

the employee’s medical condition, illness or injury (physical or mental)
for the employee to obtain diagnosis, care, or preventive care from a health care provider for the above conditions
caring for the employee’s child, parent, spouse, domestic partner, or another individual in a close relationship with the employee (by blood or affinity) who has a medical condition, illness or injury (physical or mental) or the need to obtain diagnosis, care, or preventive care for the same
domestic violence, sexual assault, or stalking, that results in a medical condition, illness or injury (physical or mental), or causes the need to obtain additional counseling, seek relocation or assistance from a victim services organization, take legal action, or assist an individual in engaging in any of these activities.

An employee may request to use paid sick leave by a written or verbal request, at least seven calendar days in advance when the need for the leave is foreseeable. When not foreseeable, the request must be made as soon as is practicable. Contractors may limit the amount of paid sick leave that an employee uses only based on how much paid sick time the employee has available. Any denial of a request to use paid sick leave must be provided by the contractor to the employee in writing with an explanation of the denial. Operational need is not an acceptable reason to deny paid sick leave requests.

May Contractors Require Medical Certifications?

Contractors may require a medical certification only if the employee is absent for three or more consecutive full workdays. Contractors must inform employees that a medical certification will be required before he or she returns to work.

What About The Overlap With The FMLA?

Contractors must still comply fully with the federal Family and Medical Leave Act (FMLA) as well as state and local paid sick time laws. If an employee is eligible for time off under the FMLA, the contractor must meet FMLA requirements for notices and certifications, regardless of whether the employee is eligible to use accrued paid sick leave. The contractor may, however, run the paid sick leave concurrently with unpaid FMLA leave.

Must Unused Paid Sick Time Be Carried Over or Paid Out?

Contractors must carry over unused, accrued paid sick leave from one year to the next, but may limit the maximum amount of accrual at any point in time to 56 hours. Contractors are not required to pay employees for accrued, unused paid sick leave at the time of job separation, but keep in mind that state or local laws may mandate a different result if the organization uses PTO instead of sick time. However, if an employee has been rehired by the same contractor within 12 months after a job separation, the contractor must reinstate the employee’s accrued, unused paid sick leave, unless such amount was paid out upon separation.

Preparing For January 2017

Employers who expect to seek or renew federal contracts on or after January 1, 2017 should review their existing sick leave and/or PTO policies to determine what changes may be required in order to comply with the new rule. The DOL provides many additional resources to explain the final rule, including a Fact Sheet, Overview of the Final Rule, and Frequently Asked Questions. Given the potential impact on contractors’ policies and how they are administered, we recommend taking steps now to determine how best to comply.

October 4, 2016

Employment Contracts with California Employees Require California Law

By Jude Biggs

Beginning January 1, 2017, employers may not require a California employee to agree to litigate claims in a state other than California or to apply the law of another state to disputes that arose in California. These new restrictions pose particular problems for companies headquartered outside of California who employ workers in California.

New CA Labor Code Section 925

Recently signed into law by Governor Jerry Brown, Senate Bill 1241 adds section 925 to the California Labor Code. It provides that an employer “shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would do either of the following:

Require the employee to adjudicate outside of California a claim arising in California.
Deprive the employee of the substantive protection of California law with respect to a controversy arising in California.”

In other words, an employer may not force an employee who primarily works and lives in California to enter into an employment agreement, as a condition of employment, that provides that any claims must be resolved, either in court or by arbitration, in another state (a so-called forum-selection clause) or that another state’s law, which offers less protection to the employee than California law, will apply (a choice-of-law provision).

Why It Matters

California law is typically more pro-employee than other states’ laws. For instance, California law prohibits employers from requiring employees to waive their right to a jury trial before a dispute arises and places substantial restrictions on arbitration agreements. It also requires the payment of business expenses, where many other states do not.

Multi-state companies frequently seek to create some uniformity and predictability in where employment disputes will be litigated so they insert a venue clause into their employment agreements. Such clauses often provide that disputes must be heard in the state where the business is based or where its legal team is located, regardless of where the employee lives or works. Similarly, companies may write into contracts that the law to be applied is that of the state where they are headquartered or incorporated. This offers the business uniformity across all its operations and helps to avoid onerous employment laws in certain states.

The new Labor Code section 925 makes non-California venue and choice-of-law provisions virtually unenforceable per se for California employees, when made a condition of employment. If an employee has to go to court to enforce his or her rights to have a case in California and to use California law in the case, the court may award reasonable attorney’s fees to the employee. Read more >>