Labor & Employment Law I JULY 19, 2017

Taking FMLA Leave Does Not Guarantee Reinstatement

Employees sometimes think taking FMLA leave insulates them from an adverse employment action. Not so, as a couple of recent cases make clear.

Autumn Tibbs worked as the administrative assistant to the Chief Judge of the Circuit Court of the Seventh Judicial Circuit of Illinois. The Chief Judge has responsibility for the administrative functions of the circuit. Judge Leslie Graves, the Presiding Judge of Sangamon County, supervised Tibbs.

Tibbs took leave under the FMLA because of health issues from March to May 2011 and from June to August 2012. The day she returned from leave in August 2012, Judge Graves presented a letter that described several instances of misconduct and said Tibbs was being placed on paid administrative leave pending a disciplinary meeting with Chief Judge Mitchell.

The letter invited Tibbs to answer the allegations at a meeting with Chief Judge Mitchell. The letter also said that Tibbs could respond in writing, but told her that the meeting would proceed with or without her. Tibbs wrote Chief Judge Mitchell saying she would not attend. Chief Judge Mitchell fired her.

Tibbs then brought suit. She claimed the Administrative Office of the Illinois Courts was her employer. She asserted that the Administrative Office had retaliated against her for using FMLA leave.

The district court granted the Administrative Office’s motion for summary judgment, finding that the Administrative Office had not actually employed Tibbs and was not otherwise responsible for terminating her employment. The court also found that even if the agency did control and terminate Tibbs’s employment, she had not offered sufficient evidence to support an inference that she was fired to retaliate against her for using FMLA leave. Tibbs filed an appeal.

To survive summary judgment on her claim of retaliation under the FMLA, Tibbs had to point to evidence supporting a reasonable inference that she was fired because she took protected leave. The main evidence she offered in support of her claim was timing, because she was suspended immediately upon returning from the FMLA leave.

The appellate court agreed the timing was suspicious. However, suspicious timing alone is rarely enough by itself. A plaintiff must ordinarily present other evidence that the employer’s explanation for the adverse action was pretext for retaliation. According to the court, the critical question is simply whether the inference of unlawful intent is reasonable (at summary judgment) or correct (at trial).

The Administrative Office introduced evidence that Tibbs was fired for facially legitimate reasons. Tibbs maintained that the reasons were phony and thus were pretexts to cover retaliatory motives.

Pretext involves more than just faulty reasoning or mistaken judgment on the part of the employer; it is a lie, specifically a phony reason for some action.

The court observed that merely disagreeing with an employer’s reasons does not meet this standard. A plaintiff must point to evidence tending to prove that the employer’s proffered reasons are factually baseless, were not the actual motivation for the discharge in question, or were insufficient to motivate the termination.

Additionally, where multiple reasons are given the plaintiff has a tougher burden. Showing that just one reason was a lie may not be enough.

Tibbs failed to offer evidence sufficient to support an inference that any of the proffered reasons was false.

Tibbs did not dispute testimony that Chief Judge Mitchell honestly believed that each reason listed in the disciplinary letter supported her discharge. It was not enough for Tibbs to argue that Chief Judge Mitchell was wrong in his assessment of her performance. She had to point to facts showing that his explanation was unworthy of belief. She didn’t.

The judgment of the district court in favor of the Administrative Office of the Illinois Courts on Tibbs’s claim of FMLA retaliation was affirmed. Tibbs v. Administrative Office of the Illinois Courts, 860 f.3d 502 (7th Cir. 2017).

Before his employment with Sotera Defense Solutions, Inc., Gary Waag worked for Potomac Fusion, Inc., reporting to Dan Haug. At Potomac Fusion, Waag was “Senior Director of Operations, National Intelligence Programs.” Waag’s primary duties at Potomac Fusion included providing budgetary guidance and oversight for national security programs, developing standardized program controls, and supporting business development efforts to grow the footprint of the firm, particularly in the area of modeling and simulation.

In December 2011, Sotera, a defense contractor, acquired Potomac Fusion, which became Sotera’s Data Fusion Analytics (“DFA”) division. Sotera installed Haug as Vice President for the DFA division, and Waag kept the Director of Operations title he had held at Potomac Fusion. Waag’s duties at Sotera included oversight of issues related to recruiting, security, IT, and facilities. and development of new business at Sotera.

In September 2012, the United States Army selected Sotera as one of the non-exclusive prime contractors for the Software and Systems Engineering Services Next Generation program (“SSES NexGen” or “NexGen” program) to provide war fighting software solutions and support to the Army at the Aberdeen Proving Ground in Maryland. NexGen was an IDIQ contract—an “indefinite delivery/indefinite quantity” contract. A prime contractor has the right to bid on “Requests for Proposals” (“RFPs”) or “task orders” issued by a federal department or agency under an IDIQ contract like NexGen. Sotera was qualified to bid on RFPs in the area of software and analytics. With a budgetary ceiling of $7 billion, the NexGen program was potentially very lucrative for contractors who were awarded work, but Sotera still had to out-bid other prime contractors. Thus, the NexGen program was worth nothing to Sotera until it outbid other prime contractors for NexGen work.

In early October 2012, Haug and Vice President Kathleen Lossau asked Waag to become the Program Manager (“PM”) of Sotera’s NexGen work in light of Waag’s experience managing IDIQ contracts. The PM position for an IDIQ contract was largely “a marketing business development role,” particularly in the early stages. Thus, Waag’s salary was not directly billable to the government—it was paid out of Sotera’s overhead costs. During Waag’s tenure as PM, Sotera did not have any work related to NexGen task orders, and Waag had no staff or employees reporting to him on NexGen projects.

On October 17, 2012, Waag severely injured his hand when he fell off the roof of his house. He was hospitalized for several days and his physician anticipated he would not return to work until December 31, 2012. Waag informed Haug about his injury on the day it happened and explained that he would not be able to work for an extended period of time due to the severity of the injury.

According to Waag, Sotera never notified him of his rights to take leave under FMLA. Sotera, however, gave its employees a handbook containing its leave policies, and this information was also accessible online. Sotera’s leave policy provides up to 12 weeks of unpaid family and medical leave and states that, “with limited exceptions, an employee who takes leave under this policy will be able to return to the same job or a job with equivalent status, pay, benefits and other employment terms.” When Waag began his employment, he received a Kindle device onto which Sotera’s leave and other human resources policies were loaded.

While he was on leave, Waag communicated with Lossau about NexGen. In late October 2012, Waag indicated he was severely limited in his ability to step into the Project Manager role. After speaking with Waag and learning he would be out of work until mid-December or early January 2013, Lossau told Haug, “I need a new PM for SSES nexgen,” and asked for Haug’s input. Shortly thereafter, Haug and Lossau decided to place Devin Edwards, in charge of NexGen IDIQ work. Haug told Edwards there was “nothing to do” at the time Edwards took over because there were no pending task orders.

In early November, Waag and Lossau corresponded via e-mail regarding the NexGen PM position. Lossau explained that “Devin has agreed to be the SSES NexGen PM and will get things started for us” and asked Waag to pass on any info he had to Devin. Waag asked what his role in NexGen would be after he returned to work, noting that Lossau’s e-mail “reads like Devin will be your full-time permanent SSES NEXGEN PM and not just a stop-gap measure until I am able to return.” Lossau responded that Waag should not “worry about [his] position” and that “[f]or the purposes of getting the team up and going with SSES NexGen we have to provide some stability [and] Devin is that stability for now.” Lossau encouraged Waag that “[a]ll will work out,” and that “we will evaluate as we ease you back into full time work when you are ready․ [T]ogether we [will] figure out what roles work best for all involved.” But, she also told Waag that he had “been in the business long enough to know that no position is permanent.”

Shortly after Waag began his medical leave, federal budget sequestration went into effect, resulting in substantial cuts to federal spending. The effect of sequestration on defense contractors was significant since funding was not readily available for government contracts. One of the many programs delayed was NexGen. In 2012 and 2013, there were no NexGen RFPs for which Sotera could submit a bid. During this period, the NexGen PM position was not a full-time job; Edwards estimated that he spent only ten to twenty percent of his time on his NexGen duties.

In late December 2012, Haug told Waag that when he returned to work, Waag would be reporting to a different supervisor, Jim Gerard, to help grow Sotera’s new Electronic Warfare Program (“EWP”) which involved modeling and simulation work. Unlike the NexGen program, which had no RFPs to bid on, the EWP unit was competing for a specific contract. Gerard was tasked with winning an EWP Management Trainer (“EWPMT”) contract—a 70 or 80 million dollar single award contract. Because of Waag’s experience in modeling and simulation, he was assigned to work on the EWPMT proposal, which was a very complex pricing job. Waag spent the majority of his time in January 2013 working on the EWPMT proposal, which was submitted in February 2013. The salary for Waag’s new position was identical to the salary for the NexGen PM position he held before taking medical leave, and, as before, Waag’s salary was overhead as he was not performing billable work in the EWP. According to Lossau, Waag’s new job was an equivalent position to the NexGen PM job and provided Waag concrete work to perform.

In late 2012, Sotera and its DFA Business Unit saw a drastic decrease in work due to sequestration, and Sotera missed its 2012 budget revenue goal by $110 million. In February 2013, Haug was informed by senior management that he needed to cut his division’s overhead cost by $2.3 million and that the only way to do that was to lay off employees. Haug’s DFA business unit was especially under pressure because it had the highest indirect costs and was woefully underperforming on the revenue side. In choosing which employees in his unit to lay off, Haug focused on employees who were not performing work directly billable to the government and who were assigned to the less important strategic priorities. Haug determined that the EWP and modeling and simulation groups were doing lower priority work than several other groups in the DFA division. Thus, Waag, an overhead employee not doing high priority work, was included in the initial group of employees laid off in February 2013. During 2013, fourteen senior managers were either laid off or resigned and were not replaced, and Waag’s boss Gerard, a vice president, was laid off after Sotera failed to win the EWPMT contract. But Edwards, Waag’s replacement for NexGen PM, was not among those laid off. Even though Sotera had no NexGen IDIQ work, Edwards was retained because he was critical to a number of other significant revenue programs and was vital to the organization for reasons unrelated to NexGen. Layoffs continued throughout 2013 and 2014, and the DFA division ultimately was rolled into the company and no longer existed. Finally, rather than be laid off himself, Haug resigned from Sotera in October 2014.

Waag brought suit against Sotera in federal court, asserting that Sotera violated his FMLA rights (1) by failing to restore Waag to the same position after he returned from medical leave, (2) by failing to restore him to a bona fide equivalent position, and (3) by terminating his employment. Sotera moved for summary judgment, arguing that Waag had no absolute right to reinstatement to the last exact job he was performing before his leave began and that Waag’s new job was equivalent to his pre-leave position. Sotera disputed that Waag was terminated because he took leave, asserting that Waag’s employment would have been terminated, due to Sotera’s poor financial condition even if Waag had not taken leave.

The district court granted Sotera’s motion for summary judgment, and Waag appealed.

The appeals court explained that in passing the FMLA, Congress sought “to balance the demands of the workplace with the needs of families, to promote the stability and economic security of families, to promote national interests in preserving family integrity,” and “to entitle employees to take reasonable leave for medical reasons, for the birth or adoption of a child, and for the care of a child, spouse, or parent who has a serious health condition.” 29 U.S.C. § 2601(b)(1)-(2). Congress hoped to achieve these purposes “in a manner that accommodates the legitimate interests of employers.” 29 U.S.C. § 2601(b)(3).

Under the FMLA, “an eligible employee” is “entitled to a total of 12 workweeks of leave during any 12–month period” for family and health-related reasons. 29 U.S.C. § 2612(a)(1). An employee who takes leave under § 2612 shall be entitled, on return from such leave—

(A) to be restored by the employer to the position of employment held by the employee when the leave commenced; or

(B) to be restored to an equivalent position with equivalent employment benefits, pay, and other terms and conditions of employment.

29 U.S.C. § 2614(a)(1). Furthermore, an employee who avails himself of FMLA leave “shall not” lose “any employment benefit accrued prior to the date on which the leave commenced.” 29 U.S.C. § 2614(a)(2). On the other hand, an employee who has returned from such leave is not entitled to “any right, benefit, or position of employment” that the employee would not have been entitled to “had the employee not taken the leave.” 29 U.S.C. § 2614(a)(3)(B).

The FMLA makes it “unlawful for any employer to interfere with, restrain, or deny the exercise of or the attempt to exercise, any right provided under [the FMLA].” 29 U.S.C. § 2615(a)(1). Claims for violations of the prescriptive rights set forth in § 2612 are known as ‘interference’ or ‘entitlement’ claims. Additionally, the FMLA contains proscriptive provisions that protect employees from discrimination or retaliation for exercising their substantive rights under the FMLA. The retaliation provision states that “[i]t shall be unlawful for any employer to discharge or in any other manner discriminate against any individual for opposing any practice made unlawful by this title.” 29 U.S.C. § 2615(a)(2).

Waag first argued that Sotera interfered with his FMLA rights by failing to restore him after he returned from leave “to his former position with the company even though the position was still available.” However, the FMLA does not require an employer to restore an employee returning from leave to his previous position no matter what. The FMLA provides that an eligible employee “shall be entitled, on return from such leave—(A) to be restored to the position of employment held by the employee when the leave commenced; or (B) to be restored to an equivalent position with equivalent employment benefits, pay, and other terms and conditions of employment.” 29 U.S.C. § 2614(a)(1).

Pursuant to the plain terms of § 2614(a)(1), Sotera had the option of placing Waag in a job equivalent to his original, pre-leave job. Waag did not have an absolute right to return to his original position. Thus, the district court correctly rejected Waag’s legal contention that Sotera interfered with his FMLA rights by not restoring him to his pre-leave position.

Waag next argued that Sotera interfered with his FMLA rights by failing to restore him to an equivalent position with equivalent employment benefits, pay, and other terms and conditions of employment. An equivalent position means one that is virtually identical to the employee’s former position, not only with respect to pay and benefits, but also working conditions, including privileges, perquisites and status. 29 C.F.R. § 825.215(a). The new position “must involve the same or substantially similar duties and responsibilities, which must entail substantially equivalent skill, effort, responsibility, and authority.” The equivalency requirement, however, “does not extend to de minimis, intangible, or unmeasurable aspects of the job.” 29 C.F.R. § 825.215(f).

The district court concluded that there was no genuine issue of material fact regarding whether the tangible aspects of the position to which Waag was restored were equivalent to those of Waag’s former position, finding that “[i]n all material and significant respects, the two positions were the same.” It was undisputed that Waag’s salary was identical for both jobs and that Waag was eligible for bonuses in both positions. The employment benefits were exactly the same for both positions. For example, Waag enjoyed full health benefits both before and after his medical leave.

Moreover, the terms and conditions of employment were equivalent for both jobs. Waag’s worksite was the same before and after leave. His title—Senior Director—stayed the same in his new position, and he reported to a Sotera Vice President, just as he had before taking leave. And, his duties and responsibilities in the EWP position were substantially similar to those attached to his original position. Waag focused on business development for most of his time at Sotera, both before and after taking medical leave. Prior to the Sotera-Potomac Fusion merger, Waag’s primary duties included business development for the modeling and simulation side of the business. Likewise, during Waag’s short stint as NexGen PM, business development was a major focus for him. According to Waag himself, the project manager of an IDIQ contract had a few critical responsibilities, “but the big one is marketing business development,” in light of the fact that “[w]hen you’re managing an IDIQ contract, you don’t have any clients yet,” and “you don’t have any funding yet,” The project manager must “win task orders,” which requires “cultivating relationships with customers.”

The court of appeals determined that no reasonable factfinder could conclude that Sotera failed to place Waag in an equivalent position or that the differences between the two jobs were more than merely de minimis.

Finally, Waag challenged the dismissal of two claims based on his termination from Sotera. First, Waag argued that Sotera interfered with his FMLA rights by terminating him a little more than one month after his return from medical leave. Second, Waag contended that Sotera terminated him in retaliation for exercising his rights under the FMLA to take medical leave.

Waag claimed that Sotera did not restore him to a real position. Rather, Waag believed that his post-leave job associated with the EWP was, in fact, a sham position, created to make it appear that Waag had been restored to an equivalent position but that, in actuality, was slated for elimination.

The court concluded, however, that no reasonable juror could believe, based on the record, that Waag was put in a short-term sham job to cover Sotera’s decision to fire Waag when he returned from leave. Waag argued that a jury could conclude that the job Sotera gave Waag following medical leave “was a fake or sham position” based largely on “temporal proximity”—that is, he was placed in a new business development job that was eliminated approximately six weeks later. Waag pointed out that obtaining government contract work involves a protracted bidding process, and maintained that his business development position was eliminated well before he had a chance to generate any revenue. Waag, however, pointed to no actual evidence in the record that would permit a jury to conclude—without speculating—that the EWP job was a sham. The undisputed evidence showed that Waag’s position was genuine and that it was not slated for lay-offs at the time that Waag returned from leave. Vice President Gerard was assigned to the EWP, which, at the time Waag joined, was working toward winning an EWPMT contract worth 70 or 80 million dollars. In fact, Waag himself worked on the proposal. Although Sotera’s bid was ultimately unsuccessful, it was a real bid. And if it was a sham, it was an elaborate one that affected other people—Gerard, a vice president, also lost his job following the failed bid.

Finally, Waag contended that Sotera terminated him in retaliation for exercising his rights under the FMLA to take medical leave. To establish a prima facie retaliation claim under the FMLA, the plaintiff must demonstrate that he engaged in protected activity, that the employer took adverse action against him, and that the adverse action was causally connected to the plaintiff’s protected activity.

Significantly, unlike FMLA entitlement or interference claims, employer intent is relevant. If the plaintiff can produce no direct evidence of intent, he can demonstrate intent by circumstantial evidence

Waag submitted that he established a prima facie case of retaliation by showing close temporal proximity between the protected activity at issue—medical leave—and his employer’s adverse action—termination from employment less than six weeks after Waag returned from leave. The appeals court agreed that, for purposes of establishing a prima facie case, close temporal proximity between activity protected by the statute and an adverse employment action may suffice to demonstrate causation. But, even assuming that Waag established a prima facie case of retaliation under the FMLA, he still “bears the burden of establishing that [Sotera’s] proffered explanation is pretext for FMLA retaliation.” Sotera offered evidence that government sequestration in October 2012 had a disastrous effect on the defense contracting industry, cutting federal spending on programs such as NexGen. Sotera missed its projected revenue for 2012 by $110 million and determined that drastic cuts in spending were required. In February 2013, Sotera decided that the DFA division, which had high overhead and was underperforming in terms of revenue, needed to cut costs by $2.3 million. To effectuate these drastic cuts, the DFA division began laying off employees in February 2013 and continued throughout 2014. Haug focused initially on employees who were not performing important strategic work that could be billed directly to the government, and thus Waag was among the first employees included in the layoffs.

The court concluded that Waag failed to produce sufficient evidence to create a genuine issue of material fact such that a reasonable factfinder could conclude the adverse employment action was taken for an impermissible reason, i.e., retaliation.

The court affirmed the district court’s grant of summary judgment in favor of Sotera as to each of Waag’s claims under the FMLA.

Waag v. Sotera Defense Solutions, Inc., 857 F.3d 179 (4th Cir. 2017).