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Tenth Circuit Decision Shows How Employers Can Deal with Performance Problems Discovered with Employees on Leave

    Client Alerts
  • September 13, 2016

Employees on approved Family and Medical Leave are entitled to reinstatement upon return to the same or an equivalent position. Commonly, when the employee is absent on leave, the employer discovers work performance issues that merit termination of employment. However, employers understandably hesitate before taking such action based on their anticipation of an FMLA interference or retaliation claim. This scenario raises the question of whether it is ever legally advisable to terminate an employee on FMLA leave for performance reasons.

A recent decision from the Tenth Circuit Court of Appeals demonstrates that in some circumstances, employers can justify their motivation for terminating an employee on FMLA leave due to discovered performance problems. In Olson v. Penske Logistics, LLC, the plaintiff was a warehouse manager who requested FMLA leave. On the day of his departure for leave, the employer discovered an “inventory crisis” consisting of numerous inventory discrepancies linked to inadequate audits and poor employee training. After investigating the circumstances and discovering more problems, Penske notified the employee that he would be terminated upon the expiration of his FMLA leave. He sued, alleging that the reasons given for the termination constituted pretext for a decision to fire him because he took FMLA leave.

The Tenth Circuit affirmed a grant of summary judgment for the employer. The court noted that under the FMLA, adverse action taken against an employee only violates the law if it was “related to the exercise…of his FMLA rights.” In this case, the employer demonstrated ample evidence of serious performance problems unrelated to the leave request. In response, the plaintiff made two arguments. First, he claimed that had he not been on leave, he could have defended his performance in a way that would have resulted in a different decision. Second, he alleged that his supervisors were inconvenienced by his leave and their resulting need to travel to deal with the inventory situation.

The court rejected both arguments. It noted that the plaintiff never introduced evidence indicating any defense to his conduct that could have altered the termination decision. Second, the managers in question regularly traveled and again, the plaintiff did not produce proof of his claims adequate to allow the case to proceed to a jury trial. The Tenth Circuit also noted that the employer had provided regular performance evaluations and warnings regarding prior less serious performance deficiencies.

Although the defendant prevailed in this case, should employers terminate employees on FMLA leave absent concrete proof of serious job deficiencies? Even a modest amount of evidence of frustration over the leave request could result in a jury determining the employer’s actual motivation for the decision. If the employer prevails as in this case, it can still spend enormous amounts of time and resources defending its decision. In most situations, employers could be better served by reinstating the employee, issuing warnings or performance improvement plans regarding the performance problems, and basing any eventual termination decision on observations made subsequent to the employee’s reinstatement.