FMLA retaliation suit allowed despite ineligibility of employee

An employee could bring a retaliation claim under the federal Family and Medical Leave Act even though his employer was not covered by the statute, a U.S. magistrate judge has ruled.

The plaintiff employee, Joseph Reid, took 17 weeks of medical leave after being put on a performance improvement plan. Defendant employer Centric Consulting labeled the middle 12 weeks as FMLA leave, even though Centric did not have the requisite 50 employees within 75 miles of Reid’s worksite for the law to apply.

Reid was fired, allegedly for performance reasons, three months after he returned. He brought an FMLA retaliation claim, arguing that Centric, having represented that he was entitled to FMLA leave, was equitably estopped from denying him the protections of the statute.

Centric argued in response that while the 1st U.S. Circuit Court of Appeals may have recognized equitable estoppel for FMLA interference claims, the doctrine did not apply to retaliation claims.

U.S. Magistrate Judge Judith G. Dein disagreed.

“[T]here is no First Circuit precedent to limit the application of equitable estoppel to interference claims,” she wrote, denying Centric’s motion for summary judgment.

“Moreover, there are strong policy reasons to hold otherwise,” Dein continued. “It would defeat the basic purpose of applying the doctrine of equitable estoppel if an employee was allowed to rely on an employer’s misrepresentation to take leave, but could then be fired for doing so.”

The 10-page decision is Reid v. Centric Consulting.

Correct decision

Plaintiff’s counsel Corrine Hood Greene of Charlestown, Massachusetts, said Dein was correct in determining that the 1st Circuit would apply the doctrine of equitable estoppel in circumstances like this.

“This allows plaintiffs who are told by their employer that they can take FMLA time and who then rely on their employer providing that protective leave to get the protection of the FMLA, even if it later turns out they weren’t eligible,” she said.

This is important because employees are not experts in the law, she said. “They should be able to rely on the employer’s assertion that they are in fact protected.”

The defendant’s attorney, Shannon M. Lynch of Boston, could not be reached for comment prior to deadline.

But Susan G. Fentin, a management-side employment lawyer in Springfield, Massachusetts, said it is common for employers, particularly smaller ones, to mistakenly treat employees as though they are covered by the FMLA when they are not.

“We see this all the time when reviewing handbooks,” Fentin said. “Lots of companies have FMLA policies in their handbook even though they’re not covered entities. And employers may have multiple offices in other states or in localities more than 75 miles from their headquarters, and those satellite offices may not be FMLA covered entities.”

But by having FMLA policies in their handbook, they’re suggesting to employees that they’re potentially FMLA-covered, and when an employee takes leave covered by the FMLA, he or she is going to be protected by the statute, she said.

“There’s no intent required,” Fentin said. “Employers could be doing this completely innocently and they don’t realize they’re creating liability for themselves.”

Soyoung Yoon, an employment lawyer in Boston, said the case “perfectly illustrates the old maxim that ‘no good deed goes unpunished.’”

Though employers deserve some credit for offering FMLA when they are not obligated to do so, there is a significant downside to going beyond the statutory requirements, Yoon said.

“By giving the employee ‘FMLA’ leave, the employer may be cloaking that employee with all the protections of the FMLA, including the protection against interference as well as the protection against retaliation,” she said.

Yoon added that she’s interested to see how the 1st Circuit might handle this issue if the case is appealed. But in the meantime, she said, “employers who are not covered by the FMLA should simply not provide FMLA leave. If a medical or personal leave is warranted, call it something else.”

Brian D. Carlson of Boston, who represents employers, said that while the notion that a plaintiff could bring a retaliation claim based on a statute he or she is not covered by seems counterintuitive, Dein’s decision is “well-reasoned.”

As Carlson explained, the 1st Circuit already held in a 2009 decision, Nagle v. Acton-Boxborough Reg’l Sch. Dist., that an employer can be equitably estopped from denying FMLA coverage if it mistakenly tells an employee he or she is entitled to FMLA leave.

“It would seem illogical to hold that, having been obligated to provide FMLA leave, the employer could then freely take adverse action against the employee in retaliation for his or her taking the leave,” Carlson said.

Susan G. Fentin, a management-side employment lawyer, said it is common for employers, particularly smaller ones, to mistakenly treat employees as though they are covered by the FMLA when they are not.

‘FMLA’ leave

Reid started working as a business developer for Centric in December 2013. In September 2014, Centric put him on a performance improvement plan due to his alleged lack of sales productivity and other purported deficiencies

Within a week of receiving the PIP, Reid spoke to human resources about potential FMLA leave and was allegedly told he’d be ineligible for such leave until December 2014, at which point he’d have completed the requisite 12 months of employment to become eligible.

HR also apparently told him, however, that he had other non-FMLA options, including short-term and long-term disability leave.

Reid requested and was granted a non-FMLA leave of absence for surgery and recovery. His leave began on Nov. 19, 2014. On Dec. 9, 2014, the leave of absence continued as “FMLA leave” for the full 12 weeks required under the statute. On March 2, 2015, the employer switched the leave back to non-FMLA leave until Reid’s return two weeks later.

At that point, he resumed the PIP with the sales requirements designated before his leave. In June 2015, he was fired for his alleged failure to meet the goals established in the PIP.

Reid subsequently filed suit in U.S. District Court, alleging that he was really terminated in retaliation for exercising his FMLA rights.

Centric moved for summary judgment, arguing that Reid was never eligible for FMLA benefits in the first place because Centric did not have 50 employees within a 75-mile radius from his workplace.

Reid countered that because Centric had treated him as FMLA-eligible, it was equitably estopped from raising his ineligibility in defending against his claim.

Equitable estoppel

Addressing Centric’s motion, Dein noted the 1st Circuit’s determination in Nagle that an employer was estopped from denying FMLA coverage to an ineligible employee who “detrimentally and predictably” relied on representations that he or she was covered.

The judge said there was a lack of consensus among the circuits about whether equitable estoppel could apply to retaliation claims in addition to interference claims, and concluded that the 1st Circuit would not differentiate between the claims, citing McArdle v. Town of Dracut/Dracut Public Sch., a 2013 decision in which the 1st Circuit recognized potential policy justifications for applying equitable estoppel to retaliation claims.

Dein said that limiting equitable estoppel to interference claims would defeat the basic purpose of the doctrine, since it would mean that a worker could rely on an employer’s misrepresentation to take FMLA leave, but the employer could still fire him for doing so.

Accordingly, the judge concluded, “This court declines Centric’s request to rule, as a matter of law, that an ineligible employee cannot bring a retaliation claim under any circumstances.”

Dein went on, however, to emphasize that it was “questionable” whether Reid would ultimately establish that he actually relied to his detriment on the notion that he was entitled to FMLA leave, since the same leave was available under company policy regardless of whether he qualified under the FMLA.