Employment & Labor Insider

I’ve written a lot about the “good-faith mistaken belief” defense to discrimination and retaliation claims. This example should give you a general idea about how it works:

An employer honestly believes that Myrtle, who is in a protected category (as are we all), did something that should get her fired. Let’s say the employer believes she embezzled, and acts accordingly. Myrtle sues, alleging that she was terminated because of she was a 50-year-old woman. The employer says, “No, you were terminated because you were embezzling, a legitimate non-discriminatory reason for discharge.” Myrtle retorts, “Hah! I win! Here is conclusive proof that the embezzler was Stan, my 30-year-old male co-worker, not me.”

The employer examines the proof and says, “Well, I’ll be darned. I guess Stan was the embezzler after all.”

"My bad."

Believe it or not, most courts would say that the employer still wins the discrimination case. If the employer acted on its good-faith (though mistaken) belief that Myrtle was embezzling, then it didn’t terminate Myrtle because of her age or sex.

Case dismissed.

This outcome makes sense in the context of the anti-discrimination laws because those laws require evidence of the employer’s discriminatory (or retaliatory) intent.

Welcome to the world of FMLA interference

But when we’re talking about interference claims under the Family and Medical Leave Act, forget everything I just said.

An FMLA interference claim does not require evidence of the employer's bad intent.

I’m oversimplifying, but an interference claim will generally be valid if (1) the employer denied an employee FMLA leave when the employee should have received it, and (2) the employer had the information necessary to know that the employee should have received it. (Whether it actually knew or not.) 

One employer’s terrible mistake

Which brings us to this week’s case. An employer in Michigan went through a merger. “Blanca” was an employee of “Company B,” which merged with “Company A.” Post-merger, she became an employee of “Company A.” Less than 12 months after the merger, Blanca requested FMLA leave for inpatient treatment of what sound like very serious mental health issues.

The company’s human resources representative reviewed Blanca’s records and saw that she had been employed with Company A for less than 12 months. Thus, the HR rep determined, Blanca was not eligible for FMLA leave. The HR rep offered Blanca some leave, but not all that she needed and was entitled to under the FMLA. One bad thing led to another, and eventually Blanca’s employment was terminated, which meant she lost her health insurance coverage too.

Blanca filed suit, alleging FMLA interference (also retaliation). Then she (the plaintiff!) filed a motion for summary judgment on both of her claims.

"That can't be good."

At some point, the employer (actually, I'm guessing it was the employer's lawyers) discovered that the “A” and “B” periods of employment should have been considered together, and therefore that Blanca had in fact met the 12-month requirement.

The employer conceded that point in court but argued that Blanca was still not entitled to summary judgment because it was an honest mistake.

The court denied Blanca’s motion for summary judgment as it pertained to the retaliation claim because intent is required for that claim.

But it granted Blanca’s motion as it pertained to the interference claim. Maybe the HR person really didn't mean any harm. It didn’t matter because she had all the relevant information but denied Blanca’s FMLA leave request when Blanca was entitled to it.

Granting a plaintiff’s motion for summary judgment means that the plaintiff wins. Without even having to go to trial. That’s bad.

When you deny FMLA leave: 3 ways to cut your losses

FMLA mistakes happen. But here are three things you can do to minimize your risk of making a mistake in the first place, and to prevent any mistake from turning into disaster.

No. 1: Check the regs, and consult with employment counsel if you aren't sure. The FMLA is technical, and the regulations are roughly 90 pages of small print. Mistakes are easy to make. The general rule, as I'm sure you all know, is that an employee is not eligible for FMLA leave until he or she has worked for the employer for 12 months before the leave would begin.

But are a few FMLA eligibility quirks (all pertaining to the 12-month period of employment):

• If an employee quit or was terminated and was re-hired, the earlier periods of employment must be counted toward the 12 months as long as the break in service was less than seven years.
• If prior periods of employment ended because of military service, the prior periods must be counted with no seven-year limit, as well as the period(s) of military service.
• If, as in this case, the employer was a “successor in interest” to another entity, the employee’s tenure with the other entity counts toward the 12 months.
• And more!

No. 2: Grant leave anyway. If the employee's medical condition would be FMLA-qualifying, consider these alternatives to outright denial even if you think that the employee is not eligible:

• Unpaid leave of absence for the requested period
• Paid time off
• Paid leave under an applicable state paid leave law
• Unpaid leave under an applicable state leave law
• Short-term disability leave
• Workers' compensation leave
• “Reasonable accommodation” leave under the Americans with Disabilities Act

Doing this gives you some leeway to make a mistake about eligibility. The U.S. Supreme Court has said that failure to designate leave as FMLA-qualifying is not the end of the world as long as the employee gets the leave she was entitled to and wasn’t prejudiced by the employer’s failure to properly designate. But in the Supreme Court case, the employee got 30 weeks of leave. That's 18 weeks more than she was entitled to under the FMLA.

No. 3: Don’t terminate the employee before the requested leave period is over (if then). In this case, the employer terminated Blanca roughly two weeks before her requested FMLA leave would have ended, which caused her to lose her group health insurance benefits and coverage for inpatient mental health treatment.

Don’t do that! You can usually leave the employee on the payroll for the full three-month period, or possibly reclassify the employee as “inactive” but not terminated, which should allow the health insurance to continue as normal for the entire period of leave. Terminating group health insurance prematurely can be a very big deal, especially for employees like Blanca who have major (and expensive) medical issues.

If you must terminate coverage (for example, your insurance doesn't cover inactive employees), then don’t penalize the employee. You may have to pay COBRA premiums minus whatever the employee would have had to pay as an active employee. Yeah, that’s an expense, but it’s a lot cheaper than defending – and losing – an FMLA interference lawsuit.