Beware of Individual Liability in FMLA claims

by Stefanie Renaud

Most employers are aware that refusing to grant leave under the Family Medical Leave Act (“FMLA”), failing to reinstate an employee after leave, or retaliating against an employee who exercises his or her FMLA rights can result in significant penalties for employers.  However, many managers, human resource professionals and other decision-makers aren’t aware that they also can be held personally liable for FMLA violations.  A recent decision from the Second Circuit is a stark reminder of that possibility.

The Facts According to the Second Circuit . . . 

The plaintiff, Cathleen Graziadio, was a Payroll administrator for Defendant, Culinary Institute of America (“CIA”).  In 2012, Graziadio’s son was hospitalized for previously undiagnosed Type 1 diabetes.  Graziadio completed and returned the required paperwork to obtain FMLA leave to care for her son.  That same day, Graziadio’s other son broke his leg, requiring surgery, so Graziadio requested leave to care for her second son.  At this point, Graziadio began to interact with Defendant Shaynan Garrioch, the Director of Human Resources.  Garrioch sent Graziadio a letter stating that her paperwork did not justify her absences and needed to be updated.  According to the Court record, for the next several days, Graziadio and Garrioch exchanged numerous emails, most of which were Graziadio asking for clarification on what paperwork Garrioch needed, and Garrioch avoiding answering Graziadio’s questions.  Ultimately, Garrioch requested that the two meet to discuss the matter rather than continue exchanging emails.  That request resulted in another round of emails attempting, but ultimately failing, to schedule the in-person meeting.  Graziadio then retained an attorney, who sent a letter to CIA’s president and corresponded with CIA’s counsel, but who was ultimately unable to resolve the issue.  In September 2012, CIA terminated Graziadio for “job abandonment.”

Graziadio filed a complaint in the District Court for the Southern District of New York, against her former employer and Garrioch alleging, among other things, FMLA interference and retaliation.  In March 2015 the court granted judgment for the defendants on a motion for summary judgment.  Graziadio appealed to the Second Circuit Court of Appeals, which reversed the District Court on all three claims.  The case is Graziadio v. Culinary Institute of America.

Individual Liability under the FMLA . . .

The FMLA applies to an “employer,” which is defined as “any person who acts, directly or indirectly, in the interest of an employer to any of the employees of such employer.”  29 U.S.C. 2611(4)(A)(ii)(I).  Therefore, as a threshold to determining whether the Director of Human Resources could be personally liable for violating Graziadio’s FMLA rights, the Court had to determine whether or not an individual is an “employer” within the meaning of the FMLA.  Here, the Court used the “economic-reality” test used by other federal courts of appeal to determine whether an individual was an employer within the meaning of the FMLA.

Under the economic-reality test, a court looks to four nonexclusive factors to determine whether or not an individual should be considered an employer.  Those factors are: whether the alleged employer (1) had the power to hire or fire employees; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment, and (4) maintained employment records.  A court may also consider any relevant evidence that suggests the alleged “employer” had control over the worker in the “economic reality” of the workplace.

Using the four factors above, the Court concluded that Garrioch was an “employer” because she had substantial control over the decision to fire Graziadio, she had had full discretion over Graziadio’s schedule and conditions of employment with regards to her return from leave, Garrioch was the only person responsible for handling Graziadio’s FMLA and related paperwork, and Garrioch was the sole person to interact with Graziadio regarding her leave.  Thus, the Court reinstated all of Graziadio’s claims against Garrioch as an individual.  The case was remanded for further proceedings, so whether Garrioch actually violated the FMLA remains undetermined.

Takeaways . . .

Although the Second Circuit includes New York, Connecticut and Vermont, Massachusetts employers should be aware that the First Circuit, which includes Massachusetts, may also use the same or similar standards when assessing individual liability under the FMLA.  In fact, even though the First Circuit has not addressed the issue, the federal district court in Massachusetts has already concluded that individual liability exists.  See Meara v. Bennett, 27 F. Supp. 2d 288 (D. Mass. 1998).

Employers are wise to discuss the potential for individual liability with supervisors and the human resources department as well as to train staff about their duties under the FMLA.  All conversations with employees about using or returning from FMLA leave should be well documented.  Employers may also wish to revisit their FMLA leave policies and make sure they are clear and straightforward.  Finally, employers with liability coverage should make sure that their insurance will cover any individual employees named as defendants.

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