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North Carolina Doubles Down on Enforcing Employee Misclassification https://t.co/F2z1twoX6A
On May 16, 2017, the United States Court of Appeals for the Fourth Circuit, which governs cases pending in North Carolina, issued an opinion that reveals the parameters within which an employer may fill an employee’s position and thereafter return that employee to work after a leave of absence covered by the Family and Medical Leave Act (FMLA).
In the case of Waag v. Sotera Defense Solutions, Inc., a defense contractor was chosen by the United States Army to bid on task orders for a software program. Before any orders were awarded, Mr. Waag was named as the employer’s program manager. However, because there were not yet any task orders to bid on, Mr. Waag was assigned to perform business development in order to better position the company for future bids.
A few weeks after Mr. Waag began his new role, he injured his hand in a non-work-related accident and notified his employer that he would be taking FMLA leave for two or three months. As it was important to have someone in the role of program manager in the interim, another employee was placed in that position during Mr. Waag’s absence. Mr. Waag was advised of this decision and was assured that his employment was not in jeopardy.
No task orders became available for the company to bid on during Mr. Waag’s leave, and when he returned, the program remained in the business development stage. Mr. Waag was reassigned to a new role to help develop a different government contract program for which there were task orders to bid upon. Ultimately, the employer was not awarded any bids, and six weeks after Mr. Waag returned to work, his position was terminated in a reduction in force caused by a federal budget sequestration that significantly diminished the employer’s government contracts and resulting revenue. The program manager who had taken Mr. Waag’s place during his FMLA leave was not part of the reduction in force because he was deemed to be a critical member of other programs that were generating revenue for the employer.
Mr. Waag filed suit against his former employer claiming interference with his FMLA rights on the basis that he was not restored to his original position after he returned from his leave, that the post-leave job was not, in his opinion, an equivalent position, and that the new job was a “sham” position that the company had created with the intent to eliminate his role in the layoffs. He also alleged that the company terminated his employment in retaliation for taking leave. The district court ruled in the company’s favor on all counts, and Mr. Waag appealed.
The 4th Circuit affirmed the district court, noting that under the FMLA, an employer is not required to hold open the employee’s original position while he or she is on leave. Mr. Waag did not have a legally protected right to be reinstated to his original position while he returned from leave. The Court noted that Mr. Waag’s post-leave position was equivalent to the employee’s former position as Mr. Waag continued to receive the same salary, was still eligible for bonuses, continued to enjoy the same benefits, had the same worksite, held the same job title, and had the same primary duty of business development. Although the job duties of the two positions may have been different if the employer had been awarded a task order, the fact remained that no task orders had been awarded, and a perceived “loss of prestige” is a “de minimis” difference between the two positions.
With regard to the retaliation claim, the 4th Circuit noted that Mr. Waag had failed to present any evidence that the proffered reason for the termination of his employment – the effect of federal budget cuts on the program on which he had worked – was a pretext for retaliation. It was evident that Mr. Waag would have lost his position whether or not he had taken leave. As Mr. Waag’s employment was not terminated while he was on leave, the burden of proof was on him to demonstrate pretext. A key takeaway from this decision is, therefore, the fact that it is generally preferable to restore an employee post-leave to an equivalent position when the employee’s job has been filed in the interim, as opposed to terminating the employee’s employment while he or she is on leave. It is also recommended that the equivalent position is virtually identical to the prior position with regard to pay, benefits, status, and working conditions.
If you have questions regarding this court decision or other legal issues, please feel free to contact Connie Carrigan at firstname.lastname@example.org.
Connie Elder Carrigan is a partner in the firm, with a practice concentration in Business Law. Her focus is assisting clients with issues regarding employment law, business advice and litigation, construction law, equipment leasing and creditor bankruptcy. Connie has lectured on topics ranging from employment law, bankruptcy, and equipment leasing to construction law....LEARN MORE