Benefits and Compensation, HR Management & Compliance

Court Upholds Dismissal After Employee Couldn’t Prove Monetary Damages

The U.S. 7th Circuit Court of Appeals (whose rulings apply to all Illinois, Indiana, and Wisconsin employers) recently interpreted the Family and Medical Leave Act (FMLA) in a case involving an interesting set of facts. The employer altered an employee’s position while he was on leave, but his compensation was frozen at a pre-leave level for six months. He was subsequently terminated for non-FMLA reasons. Because his compensation never changed, however, the court found no harm, no foul.

Dismissal upheld

Facts

Nathan Hickey filed a lawsuit against his employer, Protective Life Corp., alleging interference with his rights and retaliation under the FMLA. He sold warranty and insurance products to auto dealerships for the company, and his territory included two well-established accounts.

In November 2016, Hickey requested FMLA leave when he began to suffer from anxiety and depression. The employer granted him 12 weeks of leave. While he was on leave, the company acquired U.S. Warranty. In a deposition, he testified he had conversations with managers at the acquired company about working there.

When Hickey returned, however, Protective announced it had changed his territory and reassigned the two established accounts. Therefore, he would need to develop more business, but the company guaranteed he would receive his preleave commission for the next six months.

In March 2017, Hickey received his evaluation for 2016. It noted he didn’t achieve his fourth-quarter goals because of the leave and rated his performance before the leave as “inconsistent.”

In the same month, Hickey met with management to seek a transfer to U.S. Warranty. According to Protective’s company policy, however, he couldn’t transfer while rated “inconsistent.” He was told not to discuss a transfer further but apparently continued to request one.

Recognizing Hickey’s unhappiness, Protective offered him a severance package, which he refused to take. Instead, he continued to seek a transfer. Ultimately, the employer decided to terminate him.

Fired employee files lawsuit

Hickey sued Protective, alleging both interference of his FMLA rights and retaliation for exercising them. He alleged the employment review, the denial of transfer, and his termination were unlawful. He requested a ruling in his favor and an award of reinstatement, compensation for lost wages and benefits, liquidated damages, and attorneys’ fees.

Protective countered it had neither interfered with Hickey’s taking FMLA leave nor retaliated against him. It argued his 2016 performance review reflected his preleave performance, and his termination was based solely on his interactions with management and had nothing to do with the leave. Therefore, it argued, the termination wasn’t in retaliation for taking the leave.

Hickey conceded his termination wasn’t retaliation for taking FMLA leave, so only the interference claim remained. He argued that whether Protective had downgraded his performance review in light of his FMLA leave was a question for the jury. He also argued a jury could conclude that upon return from leave, he wasn’t reinstated to the same or an equivalent position.

The district court dismissed Hickey’s claim, noting that to recover under the FMLA, an employee must show monetary damages resulting from the alleged interference. It pointed out he was reinstated to the same position with a guarantee of the same pay for at least six months.

7th Circuit’s ruling

The 7th Circuit pointed out the U.S. Code makes it “unlawful for any employer to interfere with, restrain, or deny the exercise of or the attempt to exercise, any right” provided in the FMLA. Among the rights guaranteed by the Act is the employee’s right “to be restored” to the same position he held when his leave commenced or “to an equivalent position with equivalent employment benefits, pay, and other terms and conditions of employment.”

The 7th Circuit noted further, however, that no relief may be afforded unless the employee has been or harmed by the violation. The employer is liable only for compensation and benefits lost “by reason of the violation” and for other monetary losses sustained “as a direct result of the violation.”

When Hickey returned from FMLA leave, the 7th Circuit noted, he initially received the same salary and benefits he had gotten before the leave, and his employment with Protective terminated for reasons unrelated to the leave. Essentially, he would have damages only if he remained employed beyond the six-month period during which his commissions remained constant and then only if he suffered a loss of income because of the alteration of his duties and proved the company had done so in retaliation for taking the leave.

But the 7th Circuit pointed out Hickey had suffered no damages at the time Protective terminated his employment, which was for reasons unrelated to the leave. The court concluded, “Therefore, even if we assume . . . the compensation arrangement given him upon his return violated the statute (a question we need not and do not decide), [he] never incurred any damages attributable to that compensation decision.” Hickey v. Protective Life Corporation, No. 20-1076 (7th Cir., Feb. 12, 2021).

Bottom line

Hickey suffered no loss of wages or benefits before his employment being terminated for a reason unrelated to the FMLA leave. Because he was reinstated to the same position at the same pay and benefits before the discharge, he hadn’t been harmed by any alleged violation. To maintain a retaliation claim under the FMLA, an employee must incur a monetary loss as a direct result of the alleged violation.

David C. McCormack is a partner with Axley Brynelson, LLP, in Waukesha, Wisconsin. You can reach him at 262-244-9093 or dmccormack@axley.com.