Employment Law Matters : Employment Lawyer & Attorney : Ogletree Deakins Law Firm : Labor Law, Human Resources

Remarks by a law firm’s human resources director could be “direct evidence” of pregnancy discrimination and violation of the FMLA, according to the 7th U.S. District Court of Appeals. According to the court, such evidence falls outside of the “hearsay” objection that might otherwise keep it from being presented to a jury. Makowski v. SmithAmundsen LLC, 7th Cir., No. 10-3330, November 9, 2011.

Lisa Makowski was employed as Marketing Director for the SmithAmundsen law firm between January 2005 and her termination in February 2008. During her employment, Makowski received annual salary increases and discretionary bonuses based on her performance. In the summer of 2007, Makowski informed the firm’s management that she was pregnant. She requested, and was granted, leave under the Family and Medical Leave Act. Between November 5 and November 25, Makowski worked from home with the firm’s permission, as she had been placed on bed rest by her obstetrician. She began her FMLA leave on November 26, and gave birth on December 2.

In January 2008, the firm’s Executive Committee conducted its firm retreat, at which it annually assessed the overall structure of the firm to determine whether staffing changes were necessary. At that retreat, the Executive Committee decided to terminate Makowski and to move another individual into the leadership position with the Marketing Department. After that meeting, the Committee informed the firm’s Human Resources Director, Molly O’Gara, that Makowski didn’t “fit into our culture,” and asked O’Gara to consult with outside counsel to discuss the implementation of Makowski’s firing.

On February 4, 2008, while Makowski was still on maternity leave, her employment was terminated over the telephone. In that conversation, Makowski was told that her position was being eliminated as part of an organizational restructuring. Later that day, Makowski came into the office to pick up her personal belongings. According to Makowski, as she was leaving the office, she was met by O’Gara, who told her that the actual reason for the termination was because of Makowski’s pregnancy and FMLA leave, and that the same thing had happened to several other women employees in the past. O’Gara allegedly suggested to Makowski that she should speak to a lawyer about a possible class action on the issue.

Makowski filed a lawsuit on December 2, 2008, alleging violations of both the Pregnancy Discrimination Act and the Family and Medical Leave Act, and cited O’Gara’s alleged remarks as direct evidence of discrimination. The firm moved for summary judgment, and the motion was granted, based on the fact that because O’Gara had not been directly involved in the decision to terminate Makowski, her statements concerning the termination were inadmissible hearsay. Without those statements, Makowski lacked evidence of the connection between her termination and any discriminatory acts by the firm.

On appeal, the Seventh Circuit reversed that decision. It found that because O’Gara’s statements concerned a matter within the scope of her duties as HR Director, they fell within an exception to the hearsay rule. Essentially, that exception means that the agent acting within the scope of his or her employment with the company speaks on behalf of the company and that, therefore, his or her statement is actually a party admission that can be used to support a claimant’s case. Here, O’Gara’s alleged comments to Makowski fit within the scope of O’Gara’s duties as an HR Director who was involved in the firm’s hirings and firings. Further, the court pointed out that O’Gara’s discussions with outside counsel at the request of the Executive Committee could actually support an argument that O’Gara was directly involved in the final decision to fire Makowski, since the Committee waited for the counsel’s imprimatur before implementing the termination.

This case sets out an important lesson for employers and underscores the need for training for managers, supervisors, and HR personnel, especially with respect to having the difficult conversations needed for disciplinary and termination meetings. The importance of the use of “talking points” for disciplinary and termination meetings cannot be overstressed. Any remarks outside of pre-established, pre-rehearsed talking points could be used – as in this case – to argue to the jury that the “official” reason given for the adverse action was simply a pretext for discrimination.
 

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The Pregnancy Discrimination Act (PDA) requires employers to treat pregnant employees in the same manner as other employees who are not pregnant, but who are similarly situated in their ability or non-ability to work. That means that under the PDA, a woman who is unable to work because of pregnancy-related illness is entitled to sick leave or benefits only on the same basis as employees who are unable to work for other reasons. Based on that rationale, a part-time salesperson recently was unable to convince the 10th U.S. Circuit Court of Appeals that she was denied leave and later fired on the basis of her pregnancy. Anderson v. The Cato Corporation, 10th Cir., No. 11-3003, October 27, 2011.

Because the Tenth Circuit was reviewing a summary judgment ruling, it was required to view the evidence in the light most favorable to Anderson, assuming her asserted facts to be true. In February 2008, Cynthia Anderson began her employment as a part-time sales associate with The Cato Company. After a few months, the company was considering her for a full-time assistant manager position. On April 9, 2008, Anderson discovered that she was pregnant; she informed the company on the following day. Anderson then asked for "couple of days off" to get some mediation for her nausea. According to Anderson, the store manager seemed "okay" with that request. However, Anderson claimed that she called on April 15 to inform the store manager that she had been admitted to the hospital and would need additional time off, and was told that she had been terminated from her associate position, but that the store manager would attempt to hold open the assistant manager position for her. Later that week, when Anderson called again, she claimed that she was told that the assistant manager position had been awarded to another employee.

According to Cato’s records, Anderson’s personnel records indicate a "voluntary termination" because of "complications with Pregnancy." The Recommended for Rehire box on the form was checked as "Yes." Anderson never sought to be rehired by Cato.

Because she planned to apply for unemployment compensation and public assistance, Anderson requested from Cato a letter setting forth the reasons for her termination. In response, a store manager wrote that Anderson was terminated "due to pregnancy related illnesses." The letter went on to explain that Anderson, who had only worked for the Company for two months, was not eligible for leave under Cato’s policies.

Anderson filed a legal action under the PDA, arguing that the company’s letter was direct evidence of a violation of that Act. However, the lower court granted Cato’s motion for summary judgment, holding that Cato terminated Anderson’s employment because she was unable to work and was not entitled to leave. That decision was upheld by the Tenth Circuit on Appeal.

The Tenth Circuit first determined that Cato’s written statement regarding the reason for Anderson’s termination was not direct evidence of discrimination. It based that determination on the fact that the letter was not an admission of illegal activity, but was an explanation of the fact that Anderson needed leave to which she indisputably was not entitled. It then went on to say that Anderson failed to proffer any evidence that Cato’s policy of terminating employees who needed extended leave to which they were not entitled, then offering to hire them back when they were able to work again, was not evenly applied to all employees regardless of whether the employee was pregnant.

Employers should not view this decision as a "free pass" to end the employment of individuals who ask for additional leave time to which they are not entitled under company policies. Because the case was before the court as a PDA claim - and not a claim under the Americans with Disabilities Act or any associated state-law disability statute – it is unclear whether the same rationale would apply if the case had included a claim under the ADA, since various courts have viewed requests for additional leave time as potential requests for reasonable accommodation that should be honored unless they create an "undue hardship" for the company. Such requests therefore should be reviewed on a case by case basis, with an eye toward the ADAAA regulations that were updated in March of this year.

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