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Joint Employers May Be Liable For FMLA Violations

Published by on April 24, 2008

The U.S. Court of Appeals for the Sixth Circuit recently issued a ruling with respect to the liability of joint employers under the FMLA.  The case is Grace v. USCAR and the opinion can be found here.  The case has implications for staffing firms and those who use them.  The case is particularly interesting because […]

The U.S. Court of Appeals for the Sixth Circuit recently issued a ruling with respect to the liability of joint employers under the FMLA.  The case is Grace v. USCAR and the opinion can be found here.  The case has implications for staffing firms and those who use them. 

The case is particularly interesting because it found that a secondary employer — i.e. the company using the staffing firm’s employees — can be liable under the FMLA even if it does not independently meet the requirements for FMLA coverage (i.e. having 50 or more employees).  It is also interesting because the employer lost a pretrial motion for summary judgment, in part, because of notes from a meeting where the elimination of her position was discussed, and the question was raised “can the lawyers construct a way to make it [her termination] doable?”

The plaintiff, Grace, worked for USCAR for a number of years as a contractor provided by a staffing firm.  The plaintiff’s job duties remained the same for USCAR even though her actual employer changed several times during her tenure.  While plaintiff was out on a medical leave of absence, USCAR obstensibly eliminated her position so that no open position was available when she returned from leave.  USCAR did hire an individual on a part-time basis to take care of plaintiff’s job duties.

The court looked at whether USCAR was a joint employer with the staffing company.  The court noted that although the FMLA itself is silent on the issue, the DOL regulations provide for an “integrated employer” test and a “joint employer” test.  In this case, the court found that the two companies were not an “integrated employer,” primarily because the two companies lacked common management.  The court did find, however, that the two companies met the “joint employer” test.  The court found that the facts fit the “where one employer acts directly or indirectly in the interest of the other employer in relation to the employee” test in the DOL regulations.  The court also relied on the fact that USCAR exercised significant control over the plaintiff’s work.

Having found a joint employment situation, the court then had to decide which of the two companies was the “primary” employer under the DOL regulations, since responsibility for FMLA compliance rests upon the “primary” employer (although both employers bear a share of responsibility with respect to reinstatement).  The court found that the staffing company was the primary employer and USCAR the secondary employer.

Turning to the issue of whether her position would have been eliminated regardless of her leave, the court found that a document from the meeting where the elimination of her position was discussed with the sentence “Can the lawyers construct a way to make it [her termination] doable” was a smoking gun that raised a jury issue as to the truth of the company’s explanation.  It also found that the staffing company was a successor company to its predecessor, thereby allowing the plaintiff to satisfy the 12-month employment eligibility threshold.

The opinion is worth reading for anyone dealing with potential joint employment FMLA issues, particularly those within the jurisdiction of the Sixth Circuit (Kentucky, Michigan, Ohio, Tennessee).

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