Wednesday, February 3, 2010

Reduction in Force vs. Leave of Absence: How not to handle the convergence

There is no rule that says that you cannot terminate an employee on FMLA leave in a reduction in force. Conventional wisdom (and the real risk of being sued), though, dictates that it must be done carefully and with every “i” dotted and “t” crossed. It is also best to keep comments about the employee’s leave of absence out of the calculus used to determine who stays and who goes. Take Cutcher v. Kmart (6th Cir. 2/2/10) (unpublished) [pdf] as an example.

Susan Cutcher worked at Kmart from 1984 until her termination as part of a workforce reduction at the end of 2005. From 2000 on, she directly reported to Barbara Borrell, who evaluated Cutcher’s performance on an annual basis. Each of Borrell’s evaluations of Borrell resulted in an overall rating of either “Exceptional” or “Exceeds Expectations,” including her final performance review, which occurred just a month before Kmart announced a nation-wide RIF and which included Cutcher. On that final performance review, Cutcher received highest marks for customer service, but lost points for teamwork.

That nation-wide RIF occurred while Cutcher was out of work on an approved FMLA leave. Cutcher’s store eliminated 6 full-time employees. Employees’ performance evaluations and scores were converted to a different scale and re-ranked for purposes of the RIF. On Cutcher’s RIF appraisal, the following comment appeared: “Poor customer and associate relations. LOA.” Kmart did not eliminate Cutcher’s position, but gave it to a coworker with a higher RIF appraisal ranking. Cutcher sued, claiming that her inclusion in the RIF violated the FMLA.

Kmart correctly pointed out that an employer need not restore an employee who would have lost her job or been laid off even if she had not taken FMLA leave. Thus, it argued for dismissal of the FMLA claims on the grounds that it would have fired Cutcher even if she had not taken FMLA leave. The 6th Circuit disagreed:

Given Cutcher’s prior annual appraisal scores, the minimal amount of time that passed between her most recent annual appraisal and the RIF appraisal, Kmart’s admission that Cutcher’s performance did not change during that short period of time, the inclusion of the “LOA” notation on the Associate Performance Recap Form, and the lack of any documented evidence demonstrating a prior concern with her job performance, a jury could infer that her leave status impacted her RIF appraisal ratings, thus leading to her termination.

The takeaway from this case is that employers planning a reduction in force must be careful in the language used to discuss employees. If you don’t want a judge or jury to infer that you took an employee’s leave of absence into consideration, don’t write “LOA” anywhere near the employee’s name on any document concerning the RIF. It may sound trite, but in litigation, everything you wrote or said can and will be used against you.

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or