The Second Circuit Court recently held that an employee may be held individually liable for employment claims brought under the Family Medical Leave Act (FMLA). The FMLA provides for individual liability in addition to employer liability, which is usually the typical cause of action asserted by plaintiff’s counsel. However, rarely have there been FMLA liability cases where the plaintiff prevailed against an employee of the employer. In Graziadio v. Culinary Institute of America, the Second Circuit held that a Director of Human Resources may be individually liable for violations of the FMLA based on the level of control the individual had over an employee’s exercise of rights under the FMLA. In this case, it’s the HR Director. Tomorrow, it could be you.
Graziadio v. Culinary Institute of America
As mentioned, the Second Circuit Court held that a Director of HR could be held liable for violations of the FMLA. This means that there are now four circuit courts (Second, Third, Fifth, and Eleventh) that have adopted this type of “economic realities” analysis to determine when an individual employee exercises enough authority over matters related to FMLA decision-making so as to be subject that individual employee to personal liability under the FMLA laws. Even though many HNI clients reside within the Seventh Circuit, it is important to realize the implications of these holdings and by no means are Seventh Circuit situated employers and employees immune from a future court decision that could produce a similar result.
The "Economic Realities" Test
The “economic realities” test will look to at least four factors (this is a nonexclusive list):
- Whether the manager or supervisor had the power to hire and fire the employees;
- Whether the manager or supervisor supervised and controlled employee work schedules or conditions of employment;
- Whether the manager or supervisor determined the rate and method of payment; and
- Whether the manager or supervisor maintained employment records.
In this case, Graziadio was terminated from her position as a payroll administrator at Culinary Institute of America (“CI”) while on leave to care for her two sons who were experiencing medical issues. The termination followed lengthy, time consuming and often unproductive correspondences between Graziadio and CI’s Director of Human Resources, which discussed all of the circumstances surrounding leaves of absences, including the FMLA process, and her anticipated return date to work. Subsequently, Graziadio failed to timely respond (via her counsel) to CI’s final request for a return to work date and CI terminated her for abandoning her position.
The Court's Reasoning
Here the Court said that there was substantial evidence of the economic realities test being met regarding the HR Director. Given that the VP of Administration deferred to the HR Director for the termination decision, the Court found that the HR Director handling the FMLA leave ended up having hiring/firing authority. Also, since the HR Director was overseeing the FMLA process, the Court found the HR Director also controlled the schedule and condition of employment. While the other two prongs of the test may not have been met, the Court indicated that the satisfaction of these two factors evidencing control by the HR Director over Graziadio’s employment alone was enough to favor individual FMLA liability.
This case is likely to change the way FMLA claims are litigated in the state. This court opinion reinforces the importance for employers to provide proper training in handling leave requests, including FMLA matters, and communications with employees out on leave to minimize the risk of liability down the road. The idea of individual employees being personally liable for FMLA issues is very troubling when you consider how often courts hand down pro-employee FMLA verdicts. Sure employers may indemnify those individuals in nearly all of those cases, but there is significant downside to having your employees sued for performing their expected job duties.
If you have employment practices liability insurance, it may be time to review that policy to ensure that it covers supervisors who may be sued individually in FMLA matters.