Alaska Employment Law

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Introduction

The District of Alaska recently issued an order granting an employer summary judgment in a FMLA case. The case is Schwager v. Frontier Community Services, No. 3:07-cv-00128 TMB. This summary briefly reviews the decision and its significance.

Facts

The facts set forth here are from the district court’s ruling, which was an unpublished disposition. Not all facts are discussed in an unpublished disposition.

Frontier Community Services (“FCS”) is a non-profit that provides job training services to developmentally disabled individuals. Susan Schwager started working for FCS in 1999. By 2005, Schwager was a vocational aide. Her supervisors changed in November 2006. Thereafter, Schwager experienced increased workplace stress. By March 2007, she had received two different “consults” (the decision is not clear, but these appear to have been written warnings) and she had also received three verbal warnings from her supervisors. All of these were for what FCS characterized as “boundary issues.” This is a term that describes appropriate boundaries between FCS personnel and their clients, the people with developmental disabilities that FCS services. FCS did not terminate her at that time (that is, as of March 2007).

On April 9, 2007, Schwager went to her doctor for stress treatment. He gave her a shot and some prescriptions. On April 10th (the next day), Schwager took the prescriptions as directed. The medication made her drowsy. She called her supervisor half-way through the work day after she finished work with a client and asked for permission to take the rest of the day off. The supervisor asked Schwager if she intended to take the same medication the next day. Schwager said she had no choice and needed to take the medication for pain relief. The supervisor then approved Schwager’s request to take the rest of the day off. The supervisor reported Schwager’s request up the chain of command. Ultimately, the Executive Director concluded that Schwager should be terminated. This decision was made on the same day (April 10, 2007). Apparently, the key aspect of this decision was that Schwager exercised poor judgment in taking medication that significantly affected her job performance. However, from the stated facts, it is not clear that Schwager knew or had been advised that she might suffer physical side effects from the medicine prescribed by her doctor.

Meanwhile, Schwager went to see her doctor after she talked with her supervisor on April 10th. She did not know that a decision had already been made to terminate her employment. Her doctor recommended that she take two weeks off. On April 11th, both Schwager and her doctor advised FCS that she needed to take two weeks off. This initial period was extended for two more weeks. Schwager finally returned to work on May 9th. Upon her return, her supervisors called her in for a meeting and advised her that she was being terminated. They also gave her a written memorandum summarizing five policies that Schwager had allegedly violated.

The decision is not clear if these were the same issues for which she had previously received verbal warnings and consults or whether these were some other, different allegations. However, given that she had not been at work, it is implied that these allegations were for alleged misconduct that preceded the date of her FMLA leave. The district court’s ruling states that FCS could never provide any evidence to support two of the alleged policy violations. The third policy violation concerned being under medication when working with a client—this related to the April 10, 2007, incident when Schwager took prescription medication at her doctor’s instruction. The fourth and fifth alleged violations involved taking a FCS client to a coffee shop and by giving soda pop and candy to a FCS client. Schwager filed suit alleging one claim for interference of her FMLA rights.

District Court ruling

Schwager argued that she was terminated, in part, because she took FMLA leave, and that FCS further violated FMLA by failing to honor her job restoration rights. FCS argued that the decision to terminate Schwager had been made before she gave notice of her intent to take FMLA leave. Schwager testified that she herself never believed that her termination was related to her use of FMLA leave. However, she argued that the jury could have concluded that FCS terminated her because it believed she might take FMLA leave in the future and also that FCS’ stated reasons for terminating her were inconsistent, and therefore pretextual.
The district court agreed with FCS and granted it summary judgment. The district court concluded it was undisputed that the decision had been made to terminate Schwager before she had actually taken FMLA leave. Moreover, Schwager did not deny any of the five stated reasons for her termination.

It is currently unknown if Schwager is going to appeal or not.

Significance

The result here can be characterized as somewhat unexpected—at least on the stated facts. It may be that there are other facts that were never addressed by the district court. This is often the case with unpublished orders and dispositions.

The underlying circumstances of Schwager’s termination gave rise to several potential claims, but Schwager placed her eggs in one basket, the FMLA claim. The most significant claim potential would probably have been under the implied covenant of good faith and fair dealing. The implied covenant of good faith and fair dealing inheres in every employment relationship. It provides that neither party will do anything to impair the right of the other to receive the rights and benefits of the employment relationship. The covenant requires an employer to act in a reasonably fair manner. Under Alaska law, the implied covenant is broadly construed. In Alaska, it is possible to terminate an employee for a legitimate reason, but to do so in a manner that violates the implied covenant. Two recent Alaska Supreme Court cases, Mitchell v. Teck Cominco and Willard v. Khotol, confirm that the implied covenant can be breached where an investigation into alleged misconduct is mishandled or where an employee is denied a fair opportunity to rebut misconduct allegations that lead to discipline.

Here, based on the facts as described in the district court’s decision, it is open to question whether or not FCS ever conducted a reasonable investigation into any of the underlying disciplinary incidents and/or whether FCS ever gave Schwager adequate notice of the allegations and a chance to rebut or refute the allegations. FCS relied on five reasons to terminate Schwager. According to the district court’s ruling, FCS had no evidence to support two of the stated reasons. A third reason involved the April 10th medication issue. Schwager was never given notice and a chance to address this alleged misconduct with FCS, and it is hard to see how it would necessarily arise to the level of misconduct when she was following her doctor’s instructions. The final two reasons involved allegations that were “boundary issues.”

Just based on the facts as stated in the district court’s ruling, there is an inference that FCS “sat on” the allegations for an unspecified period of time. This may not be true. It may be that FCS issued disciplinary warnings each time in a timely manner. However, what is evident is that the disciplinary incidents arose before Schwager ever gave notice of her intent to take FMLA leave. FCS did not terminate Schwager until she returned from FMLA leave. If the allegations were sufficient to terminate Schwager, it is not clear why that decision had not already been made and communicated to her before she took FMLA leave. All of this creates inferences that could have easily supported an implied covenant claim. However, Schwager never alleged an implied covenant claim.

On the merits of the FMLA claim, it appears from the facts stated in the district court’s ruling that FCS knew or reasonably should have known that Schwager suffered from a physical or mental impairment that may have constituted a serious health condition under FMLA. At that point, a prudent employer would have collected additional information from the concerned employee, and then (if appropriate to do so) designated the leave as FMLA leave or perhaps made a provisional designation subject to collecting additional information such as a medical certification.

The district court concluded that the termination survived scrutiny because the decision was made before Schwager gave notice of her intent to take FMLA leave. However, the decision to terminate Schwager was not communicated to her at that time. If there was a basis to terminate Schwager, it is unknown why the decision was not made at an earlier date. That is not to criticize FCS, but simply to observe that it is unknown. Moreover, the district court’s reasoning would seem to allow employers to adopt the “ostrich defense;” that is, to remain ignorant of an employee’s condition by failing to discharge their own responsibilities, and then argue that they had terminated the employee before receiving official notice of an intent to take FMLA leave.

Finally, there is at least some inference that FCS decided to terminate Schwager because she was taking prescription medicine. Her supervisor asked on April 10, 2007, whether or not Schwager would be taking medicine the next day. Schwager said she would take the medication if she were still in pain. The supervisor then reported all of this up the chain of command. A decision was made that same day to terminate Schwager. This decision was made without giving Schwager any notice or an opportunity to address and rebut any of the underlying allegations. A reasonable juror may have concluded from these circumstances that FCS decided to terminate Schwager because she might be taking FMLA leave. This is particularly so where, according to the district court’s ruling, some of the stated reasons for her termination lacked any proof.

In noting these considerations, I do not state or imply criticism of either the district court or counsel. It is often the case that there are many facts that are never expressly noted in a decision, and at other times relevant points are not fully fleshed out in a ruling because there is no reason to do that when the court and parties are familiar with the relevant facts and legal arguments that were made in legal papers or during oral argument. However, in the abstract, this is an interesting decision that raises a lot of questions as to how the claim arose and how it was litigated. From the outside looking in, we will probably never know exactly what did or did not happen.

Recommendations

Leaving aside the results of this particular case, several recommendations seem pertinent:

1) Make sure that any allegation of workplace misconduct is reasonably investigated. Do not include “phantom” allegations in a disciplinary memorandum.

2) Employers should not “bank” or “sit on” allegations of workplace misconduct. If misconduct is sufficient to warrant any form of discipline, it should be acted upon in a timely manner.

3) Give employees notice and a reasonable opportunity to rebut or refute allegations of workplace misconduct.

4) Clear termination decisions through counsel.

5) If an employer has notice of circumstances potentially implicating FMLA or the ADA, the employer should proactively develop information in an appropriate and confidential manner. This should primarily involve engaging in an interactive dialogue with the employee in question. If the circumstances support designation of FMLA leave, the employer should make sure that an appropriate designation is made.

6) An employee on FMLA leave is not insulated from discipline, even termination. However, employers should be careful to make sure that any decision affecting an employee who is out on FMLA leave is fair in form and function, and is supported by competent evidence.