HR Professionals Beware: You Could Be on the Hook Personally for FMLA Violations

Applying the Fair Labor Standard Act's (FLSA) "economic-reality test," the United States Court of Appeals for the Second Circuit recently ruled that an HR Director can be held personally liable, as an employer, for violations of the Family and Medical Leave Act (FMLA) if they have sufficient control over an employee or their FMLA rights. Graziadio v. Culinary Inst. Of Am., No. 15-888-cv (2nd Cir. 2016).

Pertinent Facts of the Graziadio Decision

Plaintiff Cathleen Graziadio was employed as a payroll administrator at the Culinary Institute of America (CIA). In June 2012, she took two weeks off from work to care for her diabetic son and sought to have her absence designated as FMLA-protected. Graziadio asked CIA's payroll clerk (who processed FMLA documentation) to provide her with any necessary paperwork, which was forwarded to her later that day. Graziadio returned to work on June 18, 2012, and on or about June 27, 2012, she submitted a medical certification supporting her need for leave to care for her son. On the same day, Graziadio's other son fractured his leg playing basketball and underwent surgery for the injury. Graziadio notified her supervisor of her need for additional leave as well as her intent to return to work on July 9th on a reduced schedule through mid-August. Graziadio then questioned whether she needed to provide further documentation in order to process her request for FMLA leave, to which no one responded.

When July 9th arrived, Graziadio's supervisor asked for an update on Graziadio's return. Graziadio indicated that if her reduced schedule was approved, she could return to work on July 12th. Graziadio again asked her supervisor if there was any further documentation that CIA needed from her. At this point, Graziadio's supervisor reached out to Shaynan Garrioch, CIA's HR Director, concerning Graziadio's request.

Despite numerous calls and emails to CIA, Graziadio heard nothing about her return to work until CIA's HR Director sent her a letter on July 17th, stating that her FMLA paperwork did not justify either of her absences and that she needed to provide CIA with updated paperwork to address the deficiency. Notably, over the next week, Graziadio questioned as to what specific paperwork she needed to have completed and also submitted additional documentation from her health care provider. CIA's HR Director never informed Graziadio exactly how her documentation was deficient. Instead, the HR Director insisted on meeting with Graziadio personally. Ultimately, no one set a time for a meeting and Graziadio retained an attorney.

Graziadio's lawyer sent a letter to CIA's President in which he reiterated that Graziadio wanted to return to work but could not do so because CIA's HR Director found her FMLA documentation deficient and would not identify what other documentation was required of her. CIA maintained the position that Graziadio would not be returned to work because she had not provided sufficient support to justify her absences and insisted that it was not CIA's obligation to explain what was missing from the paperwork, but instead that it was Graziadio's obligation to comply with the FMLA. By early September, CIA's HR Director had not approved a return to work or schedule change and Graziadio was terminated for abandoning her position.

Graziadio filed a lawsuit against CIA, its HR Director and her supervisor in the Southern District of New York alleging FMLA interference, retaliation and associational discrimination under the Americans with Disabilities Act (ADA). The defendants moved for summary judgment on all claims, which the district court granted in full. That decision was appealed to the Second Circuit Court of Appeals.

Individual Liability

Under the FMLA, an "employer" includes any person who "acts, directly or indirectly in the interest of an employer" towards an employee. Whereas the district court concluded that CIA's HR Director did not constitute an "employer" for purposes of FMLA liability, the Second Circuit, applying the FLSA's "economic-reality test" which asks whether the alleged employer has sufficient power to control (in whole or in part) the employee or their rights under the FMLA to be designated as an "employer," reversed the finding. To answer whether sufficient control exists for an individual to constitute an employer, courts applying the economic-reality test consider several "non-exclusive and overlapping" factors. These factors include whether the alleged employer (1) had the power to hire and fire employees; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records.

Applying these four factors to Graziadio's case, the Second Circuit concluded that it would not be unreasonable for a jury to find that CIA's HR Director was an "employer" of Graziadio under the FMLA. With respect to the first factor, hiring and firing power, the Court found that the HR Director played an important role in Graziadio's termination, even if the VP of Administration had the ultimate say in a termination. Second, there was evidence that the HR Director exercised control over Graziadio's schedule and conditions of employment, at least with respect to her return from FMLA leave, since the HR Director was the only individual to review the FMLA paperwork, determine its adequacy and make decisions regarding Graziadio's ability to return to work (and under what conditions). While no evidence concerning the third factor was put forward and the fourth 'maintenance-of-records' factor cut against finding the HR Director as an employer, the Second Circuit still found that sufficient evidence existed to suggest that the HR Director exercised sufficient control over Graziadio's employment to be subject to individual liability under the FMLA.

Graziadio's FMLA Interference & Retaliation Claims

While Graziadio is most significant for expanding the doctrine of individual liability under the FMLA, it also highlights the vulnerabilities employers face with respect to claims for FMLA interference and retaliation. In reversing the district court's dismissal of Graziadio's interference claim, the Second Circuit found that enough evidence existed for a jury to find that Graziadio was denied FMLA benefits to which she was entitled with respect to each of her sons. Most notably, the Second Circuit emphasized that an employer must specifically request medical certification for each leave claim and that neither a handbook provision requiring certification nor a vague request for "paperwork" was enough to put Graziadio on notice that certification was required.

The Court also noted that CIA was unresponsive to Graziadio's pleas for clarification and that a jury could find that CIA's conduct relieved Graziadio of any unsatisfied obligation to provide medical certification. Moreover, if Graziadio was relieved of her obligation to provide certification, her failure to provide the documentation could not have been a legitimate basis for her termination, a fact that strengthens Graziadio's retaliation claim. Coupled with the close timing between Graziadio's leave request and her termination, the Court found ample evidence for a jury to conclude that Graziadio's termination arose not from her abandonment of her position, but was rather retaliation for her "much-contested attempt to take FMLA leave." (Graziadio's ADA claim was dismissed by the district court and said dismissal was affirmed by the Second Circuit.)

Employer Takeaways

The Graziadio decision is an important reminder that HR Directors and other managers who are involved in the FMLA process can be named individually as parties in FMLA as well as other types of employment litigation. Unanswered emails, phone calls and questions from employees may be used as evidence to attempt to show that a manager had an improper motive, which can subject both the manager and the employer to potential liability under the FMLA.

In applying the FLSA's economic-reality test, the Second Circuit followed the footsteps of the Third, Fifth and Eleventh Circuits. It should be noted that the United States Supreme Court and the Seventh Circuit (which includes Wisconsin, Illinois and Indiana) have not directly addressed the issue of individual liability under the FMLA and some circuits maintain that there is no individual liability under the FMLA. However, some district courts in the Seventh Circuit have found that individuals can be held liable under the FMLA and have relied on the FLSA to guide the interpretation of the FMLA. Accordingly, it would not be surprising for the Seventh Circuit to join the Second, Third, Fifth and Eleventh Circuits in applying the FLSA's economic-reality test to individual liability questions under the FMLA in the near future.

Beyond the implications of expanding individual liability for FMLA administrators like CIA's HR Director under the economic-reality test, the Graziadio decision highlights common vulnerabilities employers face in administering FMLA leave requests and the protective steps employers should take to ensure they are not unnecessarily exposed to those vulnerabilities. Such steps include having a coordinated system in place for requesting medical certification, drafting detailed clarification memorandums when an employee's certification is deficient, performing adequate follow-up with the employee, training all supervisors, managers and FMLA administrators to take a collaborative rather than hostile approach to processing FMLA leave requests and emphasizing that those same employees can be held individually liable under the FMLA if such requests are not processed in accordance with the law.