Employer Did Not Retaliate in Demoting Employee for Planning to File a Fraudulent FMLA Claim

The Seventh Circuit recently held that a Costco store did not engage in a retaliatory response when it demoted a manager to cashier after learning that he was planning to file an allegedly fraudulent FMLA leave request.  The Court further held that Costco did not have an obligation to reasonably accommodate this manager by transferring him to a different store while he remained on FMLA leave.  Curtis v. Costco Wholesale Corp., 2015 U.S. App. LEXIS 20446 (November 24, 2015).

Background Facts and Allegations

Defendant Costco hired plaintiff Keith Curtis in 2001, who was thereafter promoted to optical manager in 2008.  Due to customer complaints, the general warehouse manager started monitoring Curtis’ department more carefully.  In September 2011, Curtis requested and was given a medical leave under the FMLA due to stress and anxiety; he returned to work in November 2011.  His performance did not improve and Curtis was placed on a 90-day performance improvement plan in April 2012 (“PIP”).  In early May 2012, an employee working under Curtis informed Costo management that she was concerned that Curtis was going to “scam” the company in that he intended to take a medical leave to secure his managerial rate of pay and position in the event of a demotion.  Curtis was subsequently demoted from optical manager to cashier.  He then requested and was given his second FLMA leave.  On June 6, 2012, Curtis submitted a request to be transferred from an Oak Park store to a Merrilville store and Costco refused his transfer request.  In January 2013, Curtis was released back to work by his doctor to any store other than Orland Park.  In July 2013, an optical position became available at the Merrilville store and Curtis was given the position.

Curtis filed a Complaint against Costco and his general manager alleging retaliation and interference in violation of the FMLA and discrimination and failure to accommodate under the ADA.  The defendants filed motions for summary judgment that were granted by the district court and affirmed on appeal.

FMLA Claims

The Seventh Circuit found several reasons as to why Curtis’ FMLA claims failed.  First, Curtis’ comment to his subordinate employee that he was contemplating taking medical leave was not adequate notice to his superiors at Costco, as it did not give sufficient information as to the duration, timing or health condition pertaining to the leave as required under the FMLA.  Second, even if this was protected activity, it is no longer protected when it is fraudulent.  Third, his retaliation claim failed because he could not establish the causal connection between his comment to his subordinate and his demotion since there was undisputed evidence that Curtis faced a plethora of performance issues and he failed to refute his alleged statement to his subordinate.  Finally, Curtis’ claim that Costco retaliated against him by prohibiting him from returning to work while he was still on his second FMLA leave and not yet cleared to work failed.  While an employer has a duty to return an employee to an equivalent position, it only has to do so once that employee has been cleared to return to work.

ADA Claims

The Seventh Circuit held that Curtis waived any argument with regard to disparate treatment by failing to present it in the district court or in his opening brief.  As for his claim that Costco failed to reasonably accommodate his request for transfer to a different location this was rejected since Curtis was on FMLA leave and unable to work at the time of this request thus, he was not a qualified individual with a disability.  He was also given the first position available after he was cleared to return to work.

Lessons for Employers

  1. Employees still have to follow company specific policies for requesting FMLA leave in order for their request to be protected under the FMLA.  An employee fails to provide proper and sufficient FMLA leave by merely telling a co-worker that he/she is planning on taking FMLA leave.
  2. Even if an employee does follow specific company policy for requesting FMLA leave, the request is not protected if it is fraudulent in nature or the employee is abusing leave.  Employers should be aware of the potential for fraudulent claims and conduct an investigation into FMLA requests that are suspected to be fraudulent or abusive.  This investigation will serve to support the employer’s “honest belief” defense in response to a future claim or litigation by the employee.
  3. Employers are under no obligation to restore an employee to his or her position if the employee is unable to perform the essential functions of the job.  An employee who is still on medical leave is unable to perform the job until he/she is cleared for work.
Trisha K. Temser

Trisha K. Temser