Category Archives: pennsylvania

May an employer be sued for denying an employee leave under the Family Medical Leave Act?

The United States Court of Appeals for the Third Circuit recently affirmed in part and reversed in part the decision of the United States District Court for the Middle District of Pennsylvania.  Erdman v. Nationwide Ins. Co., No. 07-3796, 582 F.3d 500 (3d Cir. 2009). The issue the Court of Appeals addressed was whether an employer may be sued for denying an employee leave under the Family Medical Leave Act.

Brenda Erdman worked full-time for Nationwide Insurance from 1980 until 1998 when she requested part-time employment so she could care for her daughter Amber, whom was born with Down’s Syndrome.  Nationwide granted Erdman’s request and also permitted her to switch to a four-day work week a few years later.  Prior to 2002, Nationwide permitted Erdman to work extra hours and count that time towards “comp time”, rather than be paid for it.  In early 2003, Erdman was informed by her new supervisor that she was no longer permitted to accrue “comp time” and that her part-time position would be eliminated.  Erdman was given the option to return to work full-time and she did so.  Prior to returning to a full-time position, Erdman asked whether Nationwide was going to honor her previously approved vacation request for the entire month of August, which Erdman normally used to prepare Amber to return to school in the fall.  Erdman was told that it was unlikely her vacation would be approved, so she decided to request the time as leave under the Family Medical Leave Act (“FMLA”).

Shortly after Erdman returned to full-time employment in April 2003, she submitted paperwork requesting FMLA leave from July 7th to August 29th.  Initially, Human Resources told Erdman there were no problems with her FMLA leave.  Unfortunately, Nationwide terminated Erdman thereafter, on May 9, 2003, citing behavioral problems that allegedly culminated in a telephone call in which Erdman used profanity.  Specifically, Erdman said, “this is a personal call and should not be reviewed for quality purposes, a–holes.”  Erdman sued Nationwide in the United States District Court for the Middle District of Pennsylvania claiming she was unlawfully terminated under the Americans with Disabilities Act (“ADA”) for requesting leave pursuant to the FMLA.

The District Court dismissed Erdman’s case at Nationwide’s request on the grounds that Erdman had not accumulated sufficient hours to qualify as an eligible employee under the FMLA and on the grounds that Nationwide did not terminate her based upon “unfounded stereotypes and assumptions against employees who associate with disabled people.”  Id. at 6.  Instead, the District Court held that Nationwide’s termination of Erdman was motivated by Erdman’s prior modifications to her work schedule.  Erdman appealed the District Court’s decision to the United States Court of Appeals for the Third Circuit.

The Court of Appeals initially determined that Erdman accumulated sufficient worked hours in the prior year to be eligible for FMLA leave.  Nationwide countered that Erdman could not recover under a retaliation theory since she never actually took FMLA leave.  The Court reasoned it would be absurd to permit an employer to escape liability for punishing an employee for taking FMLA leave simply because the employer fired the employee before the leave began.  Per the Court, the question was whether Nationwide’s actions amounted to interference with Erdman’s FMLA rights or retaliation for asserting them.

To succeed on an interference claim, Erdman had to show that she was 1) entitled to and 2) denied some benefit under the FMLA.

To establish a retaliation claim, Erdman had to show: 1) she was protected by the FMLA; 2) she suffered an adverse employment action; and 3) the adverse action was causally related to her exercise of FMLA rights.

The Court held that Erdman established all three factors of a retaliation claim.  It also held that Erdman did not have to actually begin FMLA leave to be protected by the law.  As a result, the Court held generally that terminating an employee for a valid FMLA request may constitute interference with the employee’s FMLA rights as well as retaliation against the employee.

In applying that reasoning to the facts, the Court determined that Erdman relied upon the ADA’s “association provision,” which prohibits “denying equal jobs or benefits to a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a relationship or association.”  42 U.S.C. §12112(b)(4).  The Court reviewed the evidence to determine if it was sufficient to establish that Nationwide terminated Erdman because of Amber’s disability.  To establish that, Erdman was required to show that she would not have been terminated had she requested time off for a different reason.  In other words, Erdman had to show that Nationwide terminated her due to Amber’s disability and not due to Erdman’s stated intention to take leave.  The Court held that there was no evidence that Nationwide terminated Erdman because of Amber’s disability.  Therefore, the Court affirmed the District Court’s dismissal of Erdman’s ADA claim.

Download Erdman v. Nationwide Ins. Co., No. 07-3796, 582 F.3d 500 (3d Cir. 2009)

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

In Most Cases, Restrictive Covenants Are Only Enforceable By the Entity that Signed the Agreement Granting them

A restrictive covenant is generally defined as an agreement restricting the practice of a person’s profession or business after they leave their current employer. But can it be enforced by an entity that was not the original employer? That issue was addressed by the Appellate Division of the Superior Court of New Jersey in a June 3, 2010 case called, Woodbridge Medical Associates, P.A. v. Berkley, WL 2195760 (N.J.Super.App.Div. 2010).

The Underlying Facts
In that case, “Richard A. Goldstein, M.D., joined [Woodbridge Internal Medical Associates, P .A.’s] (“WIMA”) medical practice in July 1997 as an employee. Goldstein was required to sign an employment agreement, which barred him, for a two-year period following his departure, from competing with WIMA within ten miles of WIMA’s offices or within five miles of the hospitals where WIMA’s physicians maintained admitting privileges. In 2004, when he became a WIMA shareholder, Goldstein signed a shareholders agreement, which contained his promise not to compete, for two years following his departure, with WIMA or its successors by engaging in the practice of medicine within five miles of WIMA’s offices or within three miles of the hospitals serviced by WIMA’s physicians.” Id at 1.
Ultimately, there was a business downturn and “the business ended up owing $200,000 in back rent. At that point, the WIMA shareholders formed a new corporate entity to insulate themselves. On October 27, 2004, counsel filed a certificate of incorporation of Woodbridge Medical Associates, P.A. (WMA) …  Importantly, “WIMA did not, however … assign its employment agreements or shareholder agreements to WMA.” Id. at 2
Ultimately, “Goldstein [and other’s] left WMA. On September 29, 2005, WMA filed suit in the Chancery Division against Goldstein [and the others] alleging, among other things, that [they] breached the restrictive covenants contained in their agreements with WIMA.” Id at 2

The Court Rules Against Enforcement of the Restrictive Covenants

    “At the conclusion of plaintiff’s case, the judge involuntarily dismissed WMA’s action seeking enforcement of the restrictive covenants” Id at 3. The matter was appealed, and the Appellate Division affirmed this ruling on the basis that “the evidence failed to demonstrate the restrictive covenants WIMA extracted from Goldstein and Murray were actually transferred or assigned to WMA.” 

Id.

In essence, by forming a new entity for the business, but failing to transfer the restrictive covenants to that new entity, the owners had precluded themselves from enforcing the covenants. In other words, you can’t insulate yourself from the liabilities of your old entity (the $200,000.00 debt for back rent) and at the same time take the position that you are not insulated from your old entity for purposes of enforcing its rights. The two arguments are inconsistent and will preclude enforcement.

Comments/Questions: ljm@gdnlaw.com

© 2009 Nissenbaum Law Group, LLC