Suppose you find your company is affected by the pandemic and resulting economic downturn. You decide to furlough some of your employees. You inform them of their impending furlough. You hope that you can now focus on staying afloat until the economy improves. Could the furloughs themselves cause you other problems? What if your employees allege that the furloughs aren’t really furloughs, but in fact are discriminatory terminations? Can they do that? Don’t they understand there’s a pandemic, the likes of which the world hasn’t seen in over 100 years? Sounds like a no-win situation. What’s an employer to do?
You can furlough employees. You just have to make sure you do it right — or at least don’t do it the wrong way. Let’s have a look at a company that allegedly did it the wrong way to see what we can learn… As you can guess, we’ve got a real case, albeit in the beginning stages. The case is Mariano et al v CSC Generations Holdings et al No. 1:20-cv-06939 (S.D.N.Y., Aug. 27, 2020). Here, is what’s gone down, so far: Two female employees, one an Integrated Marketing Director, and the other a Market Editor worked for One Kings Lane a home decor company previously owned by Bed Bath & Beyond. Both were highly qualified, worked long hours, and performed exceptionally well in their jobs. Both became pregnant and sought maternity leave. One week after CSC acquired the company, and only a few weeks before each was supposed to take maternity leave, CSC “furloughed” them, “under the false pretext of a COVID-19 related downsizing”.
After the acquisition, CSC took the position that both employees were no longer FMLA-eligible, because of the change in the corporate structure. When it “furloughed” the employees, it did not provide a return-to-work date. CSC selected them rather than lower-performing, lower-paid employees. Both employees learned they would not receive the paid maternity leave they had previously been promised. One employee was told that she also wouldn’t get short-term disability benefits because her pregnancy was a pre-existing condition. They were told that they were new employees of CSC, and so hadn’t worked enough hours to be eligible for FMLA.
Both employees complained of sex and pregnancy discrimination, through their counsel. In response, CSC terminated their access to their e-mail accounts. After they formally filed discrimination complaints the company reinstated them but ordered them to return to work approximately one month after they had each given birth. CSC then offered maternity benefits that were substantially less than the benefits they had (or were promised) before they were terminated. They also applied for paid family leave benefits under the New York State’s Paid Family Leave Act, which they apparently have still not received. Both employees sued claiming sex and pregnancy discrimination and FMLA interference, and retaliation. CSC.
These employees just filed their complaint on August 27, 2020. CSC still has time to file an answer, so the case is very much in the beginning stages. If these allegations are true, CSC is in a lot of hot water. According to the employees, CSC targeted pregnant employees for termination, denied them maternity leave benefits, and interfered with their rights under FMLA and New York’s Paid Family Leave Law.
What about CSC’s position that the change in corporate structure renders these employees ineligible for FMLA? The FMLA covers this issue. If there is substantial continuity of the same business operations, among other things, then the successor will step in the shoes of the prior employer and assume those same responsibilities. The complaint alleges such continuity. You can read the full complaint here for more details.
OK, what does all this mean? Here are some takeaways:
- If you are furloughing employees, make sure that you aren’t targeting people belonging within any classes protected by federal and/or state anti-discrimination laws.
- Don’t think you can do so and then hide behind COVID-19 as your reason.
- Unless you have specifically been notified otherwise, employment laws are not on hold during the pandemic.
- While your employees may be employed at-will, if the termination appears to be discriminatory, or in violation of other employment laws, you cannot hide behind the employment-at-will doctrine.
- If you “furlough” an employee that you have no intention of accepting back to work, that is a termination–and a wrongful one if it is found to violate any employment laws.
- If you take ANY adverse action against an employee who attempts to exercise FMLA rights (or rights under corresponding State law) or who complains of discrimination, that will most likely trigger liability for retaliation.
I think you get the point.
Until next time…
Watch the latest video clip in my series, “Ask the Employer’s Lawyer: My Employee Has Exhausted All Her FMLA Leave Time. What do I do?
Watch my television interview on Stop My Crisis with Vivian Gaspar.
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