Court Report

Production-based bonuses may be prorated during FMLA leave; RICO claim challenges the alleged hiring of illegal immigrants; more.

Dec 1, 2006

HR Magazine, December 2006 Working Remotely Was Not Reasonable

Mulloy v. Acushnet, 1st Cir., No. 05-2160 (Aug. 24, 2006).

Just because an employee with a disability believes he can effectively perform a job from an area other than the job site does not mean he is entitled to do so under the Americans with Disabilities Act (ADA), according to the 1st U.S. Circuit Court of Appeals.

This case involved a plaintiff with a condition known as occupational asthma, an ailment that allows a person to work only in the most exceptionally clean environment. The plaintiff worked as a computer program designer at a golf ball manufacturing plant. His work consisted of designing programs for the manufacture of golf balls and checking and maintaining computer equipment. This involved a combination of working from an office cubicle and also going onto the factory floor to adjust and fix equipment.

Unfortunately, the plaintiff’s job exposed him to numerous chemicals daily. These chemicals irritated and exacerbated his condition. At first, the company sought to simply scale back his time on the floor. However, eventually his condition reached the point where he was unable to be near the facility. After a transfer to another facility owned by the company, the plaintiff attempted to continue to perform his job; however, the company eventually terminated him.

In response, the plaintiff sued, alleging a violation of the ADA. He argued that he had an ADA disability and thus was entitled to the reasonable accommodation of allowing him to work from the remote facility. The district court ruled in favor of the company, and the plaintiff appealed.

The appeals court agreed with the district court and held that rather than being a reasonable accommodation, the plaintiff’s desire to be able to work remotely actually constituted a redefinition of one of the essential functions of the job itself.

Even though the plaintiff did make some arguments as to his ability to handle the job away from the workplace using remote control equipment and video technology, the court held that it was reasonable for the company to require that the employee be present at the job site. In short, the court ruled that although the ADA requires an employer to make a reasonable accommodation for an employee with a disability, it does not go so far as to require an employer to create a whole new job. Since presence at the job site was one of the essential functions of the job, the termination was justified.

By Michael C. May, an attorney with the law firm of Albo & Oblon in Arlington, Va.

Employer May Prorate Bonus During FMLA Leave

Sommer v. Vanguard Group, 3rd Cir., No. 05-4034 (Aug. 24, 2006).

In a case of first impression, the 3rd U.S. Circuit Court of Appeals ruled that employers may prorate production-based bonuses of employees taking leave under the Family and Medical Leave Act (FMLA).

Robert Sommer alleged that the FMLA prohibits employers from reducing bonuses based on hours worked when the targeted hours were missed due to FMLA leave. In affirming a district court ruling dismissing the claim, the appellate court held that employers are allowed to prorate “production bonuses,” even though “absence-of-occurrence” bonuses, such as those awarded for perfect attendance, could not be reduced.

Sommer worked for the Vanguard Group as a financial administrator. In late 2000 and early 2001, Sommer took two months of FMLA leave, claiming major depression and generalized anxiety. Due to this absence, Vanguard prorated Sommer’s bonus under its partnership plan, reducing it by $1,788.23.

Vanguard terminated Sommer in 2004 for misrepresenting his qualifications to act as a financial administrator. Sommer sued, alleging Vanguard violated the FMLA by prorating his partnership plan bonus.

Vanguard established its partnership plan in 1984 to reward employees for personal and corporate achievement. Under the plan, employees working at least 1,950 hours received a full bonus. Those working fewer hours received a prorated bonus.

Company policy specifically stated that “time spent on leave is not considered time worked” and the bonus was “always prorated for leave time.” The policy made no distinction between types of leave.

The district court dismissed Sommer’s claims, finding the partnership plan bonus was production-based, for which proration is allowed.

On appeal, Sommer contended the district court incorrectly classified the partnership plan as a production bonus rather than an absence-of-occurrence bonus.

In considering this argument, the appellate court noted that, under the FMLA and a 1994 Department of Labor opinion letter, an employer may prorate a production bonus for FMLA leave, whereas an absence-of-occurrence bonus, such as for perfect work attendance, cannot be compromised by FMLA leave. Sommer argued he qualified for a full absence-of-occurrence bonus because he was employed on the last day of the year, the date of distribution and all days between.

The appeals court disagreed, affirming the lower court and holding, “Sommer’s argument that the plan is an absence-of-occurrence bonus because qualification hinges upon continued employment ignores the simple fact that, beyond the plan’s qualification requirements, there is an hours-based annual production requirement.”

By Jonathan Hafen, an attorney with Parr Waddoups Brown Gee & Loveless in Salt Lake City.

RICO Claim Challenges Alleged Hiring of Illegal Immigrants

Williams v. Mohawk Indus. Inc., 11th Cir., No. 04-13740 (Sept. 27, 2006).

A class of current and former Mohawk Industries Inc. employees has been given the green light to pursue their Racketeer Influenced and Corrupt Organizations (RICO) claims against the company.

The 11th U.S. Circuit Court of Appeals had previously approved the action, but the company took the decision to the U.S. Supreme Court, which dismissed the case on June 5 after briefing and oral argument, directing the 11th Circuit to reconsider its ruling in light of the Supreme Court’s ruling in an unrelated RICO case that the high court dismissed for failure to state a RICO claim.

The unrelated case (Anza v. Ideal Steel Supply Corp., 126 S. Ct. 1991 (2006)) involved a dispute between business competitors, one of whom claimed that the defendant’s failure to pay state income taxes gave an enhanced competitive position in the market that the plaintiff lacked, causing the plaintiff’s business to suffer. The alleged injury was too indirect to satisfy the proximate cause test required to state a RICO claim, the Supreme Court held. It obviously felt that employees claiming wage depression because their employer allegedly employed undocumented workers were similarly unable to state a RICO claim.

However, the 11th Circuit did not see it that way. After reaffirming its prior decision with respect to other RICO requirements that Mohawk had asserted to the Supreme Court were unmet, the appeals court turned to the proximate cause issue and held that at the pleading stage the plaintiffs’ complaint was sufficient to justify keeping the complaint alive.

The complaint alleged that Mohawk had recruited, hired and harbored thousands of undocumented workers at its facilities in Georgia, undermining the individual and collective bargaining power of the plaintiffs and their union to press for higher wages. The appeals court rejected Mohawk’s argument that myriad factors could account for low wage rates other than the alleged unlawful conduct.

By Mary E. Pivec, an attorney with the firm of Sheppard Mullin Richter & Hampton LLP in Washington, D.C.

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