Manager whose pay change followed on heels of leave is unable to revive FMLA, contract claims

A district court’s dismissal of the FMLA claims of an O’Reilly Automotive manager against his former employer were upheld by a divided Sixth Circuit in an unpublished opinion. The crux of the suit brought by the employee was that his former employer had pulled the plug on assurance pay that he was receiving in lieu of commission-based pay in retaliation for his repeated use of FMLA leave. Among other things, the appeals court concluded that the district court did not clearly err in concluding that two other managers who remained on assurance pay were not similarly situated to the employee. Judge Moore dissented.

Change to pay structure. After 25 years of working in the auto stores that eventually became O’Reilly Automotive, the last two-thirds of which were spent as a store manager, the employee, whose suit led to this appeal, resigned from his job. He contended that he was forced to resign because of the change in pay that came about as a result of being removed from salary-based pay and placed on the employer’s new system of paying store managers based on store profits. However, he contended that although that switch had happened a few years before, he had been kept on “assurance pay,” which equaled his prior salary, and that he was only switched over when he used FMLA leave.

First leave and pay change. The employee first received assurance pay beginning in April 2009. Over a year later, in August 2010, he was still on assurance pay when he sprained his ankle and had to take FMLA leave. After his sprain but before his leave commenced he was removed from assurance pay and transferred to a slower store. As a result, he submitted a resignation letter while he was on leave. However, the regional manager apparently talked him into staying and he was placed back on assurance pay and transferred to a different store. According to the employee, the regional manager promised him that as long as the sales at his store continued to grow, he would remain on the assurance plan.

Second leave and pay change. However, in December 2012 the employee took FMLA leave again after undergoing hernia surgery. He was on leave for one month and during that time he was again removed from assurance pay. In September 2013, after he was informed that his pay would not be reinstated and that he would not be transferred to a higher-volume store, he submitted his resignation. He filed suit against his former employer alleging violations of the FMLA, as well as breach of contract and tort claims. After summary motions the district court held a bench trial. The court entered judgment against the employee and dismissed his lawsuit with prejudice, finding that the employer had not interfered or retaliated against the employee in violation of the FMLA when it removed him from the assurance pay plan. It also found that the employer did not constructively discharge the employee or breach its contract. The employee appealed.

FMLA retaliation. The parties did not dispute that the employee met the first three elements of a FMLA retaliation claim—the dispute was over whether there was a causal connection between the employee’s use of leave and the adverse employment action. The district court found that the reason given by the employer for removing the employee from assurance pay—that his performance as a store manager did not produce profits that were sufficient to cover his salary—was not pretext for discrimination.

On appeal, the Sixth Circuit found that there was no clear error in the lower court’s conclusion. Looking at the evidence, the appeals court noted that the employer had been concerned about how many managers were on assurance pay. The regional manager testified that he would periodically receive a list from the corporate office of those managers whose assurance pay had expired or would soon expire and he had to determine whether they should be extended. He testified that the employee’s name was on that list, that he had one of the highest assurance pays of the store managers (because of his employment longevity), and that he was removed because his performance did not justify the higher salary. He testified that the employee was one of the last managers removed.

‘Highly suspicious’ timing. However, the employee argued that the reason given was pretextual and noted the temporal proximity between the removal and his use of FMLA leave. Indeed, the appeals court agreed that the timing of the employee’s removal in 2013 was “highly suspicious” and noted that temporal proximity was “the most powerful evidence” of pretext. He began his leave in December and mid-way through it was determined that he would be removed from assurance pay. The employee also argued that he had been removed from assurance pay one time before, which also happened to coincide with his use of FMLA leave.

Even with comparators, not enough. Although the employee pointed to another manager who was kept on assurance pay longer than him (and a second one who was removed but then given a pay raise), the appeals court gave credence to the regional manager’s assertion that they were not similarly situated because the manager who remained on assurance pay was at a new, unestablished store. The appeals court noted that the employee was “only able to provide two examples, which is not overwhelming when most other managers were removed long before 46 months and did not receive raises.” However, even taking those examples along with the “certainly suspicious” facts related to temporal proximity, the appeals court did not feel there was sufficient cause to “disrupt the district court’s conclusion in light of the other evidence on the record.” The court also found no reason to disrupt the lower court’s conclusions with regards to dismissal of the employee’s FMLA interference, breach of contract, and constructive discharge claims.

Dissent. Judge Karen Moore dissented, arguing that the lower court’s findings were sub-standard and that the employee had “presented a host of evidence to prove that his medical leave was the real reason for his extreme drop in pay.” In particular, the dispute regarding whether the other manager who remained on assurance pay was similarly situated was a pivotal one and was bungled by the lower court, she argued. It should have led to reversal.

SOURCE: Russell v. CSK Auto Corporation, nka O’Reilly Automotive, Inc., (CA-6), No. 17-1961, June 27, 2018.
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