Employers routinely hire human resources (HR) employees to help the company navigate the myriad laws and regulations governing employment issues. These employees are often tasked with ensuring that the employers do not run afoul of these laws and regulations. For example, when employees request that they be allowed to take a leave of absence, managers often look to the company’s HR employee for assistance in determining when and under what circumstances an employee can take leaves, what documents are required from the employee, when the employee can return to work, and what accommodations, if any, are required when the employee returns to work. It is common — indeed, an accepted and even legally recommended policy — for companies to allow HR personnel to be the “point person” with regard to an employee’s leave of absence request. But, HR employees beware: The Second Circuit recently held that an HR director can be personally liable for violating the Family and Medical Leave Act (FMLA), 29 U.S.C. §§ 2601, et seq. for her conduct in interacting with an employee seeking such leave.

In Graziadio v. The Culinary Institute of America, et al., a former employee sued her employer, her supervisor, and the HR director for violating the FMLA and Americans with Disabilities Act (ADA). The U.S. District Court for the Southern District of New York granted summary judgment for the defendants on all claims. On appeal, the Second Circuit reversed the grant of summary judgment against the employer and the HR director for FMLA interference and retaliation. The court found that the HR director met the definition of an “employer” under the FMLA and therefore it was a jury issue whether she could be held personally liable for interfering with the former employee’s rights under the FMLA and retaliating against her for seeking to exercise those rights.

The facts of Graziadio are rather commonplace. Graziadio requested, and was granted, two leaves of absence to care for her children. After returning from the second leave, Graziadio asked that she be allowed to work a reduced three-days-per-week schedule for the next two months. The HR director concluded that she had not provided any documentation to support her second leave of absence or the need to reduce her employment to just three days a week. Therefore, the HR director started communicating with Graziadio to request that she provide the appropriate documentation, and indicated that Graziadio would not be allowed to return to work without it. Graziadio never provided the requested documentation, and, ultimately, was terminated for “abandoning” her job.

The Second Circuit recognized that the definition of an employer under the FMLA included “any person who acts, directly or indirectly, in the interest of an employer to any of the employees of such employer.” 29 U.S.C. §2611(4)(A)(ii)(l). Therefore, the court applied an “economic reality” test to determine whether an individual could be held liable for violations of the FMLA. The factors of the “economic reality” test are:

1. Whether the individual had the power to hire and fire the employees;
2. Whether the individual supervised and controlled the employee’s work schedule or conditions of employment;
3.  Whether the individual determined the rate and method of payment; and
4. Whether the individual maintained employment records.

The court stated that in the FMLA context, the economic reality test determines essentially “whether the putative employer controlled in whole or in part plaintiff’s rights under the FMLA.”

The court concluded that the evidence in the Graziadio case showed that the HR director controlled Graziadio’s rights under the FMLA because the HR director reviewed the employee’s FMLA paperwork; the HR director was tasked with determining the paperwork’s adequacy; the HR director controlled the employee’s ability to return to work and the conditions of that return to work; and the HR director was the one who communicated with the employee regarding her leave of absence and return to work. The court downplayed undisputed evidence that the HR director did not have the authority to fire Graziadio, and that the termination decision had been made by the company’s vice president. Because the vice president did not independently investigate Graziadio’s situation, but relied on the information provided by the HR director, the court found that the HR director “held substantial power over Graziadio’s termination.”

The Graziadio case exemplifies the care and caution that managerial employees must have when ensuring compliance with federal laws and regulations regarding employee benefits. From all respects, it appears that the HR director was doing exactly what she was hired to do. She was interacting with the employee to ensure that the leave of absence qualified for protection under the FMLA, and that the requested accommodations were necessary. However, the Second Circuit found that the HR director’s conduct went too far: The economic reality was that the HR director became the employee’s employer, and, therefore, was personally liable if the employee’s rights under the FMLA were violated.

If you have any questions about how this could impact your business, please contact:

• Caroline J. Berdzik (609.986.1314; cberdzik@goldbergsegalla.com)
• Martha P. Brown (336.419.4907; mpbrown@goldbergsegalla.com)
• Or another member of the Goldberg Segalla Employment and Labor Practice Group.