Labor & Employment
Summer 2018

FMLA the Right Way: Waag v. Sotera

Under the Family and Medical Leave Act (FMLA), eligible employees may take leave and return to working in the same job or an equivalent position. However, employees who take FMLA leave are not protected from actions that would have otherwise affected them if they were not on leave, such as necessary layoffs in times of economic difficulty. Distinguishing between a lawful discharge and an unlawful interference with an employee’s protected FMLA rights isn’t always an easy task. In an aid to employers, a recent case from the Fourth Circuit offers a textbook example of a proper reinstatement and later layoff where the employer prevailed.

Gary Waag was working for Sotera Defense Solutions, Inc. as a Director of Operations in Sotera’s Data Fusion Analytics Division. In September 2012, the United States Army selected Sotera as a nonexclusive prime contractor for the army’s NexGen program, giving Sotera the right to bid on contracts. In early October 2012, Waag was asked to become the Program Manager for Sotera’s NexGen work, which was primarily a business development position that involved non-billable work until a contract was obtained, making Waag’s salary overhead.

Shortly afterward, Waag severely injured his hand after falling off the roof of his house. He informed Sotera on the date of the injury and his physician wrote him off work until December 31, 2012. Due to his injury, Waag was unable to perform in his position as the Program Manager, and Sotera placed another employee, Devin Edwards, in Waag’s former position for NexGen work. Shortly afterward, federal budget sequestration went into effect and the army delayed its NexGen program due to a lack of funding. Due to this, Edwards’ position as replacement Program Manager for the NexGen program became a minor role in comparison to Edwards’ other duties for Sotera.

Upon his return, Waag was reassigned to a new position working on a separate bid for a different army contract. Waag’s new position included an identical salary and identical benefits, but was also a non-billable overhead cost to Sotera until they obtained a contract. In late 2012, Waag’s division saw a drastic decrease in work due to sequestration, and overhead costs needed to be cut by laying off employees doing non-billable work, including Waag. Edwards, who was Waag’s replacement in his former position, was not laid off as the company considered Edwards to be important to a number of other revenue-generating programs.

Waag then brought suit against Sotera, alleging that Sotera violated the Family and Medical Leave Act by not restoring Waag to his prior position after his return from over two months of medical leave; by placing him in a new job that was not equivalent to his prior position, and by terminating him from his new job in retaliation for taking medical leave. The district court granted summary judgment in favor of Sotera, and Waag appealed to the Fourth Circuit.

Employees who take leave under the FMLA are entitled, upon their return, either “to be restored by the employer to the position of employment held by the employee when leave commenced” or “to be restored to an equivalent position with equivalent employment benefits, pay, and other terms and conditions of employment.” In addition, employees returning from FMLA leave shall not lose “any right, benefit or position of employment” they would be entitled to, had the employee not taken leave.

Waag first argued that the employer had interfered with his FMLA rights by failing to restore him to his former position with the company, which had been reassigned to another employee. In response, the court noted that the plain text of the law “does not indicate a preference for restoring covered employees to their pre-leave positions over ‘equivalent’ positions, and it does not require an employer to hold open an employee’s original position while that employee is on leave.”

Waag then argued that Sotera interfered with his FMLA rights by failing to restore him to an equivalent position. The court, however, noted that Waag’s salary and benefits were identical for both positions, that both positions offered him eligibility for bonuses, that his title of Senior Director remained the same, that he worked in the same location, and that his duties and responsibilities were substantially similar to his prior position. As these terms and conditions of employment were nearly identical, the court found Waag’s other complaints about the differences between the positions, which included his claims of a loss of prestige, to be “de minimis.”

Waag’s final argument was that Sotera placed him in a “sham position,” which Sotera had created to make it appear that Waag had been restored to an equivalent position, with the later intention of terminating him from employment. He argued that a reasonably jury could conclude that Sotera had done so based on temporal proximity, i.e., that Waag was placed in a new job that was eliminated six weeks later. The court, however, rejected this argument, noting that there was no other evidence in the record that would permit a jury to conclude, without speculating, that the job was a sham.

The court admitted that a close temporal proximity between protected FMLA activity and an adverse employment action could establish a prima facie case of retaliation, however, Waag was also required to show that Sotera’s proffered explanation was, in fact, a pretext for retaliation. As Sotera offered substantial evidence showing that the government sequestration had a disastrous effect on its business, and Waag could not point to any evidence in the record that would allow a reasonable jury to conclude he was let go due to retaliation, the Fifth Circuit upheld finding of summary judgment for Sotera.

The law often places employers in the position of ensuring that employees’ FMLA rights are protected while also making difficult but important business decisions. The takeaway from this case is to make a complete record of the employee’s proper reinstatement and the business decisions that lead to any later layoff. Although employers are not required to reinstate employees to their former position, employers should ensure that returning employees are placed in an equivalent position with equivalent pay, benefits, and terms and conditions of employment. When put in the position to make the necessary layoff of an employee returning from FMLA leave, employers must take care to thoroughly document the reasons for doing so, and to ensure that no part of the layoff is due to retaliation or interference with an employee’s FMLA rights.