Wait! Don't Fire The Employee With A Really Sick Child!

At least not before checking with your attorney.

An interesting case from the Northern District of Iowa was recently brought to my attention.  Although no final disposition of the case occurred due to parties resolving the matter out of court, the facts and issues are important enough to bring to the forefront.  The facts are derived from the company’s motion for summary judgment and the former employee’s response to that motion:

Myers worked for Hog Slat, Inc. as a salesperson for 15 years before being abruptly terminated in January of 2013.  He had a sparkling history with the company—top sales person under his supervisor and exceeded expectations every year.  In 2008, Myers had a daughter born with a severe medical condition.  In January 2012, his daughter was hospitalized for a length period of time, resulting in approximately $1,000,000 worth of medical bills.  Two people in the company, including the CFO, were aware of the magnitude of the medical bills and were also aware that medical bills would likely continue into the future.  Shortly thereafter, Hog Slat received information that its premiums would be increasing and Myers’ daughter would be subject to a “laser”, meaning Hog Slat would be financially responsible for a larger portion of medical claims related to her.

There was evidence presented that at the time the CFO learned of the large claim, Myers was asked to restructure his billing process creating additional work for him; Myers was subject to micromanagement by the CFO, and Myers’ commission structure was being re-interpreted by the CFO.  Myers (and another employee) also went on fishing trip sponsored by a vendor and competitor.  Myers’ trip was approved in accordance with company policy; however, because he was on the fishing trip, Myers failed to send out his bills on a timely basis.  Upon returning Myers received a “pretty good butt chewing” from the CFO.  Myers was terminated two months later after requesting the company pay his commission in accordance with his interpretation of the commission arrangement in the contract.  The company stated that his termination was a result of not billing his customers while he was on the fishing trip.

Myers sued on a number of theories, including Americans with Disabilities, Interference with employee benefits in violation of ERISA, violation of the Wage Payment Collection Act, Wrongful Termination in violation of public policy, and breach of contract.  The two claims that were the subject of the motion for summary judgment and which I found interesting are the ADA and ERISA claims.

Many of the times, articles and cases, center on an employee’s disability; however, the ADA also prohibits discrimination against an employee because of his or her association with a person with a disability.  It prohibits adverse action due to expenses arising from a family member’s disability.  Similarly, ERISA prohibits discrimination for the purpose of interfering with the attainment of any right a participant may become entitled to under a plan.  In this case, Myers alleged that his termination was predicated on his daughter’s large medical claims and the company’s desire to reduce its exposure.

Because this was just a motion for summary judgment ruling, the court did not ultimately conclude that discrimination occurred, but it did conclude that Myers had at least created a factual dispute.  The unprecedented high medical bills, the significant increase in premiums and laser, the knowledge that additional medical bills would be incurred, the changes in the oversight of Myers’ work, the change in interpretation of the bonus and the timing of all the events led the court to find that a “reasonable person” could find a connection between the medical claims and the termination.  Furthermore, the court was concerned with the gap in time between the fishing trip and untimely billing and the termination.  The court also noted that no other employees had been terminated for similar conduct and the disciplinary policy outlined in the handbook may not have been followed.  Thus, the court ruled that Myers’ claim could proceed.  As stated earlier, it was settled shortly after this ruling so there is no final ruling or jury verdict on the issues presented. 

Regardless, employers should be aware that association with a disabled person is a protected characteristic and should protect against discrimination claims on such grounds.  Furthermore, employees should never be fired for insurance claims or potential future insurance claims.  So, before you fire the employee with the sick child, make sure you have some legitimate reason to back it up.

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