$2.8+ MILLION ARBITRATION AWARD
Natalie Koss, Esq., Represents Technology Salesperson in Successful FMLA Claims
Washington, DC, area attorney Natalie Koss has secured a $2.8 million arbitration award for her client, an employee of an open-source software corporation with more than $3 billion in annual U.S. sales.
The employee, a senior executive sales professional, had been responsible for earning millions of dollars in new and renewal sales for his employer before suffering discrimination when attempting to exercise his parental leave rights under the Family and Medical Leave Act (FMLA).
The multi-million-dollar arbitration award for this FMLA violation includes penalties for the discrimination and subsequent retaliation by his employer.
Natalie Koss represented the employee from the initial investigation of claims through the arbitration and fee award process. The client benefited from her skilled counsel, as well as the arbitration provision in his employment contract, which ultimately resulted in a quick and efficient resolution of his employment claims.
In finding in favor of the employee, the arbitrator noted that the “outcome in favor of Claimant was excellent” and that Natalie Koss is a “skilled litigator with substantial experience in departing employee litigation.”
FACTS PRESENTED AT ARBITRATION
In this matter, the employee first experienced discrimination after a successful tenure in Federal sales for an international corporation. During a phone call with clients to schedule a follow-up meeting, the employee announced his unavailability due to his intention to take FMLA leave and attend the birth of his child. His sales manager, implying that the employee was required to attend the meeting, remarked that his wife would just have to “cancel the pregnancy.”
This comment, which the arbitrator would describe as “inappropriate” and “tone-deaf,” was also particularly painful and distressing to the employee, as his wife’s pregnancy was difficult and required her to quit her job and remain on bed rest. The sales manager later emphasized this point when he told the employee at another meeting that salesmen who take parental leave “pay the consequences.”
Due to these threats, the employee postponed his leave for months.
Soon afterward, the sales manager sent the employee a Saturday night email accusing the employee of “deceiving” him and asking that the two of them have a conversation about the leave on the following Monday. During that subsequent meeting, the employee expressed his concerns to his sales manager, telling him that he felt harassed by the Saturday night email as well as by the earlier comments regarding his wife’s pregnancy and desire to take leave.
The interactions were reported to Human Resources, and the sales manager issued an apology email, which the arbitrator described as “tepid.” The sales manager faced no disciplined, nor was there any sort of investigation.
Weeks later, the employee finally began parental leave to be with his wife and three-month-old child. Almost immediately upon his return, however, the sales manager disciplined him in front of another employee at a meeting for failure to follow the employer’s so-called “four rules of communication.” The sales manager considered them inviolate, even though he had never disseminated these rules, either to the employee or anyone else.
Soon after this disciplinary meeting, which the arbitrator characterized as “bizarre,” the employer transferred the employee to a sales division that was substantially different than the one he had been working in for years. Working in this unfamiliar sector required closing many more deals for smaller compensation, which in turn required significantly more effort to meet his sales quota. Additionally, the geographic area the position covered was substantially larger than in his old position.
According to the employer, this new position would not involve as much travel as required in its job description, which to the employee would mean more time spent with his newborn.
A year into his new position, however, even after he exceeded his sales quota, the employer placed the employee on a “performance improvement plan” (PIP), due in part to the allegedly low amount of travel that the employee engaged in, despite the previous assurances that this position would provide him more family time.
The employee noticed he was being treated differently than coworkers. Many employees in similar positions who had not even achieved their assigned quota were not placed on a PIP. He immediately recognized the PIP not as performance improvement, but as the initial step in his termination.
Shortly thereafter, the employee sought and retained Natalie Koss as his attorney.
CLAIM: FMLA INTERFERENCE
During arbitration, the employee asserted that his employer had willfully interfered with his right to take parental leave under the FMLA. He also asserted that his employer had discriminated and retaliated against him for taking FMLA leave.
To establish a claim of FMLA interference, an employee must prove three elements. First, the employee must demonstrate an entitlement to FMLA benefits. Secondly, evidence must show that the employer interfered with, restrained or denied the exercise of the right, or the attempt to exercise that right. Third, the employee must show harm occurred. Ragsdale v. Wolverine World Wide, Inc., 535 U.S. 81, 89 (2002) (citing 29 U.S.C. § 2615(a)(1)).
Since the parties did not dispute the employee’s FMLA eligibility, the arbitrator was only required to determine if the employer had interfered with the employee’s rights and whether the employee was harmed as a result of that interference.
The arbitrator found that the employer’s statements about the employee’s wife’s pregnancy and the employee’s desire to take leave, taken together, constituted interference. Although the employer had characterized his pregnancy remark as simply “a joke,” the remark in context was “insensitive,” “tone-deaf,” and “a violation of the company’s code of ethics.” The employee had reasonably interpreted these statements to mean that his employer would not support him in taking leave and that doing so would interfere with his career. It does not matter that the employer did not outright deny any leave requested at the time, only that the employer interfere with the exercise of FMLA rights. McFadden v. Ballard Spahr Andrews & Ingersoll, LLP, 611 F.3d 1, 7 (D.C. Cir. 2010).
The Saturday night email also demonstrated the employer’s intent to interfere with leave. The arbitrator critically characterized the email as “an electronic after-hours temper tantrum by a boss intruding on the private time of an employee who had recently put-off taking family leave to which he was entitled by law, and who was therefore juggling the intense demands of his job and family situation with a new baby.” It was plain to the arbitrator that this was harassment.
In addition, the timing of the “bizarre” disciplinary meeting, which occurred soon after the employee finally took leave, and when the employee had not done anything to warrant discipline, evidenced to the arbitrator the employer’s intent to interfere with the employee’s FMLA leave. Moreover, the meeting also demonstrated the employer’s desire to retaliate against the employee for his complaints of leave interference.
CLAIM: FMLA RETALIATION
The FMLA expressly forbids any employer from discriminating against any employee who opposes any practice made unlawful by the FMLA. 29 U.S.C. § 2615(a)(2). Therefore, the FMLA provides legal rights “that protect employees from discrimination or retaliation for exercising their substantive rights under the FMLA.” Dotson v. Pfizer, Inc., 558 F.3d 284, 294 (4th Cir. 2009).
To establish a claim of FMLA retaliation, an employee must prove that the employee engaged in protected activity under the FMLA. Secondly, the employer must have taken adverse action against the employee. Finally, the adverse action must be causally connected to the protected activity. Sharif v. United Airlines, Inc., 841 F.3d 199, 203 (4th Cir. 2016).
In this case, the arbitrator found that the employee’s transfer from one division to another was a materially adverse employment action. The resources and connections the employee had built over two decades in his previous position were now useless. He also faced the steep learning curve of a new sales sector.
Additionally, while he only needed to cover a relatively small metropolitan area as territory in his previous position, his new territory expanded into a drastically larger 18-state region. Although the employer assured that his travel would remain limited, eventually travel throughout these states became a requirement, which would take away much time from the employee’s ability to parent.
The arbitrator found that the sales manager had engineered the reassignment as a direct result of the employee’s complaints about harassing behavior and his taking FMLA leave. Although he did not approve the final decision, the former sales manager, the arbitrator found, had “significant weight and influence” in the decision to reassign the employee.
The sales manager also created a “list of grievances” about the employee, which included his harassment claim. This list, compiled shortly after that claim and referencing it, was clear evidence to the arbitrator that the reassignment was a result of the employee’s protected activity to take FMLA leave.
DAMAGES & AWARD
After a six-day arbitration hearing, the arbitrator awarded the employee damages for both claims of FMLA interference and retaliation. As such, the employer was liable to the employee for lost wages due to its violations. 29 U.S.C. § 2617(a)(1)(A)(i)(I). As an alternative to reinstatement, especially depending on the nature of the violations and animosity between parties, front pay may be an appropriate form of relief, and the arbitrator deemed it so in this case. Cline v. Wal-Mart Stores, Inc., 144 F.3d 294, 307 (4th Cir. 1998).
The employer argued that the employee did not make reasonable efforts to mitigate damages by attempting to find other work. The arbitrator found to the contrary, citing the variety of companies the employee had applied to, the “highly specialized nature of [his] experience,” the “baggage” of his experiences with this company, the impact to his reputation and more. Additionally, the arbitrator noted the “massive and unprecedented disruption that the COVID-19 pandemic wreaked on the economy while [the employee] was in the midst of attempting to find other work.” Although unsuccessful, the employee’s attempts at mitigation were reasonable in these difficult circumstances.
The FMLA provides for liquidated damages, allowing recovery for an additional amount equal to the total of lost compensation. 29 U.S.C. § 2617 (a)(1)(A)(iii). In this case, these damages consisted of back pay. A violating employer can only avoid these damages by proving it acted in good faith, with the reasonable belief that it had not violated the FMLA. Id.
The arbitrator found that the company had not acted in good faith. Therefore, the arbitrator awarded the employee liquidated damages.
Both parties hired experts to testify as to the proper amount for damages, as calculation can be a rather technical process, including past losses and potential future earnings lost.
Following the advice of counsel, the employee retained a vocational rehabilitation expert and a certified public accountant to testify as to the amount of these potential losses. The accountant relied on the testimony of the vocational rehabilitation expert for his calculations.
The arbitrator found the employer’s expert to be unreliable. The expert assumed that the employee’s earnings would be diminished for “only five years,” but this assertion, through extensive and vigorous cross examination by Natalie Koss, was shown to be wildly inaccurate as it was not supported by the sources that he himself had cited. He also used an “unreasonably optimistic” rate of growth and failed to factor in two years of lower-than-expected commission earnings. Therefore, the arbitrator found this expert’s testimony to be unpersuasive.
In line with the employee’s experts’ more reliable calculations of back pay and front pay, the arbitrator awarded the employee $1,887,507.00 in back pay and front pay. For liquidated damages, the arbitrator awarded the employee an additional amount of $269,821.00 in back pay.
In total, the arbitrator awarded the employee $2,854,621.08 in damages including attorneys’ fees and costs due to his employer’s FMLA interference and FMLA retaliation.
CONCLUSION: ARBITRATIONS FOR EXECUTIVES & SALESPEOPLE
Although many C-Level executives, senior managers and sales professionals have lamented the arbitration provisions of their employment agreements, some are seeing arbitration claims that result in significant employee-friendly awards. Arbitration provisions in an employee’s current employment contract should not necessarily be worrisome. Success on some claims may be possible.
In fact, a casual review of arbitrators reveals an increasing number with numerous years of specialized experience in employment law. These arbitrators may deliver fair and well-reasoned decisions with far less client expense than courtroom litigation entails.
Arbitration also may prevent claims from languishing in Federal or state court unnecessarily for years. The shutdowns associated with COVID-19 had a small impact on the schedule in this matter. Although necessary due to public health and safety, no one can estimate how long this matter could have taken to reach a judgment with judicial delays during the height of the pandemic.
In addition to the quality of the claims at hand, a key to success in high stakes employment arbitration is retaining an attorney with significant experience in the process.
Success in this matter was, in no small part, directly attributable to the representation provided by Natalie Koss, whose skill level the arbitrator even noted in the award decision.