On March 26, 2008, the United States Court of Appeals for the 6th Circuit filed a decision in a case involving a number of complex issues related to the Family and Medical Leave Act (FMLA). The case involved joint employment, successor-in-interest rules and whether a position still existed.
The plaintiff, Rosalyn Grace, held several information technology (IT) positions for USCAR for 8 years, beginning in 1996. At all times during her service with USCAR, Grace was a contract employee of a staffing agency. All of USCAR’s employees are either contractors, like Grace, or employees on loan from partner companies. In December of 2003, the staffing agency that employed Grace filed for bankruptcy and she became an employee of Bartech, another staffing agency. In November of 2004, Grace was hospitalized for asthma and took leave, expecting to return in January 2005. Days before she expected to return, Bartech informed her that USCAR had decided to outsource its IT duties and that her position was terminated.
Grace contended that the reorganization was a pretext and filed suit against USCAR and Bartech alleging violations under FMLA and both state and federal gender discrimination laws. The district court granted motions for summary judgment by the defendants and Grace appealed.
The first issue the court addressed was that of who was Grace’s employer? The court concluded that Bartech and USCAR were joint employers, with Bartech being the primary employer and USCAR the secondary employer.
Bartech and USCAR argued that they did not engage in retaliation and that the decision to terminate Grace resulted from a legitimate economic decision to reorganize the IT division. Grace argued that this was a pretext and pointed to both notes of a meeting and a deposition to support her argument. After the Director of Operations was told he needed to have a legitimate business reason to terminate Grace he raised the question “Can lawyers construct a way to make it [Grace’s termination] doable?” The court referred to this as a smoking gun that raises a genuine issue of material fact, subject to a jury determination.
Bartech also contended that Grace was not entitled to FMLA leave because she had not worked for Bartech for 12 months. Grace argued that Bartech was a successor in interest and that she was entitled to FMLA because she had worked for USCAR for 8 years. The court concluded that Bartech was a successor in interest.
USCAR argued that it was not subject to FMLA because it did not have any employees of its own, but the court ruled that secondary employers must honor leave and not engage in retaliation, even if they are not covered employers under FMLA.
Grace also argued that she had been the victim of gender discrimination, but the court ruled that she offered no evidence to support her claim. She also alleged a hostile work environment claim. Even though USCAR’s Executive Director called Grace a “dancing girl” and a “call girl” and ignored her, other than to comment on her appearance, the court ruled that while these offensive utterances may have made Grace and other women in the office feel uncomfortable on occasion, they did not rise to the level required by the definition of a hostile work environment.
