Lessons on Documenting Reasons for a Termination
by: Ryan N. Parsons
In Weaver v. Netflix, Inc. [an enhanced version of this opinion is available to lexis.com
subscribers], a federal trial court rejected an Oregon employer's
argument that it terminated an employee for performance reasons and determined
a trial was necessary to weigh the employee's claims that she was terminated
for requesting leave under the FMLA
and its state law counterpart, the Oregon Family Leave Act. Though the employee had
performance and absenteeism issues prior to the requested leave, the court
determined that the timing of the termination, less than two weeks after the
leave was requested, was sufficiently suspicious that a jury needed to resolve
The employer introduced evidence that the employee's
performance ratings "were consistently the lowest among her peers" and that she
had shown poor judgment in the past by taking a vacation during the busiest
time of the year for the company. The employer also introduced evidence that,
based on these faults, the employee's supervisor planned to terminate her prior
to becoming aware of the need for leave, but was holding off until the
conclusion of the employer's busy holiday season. The supervisor never
documented this plan and, just weeks later, the employee informed the employer
that she needed neck-fusion surgery that would cause her to miss between two
and six weeks of work. Less than two weeks later, at the end of the employer's
first quarter (and busy season), the employee was terminated.
The court determined that the employee was "skating on
the thinnest of ice," yet still ruled that there was enough evidence to proceed
to trial. Because of the brief period between the request for FMLA leave and
the termination, the court found the employee could raise an inference that the
employer terminated her in retaliation for exercising her rights under the
FMLA. Additionally, the employer's termination documentation included a
statement that the employee failed to use "good judgment when asking for time
off." The court concluded that this could have referred to the FMLA leave,
despite the employer's contention that it referred to the previous vacation she
The key takeaway here is not only to document your
decisions and plans, but to do so in a thoughtful and timely manner. Had the
supervisor indicated her intent to terminate the employee in writing prior to
becoming aware of the FMLA leave, the employer almost certainly would have won
the case. Likewise, had the employer been more careful when preparing its
termination documents, specifically mentioning the employee's ill-advised
vacation, rather than referring more generally to "time off," the court
probably would have ruled in the employer's favor. What you write, when you
write, and how you write it can be the difference between getting a case
dismissed quickly and having to litigate it in front of a jury.
Is the IRS Voluntary Classification
Settlement Program Right for Your Business?
by: Tamar N. Dolcourt
The IRS, U.S. Department of Labor (DOL), and various
states have joined together in an effort to crack down on misclassification of
employees as independent contractors, as reported in the October 10, 2011
edition of Legal News: Employment Law Update. In combination
with the increased investigation and enforcement of laws pertaining to employee
classification, the IRS has also introduced the Voluntary Classification
Settlement Program (VCSP), which allows companies to prospectively
reclassify certain individuals as employees without significant penalties.
However, there are certain restrictions and pitfalls to be aware of before your
company enters the VCSP.
Under the VCSP, employers may reclassify independent
contractors as employees if the workers have been consistently treated as non-employees,
and the employer has filed the appropriate 1099 forms for the previous three
years. Additionally, the employer may not be currently undergoing a
classification audit by the IRS, DOL, or any state agency; if the employer had
previously been the target of such an audit, it must have complied with the
results to be eligible for the VCSP.
Eligible employers will reclassify these workers as
employees for future tax periods and pay 10 percent of the employment tax
liability due for the most recent tax year as a result of the reclassification,
with no penalties or interest on that liability. The IRS also will agree not to
audit the employer as to classification of these workers for prior years.
However, the employer must agree to extend the limitations period for
assessment of employment taxes for an additional three years for each of the
first, second, and third years after it reclassifies its employees. The IRS
also has no obligation to accept an employer's participation in the VCSP.
Not only is the employer required to agree to extend the
assessment period for an additional three years, but there are other factors to
consider before deciding to enter the VCSP. Though the IRS will limit an
employer's federal tax liability under the program as described above, the DOL
and various state agencies are not involved with the program at this time, and
it is possible that any reclassification with the IRS may lead to back
penalties and assessments by these agencies. Therefore, any consideration of
whether to participate in the VCSP should include a determination of potential
liability to agencies other than the IRS.
The VCSP may be an effective tool for employers who
realize they have misclassified workers and wish to proactively address the
issue before they become the target of an IRS investigation. However, there are
significant considerations beyond federal tax liability that must be considered
when assessing whether the program is right for your company.
Labor and Employment Trivia
Last week's question:
Who was the first female ever appointed to the president's cabinet, and what
agency of the federal government did she run?
Answer: Frances Perkins was
appointed Secretary of Labor in 1933 by President Franklin Roosevelt. She was
the first woman Industrial Commissioner under New York Governor Franklin
Roosevelt and held other important labor-related jobs in the New York state
government under Governors Roosevelt and Al Smith.
Secretary Perkins served 12 years, 3 months, longer than any other secretary.
In 1980, the Department of Labor headquarters building in Washington, D.C. was
named for her.
This week's question:
Which federal labor law was passed over a presidential veto? Who was the
president and how did he seek to use the law he originally opposed?
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