On March 9, 2022, the U.S. Court of Appeals for the Seventh Circuit issued an employer-friendly decision in Anderson v. Nations Lending Corporation. Despite some facially bad facts—including that the employee was discharged only four days after returning from leave under the Family and Medical Leave Act (FMLA) and subject to a supervisor’s comments about her being “sick a lot”—the court affirmed summary judgment in favor of the employer. The case underscores the long-standing legal principle that an employer may discharge an employee if the employee would have been discharged regardless of having taken leave.

Background

In January 2017, Nations Lending Corporation (NLC) hired Tracy Anderson to work as a pre-fund underwriting auditor. Throughout her first year of employment, Anderson exhibited performance deficiencies in her work. Though Anderson never received formal discipline or counseling for her actions, her supervisor provided her with ongoing training.

After utilizing her available sick time for extended leave from October 2017 to January 2018, Anderson returned to work, but her performance continued to suffer. In January 2018, Anderson’s supervisor questioned her about additional performance issues discovered while she was out. Anderson could not provide much detail regarding her errors. Although Anderson promised to be more meticulous, her supervisor created a spreadsheet to keep track of her performance issues in February 2018 after discovering yet another mistake.

Anderson continued experiencing health issues that necessitated her taking leave under the FMLA beginning in March 2018. Before her leave, her supervisor made comments about Anderson being “sick a lot” and needing “a full team there to run her department.” Shortly after Anderson began leave, NLC’s audit system discovered several more errors in her work. Then, on May 1, 2018, the U.S. Department of Housing and Urban Development notified NLC of two additional errors that Anderson had made on a loan in the prior year.

Following the errors discovered in May 2018, Anderson’s supervisor recommended that Anderson’s employment be terminated because of her poor performance and because her level of performance was inconsistent with her twenty years of experience in this field. While Anderson was still on FMLA leave, NLC initiated an investigation into Anderson’s performance.

On June 11, 2018, prior to the end of the investigation, Anderson returned from her FMLA leave. Upon her return, she was instructed to review her emails, sort through computer issues, and catch up on training modules. Although her job ordinarily entailed reviewing loans, she was not assigned any files upon her return. NLC completed its investigation on June 14, 2018, and terminated Anderson’s employment the following day.

The Plaintiff’s Lawsuit

After the termination of her employment, Anderson brought a lawsuit against NLC alleging violations of the Americans with Disabilities Act (ADA) and interference and retaliation arising under the FMLA. The district court granted NLC’s motion for summary judgment on all claims. Anderson appealed the court’s ruling on her FMLA claims, but she abandoned her ADA claims. The Seventh Circuit Court of Appeals affirmed the district court’s summary judgment ruling, finding there was no genuine issue of material fact for either FMLA claim.

In rejecting her FMLA interference claim, the Seventh Circuit emphasized that no factfinder could determine that Anderson had not been restored to her position upon returning from leave. Indeed, the court concluded no factfinder could determine that asking a returning employee to catch up on missed emails, directives, and trainings “amounts to the sort of ‘make-work’ that might indicate an intent to sideline or ‘warehouse’ an employee permanently.” The court also noted that NLC had sufficient grounds not to assign Ms. Anderson loans to review immediately upon her return to work because of its ongoing investigation into her performance.

The Seventh Circuit also rejected Anderson’s claim that her dismissal was pretextual. In doing so, the court reiterated the long-standing legal principle that “[a]n employee is not entitled to return to her prior position if she would have been terminated regardless of whether she took FMLA leave.” The court pointed to the fact that Anderson never disputed NLC’s issues with her work performance and that her supervisor began tracking her performance deficiencies months before she began her FMLA leave.

Further, the court considered NLC’s employment policies, which specifically stated that the company could terminate the employment of an employee “without engaging in corrective counseling whenever the seriousness of the situation require[d].” Therefore, Anderson’s argument that she had never received formal discipline, counseling, or corrective action for her performance before the termination of her employment was not strong enough to withstand summary judgment.

The court also rejected Anderson’s FMLA retaliation claim. Anderson alleged that the timing of her employment termination and her supervisor’s comments demonstrated that the termination was retaliatory. The court concluded, however, that the company began tracking the errors before Anderson went on FMLA leave and discovered additional errors while she was on leave. Moreover, the court determined that her supervisor’s comments were not sufficient to create a fact issue because she was not the final decision-maker regarding the termination of Anderson’s employment. The court also noted that “[w]aiting to confirm the results of the investigation supports a finding that NLC terminated Anderson based on performance,” not in retaliation for taking leave.

Key Takeaways

The decision in Anderson v. Nations Lending Corporation represents a practical analysis and a ruling that employers may want to consider when defending FMLA claims brought by underperforming former employees. The case is helpful for employers because the district court dismissed the case at summary judgment (before trial), concluding that the plaintiff’s arguments and evidence had not created a genuine factual dispute that justified a trial. The appellate court panel agreed unanimously with the district court.

This case reflects recurring themes in FMLA litigation that employers may want to keep in mind when managing performance issues exhibited by employees utilizing leave:

• The FMLA does not provide unlimited, or unchecked, job-protected leave for employees. As seen in this case, where an employee struggles with performance or would have been disciplined absent the need for leave, an employer can take action. Prior to taking disciplinary action, up to and including dismissal, an employer may want to confirm that an employee has failed to adhere to his or her performance expectations, clearly set by the employer, regardless of whether the employee has taken FMLA leave.

• Documenting ongoing performance issues is key. A crucial fact in this case was that the employer documented the employee’s performance deficiencies before she went on FMLA leave. This documentation further demonstrated to the court that the employment termination was based on the employee’s performance and in no way associated with the employee’s need for leave.

• The failure to have a history of formal discipline may not automatically suggest pretext when a termination decision is based on recurring poor performance. This is particularly true when disciplinary policies permit the employer to bypass steps in the progression and proceed straight to termination, when warranted.