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Employer Law Report

Suspected FMLA Fraud Results in Termination

Posted in Leave Administration

Employers required to comply with the requirements of the Family and Medical Leave Act often are concerned about the fraudulent use of such leave by employees. Because employees taking intermittent leave under the FMLA are not required to provide certification from a healthcare provider for each incident of leave, the potential for fraud is even higher when intermittent leave is at issue. A recent decision from the U.S. Court of Appeals for the Seventh Circuit may provide more hope for employers seeking to minimize employees’ fraudulent use of FMLA intermittent leave.

The employer in Vail v. Raybestos Products Company had received tips from other employees that the plaintiff was abusing her intermittent leave, which she allegedly was taking because of her migraine headaches. Specifically, the employees reported that the plaintiff was calling in sick with a migraine, then helping her husband with his yard care business during the day. The employer hired an off-duty police officer to investigate. The officer reported seeing the employee cutting the grass for several of her husband’s clients while absent from work because of an alleged migraine. Relying on this report, the employer refused to reinstate the employee upon her return from work and terminated her employment for fraud. 

The employee sued, claiming that the employer had interfered with her rights under the FMLA. She asserted that the officer’s report did not prove that she had committed fraud when she had called in sick because she was not scheduled to work when he observed her cutting grass. She argued that because she worked third shift, 11:00 p.m. to 7:00 a.m., and the video of her cutting the grass was taken in the morning after her shift was over, she could have been telling the truth when she called in sick the night before.

The court found it unnecessary to determine whether the employee had actually committed fraud when she called in sick. Rather, the court found that the employer was entitled to terminate her employment because it had an “honest suspicion,” based on employee reports and the officer’s observations, that she had committed fraud. As a result, the employer could not have had an improper motive in terminating her employment. Accordingly, the Seventh Circuit affirmed the lower court’s grant of summary judgment to the employer based on this “honest suspicion” standard.

Employers outside the Seventh Circuit should use caution if relying on the Vail decision. Although case law is somewhat inconsistent, the Sixth Circuit has held that motive is irrelevant in FMLA interference cases. Because the Seventh Circuit’s decision turned on an analysis of the employer’s motive, it is possible that a court in the Sixth Circuit might reach a different conclusion and require a showing of actual, rather than suspected, fraud.

The Seventh Circuit covers Indiana, Illinois, and Wisconsin. The Sixth Circuit covers Ohio, Michigan, Kentucky, and Tennessee.