Two Sixth Circuit decisions issued last week underscore the hazards associated with terminating an employee between the time that she announces her pregnancy and any time shortly after she returns from pregnancy leave. Fortunately, both decisions, which uphold lower court summary judgment decisions, also demonstrate that an employer can escape liability when it has valid reasons for the termination, even when the termination was made at a time that was temporally close to the pregnancy announcement or the pregnancy itself. In the first decision, Madry v. Gibraltar National Corporation, the court upheld summary judgment for the employer on Madry’s claim that the FMLA required her employer, Gibraltar, to reinstate her to the position that she held prior to her leave. Gibraltar defended on the grounds that an employee returning from FMLA leave is not entitled to restoration unless she would have continued to be employed if she had not taken FMLA leave. Gibraltar claimed that Madry was terminated for lack of work caused by economic reasons. It does not appear that Madry relied on the retaliation provisions of the FMLA nor any state or federal pregnancy discrimination statutes to support her contention that her termination was unlawful.
Madry offered four reasons why the employer’s “lack of work” explanation should not be believed. First, she argued that another similarly situated employee whom the employer identified as having also been laid off during her FMLA leave for a “lack of work” really was a “problem employee who at best was laid off for multiple reasons and at worst because she performed poorly.” The court, however, easily rejected this argument because it did not refute that “lack of work” was one of the reasons for the layoff. Second, she argued that the economic data did not support the employer’s claim that it suffered a downturn in business, but in fact shows that business was slightly increasing. The court again, however, rejected this argument because the economic data for the critical two months leading up to the decision not to reinstate Madry supported the employer’s argument that its business was in decline prior to the termination decision. In addition, to the extent that Madry argued that Gibraltar was required to show that her termination was economically required, the court noted that reducing labor costs and improving efficiency are valid business reasons for conducting layoffs, even when the degree to which such actions are motivated by economic hardship is debatable. Third, Madry argued that any terminations occurring after her termination were irrelevant to her claim and Gibraltar’s proffered reason for her termination. Though the Sixth Circuit agreed with this argument, it also held that this evidence is not necessary in finding the employer’s proffered reason legitimate, as the pre-termination economic data amply supported its burden of production. Finally, Madry argued that Gibraltar did not produce any company communications from around the time of her leave and termination that indicate a necessity for company layoffs as a result of reduced business. The court held, however, that the lack of any formal communications regarding the necessity to lay off employees does not render its decision unreasonable.
In the second case — Megivern v. Glacier Hills Incorporated — the plaintiff alleged that her employment was unlawfully terminated on the basis of her pregnancy and that her employer interfered with benefits due her under the FMLA and ERISA. The facts of this case are quite long and involved. Suffice it to say that Megivern had ongoing performance issues that resulted in her being placed on a performance improvement plan (“PIP”) approximately two weeks after announcing her pregnancy to co-workers. Approximately five weeks later, she was terminated for not improving to satisfactory status after being placed on the PIP. As these cases typically develop, in upholding the lower court’s grant of summary judgment in Glacier Hills’ favor, the Sixth Circuit focused ultimately on whether Megivern had sufficient evidence to prove that Glacier Hills’ proffered performance reasons for the termination decision were pretextual. In particular, the court found that the temporal proximity between the pregnancy announcement and the termination was not sufficient by itself to establish pretext. Instead, the court required Megivern to present other, independent evidence of pretext, which she was unable to do. The court rejected Megivern’s primary argument that the reasons for her termination shifted over time, finding instead that “the rationale given for terminating Megivern’s employment was clearly articulated in the termination notice prepared by Thompson and has remained the same since. In addition, the court not surprisingly found that the final decision-maker’s failure to congratulate her on her pregnancy did not provide evidence of pretext, especially since there was no evidence that Megivern had ever told that she was pregnant directly. Finally, Megivern presented “me too” testimony from three other employees who contended that they too were treated badly based on their pregnancy, but the court upheld the rejection of this evidence because the others’ situations were all factually distinct from Megivern’s.
Madry and Megivern demonstrate that an employee’s pregnancy does not immunize her from discipline or termination. This, of course, does not mean that a discipline or termination decision is not going to result in lengthy and costly litigation against a potentially sympathetic plaintiff. Nevertheless, particularly where legitimate business reasons — whether they be economic or performance-based — can be documented, the employer may be better served by taking the litigation risk rather than whatever risks may be associated with retaining the employee.