Penske and the warehouse manager: Logistics of FMLA interference

by Kirton McConkie PC

Kirton McConkie PC


Utah Employment Law Letter - October 2016

Discrepancies and dishonesty

Kris Olson was a warehouse manager for Penske Logistics. After 12 years with the company, he received his first formal disciplinary notice in January 2014. He was given the disciplinary notice because he hadn’t fired a worker who violated company safety rules.

In June 2014, Olson received more severe disciplinary action after it came to light that he hadn’t hired enough employees for the warehouse, despite being urged to do so by higher-level management. After receiving a 60-day action plan and being warned that failure to comply with the plan would result in immediate termination, he seemed to turn things around and get back on track.

On July 18, Olson took approved FMLA leave. On that same date, Olson’s supervisor, Rick Elliott, received a report from one of Penske’s customers, Whirlpool, that raised concerns about the inventory at the warehouse Olson managed. During an investigation that occurred while Olson was on leave, Penske uncovered numerous severe and systemic problems at the warehouse.

First, the inventory reconciliation report was exces­sively long, and some of the noted discrepancies were more than a month old. Furthermore, the warehouse was 567 audits behind schedule. Penske also discovered that Olson hadn’t trained employees on basic inventory procedures. Instead, he told them that whenever a prob­lem arose, they should bring it to him and he would take care of it.

Elliott determined that Olson hadn’t billed Whirl­pool for extra work Penske had performed and had lied when he claimed that no extra work had been per­formed. Additionally, Penske’s investigation showed that over the course of approximately four years, Olson had hidden inventory in approximately 26 “ghost stows.” In other words, he had concocted records for imaginary storage locations. When inventory went missing, he as­signed the missing inventory to the ghost stows, fooling Whirlpool into believing it was still in the warehouse.

In light of those discoveries, Elliott and Penske’s loss-prevention team independently recommended fir­ing Olson, a decision that Bruce Gruebner, the HR of­ficial responsible for terminations, agreed with. Acting on a faulty understanding that Olson hadn’t received approval for his FMLA leave, Penske sent him a termi­nation letter on August 18 that stated he was being ter­minated on the basis of its investigation findings and his allegedly unapproved leave.

Olson called Penske on August 19 and clarified that his leave had been approved. On August 20, Penske sent him another letter stating, “Because the severity of your performance issues and policy violations was not dis­covered until after you went out on leave of absence, in a spirit of fairness, if you so desire, we will rescind your termination and continue your employment as being on unpaid leave through October 19, 2014.” The letter indi­cated that Penske would terminate his employment as soon as his FMLA leave ran out. Olson didn’t accept that final offer.

FMLA leave interference claim

Olson sued Penske, claiming his termination con­stituted unlawful interference with his FMLA rights. To make his claim stick, however, he had to identify some “causal connection” between his FMLA leave and the decision to terminate him. Because he wasn’t able to do that, the trial court dismissed his claim. He then ap­pealed to the U.S. 10th Circuit Court of Appeals (whose rulings apply to all Utah employers).

On appeal, Olson advanced two arguments in an ef­fort to show the required causal connection. First, he ar­gued that “if he had not taken leave, he would have been at work and able to defend his job performance.” The 10th Circuit rejected that argument because “he cite[d] no evi­dence that he would have been allowed to defend him­self, or that any defense could have possibly succeeded.”

Second, Olson argued that he was fired because El­liott and other Penske employees resented his absence at a difficult time. But according to the 10th Circuit, there was “no evidence that [Elliott] considered himself incon­venienced,” and according to Elliott’s uncontroverted testimony, his recommendation to terminate Olson was “based on poor performance, including the [inventory issues] and the reimbursement requests Mr. Olson lied to me about.”

Furthermore, the court said, there was no “evidence that [the inconvenience Olson caused Elliott] contributed to the loss-prevention team’s recommendation or to Mr. Gruebner’s ultimate decision to fire [him].” Olson v. Pen­ske Logistics, LLC, 2016 WL 4492242 (10th Cir.).

Lessons learned

Before sending the initial termination letter, Penske should have gotten the story straight about whether or not Olson’s leave was approved. Waiting until he had returned from leave might have helped it prevent his claim for FMLA interference.

But more important than Penske’s mistake are the things it did correctly. The company’s decision was based entirely on Olson’s job performance. It investi­gated carefully and documented its findings. Conduct­ing a thorough investigation is an important step that can be useful in taking the teeth out of not only FMLA claims but also discrimination claims.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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