Failure To Thoroughly Research Can Cost. Lots.

Ask a simple question. Get a simple answer. If you actually research it, that is. Nutrition Management Services learned this lesson the hard way when its in-house counsel failed to research whether the pregnant plaintiff former employee was covered by the Family and Medical Leave Act of 1993 prior to terminating her employment in response to her “good news.” The employer was not only found liable for violating the applicable federal and state civil rights laws, but also was hit with a hefty liquidated damage award for not acting in “good faith” under the Act. The offending misconduct was failing to take steps (read: research) to ascertain whether the law even applied to the plaintiff.

The Act entitles a prevailing party to an award of compensatory damage for its violation. Liquidated damages equal to the compensatory award and interest are tacked on when an employer’s violation is not in “good faith” and the employer does not have reasonable grounds to believe that it was acting in good faith.

The employer’s director of human resources, an attorney with general knowledge about employment law, made the decision to terminate. Apparently, the director had just enough knowledge to get himself in trouble. He testified to his belief his decision was supported because she was a brand new employee. However, the director failed to recognize that time spent working for the employer’s “successor-in-interest” counted towards the period mandated by the Act.

The phrase “good faith” is not defined in the Act; nonetheless, the court found this failure fit squarely within the meaning of the phrase:

Reasonable good faith requires a defendant to take affirmative steps to ascertain the requirements of the law. Martin, 940 F.2d at 908-909 (reversing district court’s denial of liquidated damages under the FLSA). “A defendant employer’s burden of proof is a difficult one to meet. Double damages are the norm, single damages the exception.” Id. at 908 (internal citations omitted). Nutrition Management has not met its burden of proving Brown’s termination was a good faith violation of the FMLA.

The liquidated damages award of approximately $80,000 brought the total damage award up to just over $160,000. The court also awarded attorneys’ fees to plaintiff’s counsel in the amount of $145,000. You can read the order here.

The lesson to be learned?

For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.

Too bad counsel didn’t “nail” the issue with a little bit of hunting and gathering for the right information.

Hat tip to the ABA Journal.

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