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Comments linking ‘demotion’ to employee’s health support ADA disparate treatment claim

By Kathleen Kapusta, J.D.

Although an employee could not show that her change from hourly to salaried was an adverse action for purposes of her ADA disparate treatment claim, her alleged demotion during a department restructuring qualified. And despite evidence that shortly after the restructuring she spent at least 80 percent of her day in bed, there was no evidence suggesting she was unable to perform her job at the time of the alleged demotion. Denying summary judgment against her claim, a federal court in Arkansas also found direct evidence of discrimination in the form of comments by the company’s COO that she was demoted because of her health—she had been diagnosed with diabetes, fibromyalgia, Bell’s palsy, depression, and thyroid disorders. The employee’s other claims, including those asserted under the FMLA and Title VII, all failed (Davis v. Kimbel Mechanical Systems, Inc., October 25, 2017, Brooks, T.).

Hired as a receptionist in 2011, the employee was promoted three years later and put in charge of the newly established warranty department. Although she was paid at a rate of $22 per hour, in 2014 she earned around $90,000 due to the tremendous amount of overtime she worked. In 2015, the employer initiated a company-wide restructuring and in February, the employee was diagnosed with diabetes ketoacidosis, diabetes mellitus, fibromyalgia, Bell’s palsy, depression, and thyroid disorders.

Because of your health. Not long thereafter, the warranty department was divided into four regions and the employee became the manager of the region that was essentially the company’s home base. When she asked why she had been demoted, the COO purportedly told her it because of her health. In May 2015, she presented a doctor’s note requesting that she be allowed to work from home for six months due to her medical conditions. The COO ultimately agreed to allow her to work remotely three days a week, but according to the employee, she was working four days a week from the office before the six-month period ended.

Zero hours per day. In July, she informed the company that she needed to take time off immediately and requested to use accrued vacation time. In September, her doctor stated that she would be able to work “0 hours per day.” She then requested and was granted FMLA leave. By September, she admitted that she spent around 80-90 percent of each day in bed. She never returned from leave and is still considered an “inactive” employee.

Adverse action. The employee subsequently sued, alleging, among other claims, disparate treatment in violation of the ADA. She contended that there were three adverse actions: changing her from an hourly employee to a salary of $71,500; demoting her from her former position as the director of the warranty department to a manager of one region; and the concomitant reduction in responsibilities as part of her new job. The change to a salaried employee, however, was not adverse as the $90,000 she had earned as an hourly employee was not a guaranteed pay amount she was entitled to each year. Rather, it was the result of an inordinate amount of overtime. And more importantly, there was evidence showing she was actually helped by conversion to salary because she benefited from more favorable leave time/pay and because she made more after the conversion to salary than she had in the preceding months when she was still hourly.

As to the claimed demotion and the resulting reduction in her responsibilities, she alleged injurious effects caused by the company’s actions in restructuring the department, which was enough at the prima facie stage to show she suffered an adverse employment action.

Qualified. While the parties agreed that she was disabled within meaning of the Act, the company argued that she was not “otherwise qualified” because she requested to work from home five days a week in May 2015, was granted an accommodation to work from home three days a week in June, and had to take indefinite leave in July and thus she was unable to meet the essential functions of her job. Unpersuaded by this argument, the court pointed out that there was no evidence to suggest she was unable to perform her job in April 2015 when the alleged adverse action—the demotion—took place. To the contrary, she was working so much overtime in the year immediately before the restructuring that she earned some $90,000, even though she was only paid $22 an hour. Thus, she was a qualified individual under the ADA at the time of the demotion.

Direct evidence. Further, there was direct evidence of discrimination in the form of the COO’s purported comments that she was being demoted because of her health. These, said the court, were statements made to the employee by a supervisor (and high-ranking executive) that established a causal link between her disability and a resulting adverse employment action.

Which standard. As to the company’s assertion that ADA disparate treatment claims require proof of “but for” causation rather than the pre-Gross motivating factor standard, the court acknowledged that the Eighth Circuit has expressed its doubts about the continued vitality of the motivating factor standard in these cases. It concluded, however, that it did not need to decide at this point which standard to apply as even under the but-for standard, there was sufficient direct evidence (her deposition testimony that the COO twice told her that she was being demoted and that the demotion was due to her health) such that a reasonable jury could find the company took these actions because of her disability. Finding genuine disputes about pivotal material facts related to her ADA disparate treatment claim, the court denied the company’s summary judgment motion.

Damages. An issue remained as to the scope of damages, however, said the court, pointing out that at some point after April 2015, but not later than September 9, 2015, the date on which her doctor certified that she could work zero hours a day, the employee became totally disabled and therefore ceased to be otherwise qualified under the ADA. This uncertainty as to the onset of her total disability necessitated a further inquiry and ruling as to both the kind of damages she was entitled to recover and the length of time over which those damages could be assessed. Because the parties had not briefed these questions, the court directed them to submit further briefing on this matter.

Other ADA claims. The employee’s ADA retaliation claim failed, however. While she suggested her conversion from an hourly worker to a salaried worker was retaliation for her request to work from home, and that it occurred right on the heels of her request, the court again pointed out that there was no showing that the conversion was adverse. As to her failure-to-accommodate claim, which was based on the fact that she was not granted her request to work from home five days a week during a six-month period, the court noted evidence showing the company did engage in the interactive process. It reached an agreement with the employee to work from home three days a week, which she consented to in writing, and also granted her requests to use accrued and unaccrued vacation time when she could no longer work. Thus, this claim failed as well.