Labor & Employment Law Daily CA-6 won’t revive bias claims of coal company VP fired after taking unauthorized trip during economic downturn
Thursday, November 8, 2018

CA-6 won’t revive bias claims of coal company VP fired after taking unauthorized trip during economic downturn

By Marjorie Johnson, J.D.

A financially waning coal brokerage company did not act unlawfully by terminating a 67-year-old sales VP after he racked up $2,300 on the company credit card during an unapproved business trip, the Sixth Circuit ruled in an unpublished opinion affirming dismissal of a myriad of claims on summary judgment. He failed to make out his prima facie case of age bias since he was not replaced; rather, his duties were assigned to another employee who maintained his duties, during a time that the company was reducing its workforce and “winding down.” He also failed to revive his disability bias claim since, although he suffered a heart condition and cancer, he testified that he came back to work “full steam” after treatment (Stearman v. Ferro Coals, Inc., November 2, 108, Siler, E., unpublished).

The VP, who began working for the coal company in 2009, was required to travel as part of the job. He was provided with a company credit card to cover the costs. He also signed the employee handbook, which stated that employees were required to seek pre-approval for business travel.

Unauthorized travel leads to firing. Due to “declining market conditions” in the coal industry, the company suspended all business travel in 2012. Employees could still travel, but only if they received specific permission to do so. The VP followed this protocol in 2013 when he requested and received approval to attend a seminar in Myrtle Beach.

He asked to go again in 2014 but never heard back. He attended the seminar anyway and charged about $2,300 to the corporate credit card. He was subsequently terminated ostensibly for improper use of a company credit card in the broader context of the declining coal industry and a need to downsize.

The company did not hire a replacement but instead assigned his duties to a substantially younger field representative. And while the VP had the highest monthly health-insurance premium in 2013, his premium dropped when he became eligible for Medicare in 2014, resulting in a substantially lower amount than what the company paid for anyone else.

Medical leave. In the months prior to his termination, the VP went through some personal hardships which resulted in his missing some time from work. Over a four-month period in 2013- 2014, he suffered a heart attack and struggled with the recurrence of prostate cancer. His mother died in July 2014 and his wife fell ill a month later. Though he claimed that he was not allowed to return to work after his medical leave, he testified that he returned to work “full steam” after receiving treatment.

Waning coal market. Meanwhile, the waning coal market caused the company to suffer financial losses. For instance, its largest customer left, and another large customer switched from coal to natural gas. As a result, the company slashed its workforce from 18 employees at the time the VP was hired to 12 by the time he left.

Post-termination. After the Kentucky Unemployment Insurance Commission awarded him unemployment benefits, the company’s owner wrote a letter to the Commission challenging its determination because the employee was terminated for cause. The employee testified that he had no serious health issues and did not consider himself disabled at the time he was let go.

He filed this lawsuit alleging age and disability discrimination under the Kentucky Civil Rights Act (KCRA), a violation of the Kentucky Equal Opportunities Act (KEOA), interference with his ERISA rights, a violation of the Kentucky Wage and Hour Act (KWHA), and a conspiracy to violate civil rights under the KCRA.

No replacement. Affirming dismissal of his age bias claim, the Sixth Circuit agreed with the district court’s determination that he failed to make the prima facie showing he was replaced by someone outside of the protected class. Rather, the company established that it did not hire a new employee, but instead assigned his duties to another worker. “Spreading the former duties of a terminated employee among the remaining employees does not constitute replacement.”

The court rejected his assertion that the replacement test applied only in “reduction-in-force” (RIF) cases. First, the supporting case itself involved a disciplinary demotion and it didn’t expressly confine itself to the RIF context. Moreover, the record showed that the coal company was engaged in a RIF since, by the time the VP left, it had cut its workforce from 18 to 12 employees. Plus, the trend continued as it now had fewer than five employees, had a single contract remaining, and was “winding down.”

No disability. He also failed to revive his claim of disability bias since he could not show he was disabled for purposes of his claims under the KCRA or KEOA. Though he suffered heart problems and received cancer treatment, he had no serious health issues at the time of his termination. As he himself put it, he came back to work “full steam” after treatment. Nor did the record suggest that he suffered any restriction in his ability to perform his job—thus eliminating a “regarded as” disability theory.

Remaining claims. The record also did not support his ERISA interference claim since he produced no evidence that he was terminated because his employer believed he would cost substantial medical expenses. Moreover, because he admittedly had no entitlement to a Christmas bonus and wasn’t denied any other agreed upon wages, he failed to show that the company violated the KWHA. Finally, because he did not engage in age or disability bias under the KCRA, the company also did not commit conspiracy to violate the KCRA.

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