Court: District Court, E.D. Pennsylvania; July 18, 2017; Federal District Court
Laurel Edelman, the plaintiff, has filed a lawsuit against her former employer, Source Healthcare Analytics, LLC (SHA), and Connie Shaffer, SHA's Senior Director of Human Resources, alleging wrongful termination in violation of the Family Medical Leave Act (FMLA) and failure to pay wages under Pennsylvania’s Wage Payment and Collection Law (WPCL). After the court dismissed certain counts from the initial complaint, Edelman submitted an Amended Complaint. The defendants have moved to dismiss additional counts, asserting that the plaintiff has not stated a valid claim, but the court intends to deny this motion.
Edelman was employed as a National Account Director at SHA from December 2014 until her termination on February 11, 2016. She raised concerns about SHA's compliance with federal contracts and laws, including HIPAA. After being informed of the need for double knee replacement surgery, she notified Shaffer about her scheduled surgery for November 9, 2015. Shaffer confirmed that Edelman’s leave would consist of short-term disability and FMLA leave, which was subsequently approved.
Following her surgery, Edelman communicated her intention to return to work on January 5, 2016, requesting reasonable accommodation for her travel limitations supported by a physician's note. Despite fulfilling work-related requests, she received no substantial reply regarding her return. After multiple inquiries, SHA instructed her to extend her leave and return on February 11, 2016. Upon her return, she was informed her employment had been terminated that same day, with the defendants claiming that her termination was permissible under the FMLA due to exceeding the allowable leave period.
Plaintiff's employment was terminated by Defendants under the assertion that SHA was eliminating its government contracting operations, which Plaintiff claims is a pretext for her termination. She alleges that, concurrently, SHA was recruiting for her former role, supported by attached online job postings for a National Account Director. Plaintiff contends that Shaffer is personally liable due to her control over Plaintiff's leave and SHA's family medical leave policies, evidenced by email exchanges directing Plaintiff on leave matters. Additionally, Plaintiff asserts that SHA owed her reimbursements for business expenses, bonuses, and commissions at the time of her termination. Defendants allegedly conditioned the payment of these amounts on Plaintiff signing a “Separation and Release Agreement” that would waive her legal claims.
The procedural history indicates that Plaintiff filed her initial complaint on December 2, 2016, claiming FMLA interference and retaliation, as well as breach of contract and WPCL violations. Defendants moved to dismiss parts of the complaint, which the Court granted on March 6, 2017, allowing Plaintiff to file an Amended Complaint, submitted on March 17, 2017, which reiterated the initial claims. Plaintiff seeks unpaid wages, expense reimbursements, liquidated damages, interest, costs, and attorneys’ fees. Defendants subsequently moved to dismiss the Amended Complaint, and Plaintiff filed an opposition, with the Court now poised to rule on the motion.
A motion to dismiss a complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) requires the court to accept all allegations and reasonable inferences in favor of the non-moving party. The complaint must contain factual allegations that raise a right to relief above speculation, going beyond mere labels or conclusions. Legal conclusions are not afforded deference, and the pleadings must present sufficient factual content to establish a facially plausible claim for relief. This means the plaintiff must provide factual details that allow for a reasonable inference of the defendant's liability. In assessing a Rule 12(b)(6) motion, the court considers only the allegations within the complaint, its attachments, and certain public documents.
In this case, Defendants contend that Plaintiff has not sufficiently stated a claim against Shaffer for individual liability under the Family and Medical Leave Act (FMLA) because there are insufficient facts indicating that Shaffer had the necessary control over Plaintiff’s FMLA leave. The FMLA defines "employer" to include individuals acting in the interest of an employer, with the Department of Labor's regulations affirming that corporate officers may be held individually liable for FMLA violations. An individual can be liable under the FMLA if they have supervisory authority over the employee and were responsible for the alleged violation. Defendants also argue that the Plaintiff has not established a contractual basis for claims related to expense reimbursements and bonuses under the Wage Payment and Collection Law (WPCL).
Courts in the Third Circuit utilize the "economic reality" test to determine FMLA liability, focusing on the totality of circumstances rather than strict employment definitions. Key factors include the individual’s authority to hire and fire, control over work schedules and conditions, determination of payment methods, and maintenance of employment records. In this case, the Plaintiff claims that Shaffer is liable due to her control over the Plaintiff's leave policies and her role in the Plaintiff's termination. Allegations indicate that Shaffer directed the Plaintiff on leave matters, approved leave requests, and denied reinstatement, which suggest she exercised significant control over the Plaintiff's employment conditions. The Defendants argue that the Plaintiff's claims lack factual specificity and that Shaffer’s administrative actions do not constitute sufficient control for individual liability. However, the Plaintiff contends that Shaffer’s unique position as the supervisor responsible for administering FMLA leave and her manipulation of the Plaintiff's return to work establish the necessary control for liability. The Plaintiff’s assertions that Shaffer had the power to terminate her employment and managed her FMLA leave are deemed sufficient under the relevant factors test for FMLA individual liability.
Shaffer had the authority to terminate the Plaintiff, having personally done so on her return. The Plaintiff's allegations suggest that Shaffer supervised and controlled her work schedule, including directing leave and return dates. Although the Plaintiff did not provide direct evidence on whether Shaffer determined payment rates or maintained employment records, her role as Senior Director of Human Resources makes it plausible that she had the necessary control. The economic reality test does not hinge on a single factor, and the Plaintiff has presented sufficient facts for individual liability under the Family and Medical Leave Act (FMLA). Relevant case law supports her claims, as seen in instances where individuals with hiring and firing authority were held liable despite not directly supervising day-to-day employment practices.
In relation to the Pennsylvania Wage Payment and Collection Law (WPCL), the Defendants contend that the Plaintiff has not established a claim regarding unpaid expense reimbursements and bonuses because she has not shown a contractual entitlement to these payments. The WPCL ensures that earned compensation becomes due upon separation from employment, with wages encompassing all forms of employee earnings, including fringe benefits. However, it does not create new rights to compensation but enforces existing obligations of the employer.
The contract between the parties is essential for determining wage entitlements. A wage payment claim under the Pennsylvania Wage Payment and Collection Law (WPCL) requires an employment contract that specifies wages. If a formal written contract is absent, an implied oral contract must be established, inferred from the parties' relationship and conduct. An employee must assert a contractual entitlement to compensation and demonstrate a failure to receive it. Courts may deny motions to dismiss if the employee plausibly alleges a reasonable expectation of compensation. In the case discussed, the plaintiff claims to have had oral contracts with SHA entitling her to reimbursement of business expenses totaling $10,046.35 and commission payments of $5,808.19. This claim, brought under the WPCL, seeks to enforce statutory rights rather than a breach of contract claim. The expectation of payment is a critical factor in establishing the validity of any oral agreement related to employment.
Plaintiff alleges that SHA had a consistent practice of reimbursing employees for business expenses, even if submitted late, supported by a history of reimbursement to her. Defendants contest this claim, arguing it lacks specific factual support for a contract and does not indicate that the reimbursement policy applied to a terminated employee. In contrast, Plaintiff maintains that her allegations satisfy pleading requirements and demonstrate an agreement to reimburse her. She claims to have submitted business expenses totaling $10,046.35, which SHA's representative initially deemed acceptable for reimbursement but later conditioned on her signing a release for all claims against SHA. This sequence of events suggests that Plaintiff had a reasonable expectation of reimbursement, leading the Court to deny Defendants' motion to dismiss this aspect of the Amended Complaint.
Regarding commissions, Plaintiff asserts she is owed $5,808.19 based on an oral agreement entitling her to a 1.5% commission on new sales and 0.75% on renewals. She provides details of the terms and attaches a commission statement as evidence. While Defendants do not dispute her entitlement to commissions during her employment, they argue that the Incentive Compensation Plan does not constitute a contract and does not entitle former employees to commissions.
Plaintiff contends that Defendants’ motion to dismiss her claim for commission payments under the Wage Payment and Collection Law (WPCL) should be rejected because their arguments rely solely on the Individual Commission Plan (ICP), which Plaintiff claims she never signed. In her Amended Complaint, she asserts that her commissions were based on an oral contract, not the ICP, specifically stating that SHA owed her commissions for contracts secured in August 2015. At this stage, the court will accept Plaintiff's allegations as true and focus on the facts presented in the complaint. Since Plaintiff denies signing the ICP, it is deemed irrelevant for determining her claim under the WPCL. The court finds that Plaintiff has provided sufficient details to support the existence, terms, and breach of an oral agreement concerning her commissions and expense reimbursements, thus establishing a valid claim for relief under the WPCL. The court will deny Defendants’ motion to dismiss Count III of the Amended Complaint regarding commission payments. Consequently, the court's order on July 18, 2017, denies Defendants’ motion to dismiss. Additionally, the case is distinguished from Freeman v. Philadelphia Housing Authority, where the mere signing of a termination letter was insufficient to establish liability, unlike the allegations made against Shaffer in this case.
