Family Medical Leave Act

GEICO Insurance Investigators Not Exempt from FLSA


On December 23, 2015, the 4th Circuit, in Calderon v. GEICO, ruled that GEICO insurance investigators are not subject to the administrative exemption of the FLSA and therefore, are entitled to overtime.   The plaintiff investigators follow company procedures and spend 90% of their time investigating potential fraudulent insurance claims.  GEICO has been classifying its investigators as exempt for a long time.

The administrative exemption applies to those who: (1) are paid, on a salary basis, in an amount not less than $455 per week; (2) “whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers;” and (3) whose primary duty involves the exercise of discretion and independent judgment. 29 C.F.R. §541.200(a).

The district court found that GEICO could not establish that the insurance investigators primary duties involved independent judgment and discretion, therefore, summary judgment was granted in favor of the plaintiffs.  The 4th Circuit upheld the decision for plaintiffs but relied upon the second element of the exemption – whether the work was directly related to the management or general business operations – find that their primary duty was “the investigation of suspected fraud, including reporting their findings.”  The court stated “[t]hus, in the end, the critical focus regarding this element remains whether an employee’s duties involve “‘the running of a business,’” Bratt v. County of Los Angeles, 912 F.2d 1066, 1070 (9th Cir. 1990), as opposed to the mere “‘day-to-day carrying out of [the business’s] affairs,’” Desmond I, 564 F.3d at 694 (citing Bratt,912 F.2d at 1070).

The court further stated that “[r]egardless of how [i]nvestigators’ work product is used or who the Investigators are assisting, whether their work is directly related to management policies or general business operations depends on what their primary duty consists of… the primary duty of the Investigators… is not analogous to the work in the “functional areas” that the regulations identify as exempt. 29 C.F.R. § 541.201(b).”  Conversely, the court found that the primary duties were directly analogous to the work the regulations identify as not satisfying the directly relatied element. See 29 C.F.R. §§ 541.3(b)(1), 541.203(j).   Admitting that the issue was very close, the court held GEICO could not establish that the plaintiffs’ primary duties were “plainly and unmistakably” directly related to the company’s management or general business operations.

This case is yet another reminder of the importance of properly classifying your employees pursuant to the FLSA.

For more information on the FLSA or any further employment related matters, please contact Dana Perminas, at 312-334-3474 or for more information.


Under the new Philadelphia law, employers with 10 or more employees will be required to provide up to one hour of paid sick leave for every 40 hours worked (including overtime hours) by an employee in the city.  Employees who are salaried exempt employees accrue sick time based on the employee's normal work week or a 40-hour work week, whichever is less.  Employees may accrue up to 40 hours of sick leave in a calendar year (unless the employer allows more).  Employers with fewer than 10 employees will be required to provide unpaid sick leave on the same terms.  Employers must update their employee handbooks and provide notification to employees of these new provisions immediately as this was required to be done by May 13, 2015. At its discretion, an employer may loan sick leave to an employee in advance of accrual.  The date on which actual accrual of paid sick leave begins should be measured from May 13, 2015, but the time period for an employee to use accrued paid sick leave is measured by the actual date of employment – an employee must be employed for at least 90 days by the employer before being able to use any accrued paid sick leave.

Like the California law, employers must allow employees to carry over all accrued paid sick leave to the next year, without limit, if the employer does not provide all 40 hours of paid sick leave at the beginning of each year.  Although the carry-over has no limitations, an employer may limit use of sick leave in any single calendar year to 40 hours.

Employers must allow employees to use the 40 hours of paid sick leave on either an oral or written request for their own or for a family member’s need.  Employers are not required to pay an employee for accrued, but unused, paid sick leave at the end of employment but keep in mind an employer will likely be required to pay out any accrued but unused vacation or PTO time pursuant to Pennsylvania state law.

If the employer’s current policy allows for paid sick leave of at least 40 hours, or 5 days, in a year, you do not need to change the policy, but must follow the record keeping and notification requirements and be used for the same purposes and under the same conditions as paid sick leave under the new law.

Employers must provide notice to employees of their entitlement to paid sick leave, including the amount, the terms under which leave can be used, the guarantee against retaliation, and the right to file a complaint regarding violations of the ordinance. Notice can be (a) by written notice in English or in any other languages spoken by five percent of the employees, or (b) by displaying a poster prepared by the city.

Employers must also maintain records documenting the hours worked, sick leave used, and payments made to employees for sick time. The failure to maintain or retain adequate records creates a rebuttable presumption against the employer, absent clear and convincing evidence otherwise. In addition, an employer must make these records available to the city enforcement agency upon request.

Under the new law, employers cannot:

■ Require that an employee find a replacement worker to cover the hours during which the employee is absent as a condition of utilizing paid sick leave.

■ Deny the right to use accrued sick leave or discharge, or take any negative employment action including threats to discharge, demotions, suspensions, or discrimination against any employee for using accrued sick time, attempting to use accrued sick time, filing a complaint with the agency or alleging a violation, cooperating in an investigation or prosecution of an alleged violation, or opposing any policy or practice that is prohibited.

For more information on the new Philadelphia law, employer vacation/sick/PTO policies or any other employment law related matters, please contact Dana Perminas at 312-334-3474 or for more information.

Employer Alert! New Illinois Law Requires Accommodations for Pregnant Employees

Effective January 1, 2015, Illinois employers will be required to provide reasonable accommodations to pregnant employees and new mothers.  Women in Illinois who are physically unable to perform certain tasks of their job because of pregnancy will be guaranteed reasonable accommodations.  This new law will cover full-time, part-time and probationary employees, and it will affect employers of all sizes. 

Employers will be required to make reasonable accommodations for conditions related to pregnancy, childbirth, and related conditions, unless the employer can demonstrate that the accommodation would impose an “undue hardship” on the ordinary operation of the employer’s business.  “Undue hardship” is defined by the law as an action that is “prohibitively expensive or disruptive” when considered in light of:  (1) the nature and costs of the accommodation; (2) the overall financial resources of the facility involved in the provision of the reasonable accommodation, the number of employees at the facility, the effect on expenses of the facility, or other impact on the facility; (3) the overall financial resources of the employer with respect to the number of employees and number, type, and location of its facilities; and (4) the type of operations of the employer.  Some examples of accommodations include limits on lifting, longer or more frequent bathroom breaks, access to places to sit, water breaks, private space for breastfeeding, and time off to recover from pregnancy, childbirth and related conditions.

Under the new law, employers will not be able to require an employee to take a leave of absence if another reasonable accommodation can be provided.  Additionally, employers cannot require the employee to accept an accommodation that the employee has not requested.  The laws will also prohibit employers from retaliating against an individual who “requested, attempted to request, used or attempted to use” a reasonable accommodation for pregnancy or childbirth.

This law dds to the existing federal laws Illinois employers are already required to follow providing for employee accommodations, such as the Family and Medical Leave Act, Americans with Disabilities Act and the Pregnancy Discrimination Act.  Illinois employers should take this time to review and revise employee handbooks or policy manuals to reflect the new law.

For more information on this topic, contact Stephanie Strickler at 312-334-3465 or

ADA Coverage: Drug v. Alcohol Users, Part 1

While statistics do not give us precise numbers of Americans that are on the job while under the influence of drugs or alcohol, it is a big problem in the U.S. that costs the country billions of dollars and leads to countless lawsuits from both employers and employees. Title I of the Americans with Disabilities Act (”ADA”) permits an employer to ensure that the workplace is free from the use of alcohol and the illegal use of drugs, as well as to comply with other federal laws and regulations that address drug and alcohol abuse, such as the Family Medical Leave Act (“FMLA”) that will be covered in our future blogs.  Simultaneously, the ADA protects alcoholics and recovering drug abusers against discrimination, but this protection is limited.  Moreover, the ADA has different policies regarding drug and alcohol users.

Drug Users and ADA Coverage

According to the ADA, if the employee or a job applicant is currently engaging in the illegal use of drugs, regardless if the user is an addict or a casual user, the employee or a job applicant is not qualified as individual with a disability and thus is not protected by the ADA.  Therefore, employers do not violate the ADA by enforcing its rules by prohibiting illegal use of drugs by employees, as long as this enforcement is done uniformly.

Qualified individuals, as provided in the ADA, are individuals who:

a)       have been successfully rehabilitated and are no longer engaged in the illegal drug use;

b)      are participating in the rehabilitation program at present time and are no longer engaged in the illegal drug use; and

c)       are erroneously considered as using drugs illegally. (42 U.S.C. § 12114(b) (1994))

It is important to note that there is an essential difference between a former drug addict and a former casual drug user.  A former drug addict may be protected under the ADA since the addiction may be considered as a substantially limiting impairment.  On the other hand, a former casual drug user is not protected according to the EEOC Technical Assistance Manual on the ADA because this user is not “substantially limited” due to a drug use. (EEOC Technical Assistance Manual on the ADA § 8.5)

Based on the “qualified individuals” definition above, the ADA does not protect those users of illegal drugs that are currently engaged in this behavior.   However, the definition of “current” has been causing a lot of difficulty to employers.  The EEOC Technical Assistance Manual on the ADA provides this definition: “’Current’ drug use means that the illegal use of drugs occurred recently enough to justify an employer's reasonable belief that involvement with drugs is an on-going problem. It is not limited to the day of use, or recent weeks or days, in terms of an employment action. It is determined on a case-by-case basis.” Also, if an individual tests positive for the illegal use of drugs, this person is considered a current drug user under the ADA (EEOC Technical Assistance Manual on the ADA § 8.3)

Sometimes a question is raised whether an employee who is addicted to drugs and breaks the company rules, can enroll in a supervised drug rehabilitation program and claim ADA protection to avoid an employer’s discipline.  The EEOC Technical Assistance Manual on the ADA speaks directly to that and states:

“An applicant or employee who tests positive for an illegal drug cannot immediately enter a drug rehabilitation program and seek to avoid the possibility of discipline or termination by claiming that s/he now is in rehabilitation and is no longer using drugs illegally. A person who tests positive for the illegal use of drugs is not entitled to the protection that may be available to former users who have been or are in rehabilitation”(EEOC Technical Assistance Manual on the ADA § 8.3).

A question that employers often ask regarding former drug addict employees is whether accommodations have to be made.  One of the most important requirements under the ADA is the duty to provide reasonable accommodations to qualified individuals with disabilities.  Former drug addict employees who are no longer engaged in illegal drug use may be entitled to reasonable accommodation.  For example, they may require a modified work schedule to allow them to attend Narcotics Anonymous meetings or a leave of absence to attend treatment.

Check back next month to see our next blog post regarding the ADA coverage of Alcohol Users.

To learn more about ADA protection of Drug Users and what that means for employers, you may contact Dana Perminas at or by calling Dana at (312) 334-3474.

Employers Fight FMLA Abuse

Under the federal Family and Medical Leave Act (FMLA) eligible employees have the right to take up to 12 weeks of leave per year.  The FMLA prohibits an employer from restraining, denying or interfering with the exercise of any right given under the Act.  However, employers can defeat FMLA interference claims if they show that an employee did not take leave for a purpose authorized by the Act. Recently, two Federal Courts of Appeals have allowed some degree of employee surveillance.  They held that if an employee has not been reinstated after his or her leave and subsequently filed an FMLA interference claim, the employer only needs to show that they refused to reinstate the employee based on an honest suspicion that the employee was abusing his or her leave in order to defeat the claim.

In one of these cases, the employer terminated the employee because the employer had an honest suspicion that an employee misused his FMLA leave based on the employee’s previous absenteeism.   As a result, the employer hired a private investigator for a day when the employee requested to take FMLA leave to care for his mother.  The investigator’s video showed that the employee did not even leave the house on that day.  Upon the request for the employee to produce supportive documentation from his mother’s nursing home, the records did not match the employer’s internal paperwork.  The court ruled that the employer’s decision to terminate the employee did not interfere with the employee’s right to reinstatement and thus, defeated the FMLA interference claim.

In a second case, the employer had an honest belief that an employee committed disability fraud in taking FMLA leave.  The employee was given disability leave after he reported severe pain and inability to stand for over 30 minutes.  However, several days later, he was seen by his coworkers at an Oktoberfest standing for over 90 minutes without any signs that his movements caused him pain.  The court ruled that the employer had acted within its rights by terminating the employee.  It is important to note that the decisive question for the court’s ruling was whether his employer reasonably believed that the employee had committed fraud, and not whether he actually committed it.