Pregnant Employees in Key Positions?

August 1, 2008

(Article originally published in the New Hampshire Business Review, August 15, 2008. http://nhbr.com/apps/pbcs.dll/article?AID=/20080815/INDUSTRY04/765485856)

Best Threads, a small New Hampshire retail chain, has sent Valued Employee to management training, costing thousands of dollars. Valued Employee has been with the company for years and is slotted to manage a new Best Threads store opening in time to catch the back-to-school rush and holiday season.

In June, after her training, Valued Employee announced she is pregnant, due in early November. She intends to go forward with the plans to manage the new store, but will require leave during the holiday rush for the birth. This means the manager of Best Thread’s new store will be six months pregnant during the back-to-school and out during the holiday rush! Wouldn’t it be better for her to take the next store management position that opens up? What should Best Threads do?

Best Threads Should Tread Carefully:

According to EEOC statistics, pregnancy discrimination charges continue to increase; up forty percent in the last ten years. As a general rule, Best Threads cannot change the terms of Valued Employee’s position because she is pregnant. Best Threads must base its decisions on the employee’s actual ability to perform the job, not on perceptions. Also, Best Threads must comply with state and federal pregnancy and childbirth leave law.

Federal Law:

The federal Pregnancy Discrimination Act (PDA) applies to employers with 15 or more employees. It makes it unlawful to refuse to hire, discharge, or otherwise discriminate against any individual with respect to compensation, terms, conditions, or privileges of employment because of pregnancy, childbirth, or related medical conditions. It requires covered employers to treat women affected in the same manner as other applicants or employees with temporary disabilities.

The Family and Medical Leave Act (FMLA) requires certain employers to provide up to 12 weeks of leave related to pregnancy and child birth to eligible employees. The Key Employee provision of the FMLA allows an employer to deny reinstatement if it would cause “substantial and grievous economic injury” to the operations of the employer. This determination can take into account whether permanent replacement is unavoidable and, if so, the cost of then reinstating the employee. However, the “substantial and grievous economic injury” standard is more stringent than the “undue hardship” test under the ADA. It is a difficult standard to meet.

State Law:

Under New Hampshire law an employer must permit a female employee to take a leave of absence for the period of temporary physical disability resulting from pregnancy, childbirth or related medical conditions and allow the employee to return to her original or a comparable position “unless business necessity makes this impossible or unreasonable.” With respect to benefits, pregnancy, childbirth and related medical conditions must be considered temporary disabilities and treated as any other temporary disability. This applies to employers employing six or more employees.

Best Threads’ Best Course of Action:

Best Threads must start from the premise that Valued Employee will be able to perform the essential functions of her promised position, regardless of generalized perceptions about her pregnancy. Best Threads may, however, notify Valued Employee of the physical requirements of the position, including any known possible hazards (e.g. any known hazards such as chemicals to the developing fetus) and require Valued Employee to report any anticipated inability to perform. Valued Employee must be allowed to work as long as she is able.

Best Threads should consider immediately whether Valued Employee meets the definition of a “Key Employee” as defined by the FMLA. If she meets the definition, Best Threads may consider whether it wishes to deny reinstatement following her leave. In making this decision Best Threads must first determine whether there would be “substantial and grievous economic injury” in reinstating Valued Employee. Considerations may include temporary reassignment of current store managers, temporary placement agencies etc. Because the “substantial and grievous economic injury” is a very high standard, legal counsel should be consulted before any decision is made. Best Threads must notify Valued Employee “as soon as practicable” if it is making the Key Employee designation or it will lose the right to deny reinstatement.

If Best Threads does not make a Key Employee designation, it must find coverage for Valued Employee during her leave, including any intermittent leave, and plan to reinstate Valued Employee upon completion of her leave. However, Best Threads can require Valued Employee to schedule her prenatal visits so as to minimize business interruptions, as best as possible. Also Best Threads may hold Valued Employee to the same performance standards to which she otherwise would be held, with exception for the legitimate FMLA absences.

This article provides general information only. Employers should consult with legal counsel when dealing with specific situations.

Cheryl Deshaies, an attorney in the Employment Law Practice Group at the law firm of McLane, Graf, Raulerson & Middleton, can be reached at 603-628-1315 or [email protected]. The McLane Law Firm is the largest law firm in the State of New Hampshire, with offices in Concord, Manchester and Portsmouth, New Hampshire and Woburn, Massachusetts.