District Court Ruling Highlights Importance of Employer Compliance

Compliance Corner wouldn’t normally include coverage of a district court case that hasn’t yet been decided. However, the details of this specific case serve as a cautionary tale for employer plan sponsors to remain diligent in their overall compliance efforts.

In 2014, employee Magdy Abdelmassih worked for a number of Kentucky Fried Chicken restaurants located in Pennsylvania. Mitra, a corporation in Texas, owned the restaurants, with Manish Patel and Pushpak Patel serving as co-owners and co-CEOs. From March 10 to April 28, 2014, Abdelmassih was on FMLA related to a chronic medical condition. Later that year, he was terminated from employment.

In Abdelmassih v. Mitra QSR KNE LLC, 2018 WL 1083857 (E.D. Pa. 2018), Abdelmassih brought a total of eight claims against the corporation, HR manager, regional manager and owners under the ADA, ADEA, COBRA, FLSA, FMLA and related state law. The Feb. 28, 2018 ruling by the U.S. District Court for the Eastern District of Pennsylvania was simply to determine whether summary judgment would be granted to the defendants on those claims. In other words, the court ruled whether the legal claims would continue under review or if they would be dismissed.

The court dismissed the ADEA, ADA, FMLA and FLSA claims against co-owners Manish and Pushpak Patel. While individuals can be held liable in some capacity under these laws, the court determined that the owners didn’t play an active, supervisory role in Abdelmassih’s employment.

The ADEA claim against the corporation and other defendants wasn’t dismissed in summary judgment, as evidence was presented that the regional manager had made disparaging comments regarding the employee’s age (he was in his 60s). The court dismissed the ADA claim for failure to provide reasonable accommodation, reasoning that there was no evidence that the employee had requested or stated a need for accommodation. The ADA claim for discrimination related to disability and the FMLA claim related to retaliation wasn’t dismissed in summary judgment, as there was evidence that the employer had possibly treated the employee in a discriminatory or retaliatory manner upon return from FMLA, ultimately resulting in termination of employment. Also, the employer failed to distribute the required FMLA notices to the employee (Notice of Eligibility and Rights & Responsibilities; Designation Notice). Additionally, the court denied summary judgment on the FLSA claim against the corporation, as there was evidence that the employee regularly worked 50 or more hours per week without overtime payment.

Lastly, upon the employee’s termination of employment, the employer failed to provide the employee with a COBRA election notice. The employee brought a claim under COBRA against the corporation and the owners. The claim against the owners was dismissed as they weren’t the plan administrators. As a reminder, under ERISA, the plan administrator is liable for statutory penalties based on failure to provide required notification. The plan administrator must be identified in the SPD. If the SPD fails to identify a plan administrator (or if the plan fails to have an SPD), the employer plan sponsor is the default plan administrator. If a specific individual is named as the plan administrator, that individual could be held personally responsible for any failures. This is why it’s best practice to identify the employer as the plan administrator in the SPD and other plan documents. In this case, the benefits brochure listed the HR manager as the COBRA contact and United Healthcare as the insurance provider. The owners weren’t mentioned in any documentation, so summary judgment was granted for that claim.

It will be interesting to see how these claims are ultimately decided by the court. While the defendants presented evidence of the employee’s past poor performance, there was enough evidence of notification failures, retaliation and discrimination on the employer’s behalf that the defendants were denied summary judgment for several of the claims. This case serves as a reminder of an employer’s obligation to distribute FMLA and COBRA notices in a timely manner, the importance of identifying the employer as the plan administrator in plan documents and the potential consequences for failure to train managers on the ADA, ADEA and FLSA requirements.

Abdelmassih v. Mitra QSR KNE LLC »