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Ninth Circuit Supports Controversial FMLA Regulation
by
Karen Davis
Bio email
TOC
Management Services
The Ninth Circuit Court of Appeals recently became the second U.S. Court of Appeals to agree with the U.S. Department of Labor’s controversial regulation that requires employers to designate time off under the federal Family and Medical Leave Act (FMLA) (Rowe v. Laidlaw Transit, 9th Cir, 4/4/2001). The Circuit Courts of Appeal are now evenly split on the issue (see endnote for details).
According to the DOL’s regulations employers must
designate qualifying time off as FMLA leave, and they must do so
promptly—within one or two business days. Until an employer designates the
FMLA leave, the Department’s regulations grant full FMLA protection to the
worker, but prevent the company from retroactively counting the time against the
worker’s 12-week entitlement. The 12-week FMLA “clock” does not start
ticking until the company prospectively designates the leave by giving the
employee the appropriate written notice. The regs do contain several exceptions
(e.g., when an employer does not learn the reason for a leave until after it
begins), but these apply only in extremely limited circumstances.
The Ninth Circuit case involved a dispute about
overtime wages. Laidlaw Transit
promoted Doris Rowe from bus driver to driver supervisor, a salaried-exempt
position. Two years later, she seriously injured her ankle. After she exhausted
all her vacation and sick pay, the company granted Ms. Rowe’s request to work
part-time while her ankle healed. Instead of paying her full salary, the company
paid her on an hourly basis until she was able to return full-time. A year
later, she resigned when the company discovered that she had repeatedly
inaccurately certified her driver test results. Ms. Rowe sued for unpaid
overtime, claiming that her supervisory position was actually nonexempt, because
the company reduced her pay while she worked part-time.
In general, the federal Fair Labor Standards Act
requires an employer to pay exempt employees their full salaries, regardless of
the quality or quantity of work, as long as they performed some work during the
workweek. A few exceptions exist. The FMLA, for example, allows an employer to
deduct from an exempt employee’s salary for partial-day absences covered by
the FMLA. Even though Laidlaw Transit never designated Ms. Rowe’s partial-day
absences as FMLA leave, the company nonetheless argued that the FMLA covered Ms.
Rowe’s absences.
The Ninth Circuit agreed with the company, and then
went on to say, “[I]f the employer fails to notify the employee that the paid
leave is FMLA-qualifying after the employee has provided an FMLA-qualifying
reason, the employee receives the protection of the FMLA.
29 CFR § 825.208(c). In
such cases, the leave does not count against the employee’s twelve-week FMLA
entitlement.”
Although the company won its wage-and-hour case, the Ninth Circuit’s decision reinforces the aggressive position that the DOL has taken with respect to an employer’s obligation to designate FMLA leave. Example: Joe Doe, an FMLA-eligible employee, suffers a motorcycle accident and takes eight months off work. His employer fails to give him the proper FMLA paperwork designating the leave. The DOL says that if an employer fails to designate the leave promptly, “the employee is subject to the full protections of the Act, but none of the absence preceding the notice to the employee of the designation may be counted against the employee’s 12-week FMLA leave entitlement” (29 CFR §825.208(c)). Under the DOL’s regulation (and the Ninth Circuit’s new decision), Joe is entitled to all his FMLA rights and benefits for those eight months. He could argue that this entitlement includes continued health insurance and the right to return to his same or equivalent job—substantially more protection and benefits than he would have received if the company had acted promptly.
Tips
to employers
•
When an employee gives a medical reason for needing time off, ensure that
his or her supervisor routes the information to your internal FMLA expert. This
expert may then determine whether to designate the leave as FMLA, and provide
the employee with the proper written notice.
•
Employers often encounter problems with their health and welfare plans
because they failed to notify plan administrators that employees had taken
leaves of absence. The FMLA requires an employer to continue medical insurance
just as though an employee continued to work. Inform your health and welfare
plan administrator promptly whenever an employee takes FMLA leave. Otherwise,
you may violate the FMLA, COBRA, and your insurance contract—not a happy
position when someone discovers the error.
•
The Rowe v. Laidlaw decision
shows how an employer can win a legal battle, but lose the war. In this case,
the employer won against the overtime claim, but gave the Ninth Circuit an
opportunity to ratify an FMLA regulation that imposes significant burdens on
employers who grant leave but fail to give the proper FMLA paperwork to the
employee. When you receive a complaint from an employee, carefully consider the
consequences of your response.
•
If you don’t already have an FMLA tracking system in place, consider
having one. You might begin by keeping an attendance calendar for each employee.
Endnote: The Sixth Circuit also agrees with the DOL (Plant v. Morton International, 5/12/2000), while the Eighth Circuit (Ragsdale v. Wolverine Worldwide, 7/11/2000) and the Eleventh Circuit (McGregor v. Autozone, 7/14/1999) ruled that an employee’s maximum entitlement under the FMLA is 12 weeks of leave, even if the company fails to provide the proper notice.
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Editor: Ross Runkel, Professor of Law Emeritus. email Ross@LawMemo.Com, Phone 503-399-8028. Copyright LawMemo, Inc.
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