RISKVUE ARCHIVE | RISK BITES

Supreme Court Invalidates DOL’s FMLA Notice Regulation — Additional Litigation Predicted

By Jennifer Suich

On March 19, 2002, the U.S. Supreme Court affirmed the finding of the Eighth Circuit Court of Appeals and invalidated a Department of Labor (DOL) regulation which states that “[i]f an employee takes paid or unpaid leave and the employer does not designate the leave as FMLA leave, the leave taken does not count against an employee’s FMLA entitlement” 29 CFR §825.700(a). In essence, an employer is no longer required to provide up to an additional 12 weeks of FMLA leave of absence if it fails to give notice to an employee that the leave would be counted against his or her FMLA leave entitlement. Ragsdale v. Wolverine World Wide, Inc., U.S. S.Ct., 82 EPD 40, 921 (2002).

This case was brought by Tracy Ragsdale, an employee of World Wide, Inc. who had developed Hodgkin’s disease. Ms. Ragsdale then took seven months of unpaid sick leave, which was permitted under the collective bargaining agreement. When she requested additional leave time or the opportunity to work part-time, the company terminated her. She sued, alleging that the employer was required to give her an additional 12 weeks of leave, since the employer had failed to give her notice that her prior sick leave was being designated as FMLA leave. In other words, she argued that the seven months of sick leave should not be attributed to her total 12 weeks of leave allowed under the FMLA.

The Court stated that the DOL regulation was an impermissible interpretation of the FMLA for two reasons: (1) the penalty imposed upon employers for failing to tell employees about their entitlement under the FMLA exceeded the DOL’s authority; (2) the penalty was incompatible with the FMLA because it automatically punished employers by denying them any credit for leave granted before the notice was given.

The Court reasoned that the regulation impermissibly established an irrebuttable presumption that the employee’s exercise of FMLA rights was impaired, and relieved the employee of the burden of proving that he or she was harmed by the lack of notice, while still entitling the employee to 12 weeks of additional leave.

In addition, the rule also alters the FMLA’s “most fundamental substantive guarantee — the employee’s entitlement to a total of 12 workweeks of leave during any 12-month period,” the Court said, noting that courts and agencies should respect the 12-week figure and give effect to this compromise that was reached between employers and employees.

Finally, the Court noted that the penalty was disproportionate and inconsistent with the sole notice provisions in the FMLA itself. The FMLA explicitly only requires employers to post a general notice informing employees of their FMLA rights, and the $100 fine was the appropriate penalty for willful violations of the only notice requirement specified in the statute.

The Court did not decide the issue of whether or not the notice and designation requirements are themselves valid or whether other means of enforcement might be consistent with the FMLA.

Most agree that as a result of the Ragsdale decision, the FMLA regulations on notice and designation have lost much of their power because the penalty for noncompliance has been greatly reduced. However, employers are still well advised to inform employees of their rights under the FMLA and notify them when their leave is being counted against the 12-week entitlement.

In addition to the DOL regulation examined in Ragsdale, it is predicted that other FMLA regulations that impose “across the board penalties” will be challenged, resulting in an increased number of lawsuits. According to a recent study presented during an April 11, 2002 Congressional hearing, the validity of 11 different regulations implementing the FMLA has already been challenged in federal courts in 58 cases. The three most frequently challenged FMLA regulations according to the study are: (1) designation of leave as FMLA leave, (2) determinations of which employees are eligible to take leave under the FMLA, and the FMLA provision at issue in the Ragsdale decision.

The DOL will likely change its regulatory interpretations to reflect the Court’s decision and Congress’ original intentions when it enacted the FMLA. However, additional litigation is still expected. 

ABOUT THE AUTHOR

Jennifer Suich is an employment lawyer with Minneapolis-based Lindquist & Vennum P.L.L.P. Ms. Suich counsels and advises clients in all areas of employment law. She can be contacted at jsuich@lindquist.com.

riskVue | The webzine for risk management professionals
June 2002