FMLA Leave: Does An Employer Have To Designate?

Under the Family and Medical Leave Act (the "FMLA"), qualified employees may take up to twelve weeks of leave during a twelve month period for one or more of the following reasons: (1) the birth of an employee's child; (2) the placement of a child with an employee for adoption or foster care; (3) taking care of specified relatives who have serious health conditions; or (4) a serious health condition that renders the employee unable to perform his/her job functions. An employee who takes FMLA leave is entitled to his/her job or an equivalent job when he/she returns from the leave.

An issue has arisen as to whether an employer must designate an employee's leave as FMLA leave at the time the leave commences in order for the employee's twelve week clock to start ticking. While the statute makes no reference to any form of designation, the regulations issued by the Department of Labor (the "DOL") indicate that such designation must be made at the time leave is taken. If the employer fails to do so, the regulations provide that the employer may continue to owe the employee an additional twelve weeks of leave. In other words, under the DOL regulations, an employer who grants an employee leave, but does not designate such leave as FMLA leave, will still owe the employee twelve weeks of leave regardless of the amount of leave the employee has already taken. Furthermore, the regulations indicate that an employer cannot retroactively classify leave as FMLA leave. This application of the FMLA has created differing opinions within the courts.

Recently, in Ragsdale v. Wolverine Worldwide, Inc., the United States Court of Appeals for the Eighth Circuit ruled that the DOL regulation regarding designation of leave was invalid. In that case, Ragsdale requested leave under her employer's policy. The employer, Wolverine Worldwide, Inc., granted the request. At no time did Wolverine indicate that any of Ragsdale's leave was FMLA leave.

After exhausting her seven-months of leave under company policy, Wolverine terminated Ragsdale for not returning to work. In response, Ragsdale requested that she be given FMLA leave. Wolverine replied that she had already utilized all of her leave and was not entitled to any more. Ragsdale filed suit against Wolverine claiming that because Wolverine had not designated any of her leave as FMLA

leave, the company had violated the statute when it denied her FMLA leave in September of 1996 and terminated her employment. In joining a handful of other courts, the Eighth Circuit ruled that the DOL's regulations "improperly 'convert the statute's minimum of federally-mandated unpaid leave into an entitlement to an additional 12 weeks of leave unless the employer specifically and prospectively notifies the employee that she is using her FMLA leave.'" The Court further noted that the statute only requires the employer to provide a total of twelve weeks, not twelve weeks in addition to what the employer offers. As such, the regulation was invalid because it expanded the statutory rights created by the FMLA. Thus, the Court found that Ragsdale had received the leave to which she was entitled under the FMLA and that she was not entitled to any additional leave regardless of Wolverine's failure to designate the initial leave as FMLA leave.

As one can see, the state of the law with respect to an employer's obligation to designate leave as FMLA leave is unsettled. Unless you are an employer in the Eighth Circuit, which covers North Dakota, South Dakota, Nebraska, Minnesota, Iowa, Missouri, and Arkansas, or one of the other jurisdictions where the same analysis as that used by the Eighth Circuit has been followed, such as the Eleventh Circuit, which covers Alabama, Georgia, and Florida, you should plan on designating leave as FMLA leave where appropriate. Unfortunately, mistakes happen and leave may not be designated as FMLA leave in a timely manner. In those circumstances, and until Congress amends the FMLA or the Supreme Court addresses the conflict amongst the Circuit Courts of Appeals, an employer may argue that the DOL regulation is overbroad and, thus, invalid. That, however, can prove to be a costly proposition. The safe bet is for employers to inform the employee, as soon as the employer becomes aware of the fact that the leave qualifies as FMLA leave, that the employee's leave is being designated and treated as FMLA leave.

AGE DISCRIMINATION DECISION BY U.S. SUPREME COURT EXEMPLIFIES NEED FOR EMPLOYERS TO DOCUMENT EMPLOYEE PERFORMANCE AND DISCIPLINE ACCURATELY

On June 12, 2000, the United States Supreme Court held that a jury may find for the plaintiff in an age discrimination case if the jury rejects the defendant's articulated non-discriminatory reason for terminating the plaintiff. To avoid such a rejection, employers must diligently and accurately document the performance of their employees.

The Court's opinion in Reeves v. Sanderson Plumbing reinforces the Court's 1992 decision of St. Mary's v. Hicks regarding the proof necessary for an age discrimination case. Under the Age Discrimination in Employment Act ("ADEA"), a plaintiff must first establish that he or she is at least 40 years of age, qualified for the employment position, and the position was filled by a significantly younger individual. The employer must then counter by articulating a non-discriminatory reason for firing or not hiring the plaintiff. Subsequently, the onus is upon the plaintiff to show that the employer's decision was motivated by age, rather than the employer's proffered reason. The United States Supreme Court clarified that if a jury rejects the employer's proffered reason for terminating or not hiring the individual, that jury is free to find in the plaintiff's favor. This clarified a split in the Circuit Courts of Appeals. Whereas some of the courts had held as the Supreme Court did, others had found that even though a plaintiff had established his/her initial case, also known as the prima facie case, once an employer indicated a non-discriminatory reason for the action, a plaintiff could not prevail unless he/she introduced additional evidence refuting the employer's proffered non-discriminatory reason. This became known as the prima facie plus analysis. The Supreme Court's decision in Reeves specifically indicates that plaintiffs may prevail based solely on the evidence introduced to establish their prima facie case.

This opinion should be a warning that employers must have ample evidence supporting the non-discriminatory reason for their actions. Employers cannot simply rely upon the testimony and recollection of decisionmakers. Instead, employers must timely and accurately document an employee's performance or lack of qualifications. Such contemporaneous demonstrative evidence will provide formidable evidence to support the employer's asserted non-discriminatory reason and hence avoid liability.

HMOS NOT LIABLE UNDER ERISA FOR TREATMENT-RELATED DECISIONS

The United States Supreme Court issued two decisions in June 2000 relating to the Employee Retirement Income and Security Act ("ERISA"). In Pegram v. Herdirch, the Court held that mixed medical treatment and eligibility decisions by HMO physicians are not fiduciary decisions under ERISA, and, hence, cannot create a cause of action under this statute.

In the Pegram case, HMO enrollee Cynthia Herdrich's appendix burst while she was waiting eight days for an ultrasound. She claimed that her HMO provider breached its duty to her by giving financial incentives for a physician to cut medical costs. The Court rejected this argument because imposing federal liability for efforts to reduce costs could destroy HMOs altogether, and would fly in the face of Congress's efforts to promote the formation of such organizations. The Court, however, left open the possibility for such plaintiffs to seek a remedy through state law claims.

NON-FIDUCIARY LIABILITY EXPANDED UNDER ERISA

In Harris Trust Savings Bank v. Salomon Smith Barney, Inc., the United States Supreme Court held that a party in interest could be liable under ERISA Section 502(a)(3) for participating in a pension plan fiduciary's prohibited transaction. In so doing, the Court held that liability depends on whether one is involved in an "act or practice" which violates an ERISA provision, rather than whether one has a specific duty under ERISA. This decision was based on ERISA language that authorizes the Secretary of Labor to assess civil penalties against a plan fiduciary or "other person" who knowingly participates in a fiduciary's violation. Hence, even non-fiduciaries who are not parties in interest are potentially liable under ERISA. Now, anyone involved in a pension plan-related transaction must examine his or her potential liability. Despite this expanded exposure to liability, however, proving liability may be difficult because a plaintiff must demonstrate that one had actual or constructive knowledge of the circumstances that rendered the transaction unlawful.

E-MAIL POSTINGS CREATE POTENTIAL LIABILITY FOR SEXUAL HARASSMENT ACCORDING TO NEW JERSEY SUPREME COURT

This past June, the New Jersey Supreme Court unanimously ruled that postings on a work-related electronic bulletin board may constitute workplace harassment. This decision highlights the fact that although the information superhighway has created avenues to enhance workplace efficiency, it has also created an avenue for employer liability.

In Blakey v. Continental Airlines, a number of Continental's male pilots had posted derogatory and insulting remarks about Blakey on the pilots' on-line computer bulletin board. This bulletin board was part of an internet service, approved by Continental Airlines, that allowed pilots and crew members to perform work-related activities such as learning their schedules and flight assignments. The Court held that because the electronic bulletin board was closely related to the workplace environment and beneficial to Continental, the bulletin board was part of the workplace for purposes of a sexual harassment claim.

The Court next addressed how an employer may be subject to liability based on statements in such a forum. The Court held that employers have a duty to utilize effective measures to stop co-employee harassment when the employer knows or has reason to know that such harassment is taking place in settings related to the workplace. Employers are not required to monitor the private communications of their employees, but must react upon receiving notice of workplace harassment.

As a result, employers must be conscious of this potential liability and educate their supervisors of the need to respond to any such behavior. When a supervisor receives workplace e-mails or reads statements on a company electronic bulletin board, the employer may be held to have notice of such statements. Under such circumstances, an employer will be held liable if such statements are found to be sufficiently severe and pervasive to create a hostile work environment and the employer failed to effectively respond. Employers must, therefore, be aware that they need to have policies in place regarding e-mail or internet workplace communications, and educate management employees on how to recognize and effectively react to improper statements in the workplace.

The Labor and Employment Department of Saul Ewing LLP provides advice, counseling, and litigation expertise on labor and employment issues. Whether developing company policies, drafting employment contracts, educating a workforce, or defending the actions of an employer, Saul Ewing's Labor and Employment Department stands ready to serve your needs.

The statements contained in this Update are intended for general information and do not constitute legal advice.

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