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Supreme Court Holds FMLA Regulation Invalid
Ragsdale v. Wolverine World Wide, Inc. On March 19th the Supreme Court handed down its first decision interpreting the Family and Medical Leave Act (“FMLA”). The Court ruled in a five to four decision that there is no legal authority for the Department of Labor’s (“DOL’s”) regulation that automatically penalizes employers for failing to give notice of their rights to employees when they take an FMLA qualifying leave. The decision leaves open, however, the issue of whether an employer may ever be liable for failing to provide such notice; and if so, what type of liability might attach.
Background — The FMLA guarantees 12 weeks of unpaid leave each year to qualifying employees. In 1996, Wolverine World Wide, Inc. (“Wolverine”), Tracy Ragsdale’s employer, granted her 30 weeks of medical leave under its leave policy. During that period, Wolverine did not notify Ms. Ragsdale that it was designating her medical leave as FMLA leave. At the conclusion of her 30-week leave, Ms. Ragsdale requested additional leave, which Wolverine refused. Wolverine ultimately terminated Ms. Ragsdale’s employment when she did not report back to work. Ms. Ragsdale then brought suit, claiming her employer’s failure to notify her that any of her leave was being counted towards her FMLA entitlement put them in technical violation of the DOL’s regulations. She sought reinstatement, back pay and other relief.
The Court’s Decision — The Supreme Court held that the DOL’s regulation requiring that an employer be denied credit for any leave granted before it provides the employee with notice of FMLA designation is contrary to the FMLA. Specifically, the Court reasoned that this penalty is unconnected to any prejudice the employee may have suffered as a result of the employer’s lack of notice. The DOL’s regulation, the Court noted, would automatically entitle an employee to an additional 12 weeks of leave even if he/she would have acted in the same manner had notice been given. The Court found this to be inconsistent with the remedial mechanism of the FMLA, under which an employee is entitled to relief only after showing that not only did his/her employer interfere with, restrain or deny his/her exercise of FMLA rights, but also that he/she was prejudiced by the employer’s interference with, restraint or denial of those rights.
The Court found that the DOL regulation at issue in this case established an “irrebuttable presumption that the employee’s exercise of FMLA rights was restrained.” In so doing, the Court reasoned that the regulation “fundamentally alters” a cause of action under the FMLA “by relieving employees of the burden of proving any real impairment of their rights and resulting prejudice.” In striking down the automatic penalty for failing to provide employees with notice of FMLA designation, the Court expressly did not decide whether the notice and designation requirements are themselves valid or whether other remedies for their breach might be consistent with the FMLA.
Implications for Employers — This decision is good news for employers insofar as it strikes down the automatic penalty for an employer’s failure to designate leave time as FMLA leave. Accordingly, in situations where an employer has failed to provide notice of FMLA designation, the Ragsdale case provides a possible reprieve from having to grant an additional twelve weeks of leave. This case should not, however, be interpreted as eliminating the need to give individualized notice when an employee takes an FMLA qualifying leave. The Court made clear that there could be situations where the employer’s failure to provide notice constitutes an impairment of the employee’s FMLA rights and that such impairment could prejudice the employee. The Court’s decision leaves open the issue of whether an employee could recover under those circumstances. Accordingly, prudent employers should continue to provide notice of FMLA designated leave for all FMLA qualifying leaves.
For further information on the FMLA, or any other employment-related issue, please feel free to call John Zandy or Peter Lefeber in