Amicus Curiae Brief — Ragsdale v. Wolverine World Wide, Inc.

~i ante f if ‘+h “>

PAI CY \\ Nii No. 00-6029 at

In The

Supreme Court of the United States

—— *

TRACY RAGSDALE, et al.,

Petitioners,

WOLVERINE WORLDWIDE, INC.,

| Respondent.

+

On Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

+

BRIEF FOR THE SOCIETY FOR HUMAN

RESOURCE MANAGEMENT AS AMICUS CURIAE

IN SUPPORT OF RESPONDENT

«

Jack Wuitacre*

M. Brett FULKERSON

Sue K. WILLMAN

SPENCER FANE Britt & Browne LLP

1000 Walnut, Suite 1400

Kansas City, MO 64106

(816) 474-8100

“Counsel of Record

—

_——

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES ..............eeeeeeeeees iii

STATEMENT OF INTEREST OF AMICUS CURIAE... 1

GREP NUTS 4 co cesccecceccncesesesceseucceccess 2

SUMMARY OF ARGUMENT.............220ee eee: +

RENEE co cvcceccceccnsevecccsccteocouesescees 6

I. The Penalty Provisions for Failing to Timely

Designate are Contrary to the Act and Not a

Reasonable Construction of It................ 6

II. The Disproportionate, Stacking Penalty Which

Requires an Employer to Provide Both Com-

pany Designed Leave and FMLA Leave Is Con-

trary to Congressional Intent and Is Not

Necessary to Implement the Act............. 12

A. Imposing a disproportionate stacking of

leave penalty on employers who already

provide paid or unpaid medical, family

and maternity leave is contrary to Con-

SPGRTIGMEE BATTER ooo. cc cccvccccscccsesess 12

B. The disproportionate stacking of FMLA

leave on employer-provided paid or

unpaid leave is not necessary to effectuate

Be Fes ec cvcscdvccnsessoveveceveesecses 17

C. The Act and other regulations protect both

employees and employers and provide an

appropriate remedy to protect employee

POE, TAIIUD occ cccccccccccsccccccvccces 21

ii

TABLE OF CONTENTS - Continued

Page

1. Unpaid Leave ........ ... err 21

2. Employer-Provided Paid Leave Substi- ©

CE oc cv vcnsccutsdestgeenuibeenenees 23

3. Congress Provided a Detailed, Care-

fully Crafted Remedy................ 25

CONC AIOIS 0... cc cccseqencskbaeasecuenuene 28

iii

TABLE OF AUTHORITIES

Page

FEDERAL CASES

American Ship Building Co. v. N.L.R.B., 380 U.S. 300

EPPS ME PPPS TTT TETTTTTITTTTT TTT TTT 26

Blankenship v. Buchanan Gen. Hosp., 999 F.Supp. 832

DEE UE EEE concsccsccccccesccsccccescceecoces 27

Burlington Truck Lines, Inc. v. United States, 371

EET err TTT TT TTT TTT TTrTee 20

Chevron U.S.A., Inc. v. Natural Res. Def. Council,

Inc., 467 U.S. 837 (1984) .........-2- eee eee 6, 7, 9, 10

Covey v. Methodist Hosp. of Dyersburg, Inc., 56

F.Supp.2d 965 (W.D. Tenn. 1999)............-0506- 26

Daley v. Wellpoint Health Networks, Inc., et al., 146

F.Supp.2d 92 (D. Mass. 2001) .............0eeeeeee 11

Fulham v. HSBC Bank USA, 2001 WL 1029051 (S.D.

Dy MS Gy DED ccccccccscccccccosccecccccccoces 7

H.K. Porter Co., Inc. v. N.L.R.B., 397 U.S. 99 (1970) .... 26

Howell v. Standard Motor Products, Inc., 2001 WL

912387 (N.D. Tex., Aug. 10, 2001)............-.+4+- 7

Jeremy v. Northwest Ohio Dev. Ctr., 33 F.Supp.2d

635 (N.D. Ohio 1999), aff'd, 210 F.3d 372 (6th Cir.

BE oo ccccccccccscccccscccccccccccccccccccccceces 27

Lacoparra v. Pergament Home Ctrs., Inc., 982 F.Supp.

SED GD. PEE. BGB7) oc cccccccccccccccccccccccccees 27

McGregor v. Autozone, Inc., 180 F.3d 1305 (11th Cir.

Bc cceccccdesccccscccccccccccccccescccevcces 7, 11

N.L.R.B. v. Metro. Life Ins. Co., 380 U.S. 438 (1965) .... 20

Nolan v. Hypercom Mfg. Res., 2001 WL 378235 (D.

I Mi. «< cue eeeeeeedegsocesceoes 8, 22

iv

TABLE OF AUTHORITIES - Continued

Page

Plant v. Morton Int'l, Inc., 212 F.3d 929 (6th Cir.

Pc addscvccapsccokesesctenescotscnseseéoubesess 10

Ragsdale v. Wolverine Worldwide, Inc., 218 F.3d 933

See GED DE dccscccvccsdeunseusicedsaes 7, 9, 11, 12

Twyman v. Dilks, 2000 WL 1277917 (E.D. Pa., Sept.

Bp EE cheedadthoceboncsévndscsebdbenndecsabebdedues 7

FEDERAL STATUTES

Ps OP Sc cnuncccncncicenddsstdéeacciscuns 26

BP ee OF SD votes écconccnvescedacenddacunns 26

Be Weeaes Oe na cescdsctdesnsdbeiistedeacion 11

fi ere ee 2, 8, 10

ee aes OF I a ve cosceseceneneeceuse 3, 8, 10, 14

pe 3

BP ts OF ED vovencanencadhesescascwniodesoedl 22

Se ey Oe iintdactcedcccusadhacoecessesel 18

BP Ses 0p OED wo bcdccoccccecetéseéceces 18

BP ee ID cp sudedcabavipedcencconttsecsetes 25

SP Wee Co ew ovccdasvctdnsteantccsottanats 25

SD Tse 1 ch daccnvcévccscedtarsccboes 10, 25, 26

Be Ge BH MEP c cccntecedeodcccescagecssseccse 6, 25

29 U.S.C. § 2617(a)(1)(A)(i),{ii) and (iii).............. 10

SOME, OI, i iicc ican Biss cisitke ccd: 10

Vv

TABLE OF AUTHORITIES - Continued

Page

Be Weer OF ec acdecdscsccsescccencencsasecnccsss 18

BP ae FF ID cvcnccctccescccccesecscceseoceses 21

SP Sies Ul AD ccnccesecnendcesenceseseseneoonss 21

is Uh Mien dconcedndecwnedecesssocdsensoussecs 16

BP Ge Fe Gee dnccccevcccssescccncvessccesesed 6, 17

FEDERAL REGULATIONS

BP Ge ee Gc cdncdcccnccccescensccoceces 2, 15

BP Ge Oe a ceccecccceccvcescscceesecesces 24

BP Gs SD Sewccanccccsccscccccusccasscasons 18

Be Ge BED ccenececcccsscusccsccedcsess 22

BD Cie © Ge cc ccctcccccccccccsccecccess passim

SP Ge te I cebacncccscccsescovesessncnses 17

fe ll rer 17

29 C.F.R. § 825.301(a)(1) ....... 0 eee eeeeeees 18, 24, 27

29 C.F.R. § 825.301(a)(2) ........ ccc cccceecscccces 18, 24

BP Ge Oh GND 6 bic cccccccscccccccecccccess 24

29 C.F.R. § 825.700(a)............065. 3, 4, 9, 10, 16, 18

MISCELLANEOUS

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Gp Bs Bs Be vc ccc cccccccscsceseccccoscccccsecs 18

STATEMENT OF INTEREST OF AMICUS CURIAE?

The Society for Human Resource Management

(“SHRM”) is the leading voice of the human resource

profession. SHRM provides education and information

services, conferences and seminars, government and

media representation, online services and publications to

more than 165,000 professional and student members

throughout the world. As the world’s largest human

resource management association, SHRM is a founding

member of the North American Human Resource Man-

agement Association and a founding member and Secre-

tariat of the World Federation of Personnel Management

Associations.

As the leading association of the human resources

profession, SHRM and its members are vitally concerned

with the orderly development of the law concerning

employee benefits, including paid and unpaid leave for

medical, maternity, paternity and family care reasons.

SHRM has long recognized its special responsibility to

support and encourage compliance with the laws regulat-

ing employment and in the administration of efficient,

workable human resource management systems.

In 1997, SHRM founded the National FMLA Techni-

cal Corrections Coalition. The Coalition is a diverse,

broad-based, nonpartisan group of approximately 300

leading companies and associations. Members of the

1 The parties have consented to the filing of this brief.

Counsel for a party did not author this brief in whole or in part.

No persons or entities other than the Amicus Curiae, its

members, or its counsel made a monetary contribution to the

preparation or submission of this brief.

Coalition are fully committed to complying with both the.

spirit amd the letter of the Family and Medical Leave Act -

(“FMLA”) and strongly believe that employers should

provide policies and programs to accommodate the indi-

vidual work-life needs of their employees. At the same

time, members of the Coalition believe that the FMLA

should be fixed to protect those employees that Congress

aimed to assist while streamlining administrative prob-

lems that have arisen.

With respect to this case, SHRM’s interest is to sup-

port rules concerning leave entitlement and return to work

that strike an appropriate and judicious balance between

statutorily-mandated unpaid leave benefits and existing

leave plans which in many cases provide pay, benefits and

greater lengths of leave. Representatives and members of

SHRM have appeared before Congress with respect to

oversight and proposed changes of the FMLA and have

submitted comments to the Department of Labor (“DOL”)

on proposed regulations implementing the FMLA.

¢

INTRODUCTION

This case presents important questions concerning

the validity of regulations adopted by the DOL pursuant

to the Family and Medical Leave Act of 1993. Under the

FMLA an employee is “entitled to a total of 12 work-

weeks” annually of unpaid FMLA leave. 29 U.S.C.

§ 2612(a)(1). The DOL’s regulations also provide, “An

eligible employee’s FMLA leave entitlement is limited to

a total of 12 workweeks of leave” annually. 29 C.F.R.

§ 825.200(a). However, through the regulations at issue,

the DOL has greatly expanded upon or acted contrary to

this simple concept by providing for leaves beyond 12

weeks annually.

Congress recognized that certain employers were

already providing paid leave for purposes for which

FMLA leave was also required and sought to provide

credit to such responsible employers. In such a case Con-

gress provided, “an eligible employee may elect, or an

employer may require the employee, to substitute any of

the accrued paid vacation leave, personal leave or medical

or sick leave of the employee for leave” provided under

the FMLA. 29 U.S.C. § 2612(d)(2)(B). Congress also pro-

vided “[i]f an employer provides paid leave for fewer than

12 workweeks, the additional weeks of leave necessary to

attain the 12 workweeks of leave . . . may be provided

without compensation.” 29 U.S.C. § 2612(d)(1).

This simple concept of accommodation of existing

leave policies has been complicated by the DOL’s confus-

ing and conflicting regulations, including those at issue

in this case, § 825.208(c) and § 825.700(a). In short, where

employer-provided leave is available, the DOL has

imposed upon employers notice and designation obliga-

tions, which if not observed, dramatically extend the

leave time by a stacking penalty that applies across-the-

board to add FMLA leave to existing employer-provided

leave and extend the FMLA’s job protections to the pre-

designation weeks of leave as well as the post-designa-

tion 12 weeks of leave. Section 825.208(c) begins, “If the

employer requires paid leave to be substituted for unpaid

leave, or that paid leave taken under an existing leave

plan be counted as FMLA leave, this decision must be

made by the employer within two business days of the

time the employee gives notice of the need for leave, or,

where the employer does not initially have sufficient

information to make a determination, when the employer

determines that the leave qualifies as FMLA leave if this

happens later.” If an employer has requisite knowledge to

determine that company provided paid leave is for an

FMLA reason and “fails to designate the leave as FMLA

leave,” the employer “may not designate leave as FMLA

leave retroactively, and may designate” the leave as

FMLA leave “only prospectively.” According to 29 C.F.R.

§ 825.208(c), “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.” This

stacking penalty for failure to designate is also set forth

in § 825.700(a) and addresses unpaid as well as paid

employer-provided leave.

The Eighth and Eleventh Circuits, and several district

courts, have found the additional leave stacking penalty

contrary to the plain language of the statute and Congres-

sional intent.

+

SUMMARY OF ARGUMENT

In enacting the FMLA, Congress created an entitle-

ment of a total of 12 workweeks of unpaid job-protected

leave annually for employees who meet specific eligi-

bility criteria. Employees are advised of this right to a

total of 12 weeks of unpaid leave by notice prepared by

the DOL and posted by employers. Congress recognized

that many employers also were voluntarily providing

paid and unpaid leave for reasons set forth in the FMLA.

In the case of employer-provided leave, Congress decided

there was to be a total of 12 weeks, whether paid or

unpaid. Petitioner argues that employees are entitled to

leave under the employer’s voluntary program and then

up to 12 workweeks of job-protected FMLA leave unless

the employer specifically notifies the employee that the

two periods of unpaid leave are running concurrently. In

the instant case, Petitioner claims entitlement to 42 weeks

of leave in one year because Respondent failed to give

her such notice.

The requirement in the regulations that employers

stack FMLA and employer-provided leaves is not pro-

vided for in the statute and is contrary to it. If Congress

had intended for employees to be entitled to more than 12

workweeks of leave annually, Congress would have

enacted provisions to that effect, indicating the condi-

tions when an employee qualifies for additional weeks of

leave. Because Congress did not do so, the 12 workweek

maximum must be applied by the courts. Indeed, the

legislative history further demonstrates the stacking pen-

alty is clearly improper as it penalizes responsible

employers and discourages more expansive voluntary

leave programs.

There may be cases where employees do not elect to

substitute employer-provided paid leave for unpaid

FMLA leave or inquire about the concurrent running of

employer-provided leave and FMLA leave, yet the

employer elects to substitute company leave for FMLA

leave. As shown by the facts here, other more reasonable

notice provisions adequately ensure sufficient notice of

the employer’s election to substitute. If an employer fails

to provide adequate notice and it works to the detriment

of an employee, causing interference with the employee’s

exercise of her statutory rights, - not the case bel« w -

Congress has expressly provided a detailed and carefully

crafted remedy. In such a case, the employee may seek to

enforce any denied FMLA rights in court and seek the

monetary and injunctive relief provided in 29 U.S.C.

§ 2617(a).

+

ARGUMENT

I. The Penalty Provisions For Failing to Timely Desig-

nate Are Contrary to the Act and Not a Reasonable

Construction of It.

In administering the FMLA, the Secretary of Labor is

authorized to issue regulations “as are necessary to carry

out” the provisions and purposes of the Act. 29 U.S.C.

§ 2654. However, the FMLA as defined in the DOL’s

conflicting regulations is significantly different than the

FMLA legislated by Congress. At issue in this case are the

DOL’s regulations which significantly expand and contra-

dict the core component of the Act - an employee’s

entitlement to a total of 12 workweeks of FMLA leave per

year.

In Chevron U.S.A., Inc. v. Natural Res. Def. Council,

Inc., 467 U.S. 837 (1984), this Court set forth a two-step

test for determining the validity of regulations such as

the ones at issue in this matter. Firs’ the Court must

determine if Congress has “directly spo..en to the precise

question at issue.” Id. at 842. If the Court “ascertains that

Congress had an intention on the precise question at

issue, that intention is the law and must be given effect.”

Id. at 843 n.9. In the event Congress has not directly

spoken to the precise question and thus the statute is

silent or ambiguous on the issue, the Court must deter-

mine if “the agency’s answer is based on a permissible

construction of the statute.” Id. at 843. Constructions that

are contrary to clear congressional intent must be

rejected. Id. at 843 n.9.

Applying Chevron’s test, the Eighth Circuit properly

found the regulations providing for additional leave

invalid. See Ragsdale v. Wolverine Worldwide, Inc., 218 F.3d

933, 937-938 (8th Cir. 2000). The Eleventh Circuit and

several lower courts have also found the regulations

invalid under the Chevron test or the principles articu-

lated therein. See, e.g., McGregor v. Autozone, Inc., 180 F.3d

1305, 1308 (11th Cir. 1999) (concluding employer’s failure

to designate paid leave as FMLA leave did not entitle

employee to 12 weeks of unpaid leave stacked on top of

13 weeks of paid leave because the regulations requiring

such a result are invalid and unenforceable whether the

Act is viewed as clear and the regulations clearly contrary

to the Act or whether the Act is viewed as somewhat

ambiguous and the regulations manifestly contrary to the

Act); Fulham v. HSBC Bank USA, 2001 WL 1029051 *7 (S.D.

N.Y., Sept. 6, 2001) (finding employer’s failure to desig-

nate paid leave as FMLA leave did not entitle employee

to 12 weeks of unpaid leave stacked on top of his 26

weeks of paid leave because regulations requiring such a

result were contrary to the Act); Twyman v. Dilks, 2000 WL

1277917, *13-14 (E.D. Pa., Sept. 8, 2000) (invalidating reg-

ulations as “directly inconsistent” with the Act’s express

language and inconsistent with the purpose of the Act);

Howell v. Standard Motor Products, Inc., 2001 WL 912387, *3

(N.D. Tex., Aug. 10, 2001) (finding employer’s failure to

designate unpaid leave as FMLA leave did not entitle

employee to 12 additional weeks of unpaid FMLA leave

and predicting Fifth Circuit would agree with Eighth and

Eleventh Circuits on invalidity of penalty regulations);

Nolan v. Hypercom Mfg. Res., 2001 WL 378235 *7 (D. Ariz.,

March 26, 2001) (finding regulation invalid because it

provides employees more leave than the substantive

guarantees of the statute). This Court should similarly

declare the regulations requiring more than 12 weeks of

leave invalid as they are contrary to the Act and not a

reasonable construction of it.

The Act expressly provides that “an eligible

employee shall be entitled to a total of 12 workweeks of

leave during any 12-month period... .” 29 U.S.C.

§ 2612(a)(1). This provision is not ambiguous. This provi-

sion is obviously not silent as to the total number of

workweeks of leave an employee is entitled to under the

Act. This maximum allowance is restated again when

permission is granted to an employer to substitute paid

leave under its benefit plans for all or a portion of the

mandated total of 12 weeks annually. In such a case, in

the same section, Congress declared that “[i]f an

employer provides paid leave for fewer than 12 weeks,

the additional weeks of leave necessary to attain the 12

workweeks of leave . . . may be provided without com-

pensation.” 29 U.S.C. § 2612(d)(1) (emphasis added).

Under the express and unambiguous language of the Act,

an employer is required only to provide up to a total of 12

weeks of leave per year. The 12 week total expressly

includes both paid leave and unpaid leave. Thus, the Act

does not require the employer to stack unpaid FMLA

leave on top of employer-provided paid or unpaid leave.

Notwithstanding the express and unambiguous lan-

guage of the Act, §§ 825.208(c) and 825.700(a) improperly

convert the unpaid leave up to a “total of 12 workweeks”

annually into an entitlement to 12 additional weeks

unless the employer specifically notifies the employee

within two business days that he or she is taking FMLA

leave. This designation, under the regulation, applies

“only prospectively as of the date of notification. .. . “

§ 825.208(c). Thus, under the DOL’s regulations, an

employer may be “forced” to provide many more than 12

weeks of leave per year should the employer fail to

provide certain notice. Ragsdale, 218 F.3d at 938. Indeed, if

the regulations were applied as urged by Petitioner, she

would have received a total of 42 weeks of leave in a

single year.

This “disproportionate penalty” for failing to desig-

nate, Ragsdale, 218 F.3d at 938, which requires an

employer to provide more than 12 weeks of leave annu-

ally, is entirely a creation of the DOL and contradicts the

clear and unambiguous language in the Act. Those sup-

porting the validity of the stacking penalty under the

Chevron test do so by first attempting to validate and

justify the designation and notice provisions and then

bootstrapping the stacking penalty onto those require-

ments. Indeed, after arguing for the validity of the desig-

nation and notice provisions, the Solicitor General

characterizes the stacking of leave as no penalty at all,

but merely the “consequence” of an employer’s failure to

10

designate.? In analyzing the Chevron test, the Solicitor

focuses on Congress’ silence as to the timing of the

employer’s “paid leave” election under § 2612(d)(1) but

ignores the clear language of the statute that manifestly is

not silent as to the propriety of the stacking penalty or

“consequence” for failing to timely designate and the

statute’s carefully crafted remedy for an interference with

FMLA rights. See 29 U.S.C. §§ 2612(a)(1) and 2617.

While some “consequence” may be appropriate for an

employer’s failure to designate paid leave as FMLA leave

in the case of detrimental reliance, as we discuss below,

Congress provided for and carefully detailed the remedial

relief available. See 29 U.S.C. § 2617(a)(1)(A)(i),(ii) and (iii)

and § 2617(a)(1)(B). The “consequence” or penalty selected

by the DOL and imposed by § 825.208(c) and 825.700(a)

dramatically contradicts the clear language of the Act,

ignores the remedy provided by Congress, and greatly

expands upon the Act’s leave entitlement. Thus, the stack-

ing penalty or “consequence” is invalid and must be

stricken.

Not only are the regulations expressly contrary to the

Act, they are also not a reasonable construction of it. As

the Eleventh Circuit stated, “The regulations not only add

requirements and grant entitlements beyond those of the

2 The Sixth Circuit employed a similar bootstrapping

analysis to validate the stacking penalty. See Plant v. Morton

Int'l, Inc., 212 F.3d 929, 935-36 (6th Cir. 2000) (finding the statute

silent as to the notice an employer must give to employees

before designating leave and then assuming without further

analysis that the provision forbidding retroactive designation is

therefore also valid).

11

statute but they also are inconsistent with the stated

purpose of the statute.” McGregor, 180 F.3d at 1308. An

express purpose of the Act is “to balance the demands of

the workplace with the needs of families . . . in a manner

that accommodates the legitimate interests of employers.”

29 U.S.C. § 2601(b)(3). Indeed, as noted by the Eighth

Circuit below, “(t]he provisions of the FMLA are noticea-

bly bereft of any purpose to interfere with employer leave

policies which grant greater leave rights than the FMLA

or to require more generous leave plans than the mini-

mum twelve weeks of unpaid leave mandated by the

FMLA.” Ragsdale, 218 F.3d at 937.

Because of the two-day time period for designating

FMLA leave and the resulting stacking for failure to

designate, a claimant is almost always assured of having

longer than “the total of 12 workweeks” mandated by

Congress.’ Requiring this quick designation and denying

retroactive application runs counter to the Act’s express

purpose of accommodating the legitimate interests of

employers and encouraging employers to adopt more

generous leave plans. There is probably no better illustra-

tion of the lack of congruency between the purpose of the

Act and the practical result of the DOL’s regulations than

the outcome sought by Petitioner in this case, i.e. 12

weeks of unpaid FMLA leave stacked on top of 30 weeks

of unpaid leave provided by Respondent.

3 As one plaintiff argued, “ . . . the regulation carries an

implicit penalty awarding an employee an additional day of

FMLA leave for each day the employer is late in making the

designation (hence the 37 days of additional leave claimed by

Daley).” Daley v. Wellpoint Health Networks, Inc., et al., 146

F.Supp.2d 92, 99 (D. Mass. 2001).

12

As stated by the Eighth Circuit, the obvious purpose

of counting paid leave - as expressly contemplated by

Congress - as part of the employee’s 12 weeks is to ensure

that neither an employee nor an employer will be disad-

vantaged by the existence of the FMLA. Ragsdale, 218 F.3d

at 938. The statutory provision, as the Eighth Circuit fur-

ther noted, protects the employer when an employee

requests FMLA leave by not requiring the employer to

provide paid leave on top of the 12 weeks of FMLA leave.

Id. Moreover, this substitution provision further illustrates

Congress’ intent to not require employers to stack FMLA

leave on top of the employer-provided leave. However, the

DOL improperly seized upon the designation provision as

the thin reed on which to impose a wildly disproportio-

nate penalty in those cases where the employer fails to

notify the employee that employer leave, whether paid or

unpaid, and FMLA leave run concurrently. Thus, the regu-

lations are inconsistent with and manifestly contrary to the

Act and its stated purposes. They should be declared

invalid under Chevron.

Il. The Disproportionate, Stacking Penalty Which

Requires an Employer to Provide Both Company

Designed Leave and FMLA Leave Is Contrary to

Congressional Intent and Is Not Necessary to

Implement the Act.

A. Imposing a disproportionate stacking of leave

penalty on employers who already provide

paid or unpaid medical, family and maternity

leave is contrary to Congressional intent.

Not only is the stacking penalty contrary to express

statutory language carefully crafted after much study and

— ~~

13

debate by Congress, the stacking of FMLA leave onto

employer-provided leave is contrary to Congressional

intent. The legislative history abundantly demonstrates

that (a) Congress wanted to applaud, rather than penalize

employers who voluntarily provide leave for FMLA pur-

poses; (b) Congress was persuaded that on balance the

12-week allotment was appropriate given the need to

adjust work schedules or hire temporary replacements

and thus provided for substitution of company paid leave

for FMLA unpaid leave as an option; and (c) Congress

wanted to encourage — not discourage or penalize -

employers to adopt more generous leave policies than

provided by the FMLA. The stacking penalty is contrary

to each of these Congressional purposes.

Congress, in 1993, determined that some private

employers were not providing sufficient leave of absence

from work for medical, maternity or parental assistance

reasons, thus in some cases, forcing employees to choose

between families and work or to lose their jobs due to an

inability to work because of health conditions. Cited

studies found that only 37% of workers in private busi-

ness were covered by “maternity” leave and only 18%

were covered by unpaid “paternity” leave. Other studies

found that 30% to 40% of businesses did not offer job

guaranteed sick leave. S. Rep. No. 103-3, at 15 (1993),

reprinted in 1993 U.S.C.C.A.N., Vol. 2 at 17 (“Senate

Report”). This Senate Report concluded:

These studies, taken together, indicate that

while many employers are providing family and

medical leaves to their employees, a significant

percentage of employers of all sizes have yet to

adopt such policies.

14

Id. President Clinton, in his signing statement, id. at

54-55, observed that “although many enlightened com-

panies have recognized the benefits to be realized from a

system providing for family and medical leave, not all

do. . . . We must extend the success of those forward-

looking workplaces where high performance teamwork

has already begun to take root and where family and

medical leave already is accepted.”

Second, as noted above, employers who provided

paid leave under existing benefit plans were permitted by

Congress in 29 U.S.C. § 2612(d)(1) and (2) to take credit

for those existing leave provisions. But the maximum of

12 weeks remained in place: “When an employer has

required or an employee has elected to substitute for

unpaid leave appropriate paid leave of less than 12 weeks

duration, the employer need only provide an additional

period of unpaid leave so that the total of paid and unpaid

leave provided equals 12 weeks.” Senate Report at 29

(emphasis added); HR Rep. No. 102-135, at 41 (1991)

(same).

The 12-week maximum and minimum was carefully

selected after years of study and debate. For a number of

years, mandated leave had been the subject of consider-

able debate. In 1991, proposed identical FMLA legislation

was not passed but the House Report (HR Rep. No.

102-135) reflected extensive debate concerning the appro-

priate amount of leave. Also, it was concluded that

employers were to be accommodated, particularly those

who furnished leave under their existing voluntary plans.

The House Report provided:

15

The amount of time available for leave also

reflects a compromise. The leave period was

reduced to 12 weeks in response to concerns

raised by employers who maintained that it was

significantly easier to adjust work schedules or

find temporary replacements over the shorter

time period. While not ideal from the

employees’ perspective, a twelve week mini-

mum represents a middle ground between the

family needs of workers and an employer's

business needs. Employers are, of course, free to

and are encouraged to provide longer leaves.

H.R. Rep. No. 102-135, at 37 (1991). Like the Act which

was finally passed in 1993, the 1991 bill permitted the

employer to substitute certain paid leaves for mandated

unpaid leave. Accordingly, an employer may require the

employee to take paid vacation or paid personal leave for

any part of the leave required under the Act. Id. at 41.

Congress only cautioned that an employer may not trade

shorter periods of paid leave for the longer periods of

unpaid leave prescribed by the Act. Id. at 42. The 1991

Report concluded: “Section 102(d) assures that an

employee is entitled to the benefits of applicable paid

leave, plus any remaining leave time made available by the

Act, on an unpaid basis.” Id. (Emphasis added). Indeed,

the DOL’s final regulations provide: “An eligible

employee’s FMLA leave entitlement is limited to a total of

12 workweeks of leave during any 12 month period for

any one, or more, of the following reasons... . ”

§ 825.200(a) (emphasis added).

The stacking penalty in case of a failure to notify and

designate runs contrary to this carefully designed

approach to leave. The disproportionate stacking penalty

16

exclusively penalizes those “enlightened” and “forward-

looking” employers who voluntarily provided leave, par-

ticularly paid leave in substantial amounts, in addition to

FMLA leave. Accordingly, since the disproportionate

stacking penalty in § 825.208(c) and § 825.700(a) falls

exclusively on those employers already providing paid or

unpaid leave, it is clearly contrary to Congressional

intent.

Not only did Congress provide for a “total” of 12

weeks of leave because of scheduling difficulties which

might otherwise arise and accommodate “enlightened”

employers by allowing substitution of employer-pro-

vided leave for mandated leave, Congress expressly

wanted to encourage employers to provide even greater

benefits than those contemplated by the Act. 29 U.S.C.

§ 2653 provides:

Nothing in this Act or in any amendment made

by this Act shall be construed to discourage

employers from adopting or retaining leave pol-

icies more generous than any policies that com-

ply with requirements under this Act or any

amendment made by this Act.

The Society for Human Resource Management respect-

fully submits that nothing discourages employers more

from adopting more generous leave policies than the

conflicting and confusing regulations of the DOL and

their arbitrary, disproportionate stacking penalty for a

“failure to notify” when that failure does not adversely

affect an employee's receipt of statutory rights, as shown

by the facts here.

17

B. The disproportionate stacking of FMLA leave

on employer-provided paid or unpaid leave is

not necessary to effectuate the Act.

As noted, 29 U.S.C. § 2654 authorizes the Secretary of

Labor to develop regulations “as are necessary to carry

out” the Act. The stacking penalty is not only contrary to

the Act and legislative intent, it is not necessary to “carry

out” the Act. This is particularly true in the case of

unpaid leave which is at issue in this case.

The interim final regulations published on June 4,

1993 (58 Fed. Reg. 31794) focused only on the election by

the employer to substitute paid leave for FMLA leave.

The interim final version of § 825.208(c) did not impose a

stacking penalty in the event the employer failed, or was

tardy, in designating that the FMLA leave was to run

concurrently with employer furnished paid leave. In addi-

tion, the interim final regulations, as do the final regula-

tions, provided for a retroactive counting of leave as

FMLA leave in the situation where an employer seeks to

designate leave as FMLA leave after the leave has begun.

See § 825.208(d). Further, in the final regulations,

employers may designate leave as FMLA leave retroac-

tively even after the employee has returned to work in

two situations: (1) where the employer did not learn the

reason for the absence until the employee’s return or (2)

where the employer knew the reason for the leave but

was not able to confirm that the leave qualifies under the

FMLA (e.g., the requested medical certification had not

been received by the employer). See § 825.208(e). As the

above provisions demonstrate, “retroactivity” is not con-

trary to the intent and purposes of the Act, and final

18

§ 825.208(c)’s prohibition on retroactivity when substitu-

tion of paid leave occurs is not necessary to ensure that

employees receive their FMLA benefits.

This stacking penalty in § 825.208(c) and § 825.700(a)

cannot be justified by citing an alleged need to notify

employees of their rights and obligations under the Act.

Congress provided for notice in a number of instances.

See 29 U.S.C. § 2619 (requiring employers to post notices

prepared or approved by the DOL summarizing the perti-

nent provisions of the law); 29 U.S.C..§ 2612(e)(1) (notice

obligation of employees to employers); 29 U.S.C.

§ 2614(b)(1)(A)-(B) (notice to key employees concerning

lack of reinstatement rights). In addition, the DOL in the

other regulations has imposed additional notice provi-

sions on the employer. See § 825.301(a)(1) (information

concerning FMLA entitlements and employee obligations

must be included in employee handbook or other docu-

ment) and § 825.301(a)(2) (providing written guidelines to

employees concerning the employees’ rights and obliga-

tions under the FMLA if an employer does not generally

publish written policies, manuals and handbooks).

Indeed, the DOL, in explaining the regulations at

issue, did not justify the stacking penalty as necessary to

compel employers to provide information on the FMLA.

Rather, the comments which accompanied the final regu-

lation and which were published in the Federal Register

on January 6, 1995 (60 Fed. Reg. 2180) reflect an entirely

different focus on the part of the DOL. A review of the

justification demonstrates it is contrary to the intent of

Congress. At that time, the DOL, in referring to the final

version of § 825.208, which first contained the stacking

19

penalty and prohibition on retroactive designation,

stated:

This section was intended to resolve the ques-

tion of FMLA designation as early as possible in

the leave request process, to eliminate pro-

tracted “after the fact” disputes. . . . Because of

the possible “stacking” of unpaid FMLA leave

entitlements in addition to an employer’s pre-

existing leave plan, it appears that some

employers that wished to mitigate their expo-

sure to extended leaves by employees have been

motivated by the provisions in the Interim Final

Rule to try to determine and count all possible

FMLA-qualifying absences as FMLA leaves (by

whatever means, including through overly-

intrusive inquiries of employees when they

request to use their accrued -paid leave)... .

[Discussion of various comments deleted.] After

careful consideration of the many comments

and objections received on this section, the

Department has revised the regulation along the

following lines. . . . If the employer has the

requisite knowledge to determine that a leave is

for an FMLA reason at the time the employee

either gives notice of the need for leave or it

commences, and the employer does not notify

the employee as required at that time that the

leave is being designated as FMLA leave, the

employer may not then designate the leave as

FMLA leave retroactively; it may designate only

prospectively, as of the date of notification to

the employee of the designation... .

60 Fed. Reg. at 2207-2208.4

* In their briefs below and before this Court, counsel for

Petitioner and Amicus in support of Petitioner assert various

20

In short, in the regulations at issue, the DOL, and

some commentators, were attempting to second guess the

provision for substitution of paid leave for FMLA leave

(and concurrent running of leave periods) which Con-

gress expressly intended. Certainly, it is not contrary to

Congressional intent or the purpose of the FMLA for

employers to be concerned about “extended leaves by

employees” over the “total” of 12 weeks contemplated by

the FMLA.

Accordingly, the requirement that FMLA leave be

stacked on top of employer-provided paid or unpaid

leave is indeed a “disproportionate penalty” as the

Eighth Circuit held, and is not necessary to carry out or

implement the Act.

rationale for imposing the stacking penalty. Such “post hoc

rationalizations” by appellate counsel must be rejected. See

N.L.R.B. v. Metro. Life Ins. Co., 380 U.S. 438, 444 (1965) (“for

reviewing courts to substitute counsel’s rationale or their

discretion for that of the Board is incompatible with the orderly

function of the process of judicial review”), citing Burlington

Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962) (“courts

may not accept appellate counsel’s post hoc rationalizations for

agency action”). This seems particularly true where different

sections of the same regulations point in different directions;

some regulations providing for retroactivity while others

prohibit retroactivity; some regulations impose a stacking

penalty, others only prohibit an employer from taking adverse

action against an employee and denying their statutory rights

by failing to provide notice.

21

C. The Act and other regulations protect both

employees and employers and provide an appro-

priate remedy to protect employee FMLA rights.

1. Unpaid Leave

Congress provided for a total of 12 weeks of leave,

job protection upon return from such leave, and sufficient

notice of those rights to employees. 29 U.S.C. § 2619(a)

requires an employer to post a notice to employees: “Each

employer shall post and keep posted . . . a notice, to be

prepared and approved by the Secretary, setting forth

excerpts from, or summaries of, the pertinent provisions

of this subchapter and information pertaining to the fil-

ing of a charge.” Section 2619(b) provides the penalty for

failure to post: “Any employer that willfully violates this

section may be assessed a civil money penalty not to

exceed $100 for each separate offense.” The final regula-

tions in Appendix C set forth the notice to employees

which is entitled “Your Rights Under the Family and

Medical Leave Act of 1993.” This notice unequivocally

advises employees of their FMLA leave rights:

FMLA requires covered employers to provide

up to 12 weeks of unpaid, job-protected leave to

“eligible” employees for certain family and

medica] reasons.

The kinds of leave protected by the FMLA are then speci-

fied.

No further notice to employees is required with

respect to their FMLA leave rights and unpaid leave. This

notice sufficiently advises employees of their “total” of 12

weeks of unpaid leave annually and places a duty upon

them to inquire further if there is any doubt concerning

22

their leave entitlements or the duration of their leave. In

Nolan, 2000 WL 378235 at * 7, the court, after an extensive

analysis of the cases and the requirements of the FMLA,

observed:

The burden of communications does not rest on

the employer alone. There is no reason why

employees should not be required to understand

the extent of their guaranteed leave. There is a

clear basis in the statute for requiring employees

to confer with employers about their anticipated

absences. See 29 U.S.C. § 2612(e). Employees

have a duty to notify employers of foreseeable

births or planned medical treatments. Id. Absent

some extraordinary medical obstacle, not

alleged here, there is no reason why employers

and employees cannot at the time of notice or

within a few days thereafter determine when

available leave shall be exhausted. This contem-

plates responsibility by employees, if they are

interested in securing their jobs, and by

employers. But as the statute plainly reflects,

employees are in a better position to anticipate

the amount of time off they will need, and they

are more motivated to insure that their job will

be protected while they are away.°

Certainly the notice of “up to 12 weeks of unpaid”

leave is clear on its face. No further notice is required in

the case of unpaid leave, as Congress recognized by its

silence.

5 The DOL’s regulations provide for resolution of disputes

or questions “through discussions between the employee and

the employer.” § 825.208(b)(1).

23

2. Employer-Provided Paid Leave Substitution

In the case of employer-provided paid leave and the

“substitution” (or “concurrent running”) which Congress

specifically addressed, the burden remains with the

employee, for the reasons cited above, to inquire concern-

ing the impact of paid leave policies. As Congress recog-

nized, the employee may elect to use paid leave, if

available. The mandated notice reflects this as well: “At

the employee’s or employer’s option, certain kinds of

paid leave may be substituted for unpaid leave.” Clearly,

the employee is on notice and must inquire about substi-

tution of leave and the impact this has on the “total” of 12

weeks.

In many instances, in the paid leave situations, in fact

there is no need for an “election” or designation by the

employer at the time leave is requested, as contemplated

and required by § 825.208(c). First, as noted, there is the

situation where the employee elects to substitute accrued

paid vacation, personal or medical/sick leave in order to

receive the wages during the absence. Second, given the

notice prepared by the DOL and posted, the employee

will — or should — at least inquire in such cases as to paid

leave and FMLA ieave rights. In any event, it is difficult

to believe an employee will not ask a rather straightfor-

ward simple question at or near the start of leave: when

does my leave end and when must I be back at work to

preserve my job?

The real issue with respect to “substitution” or “des-

ignation” occurs with respect to paid vacation or paid

personal leaves which also may be substituted at either

24

the employee’s or the employer’s option for any qualify-

ing FMLA unpaid leave. § 825.207(e). If neither the

employee nor the employer elects to substitute paid leave

for unpaid leave under the above conditions and circum-

stances, the employee will receive an unpaid leave and

will remain entitled to all the paid vacation or personal

paid leave which is earned or accrued under the terms of

the employer’s plan. Thus, the narrow circumstances

under which an employer designation or substitution is

required suggests again the disproportionate nature of

the penalty imposed by the DOL by the burdensome

notice provisions placed upon the employer in

§ 825.208(c).

Even in those instances of paid leave substitution

where confusion may arise (e.g., paid vacation time or

paid personal leaves), specific designation “within two

business days” of notice of the qualifying nature of the

leave should not be required if the employer through

distribution of written materials, handbooks or benefit

description advised the employee of the employer's prac-

tice to require substitution in those cases. See

§ 825.301(a)(1) and (2). Even where such information has

not been provided prior to the leave request, there is no

cause shown for the prohibition on “retroactive” designa-

tion which is permissible in other situations under the

regulations.®

6 To the extent that § 825.301(b)(1) requires specific notice

of this designation, it is contrary to the purposes of the Act

particularly if previously provided by the employer in another

form and by the DOL’s approved poster.

25

3. Congress Provided a Detailed, Carefully

Crafted Remedy.

Although not the case below, if the employer has not

provided such information concerning substitution of

paid leaves, or fails to designate and the employee loses

statutory rights in reliance thereon, the employee has

recourse for failure to notify in the case of detrimental

reliance and loss of statutory rights. As the Eighth Circuit

recognized, there can be cases where an employee relies

upon statements made by the employer or relies upon the

silence resulting from the employer’s failure to make the

substitution election. However, the “disproportionate”

stacking is not the answer. Rather, the statute provides a

detailed remedy if the employee has been damaged by

the denial of 12 weeks of unpaid leave or reinstatement at

the end of the 12 week period. See 29 U.S.C. § 2615(a)(1)

and 2617(a). The enforcement provisions in 29 U.S.C.

§ 2617 and its detailed, carefully tailored exclusive dam-

age and relief scheme expressly provide the remedy for

the “interference with rights” described in § 2615(a).

Indeed, as the Eighth Circuit observed, failure to give

proper notice - where required in certain situations -

“may function to interfere with or to deny an employee's

substantive FMLA rights.” 218 F.3d at 939. But Congress,

while conferring a right in such cases, also provided a

comprehensive and carefully crafted remedy which the

DOL simply ignores and substitutes a disproportionate

one.”

? The Solicitor attempts to draw a parallel between the

definition of FMLA “prohibited” acts in 29 U.S.C. § 2615(a)(1)

(“it shall be unlawful for any employer to interfere with,

26

Thus, any failure of the employer to provide suffi-

cient notice to the employees concerning their rights to

paid leave should be dealt with under 29 U.S.C. § 2617

and pursuant to traditional concepts of law. See Covey v.

Methodist Hosp. of Dyersburg, Inc., 56 F.Supp.2d 965, 968

(W.D. Tenn. 1999) (“In order to succeed on a failure to

inform claim, the plaintiff must show (1) that the defen-

dant failed to correctly inform her of her FMLA rights;

restrain or deny .. . any right provided under this subchapter”)

and a similar definition of unfair labor practice in the National

Labor Relations Act, 29 U.S.C. § 158(a)(1) (it shall be an unfair

labor practice for an employer “to interfere with, restrain or

coerce employees in the exercise” of their Section 7 rights).

While the NLRB may have wide discretion in interpreting and

applying that phrase to employer conduct or misconduct, it

does so in the context of adjudicating unfair labor practices

under 29 U.S.C. § 160(a)-(c). Under FMLA that task was left to

the courts by 29 U.S.C. § 2617. Next, the NLRB has not

attempted to define what constitutes “interference with” or

“restrain” or “coercion” by regulations. And even where the

NLRB enters certain remedial orders pursuant to and following

unfair labor practice adjudications, its powers can only be

exercised consistent with the statute. See, e.g., H.K. Porter Co.,

Inc. v. N.L.R.B., 397 U.S. 99, 108-109 (1970) (Board exceeded

powers conferred by statute in ordering employer to implement

a particular form of collective bargaining agreement: “The

Board’s remedial powers under § 10 of the Act are broad, but

they are limited to carrying out the policies of the Act itself.”);

American Ship Building Co. v. N.L.R.B., 380 U.S. 300, 307-311

(1965) (Board erred in concluding lock out in response to

whipsaw strike constituted illegal interference, restraint or

coercion under the Act, 380 U.S. at 318, because “ . . . the role

assumed by the Board in this area is fundamentally inconsistent

with the structure of the Act and the functions of the section

relied upon . . .” and constitutes an improper “assumption by

an agency of major policy decisions properly made by

Congress.”).

27

’

and (2) that failure caused her to forfeit protections pro-

vided by the Act.”); Jeremy v. Northwest Ohio Dev. Ctr., 33

FSupp.2d 635, 639 (N.D. Ohio 1999), aff'd, 210 F.3d 372

(6th Cir. 2000) (“Assuming that defendant did not pro-

vide adequate notice, plaintiff still fails to allege that this

resulted in either forfeiture of FMLA protections or

adverse consequences”); Lacoparra v. Pergament Home

Ctrs., Inc., 982 F.Supp. 213, 220-22 (S.D. N.Y._ 1997)

(employee alleges that employer provided insufficient

notice of her rights and responsibilities under the FMLA

as required by 29 C.F.R. § 825.301(a)(1) but court found

no benefits under the FMLA were denied); see also, Blan-

kenship v. Buchanan Gen. Hosp., 999 F.Supp. 832 (W.D. Va.

1998) (discussing adequacy of notice in handbook and

equitable estoppel claim).

Respondent's failure to designate in this case did not

cause Petitioner to forfeit any protections under the

FMLA. Petitioner’s series of hypothetical examples of

“options” allegedly lost due to lack of information are not

supported factually, rely on inaccurate interpretations of

the Act and regulations, ignore the notice Petitioner did

receive from Respondent and demonstrate the practical

difficulty — if not impossibility - facing employers as a

result of the DOL’s schemes. Even if Respondent had

notified Petitioner on the first day of her leave that her

FMLA leave and employer-provided leave ran concur-

rently, she could not have returned to work at the end of

12 weeks and would not have had any federally-pro-

tected job rights during the remaining weeks of her leave.

+

28

CONCLUSION

Petitioner received her unpaid leave entitlement of 12

weeks under the FMLA. There is simply no question

about this. An additional grant of 30 weeks as a result of

the disproportionate stacking penalty would clearly be

contrary to Congressional intent. No election or designa-

tion was even contemplated by Congress in the case of

unpaid leaves.

The stacking penalty imposed on employers when

they fail to designate existing medical, sick, maternity or

parental care paid leave - or even unpaid leave - as

FMLA leave is not necessary to implement the Act.

Indeed, it is contrary to the Act and to legislative intent.

Congress clearly intended that employer-provided paid

leaves - if the employee or employer elected - could run

concurrently with FMLA leave and FMLA leave would

not be stacked on top of employer-provided leave. Con-

gress wished to encourage - not penalize - employers

who provided greater leave than the FMLA.

No categorical disproportionate penalty should

attach to an employer's failure to exercise its substitution

option in a specific manner. The paid leave substitution

option can be communicated in many ways - even by

information distributed in advance or in handbooks, in

plan booklets or other written literature. Where no infor-

mation bas been posted or previously provided, the “des-

ignation” of the paid leave as FMLA leave at some point

may be required. However, retroactive designation does

not run counter to the statute, as other regulations amply

demonstrate.

29

If an interference with FMLA rights actually occurs,

an employee may seek to utilize the Act’s detailed, care-

fully crafted remedy. Utilizing the statutory remedy and

traditional concepts of law, lower courts have struck a

balance between employer rights expressly preserved by

Congress and any loss of employee rights of “up to a total

of twelve workweeks”of leave and reinstatement. This

Court should follow suit. The DOL’s disproportionate,

categorical stacking penalty is contrary to the Act and

Congressional intent and is not required to carry out the

Act.

Respectfully submitted,

Jack WurTacre*

M. Brett FULKERSON

Sue K. WittMAN

SpeNceR Fane Britt & Browne LLP

1000 Walnut, Suite 1400

Kansas City, MO 64106

(816) 474-8100

"Counsel of Record

October 2001