Legal Bulletins

On March 19, 2002, the Department of Labor (DOL) regulations implementing the Family & Medical Leave Act (FMLA) were dealt another blow. The United States Supreme Court, by a 5-4 decision in Ragsdale v. Wolverine Worldwide, Inc., struck down 29 CFR § 825.700(a), which provides that an employer that fails to appropriately designate a covered absence as FMLA leave cannot count the absence against an employee’s twelve week FMLA entitlement.

The DOL had taken the position that an employer that failed to timely designate the leave as required by 29 CFR § 825.208, was precluded from making a retroactive designation, and was required to treat the employee’s undesignated absence as an FMLA covered event for purposes of the health insurance continuation and reinstatement provisions of the FMLA. Thus, the DOL regulations effectively precluded an employer from terminating an employee because of an absence covered by the FMLA, regardless of its duration, if the employer failed to make the required written designation. Under the DOL regulations, the employee was treated as being on an indefinite FMLA leave until twelve weeks after the employer made an effective designation. Accordingly, the employer could not terminate the employee during the undesignated absence and had to afford the employee the reinstatement rights provided by the FMLA, if the employee was able to return to work within twelve weeks of when the employer made an effective designation.

The Supreme Court decided that, even assuming the notice and designation requirements imposed by 29 CFR § 825.208 are valid, DOL exceeded its authority to the extent that the regulations impose a penalty (precluding an employer from counting undesignated periods of absence against an employee’s twelve week FMLA entitlement) which is unconnected to any prejudice which an employee may have suffered from the employer’s failure to timely designate an absence as FMLA leave.

The Practical Impact

While the Supreme Court struck down the DOL regulation prohibiting an employer from counting any undesignated leave against an employee’s statutory entitlement, it expressly did not pass on the question of “whether other means of enforcing” the notice and designation requirements might be consistent with the statute. In that regard, the Court acknowledged that there may be circumstances where it is reasonable for an employee to assert that a failure to give the notice required by the regulation prejudiced the employee’s exercise of statutory rights. This is the approach previously taken by the U.S. Court of Appeals for several circuits; i.e., that in order to prevail, an employee must show that the failure to designate an absence as FMLA leave served to “deny, restrain, or interfere with” the employee’s rights under the FMLA. Thus, while the Ragsdale decision provides employers some protection against liability for the failure to make an effective designation under the DOL regulations, the decision should not be viewed as absolving employers from making every effort to give the required notice. Under the wrong set of circumstances, it is likely that an employer’s failure to timely designate an absence as FMLA leave could result in significant liabilities. Accordingly, employers should review their procedures to make sure that they are complying with the requirements of the FMLA.

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