Eastern District Court Finds FMLA Regulations Invalid

29 C.F.R. Section 825.208(c).

The regulations extend this principle to situations where the employee takes unpaid leave as well as paid leave, stating 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 C.F.R. Section 825.700(a).

REGULATIONS UNDER CHEVRON STANDARD

The Twymancourt reviewed the Department of Labor’s regulations under the U. S. Supreme Court’s test for considering the validity of regulations set forth in Chevron U.S.A., Inc. v. Natural Resources Defense Counsel, Inc., 467 U.S. 837 (1984).

The Chevrontest provides that first, the court must determine whether Congress’ intent is clear from the plain language of the statute. “When an analysis of the statute reveals a clear congressional intent, a contrary agency interpretation is not entitled to deference.” If the statutory language is ambiguous, however, the court must defer to a reasonable agency interpretation of the relevant provision.

In Twyman, Judge Kelly recognized that courts have come to differing conclusions on whether the notice provision contained in the regulations is permissible interpretation of the FMLA.

The 11th U.S. Circuit Court of Appeals was the first appellate court to find the DOL regulations invalid in McGregor v. Autozone, Inc., 180 F.3d 1305 (11th Cir. 1999). More recently, the 6th U.S. Circuit Court of Appeals has expressly held the regulations to be valid in Plant v. Morton International, Inc., 212 F.3d 929 (6th Cir. 2000).

The most recent appellate court decision on this issue is Ragsdale v. Wolverine Worldwide, Inc., 218 F.3d 933 (8th Cir. 2000). The Ragsdalecourt, as cited by Judge Kelly, held that “to find that [an employer's] technical violation of the designation regulations functions as a denial of [the employee's] FMLA rights would be an egregious elevation of form over substance; a result clearly not contemplated by the FMLA.”

The Twymancourt applied the Chevron test and found that the plain language of the FMLA is clear: “all eligible employees are entitled to a total of twelve weeks of leave per every twelve months. Therefore, the FMLA sets both a minimum standard of leave for employers to provide to employees as well as a statutorily required maximum, thereby ensuring that neither the employer nor the employee is disadvantaged.”

After finding the FMLA to be clear, Judge Kelly found that the regulations were not entitled to deference. Specifically, he found that the “entitlement to an additional twelve weeks of leave whenever the employer fails to prospectively notify the employee that he or she is using FMLA leave [i]s directly inconsistent with the statute’s expressed language.”

Judge Kelly continued: “the DOL regulations are inconsistent with Congress’ explicit purpose in enacting the statute [t]o balance the demands of the workplace with the needs of families . . . in a manner that accommodates the legitimate interest of employers.”

The Twymandecision does not reference Dintino v Doubletree Hotels Corp., No. Civ. 96-7772 (E.D. Pa. Nov. 14, 1997). In Dintino, Judge John P. Fullam applied the DOL notice regulations, but did not specifically address their validity. Similarly, in Voorhees v. TimeWarner Cable Nat’l Div., No. 98-1460 (E.D. Pa. Aug. 30, 1999), the court referred to, but did not specifically address, the notice provisions contained in the regulations.

BURDEN SHIFTING

Another issue under the Act is the test to be applied to claims brought under the Act. There are two primary types of claims: one for failure to reinstate an employee to his or her position and the other for retaliation for exercising rights under the Act.

The Voorheesdecision can be read as applying the McDonnell Douglasburden-shifting test, used in employment discrimination cases, to a retaliation claim under the FMLA. In a retaliation claim, an employee takes FMLA-protected leave but is terminated shortly after his or her return to work. The employee then brings a claim that the termination was impermissibly related to the leave taken.

The Voorheescourts noted that “in the context of claims based on retaliation under the FMLA . . . there is some consensus that the McDonnell Douglasburden-shifting framework is useful.” The court cited Holmes v. Pizza Hut of America, Inc., No, 97-4967 (E.D. Pa. 1998), as a case applying this framework to such a claim.

Under this test, the employee must establish a prima facie claim for retaliation by showing that (1) he or she engaged in protected activity; (2) he or she suffered an adverse employment decision; and (3) there was a causal connection between the protected activity and the adverse employment action. The burden then shifts back to the employer to articulate a legitimate business reason for the action taken. The employee can then rebut this reason by demonstrating its falsity or the pretextual nature of the reason given.

A more difficult question arises as to the appropriate burden of proof when the claim under the FMLA is for a failure to reinstate at the conclusion of the leave. Although the Voorhees court alludes to the appropriate standard, no court in the 3rd Circuit has specifically addressed the parties’ burdens of proof.

The most detailed discussion of this issue is contained in the recent 7th Circuit decision Rice v. Sunrise Express, Inc., 209 F.3d 1008 (7th Cir. 2000). The Ricecourt found that where an employee claims that he or she was denied reinstatement and the employer asserts that the position was legitimately eliminated or any other explanation as to why the employee would not have remained in his or her position regardless of the leave,

the employee always bears the ultimate burden of establishing a right the benefit [of reinstatement]. If the employer wishes to claim that the benefit would not have been available even if the employee had not taken leave, the employer must submit evidence to support that assertion. When the burden of going forward has been met, however, the employee must ultimately convince the trier of fact, by a preponderance of the evidence, that, despite the alternate characterization afforded by the employer, the benefit is one that the employee would have received if leave had not been taken.

Although the Voorheescourt stated that it would analyze the employee’s right to reinstatement “directly,” the analysis appeared to use a burden-shifting approach, without labeling it as such. Specifically, TimeWarner argued that it would have changed Voorhees’ job responsibilities and created a new position even if Voorhees had not taken a leave of absence.

The Voorheescourt discussed TimeWarner’s evidence in support of this position. The court then considered affidavits presented Voorhees contradicting TimeWarner’s evidence, which it found undermined TimeWarner’s proffered reasons for reducing Voorhees’ job responsibilities. The test applied, therefore, was virtually identical to that articulated by the 7th Circuit in Rice.

The critical question is which party carries the burden of proof both at trial and at summary judgment. If the court requires direct evidence, the employer will bear the burden of proving that it would have taken the action regardless of the employee’s leave. If the burden-shifting approach is used, then the employee will always bear the ultimate burden of showing that his or her leave played a role in the job decision.

Sid Steinberg is a partner in Post & Schell’s directors and officers litigation group. He concentrates his national litigation and consulting practice in the field of employment and employee relations law. Steinberg has lectured extensively on all aspects of employment law, including Title VII, the FMLA and the ADA.