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Regulations of the U.S. Department of Labor concerning the Family and Medical Leave Act have come under increased scrutiny in the circuit courts. In recent decisions, the 2nd and the 11th U.S. Circuit Courts of Appeals joined the 1st and the 7th Circuits in examining two regulations interpreting when a worker is covered under the FMLA as an “eligible employee” and entitled to the act’s 12 weeks of job-protected leave. In Chevron USA Inc. v. NRDC, 467 U.S. 837 (1984), the U.S. Supreme Court set out the two-step analysis for determining whether to afford deference to an agency regulation. First, a court must determine “whether Congress had directly spoken to the precise question at issue” — i.e., whether the statute is silent or ambiguous on the specific issue being raised. Second, if the statute does not adequately address the issue, a court will determine if the agency’s interpretation of the statute is reasonable “in light of the legislature’s design.” If the interpretation is reasonable, the court is obligated to give the regulation deference. Applying the Chevronanalysis to Labor Department regulations interpreting the FMLA has led to varied results. THE ‘SMITH’ CASE In Smith v. BellSouth Telecommunications Inc., (11th Cir., 2001), a former employee, who had resigned from his position as a service representative with BellSouth reapplied for employment. The former employee had taken leave under the FMLA when he was previously employed by BellSouth, and he was told that his personnel file was marked “not eligible for rehire” because of poor attendance. His application for re-employment was rejected. He brought suit in district court under the antiretaliation provision of the FMLA. The district court granted BellSouth’s motion for summary judgment holding that the FMLA applies only to current employees. On appeal, the 11th Circuit addressed whether Labor Department regulations concerning the definition of “employee” could expand coverage to include applicants. Regulations prohibit an employer from discriminating against “employees or prospective employees” who have taken leave under the FMLA and prohibit an employer from using “the taking of FMLA leave as a negative factor in employment actions, such as hiring.” Under the two-part Chevronanalysis, the court first looked to discern whether there was any ambiguity in the FMLA regarding coverage for a job applicant as an “employee.” The FMLA defines the term “employee” by reference to the Fair Labor Standards Act as “any individual employed by an employer” without consideration of when employment occurs. The court held that the term was ambiguous as to whether the definition includes an applicant such as Smith, in light of the remedial purpose of the statute and the broad definition of the term “employee” given by courts interpreting other statutes, such as the FSLA, Title VII, the Age Discrimination in Employment Act and the National Labor Relations Act. Finding the statute ambiguous, the court then determined the department’s interpretation, expending the FMLA to include prospective employees, to be “reasonable.” The appellate court thus reversed summary judgment in favor of BellSouth and returned the case to the lower court. The 11th Circuit joined the 1st Circuit in specifically adopting the regulation applying the FMLA to applicants. THE ‘WOODFORD’ CASE While the 11th Circuit adopted a department regulation expanding the FMLA’s coverage in Smith, the 2nd Circuit recently struck another regulation which likewise sought to expand coverage under the act. In Woodford v. Community Action of Greene County Inc., 268 F.3d 51 (2d Cir. 2001), Woodford was the director of Greene County’s Head Start program. She requested leave, alleging mental anguish from harassment by her supervisor. Following Woodford’s request for leave, Community Action of Greene County provided her with a notice, in accordance with the act, which indicated that she was an employee eligible for leave under the FMLA but that her request for leave would be denied, as she was determined to be a “key employee” whose absence would “cause substantial and grievous economic harm” to the agency under 29 U.S.C. Section 2614(b)(1)(A). Nevertheless, Woodford took a leave of about two months and then sought to be reinstated to her position pursuant to the FMLA. The agency denied her request, and Woodford initiated a civil action in the Northern District of New York. In defense of Woodford’s FMLA claim, the agency asserted not that she was a key employee but that she was ineligible for leave under the FMLA because she had failed to work 1,250 hours in the preceding year, as required for eligibility under the act. The district court granted the employer’s motion for summary judgment on the basis of Woodford’s failure to have worked the requisite 1,250 hours. On appeal to the 2nd Circuit, Woodford asserted that the employer could not contest her eligibility under the FMLA after it had provided her with a notice of eligibility. A Labor Department regulation prohibits an employer from challenging an employee’s eligibility for leave under the FMLA once the employer has given notice to the employee that she is eligible for leave. 29 C.F.R. Section 825.110(d). The 2nd Circuit affirmed summary judgment for the agency, finding no ambiguity in the statute defining eligible employees as those who worked at least 1,250 hours in the preceding year. The 2nd Circuit joins the 7th and the 11th Circuits in striking down the regulation because it “impermissibly widens the statutory definition of ‘eligible employee.’” DETRIMENTAL RELIANCE The 2nd Circuit also addressed a competing interest, which is addressed by 29 C.F.R. Section 825.110(d) and about which the act is silent: detrimental reliance. The regulation was meant to ensure that employees can rely upon their employers’ approval of leave under the FMLA when they make commitments with regard to illnesses and their families. In Woodford, the court stated, “It is our view that even in the absence of a formal regulation, the doctrine of equitable estoppel itself may apply where an employer who has initially provided notice of eligibility for leave later seeks to challenge that eligibility.” Although the court refused to address the legal argument of estoppel because Woodford failed to raise the issue on appeal, the 2nd Circuit makes it abundantly clear that equitable estoppel may be asserted to prevent an employer from later arguing that the employee is not covered under the FMLA if it has already acknowledged coverage in a notice to the employee. The 2nd Circuit has since revisited this issue in Kosakow v. New Rochelle Radiology Associates. In Kosakow, a technician with New Rochelle Radiology Associates was not reinstated following leave for the surgical removal of a cyst. The employer failed to post or otherwise notify Kosakow that employees must work at least 1,250 hours to become eligible for leave under the FMLA. The District Court for the Southern District of New York granted the employer’s motion for summary judgment on the ground that Kosakow did not work the minimum number of hours required for eligibility. On appeal, the 2nd Circuit reversed the district court’s decision and stated that the employer’s failure to post the FMLA eligibility requirements may estop the employer from challenging her eligibility under the FMLA. The 2nd Circuit remanded the case to the district court to determine, among other issues, whether the elements of estoppel had been met, thereby refuting the employer’s challenge to Kosakow’s eligibility for covered leave. Courts continue to view critically Labor Department regulations on the FMLA. The 11th Circuit’s application of Chevronresulted in an expansion of the definition of “employee” to former employees reapplying for employment. The 2nd Circuit’s application of Chevronresulted in the rejection of the regulation broadening the definition to include employees who had not worked the requisite 1,250 hours but had received a notice stating that the employee is eligible for leave. When the regulations contradict unambiguous provisions of the FMLA, the regulation will not be given deference. Sidney R. Steinberg is a partner in the business law and litigation departments of Post & Schell, www.postschell.com. He concentrates his national litigation and consulting practice in employment and employee relations law. Steinberg has lectured extensively on all aspects of employment law, including Title VII, the FMLA and the ADA.

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