United States: First High Court FMLA Case: Failure To Designate Time Off As Family/Medical Leave May Be Risky

Co-authored by Mr Steve Hamann

The United States Supreme Court, in Ragsdale v. Wolverine, 122 S. Ct. 1155 (2002), held that the Secretary of Labor overstepped her bounds when she promulgated a Family and Medical Leave Act regulation categorically prohibiting an employer from designating an employee’s leave as FMLA, when the employer did not provide individualized written notice to the employee that the leave would be so designated.

Generally, under the FMLA an employer must provide an eligible employee a total of 12 weeks of leave in a 12-month period for the arrival of a new child, a disabling health problem, or a family member’s serious illness. The Act also requires an employer to (1) maintain the employee’s group health coverage; (2) grant leave on an intermittent basis when medically necessary; and (3) reinstate the employee to his or her former position, or its equivalent, upon the employee’s timely return to work. An employer who interferes with, restrains, or denies the exercise of these rights may be subject to consequential damages and appropriate equitable relief.

In Ragsdale, Wolverine World Wide, Inc. granted plaintiff Ragsdale 30 consecutive weeks of leave when cancer treatments kept her off work. At the end of the 30 weeks, Ragsdale sought an additional 30 days of leave. Wolverine denied her request, saying Ragsdale had exhausted the seven months of unpaid sick leave available under Wolverine’s leave plan. Ragsdale sued, claiming that FMLA regulations (specifically, 29 CFR 825.700(a)) entitled her to an additional 12 weeks of leave because Wolverine had failed to notify Ragsdale up front that 12 of the 30 weeks of leave she had already taken would count as her FMLA leave.

The Supreme Court, in its first case under the FMLA, rejected Ragsdale’s claim and invalidated the regulation, holding that it impermissibly exceeded the scope of the statute by imposing a one-size-fits-all penalty on employers who fail to notify employees that their leave will count as FMLA leave.

The Court reasoned that in the statute’s penalty provisions Congress intended to penalize employers who harm employees by interfering with, restraining, or denying an employee his or her rights under the statute. In contrast to the statute, regulation 825.700(a) penalized an employer by requiring the employer to grant more than 12 weeks of leave, regardless of whether the employee had suffered any harm.

The facts in Ragsdale illustrate this point. Ragsdale suffered no harm – she was allowed 30 weeks of leave, more than twice what is required by the statute. The penalty against Wolverine was not tied to any harm suffered by Ragsdale. Thus, the Court held the penalty inconsistent with, and disproportionate to, the Act itself.

Importantly, the Court did not invalidate the requirement of individualized notice that an employee’s leave counts towards his or her FMLA entitlement. What the Court did in Ragsdale was invalidate the categorical application of the penalty requiring an employer to grant additional leave when an employer fails to provide such individualized notice.

The upshot of the Court’s ruling appears to be that an employer does not have to provide leave in excess of the 12 weeks mandated by the statute when an employee has not been prejudiced by the employer’s failure to notify the employee that his or her leave would count as FMLA leave.

The questions remain when and how a court will determine whether an employee has been prejudiced in such circumstances. The Court gave some guidance in answering this question when it noted that in order to determine whether an employee has been prejudiced, a judge or jury must answer questions such as (1) whether the employee would have exercised his or her FMLA rights in the absence of the employer’s actions, and (2) what steps the employee would have taken had circumstances been different. For example, when would the employee have returned to work after taking leave?

To be sure, the safest approach an employer can take is to continue to provide individualized written notice to an employee that the employee’s leave will count towards his or her annual FMLA entitlement. This will avoid a potential after-the-fact judicial determination that an employee was prejudiced because the employer did not provide the notice.