The Wrath Of Ragsdale?
by Darrell R. VanDeusen

It did not take long for employers in Family and Medical Leave Act (FMLA)^[1] cases to feel emboldened and renew challenges to Department of Labor regulations following the Supreme Court's decision earlier this year in Ragsdale v. Wolverine Worldwide, Inc.^[2] At least 11 different regulations implementing the FMLA have been challenged in the last few years, and that trend will no doubt continue after Ragsdale, where the Supreme Court struck down the FMLA rule covering designation of leave and found "considerable tension" between the law and DOL regulation Section 825.700(a). ^[3]

In jumping on the bandwagon to challenge the regulations, however, employers should be careful to consider the practical effect of the arguments they advance, and the public policy that would be created by the result they desire. In Ruder v. MaineGeneral Medical Center, ^[4] the employer learned this valuable lesson the hard way when it moved to dismiss an employee's FMLA claim because the employee was one week shy of his one year anniversary when leave commenced. The employee sought to use two weeks of accrued vacation to get his one year of service and qualify for FMLA leave. The employer challenged an employee's ability to use his employer's approved leave in order to "grow into" FMLA leave. The court would have none of it.

The Facts of Ruder

Ruder began working at MaineGeneral Medical Center on January 17, 2000, as the practice manager responsible for offices in Augusta and Waterville, Maine. Ruder left work for what he claimed were qualifying medical reasons on January 5, 2001. At that time, Ruder had at least two weeks of unused accumulated vacation time available, and used it. But the hospital denied Ruder's request for leave under the FMLA, claiming he had not worked for one year. Instead, it permitted him to take a medical leave of absence through April 1, 2001 -- giving Ruber twelve weeks of leave, albeit not under the FMLA.

Ruder reported to work when his approved medical leave ended, but the hospital terminated him. MaineGeneral then divided Ruder's former position into two -- one that managed the Augusta office and one that managed the Waterville office. Both positions had job duties equivalent to those Ruder performed before his leave. After requiring Ruder to reapply and interview for one of the new positions, MaineGeneral decided not to rehire him.

Ruder filed a lawsuit alleging that MaineGeneral violated the FMLA by denying his request for leave, failing to reinstate him upon his return and terminating his employment. The fact that Ruder was provided with twelve weeks of leave and then terminated rather than reinstated when he returned ready to work made this a difficult case for the hospital if Ruder was eligible for FMLA leave. MaineGeneral thus moved to dismiss the claim, arguing that Ruder was not eligible for FMLA leave because he had not worked for the hospital for at least one year when his medical leave began.

The Law and the Regulations

To qualify for leave under the FMLA, an employee must meet two threshold requirements: (1) he must have worked for the employer for a minimum of twelve months; and (2) he must have worked at least 1250 hours in the preceding twelve months. ^[5] The hospital's argument seemed simple enough: Ruder began working for MaineGeneral on January 17, 2000 and he had not yet met the first eligibility requirement when he left work fifty-one weeks later on January 5, 2001. ^[6] Looking to the DOL regulations, the hospital relied upon the statement in Section 825.110(d) that the determination of whether an employee is eligible for the protections of the FMLA must be made "as of the date leave commences."^[7] But, the court noted, this argument ignored the "crucial follow-up question: when was Plaintiff's 'leave' deemed to have 'commenced' for purposes of the FMLA?"

The court then rephrased the question as "whether the FMLA permits Plaintiff to use his accrued vacation time to achieve one year of employment and become eligible for the statute's protections." To answer this question, the court agreed with Ruder that the appropriate regulation to look to was Section 825.110 (b),^[8] which provides that "the 12 months an employee must have been employed by the employer need not be consecutive months. If an employee is maintained on the payroll for any part of a week, including any periods of paid or unpaid leave (sick, vacation) during which other benefits or compensation are provided by the employer (e.g., workers' compensation, group health plan benefits, etc.), the week counts as a week of employment."

Under Section 825.110(b) then, an employee may take vacation time during his first year of employment, and any weeks spent on vacation count toward the required year of employment. The court went on to note that "exactly when within that first year the employee takes the vacation is irrelevant. An employee could take vacation during his thirtieth and thirty-first weeks of employment or his fiftieth and fifty-first weeks, and in either case count those as weeks of employment for purposes of FMLA eligibility." As such, it made no difference if Ruder's vacation time was used at the end of the year or at some earlier time.

Relying upon cases where courts held that an employee may not use employer-approved leave to get over the one-year eligibility threshold, MaineGeneral argued that the FMLA should not be interpreted to permit employees to take leave during the last weeks of their first year of employment and thereby "grow into" FMLA eligibility. ^[9] The court was not persuaded by those decisions, however, because they had not considered the impact of 29 C.F.R. § 825.110(b).

The court also rejected the hospital's claim that Ruder was, in effect, seeking fourteen weeks of leave if he had been able to use two weeks of vacation time to become FMLA eligible and then take the twelve weeks of FMLA leave. MaineGeneral claimed that Ragsdale rejected interpretations of the FMLA that operate to give employees more than twelve weeks of leave. While this is true, the court thought that the hospital took that general proposition out of context. In Ragsdale, the employee enjoyed the protections of the FMLA throughout an initial period of leave but nevertheless insisted that those weeks should not be counted against her total FMLA allotment. ^[10] Ruder, on the other hand, was not trying to get more than he deserved from an employer who had already bent over backward to help him. Ruder was trying to use the leave available to him to get to the point where he was eligible for FMLA leave.

MaineGeneral made the final argument that permitting Ruder's claim to go forward would discourage employers from offering generous leave policies. The FMLA cautions that nothing in it "shall be construed to discourage employers from adopting or retaining leave policies more generous" than those required under the statute. ^[11] The hospital argued that employers would be stingy in formulating vacation policies if every week of vacation time they provide during the first year reduces by one week the time employees have to work before they become FMLA-eligible. The court rejected this argument because it ignored the fact that leave time during the first year already does count toward an employee's FLMA eligibility under Section 825.110(b).

Moreover, the court recognized that the timing of use of vacation leave available during the first year would be irrelevant to the vast majority of employees, who use their allotted vacation time for recreational or other personal purposes and not for an FMLA-qualifying event that occurs immediately before their one-year anniversary of employment. The hospital's argument simply went too far, implicitly suggesting that most employees would try to plan to save up their vacation time for some unanticipated medical condition for which they would need leave just before the end of their first year. Rejecting this cynical view of most employees, the court stressed that even if employers perceive its ruling to be a novel interpretation of the FMLA, "it is an interpretation that will affect so few employees that it is unlikely to significantly change employers' incentives in formulating general leave policies."^[12]

The court considered its decision to be the most natural reading of Section 825.110(b): that an employee may take a vacation during which he remains on the payroll and is receiving benefits, and during that vacation pass the one-year eligibility threshold of the FMLA. ^[13] Ruder alleged that he worked for fifty-one weeks and had accrued at least two weeks of vacation time when he left work. He was provided leave, but then not returned to his position as required under the FMLA. Maybe, said the court, he could prove facts consistent with his allegations, and he should be given the opportunity to do so.

Conclusion

The problem for MaineGeneral was not an irrational regulation. The problem was that the court thought the hospital was trying to use Ragsdale as a sword not a shield -- trying to be overly technical to the detriment of an employee who did not deserve it. First, the court's reading of Section 825.110(b) does not appear to be inconsistent with congressional intent behind the FMLA. Second, Ruder appeared from the facts alleged in the complaint, to be an employee who was a victim of bad timing, not a schemer trying to put one over on the hospital. Merging fact and law, it is not hard to see why, taking the allegations of the complaint as true, the hospital's motion to dismiss was denied.

It may be that after discovery a different result will obtain for Ruder. After all, the hospital did give Ruder a twelve week medical leave of absence. According to the complaint, the job he had held changed while he was out on leave and he had the opportunity to be considered for the new position. But, at the motion to dismiss stage, the hospital's argument went too far. Management side employment lawyers need to keep this in mind as the FMLA continues to be defined after Ragsdale. Courts will continue to attempt to balance the rights and responsibilities of the Act, to avoid an inequitable result. A perceived "excessive" application of Ragsdale by an employer to a sympathetic employee's case could backfire on the employee, creating the wrath of Ragsdale.

^[1]   29 U.S.C. §§ 2601 et. seq.

^[2]   122 S. Ct. 1155 (2002).

^[3]   122 S. Ct. at 1158.

^[4]   ___ F. Supp.2d ___; 2002 U.S. Dist. LEXIS 8564 (D. Me. 2002).

^[5]   29 U.S.C. § 2611(2)(A); 29 C.F.R. § 825.110(a).

^[6]   There was no dispute that Ruder met the 1250 hour requirement.

^[7]   29 C.F.R. § 825.110(d); see, e.g., Butler v. Owens-Brockway Plastic Prods., 199 F.3d 314, 316 (6th Cir. 1999).

^[8]   29 C.F.R. § 825.110(b).

^[9]   See Sewall v. Chicago Trans. Auth., No. 99 C 8372, 2001 WL 40802, *5 (N.D. Ill. Jan. 16, 2001); Jessie v. Carter Health Care Ctr., 926 F. Supp. 613, 617 (E.D. Ky. 1996); Schlett v. Avco Fin. Servs., 950 F. Supp. 823, 835 (N.D. Ohio 1996). The validity of Section 825.110(d) has been challenged in a number of other cases with virtually every court finding it invalid. See, e.g., Kosakow v. New Rochelle Radiology Associates, P.C., 274 F.3d 706 (2d Cir. 2001); Caraballo v. Puerto Rico Telephone, Inc., 178 F. Supp2d 60 (D.P.R. 2001); Alexander v. Ford Motor Co., 204 F.R.D. 314 (E.D. Mich. 2001). But see Miller v. Defiance Metal Products, Inc., 989 F. Supp. 945 (N.D. Ohio 1997).

^[10]   122 S. Ct. at 1164.

^[11]   29 U.S.C. § 2653.

^[12]   ____ F. Supp.2d at _____; 2002 U.S. Dist. LEXIS 8564.

^[13]   See Rollins v. Wilson County Gov't, 154 F.3d 626, 628 (6th Cir. 1998) (noting in dicta that pregnant plaintiff could have used four weeks of medical leave during which she remained on the payroll and received benefits to extend her employment period beyond twelve months).

Reprinted by permission from Matthew Bender's "Labor and Employment Bulletin."

June 2002

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