Giving an enormous victory to employers, a sharply divided U.S. Supreme Court held that an employee who took 30 weeks of medical leave was not entitled to an additional 12 weeks simply because her employer failed to "designate" her leave as required by regulations under the Family and Medical Leave Act ("FMLA").

In Ragsdale v. Wolverine World Wide, Inc., the Court held that the designation regulation was invalid and improperly expanded the scope of the FMLA beyond Congress’s intent, which was to provide eligible employees with 12 weeks of leave per 12-month period.

The plaintiff had Hodgkin’s Disease and was on a medical leave for seven months. Although the employer maintained her health insurance benefits (even paying her premiums) and held her position open for the first six months of her leave period, it failed to notify her that part of her leave was covered under the FMLA. When the plaintiff requested an additional month of leave, the employer denied the request. She was eventually terminated.

Although the employee received substantially more leave than required by the FMLA, she sued her employer, alleging that the company’s failure to designate her leave as FMLA-qualifying entitled her to an additional 12 weeks of leave. The district court dismissed her lawsuit, and the Court of Appeals for the Eighth Circuit (Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota) affirmed the dismissal. Justice Kennedy wrote the majority opinion for the Supreme Court, affirming the Eighth Circuit. He was joined by Chief Justice Rehnquist, and Justices Stevens, Scalia, and Thomas. Justice O’Connor, joined by Justices Souter, Ginsburg, and Breyer, dissented.

The portion of the regulation at issue, 29 C.F.R. §825.700(a), has long been a thorn in the side of employers. It states that if an employee takes leave "and the employer does not designate the leave as FMLA leave, the leave taken does not count against an employee’s FMLA entitlement." In other words, if the employer fails to provide the employee with written designation that the time off counts against the employee’s FMLA leave entitlement the employee receives a windfall of 12 additional weeks of leave with all of the FMLA’s protections (most notably, job protection), regardless of the amount of leave already received. The Court held, however, that this penalty is unduly harsh and overly technical when applied to employers who have generous leave policies and act in good faith but, because of misunderstanding or oversight, fail to provide the proper designation.

Although the Ragsdale decision is certainly welcome news for employers, a few cautions are in order. First, the Court expressly refused to decide whether the Department of Labor’s designation requirement was invalid in its entirety. Second, and more importantly, the Court stated that additional leave might be an appropriate remedy where an employer’s failure to designate the employee’s time off from work causes some prejudice to the employee.

Our preventive advice remains unchanged after Ragsdale: An employer should continue making a good faith effort to properly designate leave as FMLA-qualifying, consistent with the requirements of the regulations. By continuing to provide employees with notice that time off from work will count against their 12 weeks of FMLA leave, employers can avoid the possibility that a court might find that the failure to designate the time as FMLA leave may have prejudiced an employee’s rights under the statute. The Court’s decision ensures, however, that when mistakes happen and employees are given every benefit conferred by the statute, employees won’t be entitled to an "FMLA windfall."

(Constangy’s Labor & Employment Insights, Fall 2000 edition, contained an article discussing the FMLA designation issue, including the Eighth Circuit decision in Ragsdale, and how to properly designate leave. This article is available on the firm’s website at www.constangy.com. If you would like a free reprint, please contact Robin Shea at 336-721-1001 or rshea@constangy.com.) 

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