FMLA: employer notice and the deemed eligible employee

A couple of recent decisions from the federal trial courts in the Middle and Eastern Districts of Pennsylvania show a gathering consensus that a controversial Family And Medical Leave Act (“FMLA”) regulation is not proper. The gathering is not complete, however, and employers need to continue appropriate practices while we watch the consensus evolve.

The question is whether an employee is “eligible” under the FMLA, 29 U.S.C. §§ 2601-2654?   The statute at 29 U.S.C. § 2611(2)(A)(ii), defines an eligible employee as one employed by employer for at least 12 months and who worked at least 1,250 hours in the 12 months before requesting leave. 

Detailed facts of the cases in review need not detain us: the common scenario is of an employee

meeting the first requirement (12 months employment) but not the second requirement (1,250 hours). In each case, the employee argued the regulation, 29 CFR § 825.110(d), required the employer to notify employee of the employee’s eligibility status and that failure to do so entitled the employee to FMLA rights. This is indeed what the regulation says, giving the employee an apparent unquestioned victory.

But in a clash of appearance against legal substance, the later prevailed. The recent trial court decisions, Erdman v. Nationwide Ins. Co., Civ. A. 1:05-0944, --- F. Supp. 2d ----, 2007 WL 1704648  (June 12, 2007) (not available on the public domain court website), and Boyd v. City of Philadelphia, Civ. A. 06-1524, 2007 WL 925908 (E.D. Pa. March 22, 2007) (praise to the Eastern District website), reveal why. Although the Third Circuit Court of Appeals has not addressed the regulation, three other Circuit Courts have. All have found that the Department of Labor exceeded its authority in creating this regulatory mandate. In particular, the “deemed eligible” regulatory right exceeds the plain statutory requirements. The regulation cannot make ineligible employees into eligible employees all in contravention of the FMLA’s clear terms.

Currently, however, the regulation is still in place. Employers will need to continue to follow ebst practices particularly in places where the impact of the regulation is unaffected by appeal court precedent.

IRS contacting districts about 403(b) plans

According to an IRS news release, a pilot project involving three states has found most school districts are not in compliance with the universal availability requirements of § 403(b) plans. According to the news release, “[t]he law requires that all public school employees normally expected to work 20 hours per week must be offered the opportunity to participate in a § 403(b) plan if the school or district sponsors one.” Substitute teachers, janitors, cafeteria workers and nurses are, according to the IRS, often not included. The noncompliance, according to the news release, appears to be based on a lack of understanding and not any bad intent. 

As a result of the pilot project’s findings, the IRS’s Employee Plans Compliance Unit is sending questionnaires to all public school districts, initially to those in Alaska, Florida, Hawaii, Illinois, Nevada, Pennsylvania, Tennessee and Virginia, and reaching all 50 states by 2008.