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CCH® BENEFITS — 11/30/06

Tenth Circuit Upholds DOL’s Interpretation Of 75-Mile Rule For Liability Under The FMLA

from Spencer’s Benefits Reports: A federal district court properly applied the Department of Labor’s interpretation of the requirement of the Family and Medical Leave Act (FMLA) that an employer employ at least 50 employees in a 75-mile radius in order to be subject to the FMLA. This was the decision of the Tenth Circuit U.S. Court of Appeals in Hackworth v. Progressive Casualty Insurance Company (No. 05-6198).

Kelly Hackworth was employed at Progressive Casualty Insurance Company’s Norman, Okla., facility as an “injury operations manager II.” On March 19, 2004, Ms. Hackworth requested paid leave under the FMLA to care for her mother. In response, Ms. Hackworth’s supervisor told Ms. Hackworth to choose between a demotion to the position of an injury operations manager I or a severance package. The supervisor also gave Ms. Hackworth three days of paid time off work to make her decision. However, at the end of the three-day period, Ms. Hackworth was approved for FMLA leave.

During her FMLA leave, on April 23, 2004, Ms. Hackworth filed a charge of gender discrimination against Progressive with the Equal Employment Opportunity Commission. Then, on May 20, 2004, Ms. Hackworth and Progressive agreed to conduct a mediation, and the parties agreed that Ms. Hackworth’s FMLA leave would be extended through June 22, 2004. On that date, Ms. Hackworth contacted Progressive and informed the company that she intended to return to work as an injury operations manager I. However, Progressive informed Ms. Hackworth not to return to work because that position had been eliminated. Moreover, Progressive did not offer Ms. Hackworth equivalent work or compensation.

Subsequently, Ms. Hackworth filed suit against Progressive in the U.S. District Court for the Western District of Oklahoma, alleging that the company had violated the FMLA by failing to reinstate her to the same or a similar position upon her return from FMLA leave. However, the district court granted summary judgment in favor of Progressive, holding that Ms. Hackworth was not an “eligible employee” under the FMLA because Progressive did not employ at least 50 employees within 75 surface miles of Ms. Hackworth’s worksite, as required by the law. Ms. Hackworth appealed, but the Tenth Circuit affirmed the district court’s ruling.

On appeal, Progressive conceded that it employed a combined total of 47 employees at its Norman worksite, where Ms. Hackworth was employed; and at its Oklahoma City worksite, which is within 75 surface miles of the Norman worksite. Progressive also employed three additional employees at its Lawton, Okla., worksite, but maintained that that worksite is not within 75 surface miles of the Norman worksite. Ms. Hackworth countered that the distance between the Lawton and Norman worksites should be measured “as the crow flies,” i.e., in linear miles, and therefore that 67 miles is the appropriate distance by which to measure the geographic proximity of the two worksites. Thus, Ms. Hackworth argued that Progressive was subject to the FMLA because it covered 50 employees within a 75-mile radius.

Court Cites DOL Regulations

In agreeing with Progressive, the Tenth Circuit initially cited DOL Reg. Sec. 825.111(b), which specifies that the 75-mile distance for FMLA coverage must be measured in surface miles. The court then stated, “Congress, in the FMLA, expressly granted the Secretary of Labor the power to ‘prescribe such regulations as are necessary to carry out’ the FMLA. Pursuant to this grant of power, the DOL promulgated a regulation to clarify the method to use in determining whether two worksites are ‘within 75 miles’ of one another, which provides: ‘The 75-mile distance is measured by surface miles, using surface transportation over public streets, roads, highways, and waterways, by the shortest route from the facility where the eligible employee needing leave is employed.’”

The Tenth Circuit went on to explain, “The standard to be used in analyzing an agency’s construction of a statute it administers is well-known and oft-applied. We must analyze such a construction in a two-step process. First, we look to whether Congress directly spoke to the precise question at issue. In so doing, we look to, among other things, the statutory text, history, and purpose. If congressional intent is clear on the precise question at issue, our analysis ends and the congressional intent is given effect. If congressional intent is ambiguous, we proceed to the second step and look to whether the agency’s answer is based on a permissible construction of the statute.”

Turning to the DOL regulation at issue, the Tenth Circuit concluded, “Congress did not expressly indicate in [the FMLA] how one should measure the geographic proximity of two distinct worksites. Thus, Congress did not express its clear intent with regard to the precise question at issue in the statutory text. Turning to statutory purpose, the FMLA was enacted, in part, ‘to balance the demands of the workplace with the needs of families and to entitle employees to take reasonable leave for medical reasons in a manner that accommodates the legitimate interests of employers.’ In striking this balance, Congress provided an exception to the FMLA’s coverage for small operations. The 50/75 provision was specifically designed to accommodate employer concerns about the difficulties an employer may have in reassigning workers to geographically separate facilities. Given the statutory purpose of the FMLA and the 50/75 provision, it does not appear that Congress clearly intended that the geographic proximity of two worksites is to be measured in linear miles. In fact, the statutory purpose for the 50/75 provision indicates that Congress just as likely intended a surface measurement to be utilized.

“When Congress leaves an implicit statutory gap, we simply ask whether the regulation is based on a permissible construction of the statute. Because invalidating an agency regulation is strong medicine, we will only do so when the regulation is arbitrary, capricious, or manifestly contrary to the statute. Several factors support the reasonableness of [DOL Reg. Sec.] 825.111(b) and lead us to conclude that it is consistent with the FMLA. First, the regulation represents a plausible and reasonable reading of the term ‘within 75 miles.’ Second, the regulation furthers the 50/75 provision’s purpose in that a surface measurement is a reasonable proxy for judging an employer’s ability to relocate an employee from one worksite to another in order to cover for an employee on FMLA leave. The use of surface miles is a fair, reasonably accurate and commonly-understood method of determining whether an employer has a significant pool of substitute workers nearby. Third, the regulation is not crafted in such a way that it unreasonably favors employers over employees. Rather, the regulation rationally furthers the FMLA’s goal ‘to entitle employees to take reasonable leave for medical reasons in a manner that accommodates the legitimate interests of employers.’”

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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