OHIO’S MILITARY FAMILY LEAVE ACT BECOMES EFFECTIVE TODAY

Ohio's new Military Family Leave Act becomes effective today at Ohio Revised Code § 5906.01 et seq. It applies to employers, defined as "a person who employs fifty or more employees" and includes the state, and other political entities, schools, townships, counties, etc. In other words, it covers not just employers already subject to the FMLA, but also all other employers who have 50 employees – regardless of whether those employees are located at a worksite within a 75 mile radius.

Under the Act, employers must provide employees with unpaid " leave up to ten days or eighty hours, whichever is less," once per calendar year when:

• The employee has worked at least 1250 hours in the preceding twelve months and has worked for the employer for at least 12 consecutive months. (Unlike the FMLA, the employee needs to work for 12 consecutive months instead of any twelve months strung together over a number of years).
  
• The employee is the parent, spouse, or person who has had legal custody of a person
  
  • who is a member of the uniformed services and
    
  • who is called to "active duty" in the uniformed services for a period longer than 30 days OR is injured, wounded, or hospitalized while serving on active duty in the uniformed services.
    

    
    

    Active duty means full-time duty in the active federal military services or pursuant to an executive order of the U.S. President, an act of Congress or proclamation of the governor. It does NOT include active duty for training, initial active duty for training, or the period of time for which a person is absent from a position of employment for the purpose of an examination to determine the fitness of the person to perform any duty unless such period is contemporaneous with an active duty period.
    

    
    

• The employee gives the required advance notice:
  
  • When the employee is taking leave because of a call to active duty, the employee must give at least 14 days advance notice to the employer that the employee intends to take leave under this Act;
    
  • When the employee is taking leave because of an injury, wound or hospitalization, the employee must give the employer at least 2 days advance notice;
    
  • No notice must be given to an employer if the employee receives notice from a representative of the uniformed service that the injury, would, or hospitalization is of a critical or life-threatening nature.
    
• The leave takes place no more than two weeks prior to or one week after the deployment date of the employee's spouse, child or ward or former ward. (I would have to assume that leave for an injured family member is not subject to this requirement).
  
• The employee does not have any other leave available to use (other than sick or disability leave).
  

  
  

Employers may require the employee requesting leave to provide certification from the appropriate military authority to verify that the employee satisfies the above criteria.

Covered employers are required to continue providing benefits to the employee during the leave of absence, but the employee shall be responsible for the same proportion of the cost of the benefits as the employee regularly pays during non-leave periods. Employers are also required to restore the employee to the position the employee held before taking that leave with equivalent seniority, benefits, pay and other terms and conditions of employment. Employers are also prohibited from discharging, fining, suspending, expelling, disciplining or discriminating against an employee regarding any term or condition of employment because of the employee's actual or potential exercise (or support for another employee's exercise) of any right under this Act. Nonetheless, employers are not otherwise prevented from taking employment action that is independent of the employee's exercise of rights under this Act.

Employees may not be required to waive their rights under this Act.

No collective bargaining agreements or benefit plans may be executed after today which limit or require an employee to waive his or her rights under this Act. However, employer must still comply with any collective bargaining agreement or benefit plan which provides leave benefits similar to those established by this Act which are greater than the leave rights provided by this Act. Indeed, an employer may provide better leave benefits than are required by this Act.

Finally, employers may be subject to a civil action for injunctive "or any other" relief that a court finds necessary to secure an employee's rights under this Act. I hear a public policy tort action coming . . . . . .

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Supreme Court: When the Contract Was Formed is Disputable and Not Arbitrable Even If It Seems Inconsistent

There's nothing like inconsistency to keep lawyers employed. On Friday, the Supreme Court issued yet another arbitration decision in which it reversed the Ninth Circuit (which uncharacteristically found the dispute to be subject to the arbitration clause). Granite Rock Co. v. International Brotherhood of Teamsters, No. 08-1214 (6/24/10). However, despite what the Court harped on last week in Rent-a-Center (that objections to the contract as a whole cannot prevent arbitration), in this case, the Court found that a dispute involving when the contract was formed had to be decided by the trial court instead of the arbitrator because the dispute was not arbitrable under the union's theory, but was arbitrable under the employer's. In other words, disputes over the formation of the arbitration clause (and the contract as a whole) may be decided by the trial court instead of the arbitrator. Moreover, the scope the arbitration clause did not include disputes over whether a contract was even formed. Finally, the Court rejected the employer's attempt to create a federal cause of action for tortious interference with contract under § 301.

According to the Court's opinion, the employer's CBA with the local union expired on April 30 and, following an impasse in negotiations, the union went on strike in June until July 2 when the members ratified a new CBA. The new CBA contained arbitration and no-strike provisions and required the employees to return to work on July 5. Prior to the ratification vote, the local's business manager requested the employer to consider a return-to-work agreement which would hold harmless any union member who was responsible for any damages incurred during the strike and picketing. The employer refused. The international union had advised the local union during negotiations and the strike and had objected to the members' returning to work without a back to work agreement protecting the members and the local union from damages caused during the strike. Thus, the international union convinced the local union to continue the strike beyond July 5, expanded the strike beyond the single facility at issue and informed the employer that it would permit the employees to return to work only after the employer agreed to the requested return-to-work agreement. On July 9, the employer filed a lawsuit in federal court under § 301 of the LMRA to enjoin the strike (as a violation of the parties' CBA) and for strike-related damages. In its defense, the union contended that the CBA had never been ratified (and, thus, could not be breached) and the trial court refused to enjoin the strike. Subsequently, 12 union members testified to the July 2 ratification vote and the employer moved for a new trial. The union then held another ratification vote on August 22 (when the members again voted to approve the new CBA) and announced the vote and the cessation of the strike on September 12 in order to render the employer's motion moot as the trial court was preparing to hear it. Although the employer's request for the injunction was now moot, the court agreed to hold a new trial on the employer's motion for strike damages. The unions then demanded arbitration of the dispute and moved the court for an order compelling arbitration. The employer then amended its complaint to add a claim against the international union for tortiously interfering with its contract by convincing the local union to breach the new CBA by extending the strike beyond July 5.

The trial court refused to recognize a new federal claim under § 301 for tortious interference and dismissed that claim. It also refused the unions' request to refer the question about when the CBA was ratified to the arbitrator. Instead, a jury concluded that the CBA was ratified on July 2 (instead of August 22) and the breach of contract claim was sent to the arbitrator to determine damages. On appeal, the Ninth Circuit affirmed dismissal of the tortious interference claim, but held that the ratification dispute should have been resolved in arbitration because any ambiguity in the scope of the arbitration clause was to be resolved in favor of arbitration and because the employer conceded the applicability of the arbitration clause by filing suit for breach of the arbitration clause in the parties' contract. The Supreme Court reversed.

The primary dispute in this case centered on whether the arbitrator or the trial court should have determined the date when the CBA was ultimately ratified: Was it July 2 or August 22? The Court held that the trial court was correct to determine the date when the CBA was ratified instead of permitting an arbitrator to do so. "[W]here, as here, the date on which an agreement was ratified determines the date the agreement was formed, and thus determines whether the agreement's provisions were enforceable during the period relevant to the parties' dispute."

The Court made little attempt to harmonize its primary analysis with the Prima Paint line of cases (as typified by last week's Rent-a-Center decision). As a general rule, the trial court determines the arbitrability of a dispute, not the arbitrator (unless, of course, the parties' clearly and unmistakably delegate the decision to the arbitrator). Once a dispute is found to be within the scope of an arbitration clause by a court, then it is referred to arbitration. To succeed in avoiding arbitration, the opposing party must challenge the validity and/or scope of the arbitration clause itself. Just last week, the Court reaffirmed that when a party raises a defense that goes to the validity of the contract as a whole, but not to the validity of only the arbitration clause, then the arbitrator decides the dispute instead of the court. That being said, the Court still rejected the Ninth Circuit's application of these rules in this case:

The second principle the Court of Appeals invoked is that this presumption of arbitrability applies even to disputes about the enforceability of the entire contract containing the arbitration clause, because at least in cases governed by the Federal Arbitration Act (FAA), 9 U. S. C. §1 et seq.,
courts must treat the arbitration clause as severable from the contract in which it appears, and thus apply the clause to all disputes within its scope "'[u]nless the [validity] challenge is to the arbitration clause itself'" or the party "disputes the formation of [the] contract." (emphasis added).

According to the Court: "These principles would neatly dispose of this case if the formation dispute here were typical. But it is not." This was supposedly because the plaintiff both conceded the formation and validity of the arbitration clause. Moreover, the Court concluded that the unions,

like the Court of Appeals, over-reads our precedents. The language and holdings on which Local and the Court of Appeals rely cannot be divorced from the first principle that underscores all of our arbitration decisions: Arbitration is strictly "a matter of consent . . . ., our precedents hold that courts should order arbitration of a dispute only where the court is satisfied that neither the formation of the parties' arbitration agreement nor (absent a valid provision specifically committing such disputes to an arbitrator) its enforceability or applicability to the dispute is in issue. Ibid. Where a party contests either or both matters, "the court" must resolve the disagreement.

To start, the Court said it was the trial court's duty to determine whether the particular dispute at issue was subject to the parties' arbitration clause. Interestingly, it states that "[t]o satisfy itself that such agreement exists, the court must resolve any issue that calls into question the formation or applicability of the specific arbitration clause that a party seeks to have the court enforce . . . . these issues typically concern the scope of the arbitration clause and its enforceability. In addition, these issues always include whether the clause was agreed to, and may include when that agreement was formed." (emphasis added).

The Court rejected any argument that the LMRA's rules concerning the arbitration of labor disputes differs materially from the FAA's rules concerning arbitration of commercial and other disputes. "We, like the Court of Appeals, discuss precedents applying the FAA because they employ the same rules of arbitrability that govern labor cases. "[E]ven in LMRA cases, "courts" must construe arbitration clauses because "a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit."

Our cases invoking the federal "policy favoring arbitration" of commercial and labor disputes apply the same framework. They recognize that, except where "the parties clearly and unmistakably provide otherwise," . . . , it is "the court's duty to interpret the agreement and to determine whether the parties intended to arbitrate grievances concerning" a particular matter, id., at 651. They then discharge this duty by: (1) applying the presumption of arbitrability only where a validly formed and enforceable arbitration agreement is ambiguous about whether it covers the dispute at hand; and (2) adhering to the presumption and ordering arbitration only where the presumption is not rebutted.

Interestingly, this case is not materially different from any other case where one party disputes that a contract was ever formed – and by extension – an arbitration clause. One could argue that this decision will apply with equal force to future disputes under the FAA. Nonetheless, the Court concedes that not every case will require the same conclusion:

In reaching this conclusion [about the arbitrability of the formation date dispute] we need not, and do not, decide whether every dispute over a CBA's ratification date would require judicial resolution. We recognize that ratification disputes in labor cases may often qualify as "formation disputes" for contract law purposes because contract law defines formation as acceptance of an offer on specified terms, and in many labor cases ratification of a CBA is necessary to satisfy this formation requirement. See App. 349−351. But it is not the mere labeling of a dispute for contract law purposes that determines whether an issue is arbitrable. The test for arbitrability remains whether the parties consented to arbitrate the dispute in question.

In its essence, the Court refused to let the unions speak out of both sides of their mouth and be too cute by half: The unions were contending that they could not be liable for breach of the no-strike clause because the CBA was not ratified until August 22, but the unions were still seeking to compel the dispute to arbitration even though the arbitration clause likewise would not have been ratified (or enforceable) until August 22. On the other hand, if the CBA were ratified on July 2, then the unions breached the no-strike clause and the dispute would be subject to arbitration. It was this central question-- that there was no valid arbitration clause unless the CBA were ratified on July 2 -- that prompted the Court to rule in favor of the trial court's jurisdiction. When the unions attempted to fix their "cute" argument by pointing out that the CBA became effective on May 1 after it was ratified (regardless of the date), the majority rejected the argument on the grounds that it had not been raised below or to contest certiorari.

The Court's secondary analysis makes more sense: a dispute about the ratification dates did not "arise under" the CBA or fit neatly within the CBA's arbitration clause. "Section 20 of the CBA provides in relevant part that '[a]ll disputes arising under this agreement shall be resolved in accordance with the [Grievance] procedure,' which includes arbitration."

First, we do not think the question whether the CBA was validly ratified on July 2, 2004—a question that concerns the CBA's very existence—can fairly be said to "arise under" the CBA. Second, even if the "arising under" language could in isolation be construed to cover this dispute, Section 20's remaining provisions all but foreclose such a reading by describing that section's arbitration requirement as applicable to labor disagreements that are addressed in the CBA and are subject to its requirement of mandatory mediation.

The Court of Appeals erred in examining only whether the parties' dispute about the no-strike clause arose under the CBA instead of examining whether the ratification date dispute "arose under" the CBA:

The issue is whether the formation-date defense that Local raised in response to [the employer]'s no-strike suit can be characterized as "arising under" the CBA. It cannot for the reasons we have explained, namely, the CBA provision requiring arbitration of disputes "arising under" the CBA is not fairly read to include a dispute about when the CBA came into existence.

Finally, the unions argued that the employer waived its objection to arbitration when it filed suit seeking to enforce the CBA which requires the dispute to be compelled to arbitration. Although I generally do not like it when parties get too cute, this argument is at least appealing on its face. However, the Court still neatly disposed of it because it hadn't forgotten that the unions were being "too cute:"

We do not agree that by seeking an injunction against the strike so the parties could arbitrate the labor grievance that gave rise to it, [the employer] also consented to arbitrate the ratification (formation) date dispute we address above. . . . [The employer's] decision to sue for compliance with the CBA's grievance procedures on strike-related matters does not establish an agreement, "implicit" or otherwise, to arbitrate an issue (the CBA's formation date) that [the employer] did not raise, and that [the employer] has always (and rightly, . . . ) characterized as beyond the scope of the CBA's arbitration clause. The mere fact that Local raised the formation date dispute as a defense to [the employer's] suit does not make that dispute attributable to [the employer] in the waiver or estoppel sense the Court of Appeals suggested, see 546 F. 3d, at 1178, much less establish that [the employer] agreed to arbitrate it by suing to enforce the CBA as to other matters.

Justices Sotomayor and Stevens dissented from the arbitrability discussion on the grounds that when the CBA was finally executed in December, it was explicitly retroactive to May 1. (This argument had been rejected by the majority on the grounds it had not been raised before the Ninth Circuit or when challenging certiorari). It also seems a little weird to me that it would matter since the same language would typically have been present in the CBA when it was ratified – either in July or August. Any "constructive" effective date would not seem to cover the unions' defense to the breach of contract claim being asserted by the employer when that defense concerned the actual effective dates based on the actual ratification date.

The secondary holding of the Court was to reject the employer's attempt to bring a tortious interference claim under § 301. This argument was unanimously rejected by the Court. Section 301 grants the federal courts jurisdiction over difficult-to-prove breach of contract claims between employers and unions and pre-empts many (even most) state law claims. The employer sought to expand federal jurisdiction so that it could reach the international union's immoral conduct in inducing the local union to breach the CBA when it could not sue the international union for full relief under § 301 because it was not a party to the CBA. However, all of the courts of appeals have refused to expand § 301 to encompass federal tort rights. The Court was also unconvinced that alternative remedies were unavailable.

In reaching this conclusion, we emphasize that the question before us is a narrow one. It is not whether the conduct [the employer] challenges is remediable, but whether we should augment the claims already available to [The employer] by creating a new federal common-law cause of action under §301(a). That we decline to do so does not mean that we approve of IBT's alleged actions. [The employer] describes a course of conduct that does indeed seem to strike at the heart of the collective bargaining process federal labor laws were designed to protect. As the record in this case demonstrates, however, a new federal tort claim is not the only possible remedy for this conduct. [The employer]'s allegations have prompted favorable judgments not only from a federal jury, but also from the NLRB. In proceedings that predated those in which the District Court entered judgment for [the employer] on the CBA's formation date,¹⁷ the NLRB concluded that a "complete agreement" was reached on July 2, and that Local and the [ international union] violated federal labor laws by attempting to delay the CBA's ratification pending execution of a separate agreement favorable to [the international union].

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

DOL: It Takes a Village to Raise a Child, so the Village Gets FMLA Leave

Yesterday, the Department of Labor issued its third Administrative Interpretation since jettisoning the decades-long practice of issuing Administrator Opinion Letters based on specific facts. This time, the Interpretation concerns the FMLA instead of the FLSA. In it, the DOL reminds the public that the FMLA is available not only to parents due to the birth, adoption or serious medical condition of their own biological, adopted , step, or foster children (as well as their legal wards), but also to individuals who stand "in loco parentis" to the child. Then, the DOL informs the public that "in loco parentis" can include an unlimited number of unmarried heterosexual and same sex roommates, significant others, partners and other relatives of the biological parents. Administrator's Interpretation No. 2010-3. There has already been a significant amount of litigation of whether grandparents can take FMLA leave to care for grandchildren within their care (when the FMLA does not provide grandparent leave). The DOL states that additional guidance was needed "regarding whether employees who do not have a biological or legal relationship with a child may take FMLA leave for birth, bonding, and to care for the child." However, the determination remains dependent upon all the facts and circumstances and the new Administrative Interpretation does little to clarify the situation and could conceivably cover family babysitters under the loose standard announced yesterday. Yet, while the specific recognition that the FMLA can extend to unmarried partners who care for children has generated significant media attention, the real legal controversy involved with the DOL's new interpretation is that it disregards the regulatory standard for "in loco parentis" in order to expand who is covered by the FMLA.

"Black's Law Dictionary defines the term in loco parentis as "in the place of a parent." The DOL recognizes that "[w]hether an employee stands in loco parentis to a child is a fact issue dependent on multiple factors" which can include "the age of the child; the degree to which the child is dependent on the person claiming to be standing in loco parentis; the amount of support, if any, provided; and the extent to which duties commonly associated with parenthood are exercised." The FMLA regulations provide that "in loco parentis" means someone "with day-to-day responsibilities to care for and financially support a child, or, in the case of an employee, who had such responsibility for the employee when the employee was a child. A biological or legal relationship is not necessary." 29 C.F.R. § 825.122(c)(3) (emphasis added). However, in yesterday's Interpretation, the DOL chose to deliberately ignore the regulation's minimal standard:

It is the Administrator's interpretation that the regulations do not require an employee who intends to assume the responsibilities of a parent to establish that he or she provides both day-to-day care and financial support in order to be found to stand in loco parentis to a child. For example, where an employee provides day-to-day care for his or her unmarried partner's child (with whom there is no legal or biological relationship) but does not financially support the child, the employee could be considered to stand in loco parentis to the child and therefore be entitled to FMLA leave to care for the child if the child had a serious health condition. The same principles apply to leave for the birth of a child and to bond with a child within the first 12 months following birth or placement. For instance, an employee who will share equally in the raising of a child with the child's biological parent would be entitled to leave for the child's birth because he or she will stand in loco parentis to the child. Similarly, an employee who will share equally in the raising of an adopted child with a same sex partner, but who does not have a legal relationship with the child, would be entitled to leave to bond with the child following placement, or to care for the child if the child had a serious health condition, because the employee stands in loco parentis to the child. (emphasis added).

In other words, even though the FMLA regulations provide that an employee cannot be "in loco parentis" unless they have daily responsibilities to both care for AND financially support the child, the DOL believes that the a person is sufficiently "in loco parentis" as long as they provide daily care for the child even though they are NOT also financially supportive.

Moreover, the DOL finds that there is no restriction on how many individuals could qualify for "in loco parentis" with respect to a single child:

It should be noted that the fact that a child has a biological parent in the home, or has both a mother and a father, does not prevent a finding that the child is the "son or daughter" of an employee who lacks a biological or legal relationship with the child for purposes of taking FMLA leave. Neither the statute nor the regulations restrict the number of parents a child may have under the FMLA. For example, where a child's biological parents divorce, and each parent remarries, the child will be the "son or daughter" of both the biological parents and the stepparents and all four adults would have equal rights to take FMLA leave to care for the child. (emphasis added).

The DOL seems to confuse the fact that the regulation specifically covers step-parents (of which there can only be a maximum of four at any given time) with the concept that there is no numerical limitation under the new DOL standard for how many "in loco parentis" a child could now have. This is particularly troubling when a person's "in loco parentis" status can change weekly and requires little proof:

Where an employer has questions about whether an employee's relationship to a child is covered under FMLA, the employer may require the employee to provide reasonable documentation or statement of the family relationship. A simple statement asserting that the requisite family relationship exists is all that is needed in situations such as in loco parentis where there is no legal or biological relationship. . . .

While the DOL indicates that the "in loco parentis" should live with the child, that requirement is not made explicit – and thus – could include babysitters who provide daily care (albeit not babysitters who only periodically take care of the child while the parents are travelling). The DOL is specifically silent of the status of grandparents and other relatives where an extended family lives together and all family members share child-raising responsibilities. Are all grandparents, aunts, uncles, cousins, girlfriends, boyfriends, etc. included in the "in loco parentis" when they are all sharing in the daily care of the children?

Examples of situations in which an in loco parentis relationship may be found include where a grandparent takes in a grandchild and assumes ongoing responsibility for raising the child because the parents are incapable of providing care, or where an aunt assumes responsibility for raising a child after the death of the child's parents. Such situations may, or may not, ultimately lead to a legal relationship with the child (adoption or legal ward), but no such relationship is required to find in loco parentis status. In contrast, an employee who cares for a child while the child's parents are on vacation would not be considered to be in loco parentis to the child.

While the DOL rushed to expand FMLA coverage to political allies, it unnecessarily jettisoned controlling regulatory language in issuing the Interpretation by expanding FMLA coverage to any regular caregiver with only minimal responsibilities for the child. A more focused interpretation of the existing regulation could have achieved the same political result without violence to the minimal regulatory requirements.

The cynical readers among you may wonder why the DOL thinks that it can overrule a regulation passed through the formal comment and rulemaking process under the Administrative Procedures Act – and contained in the Code of Federal Regulations – with a mere Administrative Interpretation. The Interpretation seems oblivious to Christensen v. Harris County, 529 U.S. 576 (2000) where the Supreme Court found that a similar administrative interpretation by the DOL was not entitled to judicial deference because there had been no formal prerequisites to its issuance.

In any event, the DOL contends that its Administrative Interpretations are entitled to the same judicial deference as Administrative Opinion Letters rulings (issued for decades) and may be the basis of an employer’s good faith defense under 29 U.S.C. § 259 to an allegation that it has violated the FLSA. The FLSA comes into play because employers may deduct periods of FMLA leave which are less than a full day as long as the employee qualifies for FMLA leave. If the employee does not qualify for FMLA leave, the employer must pay exempt/salaried employees for the full day even if the employee took some time off for covered purposes. If, for instance, an exempt employee is granted “in loco parentis” leave under this Interpretation, but then later challenges the deductions from his or her paycheck as violating the FLSA – and maybe even the employee’s exempt status – then the employer could avoid liquidated damages, longer limitations period and liability altogether by citing reliance on this Interpretation.

Of course, the more salient issue for employers is how this new Interpretation will be abused by chronic malingerers who have found ingenious ways to avoid ever working overtime or on weekends or on holidays by creative manipulation of the FMLA. (No conscientious or reasonable employer has any particular interest in denying FMLA leave to a genuine in loco parentis employee who needs it; it is only a genuine need to control FMLA abuse which prompts dismay at Interpretations with no enforceable standards to control their abuse). In my deep, dark past, I had an FMLA question arise about what an employer was to do when two potential fathers sought time off for the birth of the same child. Both thought that they were the biological father and one was the current boyfriend of the mother, while the other was not. I have even had situations arise where the biological parents both lived with different significant others as well as their parents – creating a situation where there were the possibility of two parents and six other people simultaneously claiming in loco parentis. If the child has asthma or even the flu, this extended family could force their employers to grant them time off work under this Interpretation for every major family celebration and holiday as long as they could claim that the child was sick (intermittently, of course) and required their care. This could be true even if the employer had heard their employee state any number of times that s/he disliked the child, refused to spend money on the child or wanted to send the child to boarding school for the indefinite future.

Thus, conservative and weary employers may elect to rely instead on the clear language of the FMLA regulation and put it on the plaintiff to convince a judge to give more weight to the Interpretation than the regulation despite the Supreme Court’s instruction in Christensen. While Interpretations may be persuasive authority and create the basis of a good faith defense for certain employers, Interpretations still do not carry the force of law like statutes, regulations passed under the APA or court decisions as far as the Christensen Supreme Court is concerned:

Here, however, we confront an interpretation contained in an opinion letter, not one arrived at after, for example, a formal adjudication or notice-and-comment rulemaking. Interpretations such as those in opinion letters–like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law–do not warrant Chevron-style deference. See, e.g., Reno v. Koray, 515 U.S. 50, 61 (1995) (internal agency guideline, which is not “subject to the rigors of the Administrative Procedur[e] Act, including public notice and comment,” entitled only to “some deference” (internal quotation marks omitted)); EEOC v. Arabian American Oil Co., 499 U.S. 244, 256—258 (1991) (interpretative guidelines do not receive Chevron deference); Martin v. Occupational Safety and Health Review Comm’n, 499 U.S. 144, 157 (1991) (interpretative rules and enforcement guidelines are “not entitled to the same deference as norms that derive from the exercise of the Secretary’s delegated lawmaking powers”). See generally 1 K. Davis & R. Pierce, Administrative Law Treatise §3.5 (3d ed. 1994). Instead, interpretations contained in formats such as opinion letters are “entitled to respect” under our decision in Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944), but only to the extent that those interpretations have the “power to persuade,” ibid. See
Arabian American Oil Co., supra, at 256—258. As explained above, we find unpersuasive the agency’s interpretation of the statute at issue in this case.
. . . .
Seeking to overcome the regulation’s obvious meaning, the United States asserts that the agency’s opinion letter interpreting the regulation should be given deference under our decision in Auer v. Robbins, 519 U.S. 452 (1997). In Auer, we held that an agency’s interpretation of its own regulation is entitled to deference. Id., at 461. See also Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945). But Auer deference is warranted only when the language of the regulation is ambiguous. The regulation in this case, however, is not ambiguous–it is plainly permissive. To defer to the agency’s position would be to permit the agency, under the guise of interpreting a regulation, to create de facto a new regulation. Because the regulation is not ambiguous on the issue of compelled compensatory time, Auer deference is unwarranted.

Thus, the even more cynical readers may ask if the Obama Administration were sincere about wanting to make this Intepretation stick and survive judicial challenge, why not open the rule to revision through the formal (albeit expensive and lengthy) APA rulemaking process? Couldn’t this new Interpretation be changed as easily as it was implemented if there is not a formal regulation adopted? Is it not more likely that a court will refuse to defer to the Interpretation in that it contradicts the clear requirements of the regulation without any explanation of an ambiguity or need for clarification?

The DOL indicates that this Interpretation addresses only FMLA leave and not military caregiver or military exigency leave which are governed by a different regulatory standard.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Supreme Court: Ohio Law Does Not Require Mandatory Maternity Leave

This morning, the Ohio Supreme Court (in a 5-1 decision) held in a highly anticipated decision that the Ohio Revised Code does not require mandatory maternity leave. In particular, the Court held that an employment policy which imposes a uniform minimum-length-of-service requirement for leave eligibility with no exception for maternity leave cannot constitute direct evidence of sex discrimination under R.C. Chapter 4112. Thus, the fact that an employer relied upon a uniformly applied policy denying any leave of absence to any employee with less than one year of seniority could not constitute direct evidence of sex discrimination under Ohio law when that policy was used to deny maternity leave to an employee who gave birth eight months after being hired. McFee v. Nursing Care Mgt. of Am., Inc., Slip Opinion No. 2010-Ohio-2744. If the Court had held otherwise, the possibility existed that employers would refuse to hire pregnant or other women in order to avoid providing them with maternity leave.

According to the Court's opinion, a woman applied for employment in a nursing home in Pataskala and received an employee handbook upon being hired. The Handbook provided that employees would not be eligible for a leave of absence for any purpose until they had worked for at least one year. Eight months later, the woman's doctor provided a note saying that she was physically unable to work until after giving birth. Shortly thereafter, she gave birth and she was fired three days later for taking a leave of absence before she was eligible under the employer's policy. She filed a Charge of Discrimination with the Ohio Civil Rights Commission, where an investigator found probable cause of discrimination. An Administrative Law Judge disagreed and recommended dismissal of the complaint, but the OCRC disagreed and imposed liability. The employer appealed to the Licking County Common Pleas Court, which reversed the OCRC, which appealed. The Court of Appeals reversed again, finding that Ohio law required employers to provide all woman with a reasonable amount of maternity leave and that the employer's policy constituted direct evidence of discrimination (which relieved the woman of having to produce other evidence of sex or pregnancy discrimination). The employer again appealed and the Supreme Court reversed.

Ohio Revised Code § 4112.02(A) precludes employment discrimination on account of sex. Revised Code § 4112.01(B) provides in relevant part that:

the terms "because of sex" and "on the basis of sex" include, but are not limited to, because of or on the basis of pregnancy, any illness arising out of and occurring during the course of a pregnancy, childbirth, or related medical conditions. Women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work, and nothing in division (B) of section 4111.17 of the Revised Code shall be interpreted to permit otherwise. This division shall not be construed to require an employer to pay for health insurance benefits for abortion, except where the life of the mother would be endangered if the fetus were carried to term or except where medical complications have arisen from the abortion, provided that nothing in this division precludes an employer from providing abortion benefits or otherwise affects bargaining agreements in regard to abortion.

First, the Court summarily rejected the appellate court's contention that the employer's policy could constitute "direct" evidence. Therefore, the employer was entitled to the McDonnell-Douglas burden shifting requirement of proving discriminatory intent and the opportunity to articulate a legitimate and non-discriminatory basis for its action.

Second, the Court found that it was not always illegal to discharge a pregnant employee. The statute simply required that pregnant employees not be fired without just cause or treated differently than other employees. "Thus, the statute does not provide greater protections for pregnant employees than nonpregnant employees." The Ohio statute mirrors the federal statute, which has generally been applied to not require preferential treatment for pregnant employees. In this case, the employer's policy was pregnancy-blind: it applied equally to all employees. "Thus, a pregnant employee may be terminated for unauthorized absence just as any other employee who has not yet met the minimum-length-of-service requirement but takes leave based upon a similar inability to work. Unless there is other evidence of discrimination or pretext, R.C. Chapter 4112 does not prohibit termination of an employee affected by pregnancy under these circumstances."

The Court rejected the OCRC's argument that the prohibition on discrimination "because of pregnancy" was separate from the "treated the same" requirement and required employers to provide maternity leave so that pregnant employees could not jobs to the same extent as non-pregnant employees because the United States Supreme Court had already earlier rejected that argument when interpreting the federal statute.

It would be contrary to this interpretation of the federal statute to hold that the first and second sentences of the state statute, which mirrors the federal statute, serve different purposes. Although the scope of the second sentence is narrower than that of the first sentence, both serve the same goal—to ensure that employees who are pregnant are not discriminated against on the basis of pregnancy. To hold otherwise would be to require that employers treat pregnant employees more favorably than other employees. The statutes do not support such a result.

The Court also refused to characterize the woman's termination as "because of pregnancy" when it was really "because of an unauthorized leave of absence." Only if she satisfied the McDonnell-Douglas burden of proof (or introduced other direct evidence of discrimination) would she be able to show that her termination was "because of pregnancy."

Finally, the Court chose to interpret the OCRC's Administrative Rule 4112-5-05(G) as consistent with the Court's interpretation of the Ohio Revised Code.

Ohio Adm. Code 4112-5-05(G)(2), the administrative regulation at issue, provides: "Where termination of employment of an employee who is temporarily disabled due to pregnancy or a related medical condition is caused by an employment policy under which insufficient or no maternity leave is available, such termination shall constitute unlawful sex discrimination."

Still later, however, OAC 4112-5-05(G)(5) provides:

Women shall not be penalized in their conditions of employment because they require time away from work on account of childbearing. When, under the employer's leave policy the female employee would qualify for leave, then childbearing must be considered by the employer to be a justification for leave of absence for female employees for a reasonable period of time. For example, if the female meets the equally applied minimum length of service requirements for leave time, she must be granted a reasonable leave on account of childbearing. Conditions applicable to her leave (other than its length) and to her return to employment shall be in accordance with the employer's leave policy." (emphasis added)

In light of these two apparently conflicting rules by the OCRC, the Court found the first rule to be ambiguous. If the Rule requires mandatory maternity leave even when similar leaves were not offered to other employees, then the Rule would require preferential treatment for pregnant employees in violation of the Ohio statute and, thus, would be unconstitutional. However, the Court found the Rule to be vague and ambiguous on this point and, thus, chose to harmonize it with the second part of the Rule and interpret it as being constituent with the Ohio statute. Without such an interpretation, the second part of the Rule would be rendered meaningless. According to the Court, the OCRC rule provides in effect that:

Ohio Adm. Code 4112-5-05(G)(2) must mean that when an employee is otherwise eligible for leave, the employer cannot lawfully terminate that employee for violating a policy that provides no leave or insufficient leave for temporary disability due to pregnancy or a related condition.

Because the woman offered no other proof of discrimination on account of sex or pregnancy, the Court affirmed the dismissal of her case by the trial court.

Justice Pfeifer dissented.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Divided Supreme Court Upholds Arbitrator’s Contractual Authority to Determine Arbitrability of Arbitration Agreement

This morning, a divided Supreme Court again reversed the Ninth Circuit Court of Appeals in California on the enforceability of an arbitration agreement in an employment discrimination dispute. Rent-A-Center, West, Inc. v. Jackson, No. 09-497 (6/21/10). This arbitration dispute centered on whether the court or the arbitrator should determine the arbitrability of the dispute when the arbitration agreement itself provided that an arbitrator should resolve any such controversy over arbitrability. In particular, as Justice Scalia put it, whether under the Federal Arbitration Act, "a district court may decide a claim that an arbitration agreement is unconscionable, where the agreement explicitly assigns that decision to the arbitrator." The Court held that the question of arbitrability is for the arbitrator to decide when the challenge goes to the validity of the entire agreement as a whole or when the agreement clearly and unmistakably empowers the arbitrator to decide arbitrability, but is for the trial court to decide when the challenge goes only to the enforceability of the arbitration clause and there is no clear and unmistakable waiver of the trial court jurisdiction.

According to the Court's opinion, the employer moved to compel arbitration after the plaintiff former employee filed a § 1981 employment discrimination suit in federal court based on the arbitration which the plaintiff had signed. The Agreement provided for arbitration of all "past, present or future" disputes arising out of [the plaintiff's] employment . . . , including claims" for employment discrimination. The arbitration clause also provided that "[t]he Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable." The plaintiff attempted to avoid the arbitration agreement by arguing that it was unconscionable (in that the parties were required to split the arbitration fees and limits were placed on discovery), but the employer asserted that such a challenge was for the arbitrator to decide. The trial court agreed with the employer, but noted that he did not think the agreement was substantively unconscionable merely because the parties were required to split the arbitration fees. A divided Ninth Circuit Court concluded that the trial court was required to determine unconscionability, but agreed that the clause was not unconscionable merely because of the fee splitting provision. A divided Supreme Court reversed.

The FAA provides that arbitration clauses must be enforced just like any other contracts. Nonetheless, unless the parties clearly and unmistakenly provided otherwise, the question of whether the parties agreed to arbitrate is for the court and not the arbitrator. "The validity of a written agreement to arbitrate (whether it is legally binding, as opposed to whether it was in fact agreed to—including, of course, whether it was void for unconscionability) is governed by §2'sprovision that it shall be valid "save upon such grounds as exist at law or equity for the revocation of any contract." Justice Scalia found it irrelevant that prior cases examining the arbitrability question involved agreements where the substantive provisions concerned subjects other than arbitration (such as check-cashing, consulting, talent management, etc), unlike this case where the "contract as a whole" involved only arbitration of any future disputes.

There are two types of validity challenges under §2: "One type challenges specifically the validity of the agreement to arbitrate," and "[t]he other challenges the contract as a whole, either on a ground that directly affects the entire agreement (e.g., the agreement was fraudulently induced), or on the ground that the illegality of one of the contract's provisions renders the whole contract invalid." Buckeye Check Cashing, Inc. v. Cardegna, 546 U. S. 440, 444 (2006). In a line of cases neither party has asked us to overrule, we held that only the first type of challenge is relevant to a court's determination whether the arbitration agreement at issue is enforceable. See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U. S. 395, 403–404 (1967) . . . That is because §2 states that a "written provision" "to settle by arbitration a controversy" is "valid, irrevocable, and enforceable" without mention of the validity of the contract in which it is contained. Thus, a party's challenge to another provision of the contract, or to the contract as a whole, does not prevent a court from enforcing a specific agreement to arbitrate. "[A]s a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract." . . . . But that agreements to arbitrate are severable does not mean that they are unassailable. If a party challenges the validity under §2 of the precise agreement to arbitrate at issue, the federal court must consider the challenge before ordering compliance with that agreement under §4 [employer parties to seek enforcement of arbitration clauses in federal court].

Nonetheless, Justice Scalia found it irrelevant that prior cases examining the arbitrability question involved agreements where the substantive provisions concerned subjects other than arbitration (such as check-cashing, consulting, talent management, etc) and merely also contained an arbitration clause, unlike this case where the "contract as a whole" involved only the arbitration of any future disputes. Instead, he found that the plaintiff could only prevail in obtaining the trial court's examination of the arbitrability of the dispute if he had challenged only the delegation clause – which empowered the arbitrator to decide arbitrability – instead of attacking the unconscionability of the arbitration contract as a whole:

It may be that had [the plaintiff] challenged the delegation provision by arguing that these common procedures as applied to the delegation provision rendered that provision unconscionable, the challenge should have been considered by the court. To make such a claim based on the discovery procedures, [the plaintiff] would have had to argue that the limitation upon the number of depositions causes the arbitration of his claim that the Agreement is unenforceable to be unconscionable. That would be, of course, a much more difficult argument to sustain than the argument that the same limitation renders arbitration of his fact bound employment-discrimination claim unconscionable. Likewise, the unfairness of the fee-splitting arrangement may be more difficult to establish for the arbitration of enforceability than for arbitration of more complex and fact-related aspects of the alleged employment discrimination. [Plaintiff], however, did not make any arguments specific to the delegation provision; he argued that the fee-sharing and discovery procedures rendered the entire Agreement invalid.

The Court refused to address an additional argument made by the Plaintiff because he failed to raise it below: that the quid pro quo for the delegation provision failed because of the Supreme Court's decision in Hall Street Associates LLC v. Mattel, Inc. entered after he signed the agreement. He claimed that he had agreed to the clause delegating arbitrability to the arbitrator in exchange for the employer's agreement that the arbitration decision would be subject to substantive judicial review (when the FAA and state laws generally provide that courts will only overturn an arbitration decision for fraud, corruption, etc.). However, his consideration for agreeing to the delegation failed when the Hall Court held that parties cannot agree by contract to alter the exclusive judicial review of arbitration decisions provided by the FAA. The Court found that he could have filed a supplemental brief with the Ninth Circuit on this issue following the Hall Court decision, but that it might have been pointless because that was already the rule in the Ninth Circuit even before the Hall decision.

In light of this decision, one can expect that employers across the country will – and even should – amend their arbitration agreements to reserve the question of arbitrability for the arbitrator in the hopes of avoiding long and expensive battles over the enforcement of an arbitration clause or agreement.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.