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FMLA’s revised joint employer regulation not given retroactive effect; thus, revised regulation not applicable to pre-amendment conduct

December 27th, 2011  |  Ron Miller

On January 16, 2009, the current version of 29 CFR §825.111(a)(3) (2009) when into effect. Under the amended regulation, the worksite of a jointly employed worker is the primary employer’s office, unless he has physically worked for at least one year at a facility of the secondary employer, in which case the employee’s worksite is that location. The 1995 version of the regulation was more stringent, providing that “when an employee is jointly employed by two or more employers, the employee’s worksite is the primary employer’s office from which the employee is assigned or reports.” Still, under both sets of the regulations, the date upon which application of the 50/75 exclusion is determined is the date the employee provides notice of the need for leave.

Background. In a recent case, Newsome v Young Supply Co, December 15, 2011, an employee alleged that joint employers unlawfully refused to restore him to his original job as a truck driver following FMLA leave. The employers, a supply company and an employee leasing company, admitted their status as joint employers, but challenged the  authority of §825.111(a)(3) (1995), establishing the employee leasing company’s facility as the employee’s worksite for purposes of determining whether the 50 employee/75 mile coverage exclusion applied.

In September 2008, the employee provided notice of his need for medical leave in order to undergo surgery. The defendants conceded that his medical condition constituted a “serious health condition” under the FMLA. At the completion of his medical leave, the defendants refused to reinstate him to his original position, or an equivalent job. Here, the joint employers alleged that the supply company, not the employee leasing company, should be regarded as the employee’s worksite. There was no question but that the leasing company employed 50 or more employees within 75 miles of its facility; however, it was equally clear that the supply company did not meet the 50/75 rule. Thus, the question was what constituted the employee’s “worksite.”

Worksite. In this instance, a federal district court in Michigan found no merit to the employers’ challenge to the application to them of the joint employer regulations under 29 CFR §825.111(a)(3) (1995). It declined to apply the amended version of the regulation, §825.111(a)(3) (2009), because it did not take effect until after the employee invoked his rights under the FMLA and commenced his leave. Further, the court declined to retroactively apply the amended version of the regulation to bar coverage of the employee’s claim.

Congress specifically delegated rule-making authority to the Secretary of Labor to “prescribe such regulations necessary to carry out” the FMLA, observed the court. The Secretary used full notice and comment rule-making procedures when promulgating the regulations implementing the FMLA. Pursuant to that authority, the Secretary promulgated §825.111(a)(3), which defines the “worksite” for an employee of “joint employers.”

In response to the employers’ argument that the current regulation should apply, the court observed that because the FMLA is a remedial statute, its coverage and protections must be construed broadly in favor of the employee. Moreover, the 50/75 “worksite” provision is an exclusion and, as such, must be construed “narrowly,” noted the court.

A federal district court in Michigan found no merit to the employers’ challenge to the application to them of the joint employer regulations under 29 CFR Sec. 825.111(a)(3) (1995). Further, it also declined to apply the amended version of the regulation, sec. 825.111(a)(3) (2009), because it did not take effect until after the employee invoked his rights under the FMLA and commenced his leave. Thus, the court declined to retroactively apply the amended version of the regulation to bar coverage of the employee’s claim.

Retroactive application. Further, the court declined to grant retroactive application to §825.111(a)(3) (2009) because such application of amendments to regulations is disfavored. Specific to the FMLA, Congress did not extend to the Secretary of Labor the authority to make regulations retroactive. Additionally, the 2009 amendments did not provide for retroactive effect. In this instance, the joint employers conceded that the employee provided notice of his need for leave in September 2008. Because that date was before the amended regulation took effect, the court ruled that the original version of  §825.111(a)(3) (1995) must be applied, and the amended 2009 version cannot be given retroactive effect.