Opinion ID: 2738170
Heading Depth: 2
Heading Rank: 1

Heading: Substitution of Leave under the WMFLA

Text: Wisconsin employees may take an unpaid leave of absence for the birth of a child. Wis. Stat. § 103.10(3)(b)(1) & (5)(a). The WFMLA specifically permits an employer to provide “employees with rights to family leave . . . which are more generous to the employee,” § 103.10(2)(a), and in addition “[a]n employee may substitute, for portions of family leave[,] . . . paid or unpaid leave of any other type provided by the employer,” § 103.10(5)(b). The Wisconsin Department of Workforce Development promulgated a regulation to clarify what the statutory substitution provision means by “leave of any other type provided by the employer.” The regulation provides: “At the option of the employee, an employee entitled to family . . . leave under the act may substitute, for any leave requested under the act, any other paid or unpaid leave which has accrued to the employee.” Wis. Admin. Code DWD § 225.03(1) (emphasis added). We are not lacking in guidance as to what type of leave provided by the employer is authorized for substitution by the WFMLA. More than twenty years ago, the Wisconsin Supreme Court explained the meaning of the phrase “leave which has accrued to the employee.” In Richland School District v. Department of Industry, Labor, and Human Relations, 498 N.W.2d 826, 832 (Wis. 1993), the court concluded that the state regulation properly interpreted the statutory phrase “leave . . . provided by the employer” to mean “any type of leave that has accrued” to the employee. Id. at 832 & n.7, 835. Only the kinds of leave that an employee accumulates over time “are available for substitution.” Id. at 832. “Leave which is indefinite or which cannot be quantified at the time of the FMLA leave request is not ‘leave . . . provided by the employer’ under [the] FMLA.” Id. The Wisconsin Supreme Court has thus distinguished “indefinite, incalculable leave” from leave that “accrues into specified, calculable amounts of time.” Id. Only the latter may be substituted for leave requested under the WFMLA. No. 12-4285 Sherfel, et al. v. Newson, et al. Page 15 The employee in Richland School District asked to substitute eighteen calculable days that had accrued to him under a collective bargaining agreement (CBA). Id. at 828, 832. Although the school district argued that the CBA’s conditions for using the leave were not satisfied, the Wisconsin Supreme Court concluded that the leave was sufficiently definite and quantifiable to be substituted for unpaid WFMLA leave, specifically noting that the employee “was not asking to substitute any form of non-accrued, discretionary or contingent leave time which the school district might give him upon request.” Id. at 832–33. The court emphasized that the Wisconsin legislature intended to restrict substitution under the WFMLA to circumstances in which the employee “has accrued reimbursable leave.” Id. at 836. Thus, § 103.10(5)(b) “increases the opportunities for a state employe[e] to use existing accrued paid leave, as opposed to creating additional paid leave.” Id. In Miller Brewing Company v. Department of Industry, Labor and Human Relations, 563 N.W.2d 460, 462 (Wis. 1997), the Wisconsin Supreme Court outlined what an employee must prove to establish a violation of the WFMLA substitution provision, § 103.10(5)(b). A plaintiff must show that: “(1) she was covered by the FMLA at the time she requested leave; (2) she requested a substitution for family leave; (3) [the employer] provided the type of leave requested; (4) the substituted leave had accrued to her; and (5) [the employer] denied the substituted leave.” Id. (emphasis added). Echoing Richland School District, the court said that “[a]n employer must provide leave that is definite and quantifiable in order for such leave to be available for substitution under the FMLA.” Id. at 462 n.6. Because a CBA granted the plaintiff 952 hours of paid reserve sick leave that was “clearly definite and quantifiable,” the court ruled that it did not need to “interpret the CBA in order to determine that [her] paid leave had accrued to her and was the type of leave available for substitution under the FMLA.” Id. at 467. Accordingly, the plaintiff’s claim was not preempted by § 301 of the Labor Management Relations Act. Id. In Kraft Foods, Inc. v. Wisconsin Department of Workforce Development, 625 N.W.2d 658, 662 (Wis. Ct. App. 2001), the issue was whether a sick leave benefit under a CBA constituted accrued paid leave that could be substituted for family leave under the WFMLA substitution provision, § 103.10(5)(b). The state agency determined that leave is accrued within No. 12-4285 Sherfel, et al. v. Newson, et al. Page 16 the meaning of Wis. Admin. Code DWD § 225.03 if “it arises from a contract, is specified and quantifiable, has a ‘draw-down’ feature, and is the type of leave that an employee is allowed to accumulate over time.” Kraft Foods, Inc., 625 N.W.2d at 663. The CBA’s sick leave benefit met the criteria, so the agency ruled that the claimant could substitute accrued sick leave under the CBA for unpaid WFMLA leave. Id. The Wisconsin Court of Appeals concluded that the agency reasonably interpreted and applied the term “accrued,” noting that the amount of sick leave was specified and quantifiable, the benefit had a draw-down feature, and the sick leave accumulated over time. Id. at 663–64. Significantly, the court observed that, “[a]lthough the sick leave benefit in the parties’ collective bargaining agreement may resemble a disability insurance policy, we agree with the department that any such resemblance is irrelevant. The issue is whether the sick leave benefit meets the requirements as a substitute leave under the WFMLA, and, as we have discussed, the department reasonably concluded that it does.” Id. at 664 (footnote omitted). The court pointed to the accumulation of leave over time “by renewing annually and increasing with an employee’s seniority.” Id. The fact that an employee had to be sick for several days before receiving paid sick leave benefits did not render the benefit “indefinite” or “incalculable.” Id. Turning to the issue before us, the Wisconsin appellate courts have never held that the substitution provision of the WFMLA allows an employee to replace unpaid family leave with STD benefits under an employer’s ERISA plan if the employee does not meet the plan’s definition of disability. In light of the governing precedents, it is doubtful that the Wisconsin appellate courts would so hold because STD benefits do not satisfy their requirements for the type of leave that may be substituted. See Richland Sch. Dist., 498 N.W.2d at 832; Kraft Foods, Inc., 625 N.W.2d at 664. In contrast to definite and quantifiable vacation days and sick leave, STD benefits are discretionary and contingent depending on the existence and continuation of an employee’s physical or mental disability. STD benefits may become available under Nationwide’s ERISA Plan if the employee satisfies the definition of disability set forth in the Plan, but STD benefits generally do not accumulate over time, they are not based on an employee’s seniority, and they do not have a “draw-down” feature. STD benefits simply do not No. 12-4285 Sherfel, et al. v. Newson, et al. Page 17 “accrue” to the employee as the Wisconsin Supreme Court understood that term in Richland School District and throughout its case law. The WFMLA, as interpreted by Wisconsin courts, operates in much the same way as the federal FMLA. The WFMLA predated the passage of the FMLA and is fully consistent with congressional intent at the time the FMLA was enacted into law. The FMLA generally allows eligible employees who are employed by covered employers to request up to twelve work weeks of unpaid leave each calendar year for reasons specified in the statute, one of which is the birth of the employee’s child. 29 U.S.C. § 2612(a)(1)(A). Although leave under the FMLA is unpaid leave, Congress provided that “[n]othing in [the FMLA] . . . shall be construed to discourage employers from adopting or retaining leave policies more generous than any policies that comply with the requirements” of the FMLA. 29 U.S.C. § 2653. This point was sufficiently important for Congress to place it within its own statutory section rather than list it in 29 U.S.C. § 2601(b) as one of the purposes of the FMLA. To satisfy the requirements of the FMLA, employers must “comply with any collective bargaining agreement or any employment benefit program or plan that provides greater family or medical leave rights to employees than the rights established” under the FMLA, but an employee’s FMLA rights “shall not be diminished by any collective bargaining agreement or any employment benefit program or plan.” 29 U.S.C. § 2652. In consonance with §§ 2652 and 2653, Nationwide adopted a maternity leave policy more generous than the unpaid leave provisions of either the FMLA or the WFMLA. Nationwide provides a new mother with six or eight weeks of paid leave for the birth of a child. The majority errs in stating that the FMLA “undisputedly does not mandate the substitution of employer-provided leave benefits the way the Wisconsin Act does.” Maj. Op. at 9. The WFMLA does not “mandate” substitution; instead, the statute expresses in permissive terms that “[a]n employee may substitute, for portions of family leave[,] . . . paid or unpaid leave of any other type provided by the employer.” Wis. Stat. § 103.10(5)(b) (emphasis added). The statute and governing regulations allow the employee to elect substitution of any other paid or unpaid leave that has accrued to the employee, but it does not require such substitution. No. 12-4285 Sherfel, et al. v. Newson, et al. Page 18 The FMLA’s substitution provision is arguably less protective of the employee than the WFMLA’s substitution provision because Congress provided that “[a]n eligible employee may elect, or an employer may require the employee, to substitute any of the accrued paid vacation leave, personal leave, or family leave of the employee for leave provided [for the birth of a child] for any part of the 12-week period” of leave. 29 U.S.C. § 2612(d)(2)(A) (emphasis added). The WFMLA substitution provision does not allow employers to require employees to substitute accrued paid leave for unpaid leave under the WFMLA. Wis. Stat. § 103.10(5)(b). The WFMLA substitution provision also creates greater employee leave rights than those under the FMLA because the employee may elect to substitute “paid or unpaid leave of any other type provided by the employer.” Aurora Med. Grp., v. Dep’t of Workforce Dev., 612 N.W.2d 646, 650, 657 (Wis. 2000). As I previously explained, however, the Wisconsin courts have defined the type of leave that may be substituted under the WFMLA provision as definite, quantifiable leave that accrues to the employee over time and has a draw-down feature. Richland Sch. Dist., 498 N.W.2d at 832; Kraft Foods, Inc., 625 N.W.2d at 664. This characterization of the type of leave that may be substituted under the WFMLA closely matches the FMLA’s description of leave that may be substituted: “accrued paid vacation leave, personal leave, or family leave of the employee.” 29 U.S.C. § 2612(d)(2)(A). STD benefits do not fall within the federal or the state characterization. These federal and state family leave statutes intersect with ERISA and with one another but each statute serves a particular purpose, and they have coexisted for a quarter of a century. Congress provided in ERISA that “[n]othing in this subchapter shall be construed to alter, amend, modify, invalidate, impair, or supersede any law of the United States.” 29 U.S.C. § 1144(d). In determining whether a construction of ERISA “impairs” the operation of another federal statute, like the later-enacted FMLA, the question is whether that construction “would frustrate the goal” of the second law. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 102 (1983); see also Humana Inc. v. Forsyth, 525 U.S. 299, 311 (1999) (“Shaw thus supports the view that to ‘impair’ a law is to hinder its operation or ‘frustrate [a] goal’ of that law”). “Congress is presumed to enact legislation with knowledge of the law and a newly-enacted statute is presumed to be harmonious with existing law and judicial concepts.” Raney v. Fed. Bureau of Prisons, 222 No. 12-4285 Sherfel, et al. v. Newson, et al. Page 19 F.3d 927, 932 (Fed. Cir. 2000) (citing Cannon v. Univ. of Chi., 441 U.S. 677, 696–98 (1979)). Thus, when Congress enacted the FMLA, we must presume that Congress intended for its new statute to exist harmoniously with the pre-existing ERISA statute and with the WFMLA. Consequently, to the extent possible, we must interpret and harmonize these statutes and accompanying case law to effectuate congressional and state intent.