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May 31, 2005
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2005-13A
ERISA Sec. 514(a) and 514(d)
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Richard A. Ervin
Program Manager
Employment Standards, Dept of Labor and Industries
State of Washington
P.O. Box 44510
Olympia, WA 98504-4510
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Dear Mr. Ervin:
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This responds to your request for an advisory opinion
concerning the applicability of Title I of the Employee Retirement Income
Security Act of 1974 (ERISA). Specifically, you asked whether section
514(a) of ERISA would preempt the application of certain leave
substitution provisions in the Washington State Family Care Act (Family
Care Act) to the Northwest Airlines, Inc. Sick and Occupational Injury
Leave Plan for Employees.
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The following summary is based on facts and representations contained in
your correspondence. Northwest Airlines, Inc. (Northwest) sponsors the
Northwest Airlines, Inc. Sick and Occupational Injury Leave Plan for
Employees (Sick Leave Plan). You represent that the Sick Leave Plan is
maintained pursuant to bargaining agreements for certain Northwest employees
represented by labor organizations and also pursuant to administrative
policies for covered management employees. Various provisions in the Sick
Leave Plan apply according to the particular bargaining agreement covering
the employee in question. For example, there are different provisions
regarding the rate of sick leave accrual, requirements for a physician’s
note, and different maximum amounts of total sick leave accumulation. None
of the provisions in the Sick Leave Plan provide that an employee has the
right to use paid sick leave to care for a child or other family member with
a health condition or experiencing a health emergency.
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Northwest established the Northwest Airlines, Inc. Voluntary Employees’
Beneficiary Trust (Trust) to fund the Sick Leave Plan. The Trust is intended
to be a tax-exempt voluntary employees’ beneficiary association (VEBA)
under section 501(c)(9) of the Internal Revenue Code. The Trust Agreement
provides that the Company shall make an initial contribution to the Trust
and shall thereafter make contributions to the Trust from time to time as
the Board of Directors of the Company or its designee shall determine. The
Trust Agreement further provides that nothing in the Trust Agreement shall
be construed as constituting an obligation on the part of the Company to
make a contribution to the Trust Fund, and the Trustee shall have no right
to demand contributions. To the extent that the Trust Fund is not adequately
funded to pay benefits due and owing under the Sick Leave Plan, the Trust
provides that participants shall look to the Company for payment. The
Benefit Booklet describing the welfare plans offered by Northwest, including
the Sick Leave Plan, provides that “[t]o the extent Northwest does not
fund these plans through the VEBA, Northwest will fund the plans directly.”
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The Family Care Act generally provides that employees
entitled to sick leave or other paid time off may use such paid time off
to care for certain relatives of the employee who have health conditions
or emergency conditions. Specifically, the Act states that:
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If, under the terms of a collective bargaining agreement or employer policy
applicable to an employee, the employee is entitled to sick leave or other
paid time off, then an employer shall allow an employee to use any or all of
the employee’s choice of sick leave or other paid time off to care for:
(a) A child of the employee with a health condition that requires treatment
or supervision; or (b) a spouse, parent, parent-in-law, or grandparent of
the employee who has a serious health condition or an emergency condition.
An employee may not take advance leave until it has been earned. The
employee taking leave under the circumstances described in this section must
comply with the terms of the collective bargaining agreement or employer
policy applicable to the leave, except for any terms relating to the choice
of leave.
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Wash. Rev. Code § 49.12.270 (2002).
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Section 514(a) of Title I of ERISA generally preempts any
state law which “relates to” an employee benefit plan covered under that
title.(1) There are, however, a
number of exceptions. Section 514(d) acts as a federal savings limit on
ERISA’s broad preemption provision. Specifically, section 514(d) provides,
subject to certain exceptions not relevant here, that: “[n]othing in this
title shall be construed to alter, amend, modify, invalidate, impair, or
supersede any law of the United States . . . or any rule or regulation
issued under any such law.” The Family and Medical Leave Act (FMLA) is a
law of the United States whose overall purpose and structure parallel those
of the Family Care Act. The purpose of the Family Care Act is to require “employers
to accommodate employees by providing reasonable leaves from work for family
reasons.” Wash. Admin. Code 296-130-010. As set out in the federal
statute, one of the purposes of the FMLA is to “entitle employees to take
reasonable leave for medical reasons, for the birth or adoption of a child,
and for the care of a child, spouse, or parent who has a serious health
condition.” 29 U.S.C. § 2601(b)(2). In addition, both provide for the
substitution of paid leave under certain circumstances.(2)
Under the FMLA, an employee may substitute paid sick leave only when
the employee or a family member has a serious health condition, and only
when the employer would normally provide paid leave in that situation. 29
U.S.C. § 2612(d)(2)(A), (B); 29 C.F.R. § 825.207. Section 401(b) of the
FMLA further provides that “[n]othing in this Act or any amendment made by
this Act shall be construed to supersede any provision of any State or local
law that provides greater family or medical leave rights than the rights
established under this Act or any amendment made by this Act.” 29 U.S.C.
§ 2651(b). In addition, section 402(b) of the FMLA provides that “[t]he
rights established for employees under this Act or any amendment made by
this Act shall not be diminished by any collective bargaining agreement or
any employment benefit program or plan.” 29 U.S.C. § 2652(b).
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Because the FMLA does not afford all employees the automatic right to
substitute paid sick leave for unpaid leave to care for a relative, we do
not address whether ERISA preemption of the Washington Family Care Act
providing such a right would “alter, amend, modify, invalidate, . . . or
supersede” the FMLA. Rather, this letter addresses only whether ERISA
preemption would “impair” the FMLA within the meaning of section 514(d)
of ERISA. For the reasons discussed below, it is the view of the Department
that the Family Care Act’s leave substitution provision is saved from
ERISA preemption by ERISA’s federal savings clause because a determination
that ERISA preempts the Family Care Act would “impair” the FMLA, which
expressly encourages more generous state family leave rights than the FMLA
provides directly.
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It is the Department of Labor’s view that the
legislative history of the FMLA makes clear that Congress intended to
protect more generous state leave laws not only from preemption by FMLA
but also from preemption by ERISA and other federal laws. In this regard,
the Senate report accompanying the FMLA explains, among other things:
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Section 401(b) makes it clear that state and local laws providing greater
leave rights than those provided in [FMLA] are not preempted by [FMLA] or
any other federal law. . . .
Likewise, Wisconsin State law provisions under which
employees may substitute paid or unpaid leave of any other type provided
by the employer for portions of family leave or medical leave would not
be superseded by the FMLA.
Section 401(b) also clarifies that state family leave
laws at least as generous as that provided in [FMLA] (including leave
laws that provide continuation of health insurance or other benefits,
and paid leave), are not preempted by ERISA, or any other federal law.
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S. Rep. No. 103-3, at 38 (1993), reprinted in 1993
U.S.C.C.A.N. 3, 40. See also S. Rep. No. 102-68, at 55 (1991).
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As additional support for this conclusion, a colloquy on the Senate floor
between the FMLA's chief sponsor, Senator Dodd, and Wisconsin Senators
Feingold and Kohl, makes the same point even more specifically:
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Mr. Feingold.
A few years ago a Wisconsin administrative law judge concluded that the
provision of the Wisconsin FMLA enabling employees to substitute accrued
paid leave for unpaid family leave was preempted by ERISA to the extent it
impacted an employer's ERISA plan that paid out sick leave. Is it the intent
of the sponsors of this bill that the provisions of the Employee Retirement
Income Security Act of 1974, as amended, shall not prevent the substitution
of accrued paid leave, regardless of the source of funding for the paid
leave?
Mr. Dodd.
Yes. This Federal legislation provides that either an employer or an
employee may elect to substitute accrued paid leave for unpaid family and
medical leave, although the scope of an employee's rights in that regard are
more generous under the Wisconsin law. The provisions of this Federal Family
and Medical Leave Act are intended to supersede ERISA and any Federal law.
The authors of this legislation intend to prevent ERISA and any other
Federal law from undercutting the family and medical leave laws of States
that currently allow the provision of substitution of accrued paid leave for
unpaid family leave, regardless of the nature of the family leave, so long
as those State law provisions are at least as generous as those of this
Federal legislation. Certainly, if Wisconsin law allows either an employer
or an employee to substitute accrued paid leave to care for a newly born or
adopted child on terms at least as generous as in this legislation, it is
our intent that no Federal law prevent Wisconsin law from making this
allowance.
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139 Cong. Rec. 2254 (Feb. 4, 1993).
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Accordingly, it is the view of the Department that
ERISA section 514(a) does not preempt application of the leave
substitution provision in Washington’s Family Care Act to the Northwest
Airlines, Inc. Sick and Occupational Injury Leave Plan for Employees to
the extent it is more generous than the FMLA.
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This letter constitutes an advisory opinion under ERISA
Procedure 76-1. Accordingly, it is issued subject to the provisions of
that procedure, including section 10 thereof relating to the effect of
advisory opinions.
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Sincerely,
John J. Canary
Chief, Division of Coverage, Reporting and Disclosure
Office of Regulations and Interpretations
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This letter should not be read as
expressing an opinion on whether the Sick Leave Plan is an “employee
welfare benefit plan” within the meaning of section 3(1) of ERISA. See
Advisory Opinion 2004-08 (Dec. 30, 2004). Rather, in accordance with
your request, we have assumed, without examining the issue, that the
Sick Leave Plan is a plan covered by Title I of ERISA. Based on that
assumption, the leave substitution provisions of the Family Care Act
appear to function as a mandated benefits law that would apply
directly to the plan, and, therefore, would “relate to” the plan
within the meaning of section 514(a) of ERISA.
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Compare FMLA, 29 U.S.C.
§2612(a)(1) (eligible employees entitled to 12 weeks of leave in
order to care for spouse, parent or child with a serious health
condition), 29 U.S.C. §2612(c) (leave granted under FMLA may be
unpaid), 29 U.S.C. §2612(d)(2) (employer may require or employee may
elect to use certain accrued paid leave for any part of the 12 week
FMLA leave) with Washington State Family Care Act, Rev. Code
Wash. § 49.12.270(1) (see description supra at p.2).
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