Tenth Circuit throws out FMLA regulation defining 'work site'.

Employers must look to the place where a worker does most of his or her work when determining eligibility for leave under the Family and Medical Leave Act (FMLA), even if the worker is jointly employed, the Tenth Circuit has ruled.

In a case of first impression nationwide, the decision invalidated a U.S. Department of Labor regulation defining a jointly employed person's work site as the "primary employer's office from which the employee is assigned or reports," regardless of whether he or she is assigned to a fixed location or moves around. (Harbert v. Healthcare Serv. Group, Inc., 391 F.3d 1140 (10th Cir. 2004) (quoting 29 C.F.R. [section]825.111 (a) (3)).)

The plaintiff's attorney, Clifford Beem of Denver, said the ruling creates a "technicality" that allows large companies to avoid providing benefits to employees who work at remote sites.

Nancy Harbert had worked as Sunset Manor's laundry and housekeeping supervisor for three years when, in 1997, the Brush, Colorado, nursing home contracted out these services to Healthcare Services Group, Inc. (HSG). Harbert became the company's account manager at Sunset Manor; she continued to work in the same office and perform the same duties. Her previous manager at the nursing home continued to supervise her, though HSG paid her salary, provided her benefits, and had the authority to fire or transfer her.

Harbert reported to the HSG regional office in Golden, regularly filing reports by phone or in writing and occasionally attending account-manager meetings there. She said she considered her job at Sunset Manor to be long-term and hoped to work there until her retirement.

In November 1998, Harbert injured her hip in a non-work-related car accident. HSG granted her two 30-day leave periods but said she was ineligible for leave trader the FMLA because of its so-called 50/75 provision, which says a worker whose employer has less than 50 employees within 75 miles of his or her "work site" is not covered. Although the nursing home--which HSG considered Harbert's work site--had more than 50 workers, only 14 were HSG employees. Sunset Manor is more than 75 miles from the company's regional office.

HSG fired Harbert when she did not return to work after the second leave period. She sued for denial of benefits and wrongful termination. The district court concluded that under the Labor Department's joint-employee regulation, her work site was HSG's regional office. Because HSG had more than 50 employees within 75 miles of the regional office, it should have provided Harbert FMLA benefits. The court awarded back pay, front pay, damages, interest, costs, and attorney fees.

On appeal, HSG argued that the regulation was invalid because the agency exceeded its authority to implement the act. The Tenth Circuit agreed in a 2-1 decision, finding that the regulation's definition of "work site" as applied in this case was contrary to the common meaning of the term. A work site is typically the place where an employee regularly performs his or her work, the judges said, but for Harbert it was the regional office she only occasionally visited.

Also, the regulation did not fit Congress's purpose in creating the 50/75 provision, the court said. "An employer's ability to replace a particular employee during his or her leave of absence will depend on where that employee must perform his or her work. In general, therefore, the congressional purpose underlying the 50/75 provision is not effected if the 'work site' of an employee who has a regular place of work is defined as any site other than that place," Circuit Judge David Ebel wrote. The court said the regulation was still valid for jointly employed workers who do not have a fixed workplace.

Jeffrey Braff of Philadelphia, who represents HSG, said, "The regulation [the Labor Department] promulgated on the joint-employment issue works if it's someone who is moving from place to place, as most temporary employees do. But for someone who is working as this woman did, for three years at this location, the regulation makes no sense at all."

Braff added that because the concept of joint employment is complex, depending on several variables, the ruling "will make the determination of eligibility for family and medical leave more predictable, because it is far easier to determine whether you have a fixed workplace than it is to determine whether you are jointly employed."

Harbert's attorney disagreed: "Despite the fact that HSG is a huge national corporation--they have thousands of employees nationwide and hundreds in Colorado--they are able to, through this little technicality, claim that their employees at Sunset Manor are not en titled to the benefits of the FMLA," Beem said.

His client has filed a petition for rehearing en banc.