Other states are eating our lunch on clean energy
March 30, 2015 10:56 AM
Wisconsin's wrong-headed plan to sue the Obama Administration over pending regulations to reduce carbon dioxide emissions is another missed opportunity to achieve a high-end, cleaner energy economy – one that attracts clean energy jobs and investment and furthers our state's long tradition of environmental stewardship.

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Wisconsin’s substitution rule called into question by recent Sixth Circuit decision
March 27, 2015 11:54 AM
Recently, the U.S. Court of Appeals for the Sixth Circuit held that the Wisconsin Family and Medical Leave Act (WFMLA) substitution provision is preempted by the federal Employee Retirement Income Security Act (ERISA). In doing so, the Sixth Circuit directly contradicted an earlier decision by the Wisconsin Supreme Court, which held that the WFMLA's substitution provision is not preempted by ERISA. Although the Sixth Circuit decision is not binding precedent in Wisconsin, employers should be aware of this recent decision, as it presents a favorable and persuasive argument while raising questions regarding the law that governs employee leaves of absence.

WFMLA's substitution provision and ERISA
The WFMLA requires employers to provide employees with certain amounts of leave for various reasons, including the birth of a child. Under the WFMLA's “substitution provision,” employers must permit employees to substitute their unpaid WFMLA leave with any other accrued paid leave. In order to constitute “accrued” leave within the meaning of the WFMLA's substitution provision, the leave rights must (1) arise from a contract; (2) be specified and quantifiable; (3) have a “draw-down feature” by which the amount of leave decreases as the employee uses it; and (4) be the type of leave that may be accumulated over time, even if it does not carry over from year to year.

Wisconsin courts have interpreted the substitution provision to permit an employee to substitute accrued paid leave even if the employee does not meet the eligibility criteria set forth in the more generous benefit plan provided by the employer. However, the federal law governing employee benefits plans (i.e., ERISA) broadly preempts all state laws that “relate to any employee benefit plan covered by ERISA.” In Aurora Medical Group v. DWD, the Wisconsin Supreme Court addressed the interplay between the WFMLA's substitution provision and ERISA's broad preemption after an employee was denied substitution of her WFMLA leave with accrued paid sick leave because she was not “ill” under the terms of her ERISA-governed short-term disability plan. The Wisconsin Supreme Court held that ERISA does not preempt the WFMLA and the employee was wrongfully denied substitution of unpaid maternity leave with paid sick leave. As further detailed below, these circumstances were precisely at issue in the recent decision from the Sixth Circuit.

Sixth Circuit case background
In Sherfel v. Newson, an employee requested substitution of her unpaid WFMLA maternity leave with paid leave under her employer's short-term disability program, which is subject to ERISA and provides partial income replacement benefits to employees that are “disabled” within the meaning of the plan. The employee had already exhausted her six weeks of maternity leave provided under the short-term disability plan. Nationwide Mutual Insurance Co. denied the employee's request because she was not “disabled” per the terms of the plan and because the income replacement benefits did not constitute “accrued” leave under the WFMLA.

The Wisconsin Department of Workforce Development (DWD) determined that the maternity leave provided by the plan as well as an additional three weeks of short-term disability benefits for the unpaid leave provided by the WFMLA.

After a Wisconsin administrative law judge found in favor of the employee, Nationwide removed the case to federal district court where the company is headquartered, seeking a declaration that ERISA preempted the WFMLA and the DWD wrongfully required the payment of benefits to employees that were not eligible under the terms of the plan. On appeal, the Sixth Circuit found in favor of the employer and held that the substitution provision of the WFMLA “relates to” ERISA plans as required for federal preemption pursuant to the Supremacy Clause of the U.S. Constitution. The court noted that the WFMLA is expressly and impliedly preempted because it interferes with the uniform administration of benefit plans and creates an alternative enforcement mechanism, in contradiction to the stated purposes of ERISA. Accordingly, the plan administrator was required to comply with ERISA rather than the WFMLA.

Practical implications for employers in Wisconsin
Until the U.S. Court of Appeals for the Seventh Circuit addresses the interplay between ERISA and the WFMLA's substitution provision, Wisconsin employers should continue allowing their employees to substitute unpaid WFMLA leave with any other accrued leave, even if the employee does not meet the eligibility criteria set forth in the benefit plan. However, the Sixth Circuit decision presents a persuasive argument that would be beneficial to employers if adopted by the Seventh Circuit. If ERISA is held to preempt the WFMLA's substitution provision, Wisconsin employers would no longer be required to substitute unpaid WFMLA leave with paid leave available to employees under ERISA-covered benefit plans when the employee does not satisfy the plan's eligibility criteria. However, benefit plans that are not covered by ERISA would still remain subject to the WFMLA's substitution provision.

Even though Sherfel is not binding precedent in Wisconsin, employers should be aware that the law appears to be changing in this area and the Sixth Circuit's decision may be persuasive to the Seventh Circuit moving forward. Employers should carefully review their policies and procedures regarding the WFMLA's right of substitution to ensure compliance and be sensitive to this changing landscape.

Frank Gumina and Laura Malugade are attorneys on the Labor & Employment Team at Whyte Hirschboeck Dudek S.C. in Milwaukee.

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Leadership lessons to be learned from Bo Ryan
March 26, 2015 10:56 AM
In my opinion, Bo Ryan isn't only the University of Wisconsin's most successful coach and the best in Big Ten history; he is the best coach in the country.

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State economic policies have consequences
March 25, 2015 11:12 AM
In recent years, BizTimes has published news stories of dozens of Illinois businesses that have moved across the border into Wisconsin.

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Who is running the good ship Wisconsin?
March 24, 2015 09:11 AM
When is a cabinet not a cabinet?

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Non-compete bill would stifle business in Wisconsin
March 23, 2015 11:53 AM
State Sen. Paul Farrow (R-Pewaukee) recently authored legislation that would significantly change employer-employee non-compete agreements.

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You’re just a clerk
March 20, 2015 10:56 AM
I was teaching a night class at Upper Iowa University recently when a student said something that left me utterly dumbfounded.

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State’s changes will cause people to go hungry
March 19, 2015 11:52 AM
I am here to announce the state's new policy on food — YOU: Will Work For Food.

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It’s Sunshine Week; how about a little clarity?
March 18, 2015 11:43 AM
During Sunshine Week, we celebrate Wisconsin's proud tradition of open government, including public and media access to government records. It's fitting that the League comes into Sunshine Week with an effort to resolve a conflict between state open records laws and federal privacy laws as it relates to the Drivers Privacy Protection Act. The League of Wisconsin Municipalities has asked to participate in a lawsuit between a New Richmond newspaper and the City of New Richmond. The League believes that the lawsuit creates an opportunity for the Wisconsin Supreme Court to clarify matters.

Wisconsin has a long and proud tradition of open government. That includes a presumption that government records, including traffic accident and violation reports, are available for public viewing. The news media are staunch protectors of this tradition, to their credit. But safeguarding personal privacy is just as important. In 1994 Congress responded to a tragic stalking and murder case by prohibiting state motor vehicle departments, local police departments and others from disclosing personal information obtained from license and vehicle records. There were numerous exceptions to this law, but there was no exception for media disclosure. In spite of this, most law enforcement offices assumed the public's “right to know” about accidents and criminal activities still ruled and life went on as before. In 2007 a federal lawsuit in Illinois forced a second look at that assumption. In the case of Senne vs. Palatine a village in Illinois was cited for violating the privacy rights of a citizen because his name and address were visible on the face of a $20 parking ticket stuck under his car's windshield wiper.

Following Senne the League cautioned its members to evaluate the state and federal laws (which we argued at the time were confusing and contradictory), and to make a decision whether or not to redact, or remove, personal information from police records before handing them over to the media. Most Wisconsin communities chose to redact the personal information. This has met with significant media concern. It sparked a lawsuit in New Richmond that is the subject of the League's request to the Court.

Our advice wasn't very popular. The media were frustrated that they no longer had free access to important information. And local police departments were unhappy with the added workload of redaction. The League's opinion was questioned on both legal and PR grounds.

The controversy sparked a high-level meeting between media organizations and the League last year, at which two things were agreed to: first, we would devise a form that could be filled out by a journalist, advising the local government the reporter needed the private information in order to fulfill what is arguably a public function: the people's right to know. With the form, communities would have a tool to decide whether to disclose the personal information. It was an imperfect solution, but it would help work around the issue until the Court could clarify. Second, and most important, both media interests and the League agreed that the two conflicting laws need to be reconciled, and the only place that can be done is via the Court system. The League of Wisconsin Municipal Mutual Insurance agreed to take on New Richmond's cost of appealing the lower court decision, and on March 6, both sides asked the Wisconsin Supreme Court to assume jurisdiction. The League has petitioned to be allowed to submit a brief in the case.

What is the League's position? Which side are we on; privacy or disclosure? The League has one goal: to advise our members on the state of the law so they can serve their citizens. And when the state of law is, as it in this case, confusing, our job is to pursue clarity. Do we want personal privacy to be protected? Of course. Do we want the media to be able to do its job of informing the public? Without question. In this case, it matters less which side “wins” or “loses,” than that the Court comes out with a clear statement of how these two laws interact. Because it's a whole lot easier to see the sunshine when the sky is clear.

Jerry Deschane is executive director of the League of Wisconsin Municipalities.

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Assessing the Affordable Care Act on its fifth anniversary
March 17, 2015 10:43 AM
Expansion of health insurance coverage does not equal access, according to Froedtert Health president and chief executive officer Cathy Jacobson.

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Co-working options abound for Milwaukee entrepreneurs
March 16, 2015 10:20 AM
To witness the burgeoning co-working trend, just pop into a crowded coffee shop. You'll see both young and old hunkered down over laptops or earnestly discussing a project.

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