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Federal Court Bars Minnesota Department of Labor and Industry From Pursuing Claims for Sick Leave Benefits Against AT&T on Behalf of Union Employees Who Were Not Sick

Minnesota statutes section 181.9413 permits employees to use "personal sick leave benefits" provided by their employers, for absences due to their child's illness or injury. In essence, then, state law "rewrites" employer sick leave benefits which, not surprisingly, typically require that the employee must be sick to use the benefit. The statute permits employees to receive paid sick leave when the employee is not sick, but is absent from work to care for a sick or injured child. As a result, Minnesota law allows employees to use sick leave for purposes not intended by their employers when providing such benefits. However, when the Minnesota Department of Labor and Industry (DOLI) attempted to apply this statute to unlimited sick leave benefits provided for in a collective bargaining agreement between AT&T and a union representing some of its employees - the Communication Workers of America (CWA) - a federal judge ruled that Section 181.9413 is preempted by federal labor law. Holding that the Labor Management Relations Act preempted state law in this instance, the court permanently enjoined DOLI from bringing, or even investigating, claims against AT&T under Minnesota's sick leave statute on behalf of employees covered by the union contract.  

The AT&T ruling may prevent Minnesota DOLI from applying state law to essentially re-write sick leave provisions in a union contract; however, it is of little help to the vast majority of employers who are non-union. Yet labor law is not the only federal law that preempts states from enforcing laws that materially alter employee benefits. The Employee Retirement Income Security Act (ERISA) is another federal law that preempts conflicting state laws. The key for ERISA preemption to apply, lies in whether an employer's sick leave policy is considered an ERISA governed plan. This requires, among other things, that paid leave is paid from a benefit fund set aside for such leave, rather than out of the employer's general funds. These and other administrative burdens that accompany an employee benefit plan under ERISA, may outweigh the benefits of preempting state law. However, for larger employers or those whose sick leave benefits may already qualify as an ERISA benefit plan, the State of Minnesota (or any other state) may be preempted from rewriting those sick leave benefits to permit their use by non-union employees who are not sick.

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For questions about Minnesota's personal sick leave statute, or how it may be preempted by various federal laws in certain instances where employees who are not sick attempt to receive paid sick leave, contact: James Sherman, at (952) 746-1700, or email him at jasherman@wesselssherman.com

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