By Michelle L. Roberts and Mia Munro

 With millions without health care coverage in the United States, California demonstrated leadership in passing Senate Bill 299 (SB 299) to close a gap in health care coverage impacting women workers when they were most vulnerable – while on brief pregnancy leaves.  The bill requires most California employers to continue health care coverage for workers on pregnancy disability leave, even if those workers do not otherwise qualify for such benefits under the federal Family and Medical Leave Act (FMLA).    Because SB 299 affords workers benefits that the FMLA intended to preserve, SB 299 is not preempted by ERISA, as argued by some skeptics.

Congress enacted the FMLA in 1993 as a critical first step in alleviating the average citizen’s struggle to balance family responsibility and economic security.  One essential component of the FMLA is the provision of 12 weeks of unpaid job-protected leave for certain family and medical situations (including pregnancy), and continuation of medical benefits during such leave.  In enacting the FMLA, Congress expected and encouraged states to provide even greater family or medical leave benefits; to that end, the FMLA expressly saves more protective state laws from preemption.  29 U.S.C. § 2651(b).

Consistent with the goals of the FMLA, California passed SB 299 (Cal. Gov’t Code § 12945(a)(2)(A)), which requires employers with five or more employees to continue providing medical benefits for female employees on job-protected pregnancy disability leave for up to four months before returning to work.  SB 299 requires approximately four additional weeks of continued medical coverage during a pregnancy leave than the FMLA (which applies to employers with 50 or more employees).

That SB 299 builds permissibly upon the FMLA is made clear by the official position of the U.S. Department of Labor (DOL), the federal agency responsible for interpreting, administering, and enforcing ERISA and the FMLA.  As head of the DOL, the Secretary of Labor has taken the position that ERISA preemption of a state law providing greater family or medical leave rights than the rights established under the FMLA would impair or otherwise supersede the FMLA, impermissibly turning FMLA’s floor into a ceiling.  The DOL’s theory, sometimes referred to cheekily as the “double savings” clause theory, is based on the “savings clause” of the FMLA which states that nothing in the FMLA “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” the FMLA (29 U.S.C. § 2651(b)), and the “savings clause” of ERISA, which provides that nothing in the statute “shall be construed to . . . impair, or supersede any law of the United States,” which includes the FMLA. 29 U.S.C. § 1144(d).

Some question the validity of SB 299 based on a federal court decision, Sherfel v. Gassman, 2012 U.S. Dist. LEXIS 140001 (S.D. Ohio 2012), which concerned the Wisconsin Family and Medical Leave Act (WFMLA).  The Sherfel case, which is not binding, involved a law that is materially different from SB 299.  The Sherfel court’s dismissal of the DOL’s theory as it applies to the WFMLA thus does not impact the validity of SB 299. In Sherfel, the WFMLA was enforced to require an employer to provide paid disability leave to an employee who was not “disabled” under the terms of the employer’s ERISA plan, and thus, not eligible for payment under the plan.    SB 299, on the other hand, simply requires a modest continuation of the medical benefit coverage already provided to working employees, while they are out on time-limited pregnancy disability leave.  SB 299 is thus merely an extension of the same benefits that the FMLA provides.  The Sherfel court  acknowledged that laws like SB 299 are different from the WFMLA, noting that the FMLA, which also requires continuation of medical benefits coverage while employees are on job-protected medical leave, “does not create or supplement employer benefits” as did the WFMLA.  Sherfel at *71.

Likewise, the Senate report accompanying the FMLA stated explicitly that state family leave laws “including leave laws that provide continuation of health insurance or other benefits . . . are not preempted by ERISA.”  S. Rep. No. 103-3, at 38 (1993).  SB 299 provides precisely the kind of “greater” leave rights that the drafters of the FMLA intended to preserve and encourage.  The Sherfel court’s analysis and reliance on the Supreme Court’s decision in Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983), does not support preemption of SB 299.  Instead, Shaw can be read to support the argument against preemption.  In Shaw, the Supreme Court held that ERISA cannot be construed to impair any federal law, and to the extent that the state Human Rights Law at issue in Shaw provides a means of enforcing Title VII’s commands, preemption of the Human Rights Law would impair federal law.  The Supreme Court in Shaw held that insofar as state laws prohibit employment practices that are lawful under Title VII, preemption would not impair federal law since Title VII is neutral on the subject of all employment practices it does not prohibit.  Quite the opposite is true with respect to the FMLA, which the DOL has determined unambiguously expresses Congress’ intention to encourage states to provide more substantial family and medical leave rights.  Aurora Med. Group v. Dep’t of Workforce Development Equal Rights Div., 236 Wis. 2d 1, 19-21 (2000).  SB 299 furthers that purpose; ERISA preemption of SB 299 would thus impair the FMLA.

There are also practical considerations.  Benefit plans are designed, and certain employers are required to comply, with federal laws that mandate continued healthcare coverage during certain leaves.  SB 299 does not significantly complicate the administration of ERISA plans, as it does not require providing coverage to employees who are not already covered by a medical plan. As the country attempts to muddy through a national health care crisis, California has taken a positive step to protect hard working pregnant workers from lapses in insurance coverage.  SB 299 should be exalted, not attacked, because it ensures that pregnant women are not forced to choose between risking their health by returning to work early, or taking doctor-recommended leave but losing their health insurance benefits.  SB 299 not only survives ERISA preemption, it is an important model for other states ensuring basic health care protections for their workers.

Michelle L. Roberts is a partner at Springer-Sullivan & Roberts LLP, a firm specializing in ERISA disability benefits claims.

Mia Munro is a Staff Attorney at Equal Rights Advocates, a nonprofit legal organization dedicated to protecting and expanding economic and educational access and opportunities for women and girls.

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