Court Holds That Wisconsin FMLA Substitution Law Is ERISA-Preempted

The U.S. District Court for the Southern District of Ohio ruled Sept. 28 that the Employee Retirement Income Security Act preempts the Wisconsin Family and Medical Leave Act's (WFMLA) benefit substitution provision (Sherfel v. Gassman, S.D. Ohio, No. 2:09-cv-00871-JLG-TPK, 9/28/12).

WFMLA's substitution provision permitted employees to substitute “paid or unpaid leave of any other type provided by the employer” for portions of family leave or medical leave.

Nationwide Mutual Insurance Co. filed suit in federal court seeking declaratory and injunctive relief after an administrative law judge determined Nationwide violated the substitution provision when it refused to award short-term disability (STD) benefits to a plan participant.

Judge James L. Graham determined that WFMLA's substitution provision, to the extent it is used to require payment of STD plan benefits, is expressly preempted under ERISA Section 514(a)and conflict preempted due to its interference with ERISA Section 502(a)'s civil enforcement provisions. The court granted Nationwide's motion for a permanent injunction barring future application of the substitution provision.

The Labor Department filed an amicus brief in December 2010 and argued that ERISA does not preempt WFMLA's substitution provision because ERISA Section 514(d)' s savings clause precluded ERISA-preemption when the operation of other federal laws would be impaired.

The full text of the opinion is at