Phillips 66 Loses Battle Over Washington Paid Leave Law

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jacklyn Wille

Phillips 66 can’t circumvent a Washington state family leave law by offering employees all-purpose time off rather than specifically designated sick leave, a state appellate court ruled ( Honeycutt v. Wash. Dep’t of Labor & Indus. , 2017 BL 27185, Wash. Ct. App., Div. 1, No. 74338-4-I, 1/30/17 ).

The court agreed with two Phillips 66 workers that the company’s failure to offer specifically designated sick leave didn’t strip them of protections offered by state law, which forces employers offering paid leave to extend that leave to workers caring for sick family members. However, the court sent the dispute back to Washington’s Department of Labor and Industries for a determination as to whether the company’s short-term disability plan—the avenue through which the workers could access paid leave in this instance—was governed by the Employee Retirement Income Security Act and thus exempt from the state mandate.

ERISA has at times proven a stumbling block for state efforts to expand workers’ access to paid leave. In 2014, a federal appeals court used ERISA’s preemptive powers to largely strike down a Wisconsin law requiring employers that offer paid disability leave to extend those benefits to new mothers.

This dispute centers on a Washington statute forcing employers that offer paid leave to make that leave available for workers who care for sick family members. Two union-represented Phillips 66 workers filed a lawsuit in 2015 claiming that the company made them choose between using vacation days or taking unpaid leave to care for sick family members. According to the workers, they should have been able to take paid leave through Phillips’ short-term disability insurance policy.

Phillips argued that it didn’t have to open up short-term disability benefits for workers’ family care needs, because it allowed workers to take vacation days in the event of their own illness or that of a family member.

The court disagreed. In its view, the vacation days offered to Phillips employees didn’t qualify as paid leave “for illness” under the terms of the Washington law. This meant that Phillips’ disability plan—the only clear avenue for employees to take sick leave—could be liable for providing paid family leave, the court said.

However, that depended on whether the disability policy was governed by ERISA, the court said. Lacking information to make that determination on his own, the court sent the dispute to Washington’s labor department so that it could determine whether the disability policy was ERISA-governed.

Judge Michael Spearman of the Washington Court of Appeals wrote the decision, which was joined by Judges Ann Schindler and Michael Trickey.

Schwerin Campbell Barnard Iglitzin & Lavitt LLP represented the workers. Davis Wright Tremaine LLP and the Washington Office of the Attorney General represented the labor department.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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