Unpaid FMLA leave may be ‘unemployment’ in Texas, but eligibility for benefits is a different question
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Thursday, May 31, 2018

Unpaid FMLA leave may be ‘unemployment’ in Texas, but eligibility for benefits is a different question

By Joy P. Waltemath, J.D.

Reversing the decision of an appeals court, the Texas Supreme Court interpreted the unambiguous language of the Texas Unemployment Compensation Act to find that an individual qualifies as “unemployed” while taking unpaid leave from her job under the Family Medical Leave Act. But because eligibility for unemployment benefits requires more than “unemployed” status, the court voiced no opinion on whether an individual on FMLA leave is ultimately entitled to such benefits. Here, the employee was unemployed because she was “not performing services for wages”—her eligibility was yet to be considered (Texas Workforce Commission v. Wichita County, Texas, May 25, 2018, Lehrmann, D.).

Seeking unemployment while on leave. The assistant emergency management coordinator took FMLA leave on August 16, the majority of which was unpaid because she had exhausted all but a few days of paid leave. In late September she was able to return to work with certain medical restrictions that the county initially was not able to accommodate, but by November 4, she returned to work in “an accommodating position in a different department.” The issue before the court, however, had to do with what the employee did while she was waiting to return to work: She filed for unemployment benefits.

The Texas Workforce Commission determined that she was “unemployed” while “on an unpaid leave of absence” for a “medically verifiable illness” and that it could pay her benefits “if [she met] all other requirements.” After the Commission Appeal Tribunal affirmed, the county sought judicial review, and the district court reversed the Commission, a decision which was upheld on appeal. The Texas Supreme Court then granted the Commission’s petition for review and ultimately agreed with the Commission.

Statutory interpretation. Looking first to the text of the statute in its de novo review, the state supreme court pointed out that the Act (at Tex. Lab. Code §§ 207.002–.003) grants benefits to an “eligible individual” who is “totally unemployed” or “partially unemployed” in a particular “benefit period.” Those terms too were defined by the Act: Subsection 201.091(a) says an individual is “totally unemployed” when the individual “does not perform services for wages” in excess of either $5 or 25 percent of the benefit amount (for that benefit period), whichever is greater. Similarly, subsection 201.091(b) defines “partially unemployed.” Importantly, the Act also defines eligibility; it further contains exceptions to and disqualifications from benefits for certain individuals who would otherwise qualify.

Eligibility not the question before the court. The court stressed that the Commission’s decisions below had not determined the employee’s eligibility, such as whether she was able to, available for, and actively seeking work during any particular benefit period, as required by the Act. The Commission concluded only that she was totally unemployed—she was not performing services for wages—and that the Commission could pay her benefits “if [she met] all other requirements.” It was the county employer’s view that the Act’s definitions of “totally unemployed” and “partially unemployed” were relevant only as to eligibility, but not to the threshold issue of whether a claimant was “unemployed,” and it asked the court to consider the ordinary meaning of unemployed—a formal severing of the employer-employee relationship.

Plain language defines “unemployed.” However, the court disagreed, finding the Act very clear that an individual “is considered unemployed” if totally or partially unemployed according to the statutory definitions. The court would not utilize the common, ordinary meaning of “unemployed” because “the Act clearly assigns it a different meaning.” Nor did the court find that its interpretation of the statute rendered portions of it meaningless, quibbling with the county’s arguments as to one provision by suggesting the county’s own interpretation rendered another provision meaningless. Accordingly, the court held that under the Unemployment Act’s plain language, an individual who does not perform services for wages during a benefit period is “unemployed” and is not disqualified from receiving benefits solely because she is on FMLA leave.

Absurd result? The court of appeals had concluded that the Commission’s interpretation yielded an “absurd result,” which was the only reason a court could disregard a statute’s unambiguous language. But the Texas Supreme Court found the appellate court’s reasoning premature: This case did not require a finding that the Act entitled an individual to receive unemployment benefits while on FMLA leave—the result the appeals court found absurd. Instead, the court held only that an individual on unpaid FMLA leave came within the Act’s definition of the term “unemployed.” This finding alone did not entitle anyone to unemployment benefits, because eligibility for benefits requires meeting additional criteria, including the ability to work, the availability for work, and an active search for work.

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