Harbert v. Healthcare Services Group, Inc.

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
DEC 13 2004
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

NANCY E. HARBERT,

Plaintiff - Appellee,
v.

HEALTHCARE SERVICES GROUP,
INC., a Pennsylvania corporation,
No. 03-1156
Defendant - Appellant.

ELAINE CHAO, Secretary of Labor,

Amicus Curiae.

Appeal from the United States District Court
for the District of Colorado
(D.C. No. 00-K-908 (MJW))

Jeffrey L. Braff, Cozen O’Connor, Philadelphia, Pennsylvania, for Defendant-
Appellant.

Clifford L. Beem, Clifford Beem & Associates, P.C., Denver, Colorado (A. Mark
Isley, Clifford Beem & Associates, P.C., Denver, Colorado, with him on the
brief), for Plaintiff-Appellee.

Roger Wilkinson, Attorney, United States Department of Labor, Washington, DC
(Howard M. Radzely, Solicitor of Labor, Steven J. Mandel, Associate Solicitor,
and Anne P. Fugett, Senior Attorney, United States Department of Labor,
Washington, DC, with him on the brief), for Amicus Curiae.
Before EBEL, KELLY, and McCONNELL, Circuit Judges.

EBEL, Circuit Judge.

Nancy Harbert (“Plaintiff”) brought this action against her former

employer, Healthcare Services Group, Inc. (“Defendant”), alleging that Defendant

wrongfully denied her request for medical leave under the Family and Medical

Leave Act (“FMLA”). Defendant had denied her request based on a provision of

the FMLA which excludes from FMLA eligibility any employee who is employed

at a particular “worksite” if the employer employs less than 50 employees within

75 miles of that worksite.

Applying a Department of Labor (“DOL”) regulation, the district court

defined Plaintiff’s “worksite” as Defendant’s regional office in Golden, Colorado.

Because Defendant employed more than 50 employees within 75 miles of its

Golden office, the district court denied Defendant’s motion for summary

judgment and, after a bench trial, found in Plaintiff’s favor. Defendant filed this

appeal, arguing that the relevant portion of the DOL regulation defining the

statutory term “worksite” is invalid. We exercise jurisdiction pursuant to 28

U.S.C. § 1291, and we REVERSE the judgment of the district court and

REMAND for further proceedings consistent with this opinion.

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 BACKGROUND

Defendant contracts out housekeeping and laundry services to long-term

care institutions. Defendant employs approximately 17,000 employees and has

contracts with about 1,300 long-term care facilities in 42 states.

Organizationally, Defendant is divided into regions, which are composed of

multiple districts. Each district is made up of individual accounts, which are the

long-term care institutions. Account managers work at the account to which they

are assigned and report to district managers. District managers report to regional

managers. In Colorado, all district managers and the regional manager have their

offices at the same location in Golden, Colorado.

Sunset Manor is a convalescent/nursing facility located in Brush, Colorado,

which is more than 75 miles from Golden. In 1994, Plaintiff was hired by Sunset

Manor as the Housekeeper Supervisor, and in 1995 her responsibilities were

expanded to include the position of Laundry Department Supervisor. In 1997,

Defendant entered into an agreement to provide housekeeping and laundry

services to Sunset Manor. Plaintiff’s employment with Sunset Manor was

transferred to Defendant, and Plaintiff became the account manager for

Defendant’s Sunset Manor account. Defendant assumed all responsibility for

retaining, transferring, or firing Plaintiff and also paid her salary and provided her

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benefits. Plaintiff’s duties, however, remained essentially the same as when she

was employed directly by Sunset Manor.

Plaintiff worked out of an office at Sunset Manor in Brush. When Plaintiff

reported to her district manager, she reported to him at Defendant’s regional

office in Golden. Such reports were almost always by telephone or through the

submission of written reports; Plaintiff went to the Golden office only for an

occasional district meeting of account managers. Sunset Manor’s administrator

exercised supervision and control over Plaintiff when Plaintiff was employed by

Sunset Manor, and this did not change after Plaintiff became an employee of

Defendant. Plaintiff believed that she had a long-term job at Sunset Manor and

planned to work there until her retirement at age 65.

On November 6, 1998, Plaintiff injured her right hip in a non-work related

automobile accident. Plaintiff got permission from Defendant to take two 30-day

periods of leave, and Plaintiff began the first 30-day period of leave on December

8, 1998. On February 20, when Plaintiff failed to report to work after the

expiration of the second 30-day period of leave, Defendant terminated Plaintiff’s

employment.

Although Defendant had granted Plaintiff two 30-day periods of leave,

Defendant denied Plaintiff’s request for leave under the Family and Medical

Leave Act (“FMLA”), 29 U.S.C. § 2601 et seq. The FMLA requires covered

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employers to provide eligible employees with up to 12 weeks of medical leave per

year for, inter alia, a serious health condition that renders the employee unable to

work. Id. § 2612(a)(1)(D). Only those employees whose employer employs at

least 50 employees within 75 miles of that employee’s “worksite” are eligible for

leave under the Act. Id. § 2611(2)(B)(ii). The statutory term “worksite” is

defined in a DOL regulation. See 29 C.F.R. § 825.111(a)(3).

Defendant denied Plaintiff’s request for FMLA leave based on Defendant’s

conclusion that Plaintiff was not employed at a “worksite” at which Defendant

employed 50 or more employees within 75 miles, and that she was therefore

ineligible for FMLA leave. This conclusion was based on the premise that

Plaintiff’s “worksite” was Sunset Manor in Brush, rather than Defendant’s

regional office in Golden. During the relevant time period, Defendant employed

fewer than 50 employees within 75 miles of Sunset Manor but employed more

than 50 employees within 75 miles of its regional office in Golden.

Plaintiff filed this lawsuit, alleging that Defendant wrongfully denied her

request for medical leave under the FMLA and wrongfully terminated her.

Defendant moved for summary judgment in part on the ground that the relevant

portion of the DOL regulation defining the statutory term “worksite” was invalid.

See Harbert v. Healthcare Servs. Group, Inc., 173 F. Supp. 2d 1101, 1106 (D.

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Colo. 2001). The district court upheld the regulation and denied Defendant’s

motion for summary judgment. See id.

After a bench trial, the district court concluded that Plaintiff’s “worksite”

under the applicable regulation was Defendant’s regional office in Golden,

Colorado. Because Defendant employed more than 50 employees within 75 miles

of its Golden office, the court held that Defendant wrongfully denied Plaintiff

benefits under the FMLA. The district court awarded Plaintiff back pay, front

pay, liquidated damages, interest, costs, and attorney fees.

In this appeal, Defendant concedes that the applicable DOL regulation

identifies Plaintiff’s “worksite” as its regional office in Golden. Defendant

argues only that this regulation is invalid, contending that the agency exceeded its

authority to implement the FMLA.

DISCUSSION

I. Appellate Jurisdiction

We first address whether we have jurisdiction to consider the merits of this

appeal. On March 13, 2003, the district court entered an order resolving the issue

of liability in Plaintiff’s favor and setting forth a formula for the calculation of

damages. The court instructed the parties to meet to determine the precise

amount of damages and prepare a judgment in accordance with that determination.

Defendant filed a notice of appeal on April 11. The district court later entered

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judgment, fixing damages in the amount agreed upon by the parties and disposing

of the case. No new notice of appeal was taken from the subsequent judgment.

Defendant now wishes to appeal only the issue of liability resolved in the March

13 decision, not the subsequent calculation of damages.

Under 28 U.S.C. § 1291, we have jurisdiction only over “final” decisions of

the district court. Albright v. UNUM Life Ins. Co. of Am., 59 F.3d 1089, 1092

(10th Cir. 1995). Accordingly, we must determine whether the March 13 Order –

the only order from which a notice of appeal was taken – was a final decision and,

if not, whether it became final when the district court subsequently fixed damages

and disposed of the case.

A. Whether the March 13 Order was a “final” decision

For a ruling to be final, “it must end the litigation on the merits, and the

judge must clearly declare his intention in this respect.” FirsTier Mortgage Co. v.

Investors Mortgage Ins. Co., 498 U.S. 269, 273-74 (1991) (internal quotations and

citations omitted). A final order is one that “leave[s] nothing for the court to do

but execute the judgment.” Albright, 59 F.3d at 1092 (internal quotations

omitted). As a general rule, “the touchstone of a final order is a decision by the

court that a party shall recover only a sum certain.” Id. (citing Fed. R. Civ.

P. 58) (internal quotations omitted) (emphasis in original). Accordingly, an order

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that determines liability but leaves damages to be calculated is not final. Id.

However, pursuant to an exception to the general rule, “an order is final even if it

does not reduce the damages to a sum certain if the order sufficiently disposes of

the factual and legal issues and any unresolved issues are sufficiently ministerial

that there would be no likelihood of further appeal.” Id. at 1093 (quotations

omitted).

For example, in Albright v. UNUM Life Insurance Co. of America, the

plaintiff had requested in his motion for summary judgment the “monthly benefit

of 66 2/3 % of his preinjury basic monthly earnings less other income benefits

such as workers’ compensation and Social Security Disability.” Id. at 1092

(quotation omitted). The district court granted his motion but did not address the

issue of benefits. Id. We stated that “both determining the correct amount of

monthly benefits and the proper deductions for other income benefits may prove

to be complicated and disputed calculations” and were not likely to be simply

ministerial. Id. at 1093. Accordingly, we held that the district court’s order was

not final, and we dismissed the defendant’s appeal. Id. at 1094.

In this case, the district court awarded Plaintiff back pay, front pay,

liquidated damages, interest, costs, and attorney fees. Specifically, the district

court set total back pay in the amount of $84,778.80, to be reduced by “the

amount [Plaintiff] has earned [since her termination] through other employment

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together with interest on the net amount at the legal rate.” The district court set

total front pay in the amount of $102,374.40, to be reduced by “the amount of

compensation [Plaintiff] would earn from Conoco [until her 65th birthday],

calculated at her present rate of earnings per week plus any guaranteed raises or

cost of living increases.”

The district court then ordered the parties “to meet and confer within[] 20

days from the date hereof to determine the precise amounts to be set forth in the

judgment in accordance with the above stated findings and conclusions.” The

district further directed, “If counsel can agree, they shall prepare a judgment in

accordance herewith. If counsel are unable to agree, they shall notify the court

within the following ten days and the matters not agreed upon will be set for

hearing.”

The various components of the damages award were not sufficiently fixed

to satisfy the standard we set forth in Albright. The amount of Plaintiff’s past

and future earnings was not determined, and calculation of those amounts could

have proven complicated and disputed. For example, nothing in the order

indicates whether Plaintiff’s weekly compensation at Conoco is fixed or varies,

and nothing in the order defines a “guaranteed” raise or cost of living increase.

As such, the process of calculating damages in this case was no more

“ministerial” than it was in Albright itself.

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 Moreover, the district court must have contemplated the possibility of a

contentious process because it provided in its order that if the parties could not

agree on the amount of the award, the disputed issues would be set for hearing.

By so providing, the district court did not “clearly declar[e] his intention” to “end

the litigation on the merits” in the March 13 Order. FirsTier, 498 U.S. at 273-74.

For these reasons, we hold that the court’s March 13 decision was not a final

decision.

B. Whether the March 13 Order became “final” when the district court
disposed of the remainder of the case

In Lewis v. B.F. Goodrich Co., we held that an otherwise nonfinal decision

becomes final and appealable if the district court adjudicates all remaining claims

against all remaining parties before the appellate court acts to dismiss the appeal

on the merits for lack of jurisdiction. 850 F.2d 641, 645 (10th Cir. 1988) (en

banc); see also Old Republic Ins. Co. v. Durango Air Serv., Inc., 283 F.3d 1222,

1225 (10th Cir. 2002); Dodd Ins. Servs., Inc. v. Royal Ins. Co. of Am., 935 F.2d

1152, 1154 n.1 (10th Cir. 1991); Fed. Sav. & Loan Ins. Corp. v. Huff, 851 F.2d

316, 317-18 (10th Cir. 1988) (en banc); Moore’s Federal Practice, § 54.25[3], at

54-87 (“If an order is not certified under Rule 54(b), but a notice of appeal is

nevertheless filed, any subsequent order of the district court that completely

adjudicates the remaining claims is sufficient to validate the otherwise premature

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notice of appeal.”). Accordingly, a decision that is otherwise nonfinal because it

leaves damages unresolved becomes final and appealable if post-appeal

adjudications in the district court precisely fix damages and dispose of the case.

Gen. Motors Corp. v. New A.C. Chevrolet, Inc., 263 F.3d 296, 311 n.3 (3d Cir.

2001).

Here, subsequent to the notice of appeal, the district court entered a

judgment fixing damages. All claims against all parties are now resolved. The

district court’s nonfinal decision therefore became final as a result of the post-

appeal proceedings in the district court. We hold that the notice of appeal filed in

this case was effective to confer appellate jurisdiction over the district court’s

March 13 Order. See Lewis, 850 F.2d at 645; Gen. Motors Corp., 263 F.3d at 311

n.3.

II. Merits

Defendant challenges only the validity of 29 C.F.R. § 825.111(a)(3), the

Department of Labor regulation defining the “worksite” of jointly-employed

employees. Both parties agree that this joint employment provision, if valid,

governs this case and that it would lead to a conclusion that Plaintiff was a

covered employee. We review a district court’s decision regarding the validity of

an agency regulation de novo. See Pub. Lands Council v. Babbitt, 167 F.3d 1287,

1293 (10th Cir. 1999).

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 The framework we use to analyze an agency’s construction of a statute it

administers was set forth by the Supreme Court in Chevron, U.S.A., Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837, 842-44 (1984). Chevron

mandates a two-step inquiry. “First, always, is the question whether Congress has

directly spoken to the precise question at issue. If the intent of Congress is clear,

that is the end of the matter; for the court, as well as the agency, must give effect

to the unambiguously expressed intent of Congress.” Id. at 842-43. Because the

judiciary is the final authority on issues of statutory construction, it “must reject

administrative constructions which are contrary to clear congressional intent.” Id.

at 843 n.9. To ascertain whether Congress had an intent on the precise question

at issue, courts should “employ[] traditional tools of statutory construction.” Id.

These tools include examination of the statute’s text, structure, purpose, history,

and relationship to other statutes. See Gen. Dynamics Land Sys., Inc. v. Cline,

540 U.S. 581, 124 S. Ct. 1236, 1248-49 (2004).

Second,

[i]f...the court determines Congress has not directly addressed the
precise question at issue, the court does not simply impose its own
construction on the statute, as would be necessary in the absence of
an administrative interpretation. Rather, if the statute is silent or
ambiguous with respect to the specific issue, the question for the
court is whether the agency's answer is based on a permissible
construction of the statute.

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Chevron, 467 U.S. at 843 (footnote omitted). The Court explained that an

agency’s answer is permissible unless arbitrary, capricious, or manifestly contrary

to the statute:

The power of an administrative agency to administer a
congressionally created . . . program necessarily requires the
formulation of policy and the making of rules to fill any gap left,
implicitly or explicitly, by Congress. If Congress has explicitly left a
gap for the agency to fill, there is an express delegation of authority
to the agency to elucidate a specific provision of the statute by
regulation. Such legislative regulations are given controlling weight
unless they are arbitrary, capricious, or manifestly contrary to the
statute. Sometimes the legislative delegation to an agency on a
particular question is implicit rather than explicit. In such a case, a
court may not substitute its own construction of a statutory provision
for a reasonable interpretation made by the administrator of an
agency.

Id. at 843-44 (internal quotations and citations omitted) (footnotes omitted).

A. The Family and Medical Leave Act (“FMLA”)

The FMLA was enacted, in part, “to balance the demands of the workplace

with the needs of families...[and] to entitle employees to take reasonable leave for

medical reasons...in a manner that accommodates the legitimate interests of

employers.” 29 U.S.C. § 2601(b). The Act entitles eligible employees of covered

employers to take up to 12 weeks of unpaid, job-protected leave each year

because of, among other things, “a serious health condition that makes the

employee unable to perform the functions of the position of such employee.” Id.

§ 2612(a)(1)(D).

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 As part of the balance that was struck between the interests of employers

and the interests of employees, Congress included a small employer exception that

excludes from the Act’s coverage employers with fewer than 50 employees. Id.

§ 2611(4)(A)(i). A separate exception was granted for small operations – that is,

a potentially large company with a relatively small satellite office in a particular

area. Specifically, the statute excludes from coverage any employee whose

employer employs less than 50 employees within 75 miles of that employee’s

“worksite” (“the 50/75 provision”). Id. § 2611(2)(B)(ii). According to the House

Committee Report, the 50/75 provision “recognizes the difficulties an employer

may have in reassigning workers to geographically separate facilities.” H.R. Rep.

No. 102-135(I), at 37 (1991).

With these eligibility restrictions, Congress recognized that only about 40

to 50 percent of all employees would be covered by the Act. S. Rep. No. 102-68,

at 24 (1991); H.R. Rep. No. 102-135(I), at 37 (1991).

B. The FMLA regulation defining “worksite”

Congress granted the Secretary of Labor the authority to prescribe such

regulations as are necessary to carry out the FMLA. 29 U.S.C. § 2654. The

regulation at issue in this case, 29 C.F.R. § 825.111(a)(3), defines the “worksite”

of an employee who is jointly employed by two or more employers as follows:

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 For purposes of determining that employee’s eligibility, when an
employee is jointly employed by two or more employers (see §
825.106), the employee’s worksite is the primary employer’s office
from which the employee is assigned or reports. The employee is
also counted by the secondary employer to determine eligibility for
the secondary employer’s full-time or permanent employees.

Id. § 825.111(a)(3). Section 825.106(a) states that two entities may be considered

“joint employers” where they both exercise some control over the work or

working conditions of the employee. Id. § 825.106(a). For example, joint

employment will ordinarily be found to exist when a temporary agency supplies

employees to a second employer. Id. § 825.106(b). In joint employment

relationships, the “primary employer” is the only employer responsible for

providing FMLA leave. Id. § 825.106(c). The “primary employer” is determined

by considering such factors as the authority to hire and fire, assign/place the

employee, make payroll, and provide employment benefits. Id.

In this case, the district court identified Plaintiff as jointly employed by

both Defendant and Sunset Manor, applied § 825.111(a)(3), and defined

Defendant as Plaintiff’s “primary employer.” None of this is at issue in this

appeal. What is at issue is whether § 825.111(a)(3) is a valid regulation

implementing the FMLA.

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 C. The Chevron analysis

Pursuant to Chevron’s mandate, we must first consider whether Congress

expressed a clear intent with respect to the meaning of “worksite” for an

employee who is jointly employed. See 467 U.S. at 842-43. We conclude that

congressional intent with respect to this issue is not sufficiently clear to render

the regulation invalid under the first step of Chevron.

“A fundamental canon of statutory construction is that, unless otherwise

defined, words will be interpreted as taking their ordinary, contemporary,

common meaning.” Perrin v. United States, 444 U.S. 37, 42 (1979); CBC, Inc. v.

Bd. of Governors of the Fed. Reserve Sys., 855 F.2d 688, 690 (10th Cir. 1988).

Congress did not define the term “worksite” in the FMLA. However, the common

understanding of the term “worksite” is the site where the employee works. Here,

the parties do not dispute that Plaintiff worked at Sunset Manor in Brush,

Colorado. Under the ordinary meaning of the term, her “worksite” would be

Sunset Manor in Brush. However, under the joint employment regulation,

§ 825.111(a)(3), Plaintiff’s “worksite” is Defendant’s regional office in Golden, a

place where Plaintiff went only for occasional meetings of account managers.

Nonetheless, Congress did not expressly define the term “worksite” in the FMLA,

and because Congress has not directly spoken to the question at issue, we proceed

to a step-two analysis under Chevron.

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 Under the second step of Chevron, we must “give[] controlling weight [to

the agency’s regulations] unless they are arbitrary, capricious, or manifestly

contrary to the statute.” Chevron, 467 U.S. at 844. In light of the deference we

owe an agency’s construction of the statute, this case presents a very close

question. However, we conclude that § 825.111(a)(3), as applied to the situation

of an employee with a fixed place of work, is arbitrary, capricious, and manifestly

contrary to the FMLA. We first address the three indicia of congressional intent

that lead us to this conclusion, and then consider the counter-arguments made by

Plaintiff and the Secretary of Labor.

1. Common meaning of the term “worksite”

We concluded above that the agency’s definition of “worksite,” as applied

to Plaintiff, runs contrary to the common meaning of that term. See discussion

supra. That the agency’s definition of Plaintiff’s worksite contravenes the plain

meaning of the term “worksite” is one indicia of congressional intent that

militates against deference to the agency’s construction of the statute under the

second step of Chevron.

2. Legislative Purpose

“Courts must guard against interpretations that might defeat a statute’s

purpose[.]” United States v. Soto-Ornelas, 312 F.3d 1167, 1172 (10th Cir. 2002)

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(quotations and alterations omitted). The agency’s definition of worksite, as

applied to Plaintiff, is contrary to the purpose underlying the 50/75 provision.

As discussed above, Congress included a provision in the FMLA excluding

from the Act’s coverage employers with fewer than 50 employees. 29 U.S.C.

§ 2611(4)(A)(i). However, Congress also recognized that even potentially large

employers (i.e., those with more than 50 employees) may have difficulty finding

temporary replacements for employees who work at geographically scattered

locations. Congress therefore determined that if any employer (large or small)

has no significant pool of employees nearby to cover for an absent employee, that

employer should not be required to provide FMLA leave to that employee.

Specifically, Congress determined that an employer must employ at least 50

employees within 75 miles of the employee’s worksite. Id. § 2611(2)(B)(ii).

The House Report confirms that the congressional purpose underlying the

50/75 provision was to remove the burden of providing FMLA leave from

employers who do not have an abundant supply of temporary replacements in

close geographic proximity to the employee requesting leave:

For purposes of determining the size of an employer, there is a
geographic limitation of a 75-mile radius that applies to the
aggregation of employees at different facilities. This provision
recognizes the difficulties an employer may have in reassigning
workers to geographically separate facilities.

H.R. Rep. No. 102-135(I), at 37 (1991).

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 An employer’s ability to replace a particular employee during his or her

period of leave will depend on where that employee must perform his or her work.

In general, therefore, the congressional purpose underlying the 50/75 provision is

not effected if the “worksite” of an employee who has a regular place of work is

defined as any site other than that place. 1

For example, if Defendant were to grant leave to Plaintiff, Defendant would

have been required to find an employee to cover for Plaintiff at Sunset Manor in

Brush, Colorado. It is undisputed that Defendant employed fewer than 50

employees within 75 miles of Brush. Defendant therefore had no abundant supply

of employees who could have covered for Plaintiff during her period of leave.

Defendant, a large employer with geographically dispersed employees, is

precisely the type of employer Congress intended to protect with its enactment of

the 50/75 provision.

Accordingly, a regulatory provision that defines Plaintiff’s “worksite” as

Defendant’s regional office in Golden does not effect the congressional purpose

underlying the 50/75 provision.

We do not intend this statement to cast doubt on the portion of the
1

agency’s regulation defining the “worksite” of employees whose regular
workplace is his or her home. See 29 C.F.R. § 825.111(a)(2).

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 3. Arbitrary distinction between sole and joint employers

The challenged regulation also creates an arbitrary distinction between sole

employers and joint employers. For example, if the employer is a company that

operates a chain of convenience stores, the “worksite” of an employee hired to

work at one of those convenience stores is that particular convenience store. See

58 Fed. Reg. 31794, 31798 (1993). If, on the other hand, the employer is a

placement company that hires certain specialized employees to work at

convenience stores owned by another entity (and therefore is considered a joint

employer), the “worksite” of that same employee hired to work at that same

convenience store is the office of the placement company. See 29 C.F.R.

§ 825.111(a)(3).

Assuming both employers employ more than 50 employees within 75 miles

of their central office but fewer than 50 employees within 75 miles of the

convenience store, the employee is ineligible for FMLA leave if the employer is a

sole employer (e.g., the company that owns the convenience store chain) but

eligible for FMLA leave if the employer is a joint employer (e.g., the placement

company).

Accordingly, the joint employment provision creates the possibility that an

employer’s responsibility to provide FMLA leave to an employee will depend

exclusively on whether that employer is a sole employer or a joint employer. This

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is true despite the fact that neither employer has an abundant supply of nearby

employees to replace temporarily an employee taking leave and, consequently, are

both subject to the burden Congress tried to alleviate by enacting the 50/75

provision. See discussion supra Section II.C.2. The effect of the joint

employment provision is to require the joint employer to bear that burden even

though the sole employer is relieved of that burden. Because both types of

employers bear the burden the 50/75 provision was designed to alleviate, there is

simply no basis in the statute or in logic for such a distinction. 2 We owe no

deference to an agency’s arbitrary construction of a statute. See Chevron, 467

U.S. at 844.

In sum, the ordinary meaning of the term “worksite,” the congressional

purpose underlying the 50/75 provision, and the arbitrary distinction the

regulation creates between sole and joint employers all militate strongly against

deference to the agency’s construction of the statute as applied to Plaintiff. At

bottom, Congress intended the term “worksite” to be construed as the employee’s

2
The Secretary insists that the distinction between sole employers and joint
employers is not arbitrary because the agency could reasonably have concluded
that joint employers are better equipped to find replacements for remotely-
stationed employees. We disagree. While some joint employers may have
employees who are willing to change job locations regularly (e.g., temporary
employees), there is no reason to believe that these employees are any more likely
than any other employee to do so if changing job locations requires moving to a
new location more than 75 miles away.

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regular place of work, and we see no reason to apply a different definition to

Plaintiff simply because she is jointly-employed. We turn next to the counter-

arguments offered by the Secretary and Plaintiff.

4. Counter-arguments

a. The legislative history’s reference to the WARN Act

The Secretary insists that the joint employment provision is valid because

the agency, as directed by the legislative history, patterned the definition of

“worksite” after the definition of “single site of employment” in the Worker

Adjustment and Retraining Notification (“WARN”) Act, 29 U.S.C. § 2101 et seq.

The Secretary correctly points out that the House and Senate Committee

Reports both indicate that the term “worksite” is to be construed consistent with

the term “single site of employment” under the WARN Act and regulations under

that Act:

The term “worksite” is intended to be construed in the same manner
as the term “single site of employment” under the Worker
Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C.
2101(a)(3)(B), and regulations under that Act (20 CFR Part 639).
Where employees have no fixed worksite, as is the case for many
construction workers, transportation workers, and salespersons, such
employees’ “worksite” should be construed to mean the single site of
employment to which they are assigned as their home base, from
which their work is assigned, or to which they report.

S. Rep. No. 103-3, at 23 (1993); see also H.R. Rep. No. 103-8(I), at 35 (1993)

(substantially the same).

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 The WARN Act requires covered employers to provide written notice to

affected employees sixty days before a “mass layoff.” 29 U.S.C. § 2102(a); see

also Frymire v. Ampex Corp., 61 F.3d 757, 761 (10th Cir. 1995). Congress

defined “mass layoff” as “a reduction in force which...results in an employment

loss at the single site of employment during any 30-day period for...at least 50

employees[.]” 29 U.S.C. § 2101(a)(3) (emphasis added). The WARN Act itself

does not define “single site of employment.”

The Secretary of Labor has promulgated a regulation defining the term

“single site of employment” for purposes of the WARN Act. 3 20 C.F.R.

§ 639.3(i); see also 29 U.S.C. § 2107. The focus of the regulation is in explaining

when two or more different employment sites can be counted together as a “single

site” for the purpose of aggregating employees to reach the 50-employee

minimum. See 20 C.F.R. § 639.3(i). The regulation also recognizes that the

employment sites of certain groups of employees will be difficult to identify.

Accordingly, it provides:

For workers whose primary duties require travel from point to point,
who are outstationed, or whose primary duties involve work outside
any of the employer's regular employment sites (e.g., railroad
workers, bus drivers, salespersons), the single site of employment to
which they are assigned as their home base, from which their work is

3
This regulation was promulgated in 1989 (see 54 Fed. Reg. 16042 (1989)),
prior to enactment of the FMLA.

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 assigned, or to which they report will be the single site in which they
are covered for WARN purposes.

Id. § 639.3(i)(6).

The Secretary argues that its FMLA joint employment regulation, 29 C.F.R.

§ 825.111(a)(3), is consistent with this WARN regulation defining “single site of

employment” for purposes of the WARN Act. Specifically, the Secretary argues

that jointly-employed employees are essentially “outstationed” workers and are

properly treated in the joint employment provision of the FMLA in the same

manner that outstationed workers are treated under this WARN Act regulation.

For several reasons, we disagree.

First, we believe that this provision of the WARN Act governs only

employees without a fixed place of work, not employees who, like Plaintiff, do

have a fixed place of work. All three examples listed in the parenthetical in the

WARN Act regulation are employees who do not have a fixed place of work. See

20 C.F.R. 639.3(i)(6) (listing railroad workers, bus drivers, and salespersons).

Furthermore, the agency, in enacting the WARN Act regulation, referred to

§ 639.3(i)(6) as “that part of the regulation relating to mobile workers[.]” 54 Fed.

Reg. 16042, 16051 (1989). 4 Finally, for employees who do have a fixed place of

4
The passage provides in full:

Another commenter suggested that in the railroad industry certain
(continued...)

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work, there is no reason to believe the agency for purposes of the WARN Act

would have named any different place as the employee’s employment site.

Accordingly, we conclude that the applicable WARN Act regulation, 20 C.F.R.

§ 639.3(i)(6), applies only to employees without a fixed place of work and is not

relevant to employees who, like Plaintiff, do have a fixed place of work.

Further, even if the term “outstationed” in the WARN Act regulation could

reasonably be interpreted more broadly to encompass employees who do have a

fixed place of work, the definition of “single site of employment” for outstationed

employees under the WARN Act is ambiguous. Under the WARN Act regulation,

there are three potentially different locations that could be the “single site of

4
(...continued)
maintenance crews have no home base and should be treated as
separate operating units. While such workers may well be considered
as a separate operating unit, their status must be determined in terms
of the single site of employment to which they are assigned. These
workers may not have an assigned home base, but they must get their
orders or assignments from somewhere, even if that place changes
from time to time. In order to cover this situation and the situation
of outstationed workers and traveling workers who report to but do
not work out of a particular office, that part of the regulation relating
to mobile workers has been revised to clarify that such workers
should be treated as assigned to their home base or to the single site
from which their work is assigned or to which they report. This part
of the definition has been moved, for reasons of organizational
clarity, to be a part of the definition of “single site of employment”
in § 639.3(i).

54 Fed. Reg. at 16051 (emphasis added).

- 25 -
employment” of an outstationed employee – namely, “the site...to which they are

assigned as their home base, from which their work is assigned, or to which they

report.” 20 C.F.R. § 639.3(i)(6). Accordingly, even if Plaintiff, who does have a

fixed place of work, could be considered “outstationed” under the WARN Act

regulation, it is entirely unclear from the regulation whether her “single site of

employment” would be Brush (the site to which she is assigned) or Golden (the

place to which she reports and from which she is assigned). As such, the WARN

Act regulation provides little, if any, guidance to the agency with respect to the

proper definition of “worksite” for an employee who, although arguably

“outstationed,” does have a fixed place of work.

Absent guidance from Congress, such ambiguity might militate in favor of

deference to the agency’s construction of the statute. As discussed above,

however, the plain meaning of the term “worksite” in the FMLA, the

congressional purpose underlying the 50/75 provision in the FMLA, and the

arbitrary distinction the regulation creates between sole and joint employers under

the FMLA are all factors that militate strongly against deference to the agency’s

construction of that statute. We therefore find no merit in the Secretary’s

argument that an ambiguous regulation implementing the WARN Act renders the

agency’s construction of the FMLA reasonable.

- 26 -
 b. Congressional recognition that the “worksite” of some
employees may not be their regular workplace

The Secretary also argues that because the legislative history suggests that

the “worksite” of some employees may be some place other than their regular

place of work, it was permissible for the agency to define the “worksite” of

jointly-employed employees as some other location. We disagree.

The House and Senate Committee Reports both provide a definition of

“worksite” for employees with “no fixed worksite.” Specifically:

Where employees have no fixed worksite, as is the case for many
construction workers, transportation workers, and salespersons, such
employees’ “worksite” should be construed to mean the single site of
employment to which they are assigned as their home base, from
which their work is assigned, or to which they report.

S. Rep. No. 103-3, at 23 (1993); see also H.R. Rep. No. 103-8(I), at 35 (1993)

(substantially the same). As such, both Committee Reports recognized that all

employees, even those without a fixed worksite, must have a definable “worksite”

so that their eligibility under the Act can be determined. For employees without a

fixed worksite, it was necessary to identify some fixed location that could serve

as a “worksite” for purposes of the Act. See, e.g., S. Rep. No. 103-3, at 23. That

location could not be the employee’s regular workplace, because the employee has

no regular workplace. Accordingly, we do not question the validity of the

agency’s regulation pertaining to employees with “no fixed worksite.” See 29

C.F.R. § 825.111(a)(2).

- 27 -
 Furthermore, we do not question the validity of the joint employment

provision, id. § 825.111(a)(3), insofar as it applies to employees of temporary

help agencies. An employee of a temporary help agency does not have a

permanent, fixed worksite. It is therefore appropriate that the joint employment

provision defines the “worksite” of a temporary employee as the temporary help

office, rather than the various changing locations at which the temporary

employee performs his or her work. See 60 Fed. Reg. 2180, 2187 (1995)

(explaining that under joint employment provision, “worksite” of temporary

employee is temporary help office).

On the contrary, if an employee does have a fixed worksite, there is no

similar need to identify a constructive “worksite” for purposes of the FMLA. The

Secretary’s argument that an employee with a fixed worksite should be treated

comparably to an employee without a fixed worksite is therefore without merit.

In sum, we find the counter-arguments offered by Plaintiff and the

Secretary unavailing, and we conclude that 29 C.F.R. § 825.111(a)(3), as applied

to an employee like Plaintiff with a fixed worksite yet subject to joint employers,

is arbitrary, capricious, and manifestly contrary to the FMLA. 5

5
We also note that we find no merit in Plaintiff’s argument that
congressional silence since the Secretary promulgated the regulation militates in
favor of the regulation’s validity. Plaintiff relies primarily on Walker v. United
Parcel Service, Inc., 240 F.3d 1268 (10th Cir. 2001). In Walker, Congress had
(continued...)

- 28 -
 CONCLUSION

We appreciate the deference we owe to an agency’s construction of the

statute it is charged with administering when the agency’s construction is not

contrary to the clearly expressed intent of Congress. As the Supreme Court

recently recognized, however, “[o]ur deference to the Secretary...has important

limits: A regulation cannot stand if it is arbitrary, capricious, or manifestly

contrary to the statute.” Ragsdale v. Wolverine World Wide, Inc., 535 U.S. 81,

87 (2002) (quotation omitted) (invalidating different FMLA regulation under

second step of Chevron). We hold that 29 C.F.R. § 825.111(a)(3), as applied in

this case to a jointly employed employee with a fixed worksite, is not a valid

exercise of agency authority, and we REVERSE the judgment of the district court

and REMAND for further proceedings consistent with this opinion.

5
(...continued)
amended Title VII without taking issue with the agency regulation in question,
even though the validity of the regulation had been the subject of debate within
the courts. Id. at 1276. We held that congressional silence under these
circumstances lent support to a conclusion that the regulation is valid,
emphasizing that “[p]lainly EEOC’s regulation has not escaped public or
legislative notice over what has been nearly a quarter century.” Id. Here, the
subject regulation had not been the subject of debate until this case.

- 29 -
03-1156, Nancy E. Harbert v. Healthcare Services, Inc.
KELLY, Circuit Judge, concurring in part and dissenting in part.

While I concur in the court’s conclusion that we have appellate jurisdiction,

I dissent from its holding that 29 C.F.R. § 825.111(a)(3) defining the statutory

term “worksite” is invalid, as applied to a jointly employed employee with a

largely fixed worksite. Declaring invalid a regulation that an agency has been

charged with developing is strong medicine and only appropriate when the

regulation is “arbitrary, capricious, or manifestly contrary to the statute.”

Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837, 844 (1984). Here, the statute never

defines “worksite” and the Secretary of Labor is empowered to prescribe rules to

implement the FMLA. 29 U.S.C. § 2654. We must defer to the agency’s

interpretation if it “is based on a permissible construction of the statute.”

Chevron, 467 U.S. at 843.

The court invalidates the regulation as applied to jointly employed

employees with largely fixed worksites as inconsistent with the purpose of the

50/75 provision. Healthcare does not appeal the district court’s decision that Ms.

Harbert was jointly employed, but instead contends that the “worksite” definition

is invalid. Aplt. Br. at 9-10. The 50/75 provision excludes an employee from

FMLA coverage if the employee “is employed at a worksite at which [the]

employer employs less than 50 employees if the total number of employees

employed by that employer within 75 miles of that worksite is less than 50.” 29

U.S.C. § 2611(2)(B)(ii).
 Joint employment comes in many forms. But the primary employer

generally has control over the reassignment, placement, and hiring and firing of

joint employees, not the secondary employer. See 29 C.F.R. § 825.106(c). Thus,

an employee’s “worksite” is defined with reference to the employer retaining the

most control over the employee, and the employer responsible for providing

FMLA leave. Id. The court’s ipse dixit that the Secretary’s definition of the term

“worksite” is contrary to common meaning fails to account for the many

variations in joint employment relationships, from forever fixed to forever

mobile. See Moreau v. Air Fr., 356 F.3d 942, 946 (9th Cir. 2004); 29 C.F.R.

825.106.

The legislative history reflects that the Senate and House obviously were

aware of variations in joint employment relationships and directed the Secretary

to construe “worksite” in the same manner as the term “single site of

employment” under the WARN Act. S.R. Doc. No. 103-3, at 25 (1993); see also

H.R. Doc. No. 103-8, pt. 1, at 35 (1993). Though both the legislative history and

a WARN Act regulation, 20 C.F.R. § 639.3(i), discuss workers that lack a fixed

site of employment, the Secretary’s interpretation that other arrangements are

encompassed within the directive to the WARN Act is a permissible and

reasonable interpretation. Holding that the WARN Act regulation only applies to

employees without a regularly fixed site of employment would seem to contravene

-2-
the express language of the provision which mentions other categories, including

employees who “travel from point to point, who are outstationed, or whose

primary duties involve work outside any of the employer’s regular employment

sites.” Id.

The court’s contrast between sole and joint employers (a convenience store

chain and a temporary placement agency) as an example resulting in arbitrary

differences in treatment is hardly persuasive. Ct. Op. at 20; but see id. at 28. The

court contends that these two employers would be treated differently even though

neither has abundant replacements nearby. Unlike the court, I find this distinction

favors the validity of the regulation. Basing FMLA eligibility on primary

employers prevents confusion and provides certainty, because a temporary

placement employee’s coverage could vary daily were he placed in different

convenience stores on a rotating basis. Further, contrary to the court’s assertion,

the ability of a convenience store and a placement agency to find abundant nearby

replacements probably is not identical, after all, the placement agency specializes

in hiring and placing employees within the area.

Though the regulation might be more precise were we crafting it, that is not

our function. It is a permissible exercise of agency rulemaking. I respectfully

dissent.

-3-