On August 10, 2018, the U.S. District Court for the District of Massachusetts ruled that the federal Railroad Unemployment Insurance Act (RUIA) completely preempts the Massachusetts Earned Sick Time Law (ESTL).¹ As a result, employers that are subject to the RUIA may not be required to comply with the requirements of the ESTL.

Background

In November 2014, Massachusetts voters approved the ESTL, which requires most employers to provide “earned paid sick time” to qualifying employees in Massachusetts.  That law took effect on July 1, 2015.

In the wake of the ESTL's passage, a number of companies that operate rail transportation systems and related facilities in Massachusetts asked the Massachusetts attorney general to voluntarily agree not to enforce the ESTL against them.  They based their request on the language of the RUIA, which both provides sick leave benefits for covered employees and contains a broad preemption provision.  When the attorney general declined this invitation, the companies filed suit, seeking both a declaratory judgment that the RUIA preempted the ESTL and an injunction against the attorney general from enforcing or applying the ESTL against them.  A number of labor unions subsequently intervened and opposed the employers’ position.

The companies initially prevailed in federal court.  On appeal, however, the U.S. Court of Appeals for the First Circuit issued a split decision.  On the one hand, the First Circuit ruled that one section of ESTL was preempted. On the other hand, the appeals court sent the case back to the district court to decide whether other sections of the ESTL fell within the scope of the RUIA’s preemption provision.

The Court’s Decision & Takeaways

On remand, the district court entered summary judgment for the employers.  The court concluded that the text of the RUIA reflects a congressional intent to ensure that the RUIA is the exclusive source of all sickness benefits for railroad employees and to preclude the employees from claiming rights to sickness benefits under any comparable state law, such as the ESTL.  Therefore, the court held that the entire ESTL is preempted.

The attorney general or one of the labor unions that intervened in the case may appeal this decision.  Further, the impact of the decision is limited:  it applies only to companies that qualify as employers under the RUIA.  Employers should therefore consult experienced employment counsel when evaluating the impact of this decision on their ESTL policy.