Litigation update on selected state benefit and leave laws 

Discussion of state benefit and leave laws tends to focus on the state house, governor’s office and the relevant state insurance and labor departments. But do not overlook state and federal courthouses, where new laws are often weighed and measured to determine if they are valid.

Currently, there are at least six cases to consider monitoring:

Paid leave

• Michigan — Mothering Justice v. Attorney General. In 2018, Michigan citizens were originally supposed to vote on a paid sick leave and minimum wage initiative. However, the legislature adopted the initiative before the vote could occur, later amending the new law during the same session. The amendments were not as generous as the original ballot measure, particularly related to leave eligibility, accrual and carryover. The validity of this “adopt-and-amend” strategy has been litigated ever since. So far, the amendments to the law have been upheld by the state’s Court of Appeals. The case has been pending before the state supreme court since February 2023, oral arguments occurred in December 2023, and a decision is expected soon. For a comparison of the laws, see our GRIST: Roundup of selected state health developments, third-quarter 2022.
• Puerto Rico — Hernández-Montañez v. Financial Oversight and Management Board for Puerto Rico. On March 25, the US Supreme Court essentially ended litigation in denying a petition that sought to reverse an appellate court opinion striking down a 2022 law that would have enhanced a vacation and paid sick leave law. Under the Puerto Rico Oversight, Management and Economic Stability Act (better known as PROMESA), the legislature had to follow certain procedures to gain approval by a federal oversight board called the Financial Oversight and Management Board for Puerto Rico (FOMB). FOMB challenged the 2022 employee-friendly changes to the original paid leave law, among which were expanded vacation eligibility and vacation/paid sick benefits for nonexempt employees and vacation eligibility for part-time employees. As a result, the original more limited law remains in effect. For a comparison of the original amended laws, see our GRIST: Roundup of selected state health developments, first-quarter 2023.

ERISA preemption of state laws

• Oklahoma — Pharmaceutical Care Management Association v. Mulready. The Tenth Circuit Court of Appeals ruled that major portions of the Patient’s Right to Pharmacy Choice Act were preempted by ERISA. The law aimed to apply restrictions on pharmacy benefit managers (PBMs) to self-funded ERISA plans, a legislative trend across many states. A petition for writ of certiorari is currently pending before the US Supreme Court. If certiorari is granted, the Court would hear the case during its 2024-2025 session, starting in October, with a decision likely in 2025.
• Oklahoma — Caremark v. Drummond. In January, Caremark, a PBM, challenged other portions of the above-referenced Oklahoma law, including an affiliated pharmacy prohibition and other network provider restrictions. The case is currently pending in the Western District of Oklahoma.

State law preemption of local laws

• Texas — State of Texas v. Cities of Houston, San Antonio and El Paso. Several years ago, Austin, Dallas and San Antonio passed paid sick leave ordinances. The state attorney general successfully stopped those laws from taking effect. Last year, the state enacted the Texas Regulatory Consistency Act, which preempts local laws in a number of areas, including the Labor Code. Specifically, cities and counties may not pass laws related to employment leave, hiring practices, breaks and employment benefits. The cities argue that the law is unconstitutionally vague and improperly delegates power to the Texas courts without adequate safeguards. In August 2023, a state trial court enjoined the law, delaying its Sept. 1, 2023 effective date. The attorney general has appealed the case to a state court of appeals, where the case is pending. See our GRIST: Roundup of selected state health developments, second-quarter 2023

State labor-benefit law constitutionality

• New Jersey — New Jersey Staffing Alliance v. Fais. Staffing agencies sued the state to prevent it from implementing a 2023 law known as the Temporary Workers’ Bill of Rights. The law requires staffing agencies to provide pay and benefits to temporary employees in certain labor classifications at the same or higher level than comparable employees at the recipient organization. The main arguments against the law are that it is unconstitutionally vague and unduly burdensome. In July 2023, a federal district court denied emergency injunctive relief. As a result, the law remains in effect, even while the case is pending before the First Circuit Court of Appeals. See our GRIST: Roundup of selected state health developments, first-quarter 2023.

Employers affected by these laws should track the progress and outcomes of these cases.