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Railroads take pivotal California labor law case to Ninth Circuit

The rail operators say California labor law covering "alternative forms of sickness" is preempted by federal law governing railroads.

(CN) — A Ninth Circuit panel heard arguments Thursday in an appeal with major implications for labor law in the United States and the sick pay of railroad workers in California.

A consortium of railroad operators, including Amtrack and Union Pacific, sued the state of California claiming its 2014 law requiring employers to offer sick leave to workers should not apply to railroads for a variety of reasons. 

Mainly, the railroads say federal preemption — the legal concept holding that when federal laws are in conflict with state laws, one must defer to the federal statutes — applies here. They say the Railroad Unemployment Insurance Act regulates railroad worker issues like sick leave, as well as unemployment insurance and disability claims. 

But California's attorneys say the federal statute does not actually cover issues like short-term paid sick leave since it was passed in 1938, before the concept of paid sick leave for personal or family illnesses was fully integrated into employment law in the United States. 

A federal judge in 2017 partly sided with the state, finding the rail operators must allow their California employees to use accrued sick time for family matters and issues related to domestic violence, sexual assault and stalking. She said Congress’ intent when it passed the 1938 Railroad Unemployment Insurance Act was to provide national short-term railroad worker disability insurance, not a “stand-alone sickness benefit statute.”

“[The railroad act] does not so much as mention these other, substantively different benefits, demonstrating that Congress did not regulate those matters and pre-empt state laws that do,” U.S. District Judge Kimberly Mueller, a Barack Obama appointee, wrote.

In 2021, however, Mueller granted judgment in favor of the rail operators, eventually finding that forcing the railroads to apply the California law would create an undue burden to interstate commerce under Dormant Commerce Clause of the U.S. Constitution.

California appealed. Arguing for the state before the Ninth Circuit panel on Thursday, attorney Kristin Liska doubled down on Mueller's earlier ruling.

“Congress understood and intended the phrase ‘sickness benefits’ to refer to situations that the RUIA's language covers, namely when an employee is unable to work due to injury, illness or pregnancy,” she told the three-judge panel.

The state argues the railroad act does not cover "alternative forms of sickness" recognized under California's law — caring for sick family members or attending to matters related to domestic violence — so the statutes are not in conflict and preemption doesn't apply. 

But U.S. Circuit Judge Morgan Christen did not seem persuaded during oral argument. 

“The federal statute seems very broad so you are going to have to help me out in order to gain traction,” she said. 

Arguing for the railroads, attorney Donald Monroe, agreed and said that if any provisions, including time off to vote or other activities, are provided to employees under laws that apply to sickness, they are automatically preempted.

“No matter what it is, if California puts it under a sickness law, they can’t apply it to railroads,” Monroe said. 

Judges did appear to think Monroe went too far in some of his arguments, asking hypothetical questions like whether a law is passed that applies to sickness as well as other components of labor relations is subject to preemption or just the parts of the law that apply to sickness.

Monroe, probably feeling he was on solid footing with his main arguments, neglected to wade into the hypotheticals to the consternation of judges. 

“I don’t think you’re going to answer my question,” Christen, an Obama appointee, said. 

However, the panel seemed inclined to adopt the railroad’s position on the question of sick leave, which is that California law cannot override the federal law that applies to railroad workers. 

U.S. Circuit Judge Daniel Bress, appointed by Donald Trump and Chief U.S. District Judge Barbara Lynn, a Bill Clinton sitting by designation from the Northern District of Texas, rounded out the panel.   

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