The Family and Medical Leave Act (FMLA) was signed into law in February 1993, and employee benefits administration and time-off tracking have never been the same since.
FMLA requires employers to provide workers with job-protected, unpaid leave for qualified medical and family reasons. I didn’t give much thought to FMLA until I became involved in health & welfare benefits administration consulting for larger companies. I have observed the enormous challenges of ensuring that workers are treated fairly as well as the difficult task employers have to comply with the law. That’s because FMLA has so many moving parts.
Despite the enormous energy employers expend to track data, they express lingering concerns over the efficacy of their processes. In particular, they worry about exposures to risks that could lead to non-compliance and unnecessary fines and penalties. I recall an employer who didn’t have adequate resources to determine if their employees’ leave requests were legitimate, a question that would create discomfort on both sides if requests were denied. As a result, this employer approved time-off requests even though the situations may not have been necessarily justified. While consulting on this employer’s health & welfare benefits administration processes, I discovered that the company wasn’t collecting employee contributions for benefits while an employee was on leave, which created a profit leak. With operations in multiple locations across the nation, there was also a real danger that this employer would be in violation of FLMA and state laws.
Eligibility for FMLA leave requires employment by the company for 12 months and at least 1,250 hours of work performed for that business during the 12-month period immediately preceding the leave. In addition, the employee must work within 75 miles of a location that employs 50 or more employees. What makes this tricky for the employer is that some states have more generous leave benefits than others. For example, in Maryland, private employers with 15 or more employees are required to offer FMLA. Other states, including Hawaii, expand the definition of family to include grandparents and parents-in-laws. It is imperative to comply with both the federal law and the rules governing the states in which an employer does business.
When reviewing a leave request, the employer has two main responsibilities:
- Ensure the request qualifies for FMLA
- Track the amount of time the employee is on leave
Types of leaves often include attending to the serious health condition of the employee, parent, spouse or child, pregnancy, care of a newborn child, adoption, or care of a foster child. Moreover, the employee doesn’t have to take all 12 weeks of leave at the same time. Anyone who’s ever worked in HR knows that tracking intermittent leave is a real headache.
Improper FMLA process risks are potentially ENORMOUS for employers.
If all of this wasn’t enough, employers must be mindful of FMLA with regard to Affordable Care Act and employee benefits compliance. If an employee is on leave under the FMLA, for the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), or for jury duty, then their time away from work must still be accounted for when determining if they average 30 or more hours per week during a measurement period. This would qualify them as full-time employees who are entitled to employee benefits. There are two ways this tracking can be handled:
- Determine the average hours of service by excluding periods of unpaid leave during the measurement period and applying the average for the entire measurement period
- Imputing the hours of service during the unpaid leave equal to the average hours of service that are not a part of the leave period
Having fun yet?
The risks and potential expense due to improper leave processes are potentially enormous for employers. Non-compliance with general notice requirements can result in a civil monetary penalty of $110 per offense.1 If an employer loses an FMLA case, it could be subject to paying lost back and front pay, liquidated damages, emotional distress and punitive damages. The average verdict for FMLA cases related to wrongful termination is nearly $335,000, according to the Disability Management Employer Coalition. Moreover, compliance with FMLA costs employers more than $21 billion in lost productivity, continued health benefits, and labor replacement. 2
What’s an employer to do? Large employers are fortunate and have numerous options for FMLA. Many disability insurance carriers offer leave administration services and there are a large number of reputable providers that offer stand-alone leave services. FMLA gets dicey for mid-market employers. Not all disability carriers offer a solution to businesses with fewer than 500 employees and the number of stand-alone providers catering to this market is also limited. That being said, if an employer is struggling with leave, there is most likely an option available that can help.
Understanding FMLA requirements, ascertaining the risks and leveraging third party expertise are critical to properly navigating the employee leave minefield. Giving workers the ability to safeguard their jobs while taking care of legitimate medical or family issues will, in the long run, benefit everyone.
1U.S. Department of Labor, “Employer Notification Requirements under the Family and Medical Leave Act”
2Disability Management Employer Coalition, “Employers Face Litigation Threat in FMLA Cases”
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