FAMILY & MEDICAL LEAVE ACT OF 1993
by Marvin Sahl, CLU
Final rules for The Family and Medical Leave Act of 1993 (FMLA) were effective on February 6, 1995. The law and the rules are administered by the Wage and Hour Division of the U.S. Department of Labor.
There are two kinds of eligibility: That of the employer complying with the act, and that of the employee qualifying for the leave.
As with all federal laws and rules, regulators have attempted to anticipate every possible situation, so the Act has both central and side issues. This article endeavors to explain the relationship of the FMLA to COBRA. This intertwining is considerable, confusing, and constricting, and this article attempts to solve the contradictions between the two acts through a simple reading of the rules.
Part 1 of this article concerns the matters just described. Part 2 is an unedited copy of the 'Compliance Guide of the Family and Medical Leave Act.' After that is an unedited copy of the rules as printed in the Federal Register on January 6, 1995, including COBRA rules.
Because the rules were published only recently, none of them have been tested in the courts, at least of this writing (mid 1995). Such tests will probably be made over several years, by employers who claim economic or administrative hardship -- or by those who believe that the rules exceed Congress' original intent.
PART 1
THE MISUNDERSTOOD KEY EMPLOYEE EXCEPTION
This exception applies to 'key' employees, defined in the rules (see Part 2). Nothing in the law allows an employer to keep from granting key employees a required, qualifying leave. The exception has to do with the key employee's return to work and job restoration. Simply put, if the employer would suffer 'substantial and grievous economic injury to its operations, the employer may refuse to reinstate certain highly paid key employees after using FMLA leave, during which health benefits are maintained.'
Denying return to work or restoration of job requires careful adherence to rules that appear in Part 2 of this article.
WHICH EMPLOYERS MUST COMPLY?
Basically, the Act requires compliance by employers of 50 or more employees for 20 or more work weeks per year, at each single location or within 75 miles of the single location. Employees whose jobs entail travel from the location, although not always present at the location, are counted in the determination.
The rules promulgated on January 6, 1995 require all governmental units, regardless of the number of employees or their locations, to comply with the Act (except for some school districts). Section 825.106 of the Act widely extends eligibility through what it calls 'Joint Employment.' This is an ERISA term, and is quoted verbatim in Part 2. I checked with the Chief Attorney for the Wage and Hour Division in Washington D.C., only to learn that the new rule's purpose is to broaden the number of people covered by the Act. The specific relationship of contractors (of any sort) and subcontractors was intentionally included.
There is no question as to the implication. Clearly, the employees of the contractor and subcontractor are combined to determine the census of employees. Rules are listed for giving notice, leave, and negotiation in joint employment situations.
Eligibility rules for counting the number of employees on an employer's payroll are found in the ERISA guidelines. An insurance agency with only a handful of employees would not be required to comply except when independent contractor agents and their employees are considered to be joint employees of both employers.EMPLOYEE ELIGIBILITY
If someone works for an employer who must comply with the Family Leave Act, his or her eligibility for leave is delineated in the rules. Employees must have worked for the employer for at least a year, during which they were on duty for at least 1,250 hours. Eligibility also depends on the reason(s) for taking the leave. The birth or adoption of a child-or illness of the employee, spouse, child, or parent-may constitute valid reasons for leave. There is little flexibility beyond these parameters.OTHER RULES
Return to work, failure to return to work, employment status upon return to work, continuation of health and welfare benefits during and after leave, COBRA rights, financial arrangements for payment of fringe benefits during leave, and other aspects of the leave are dealt with extensively by the new rules. The relationship of FMLA and the Fair Labor Standards Act is also detailed.PART 2
Compliance Guide to the Family & Medical Leave Act Compiled by Marvin Sahl, CLU partially from U.S. Department of Labor WH Publication 1421, June 1993 and The United States Federal Register, January 6, 1995.
The Family and Medical Leave Act (FMLA) became effective on August 5, 1993. The Secretary of Labor has issued regulations to implement the FMLA. This 'Guide to Compliance' begins by summarizing those regulations, explaining the basic provisions of the new law, and the rights and responsibilities of affected employers and employees.SUMMARY
The Family and Medical Leave Act was enacted on February 5, 1993.
The new law became effective on August 5, 1993, for most employers. If a collective bargaining agreement (CBA) was in effect on that date, the Act became effective on the expiration date of the CBA or February 5, 1994, whichever was earlier. This delay in the effective date applied only to employees covered by a CBA in effect on August 5, 1993, and not, for example, to non-bargaining unit employees.
The Wage and Hour Division of the U.S. Department of Labor's Employment Standards Administration administers and enforces FMLA for all private, State and local government employees, and some federal employees.
FMLA entitles eligible employees to take up to 12 weeks of unpaid, job-protected leave each year for specified family and medical reasons. An eligible employee's right to FMLA leave began on August 5, 1993. Any leave taken before that date does not count as FMLA leave. However, events qualifying under the Act for FMLA leave purposes (e.g., the birth of a child) occurring before August 5, 1993, still entitled eligible employees to the benefits of FMLA on and after August 5, 1993.
The new law contains provisions relating to employer coverage; employee eligibility for the benefits of the law; entitlement to leave, maintenance of health benefits during leave, and job restoration after leave; notice and certification of the need for FMLA leave; and protections for employees who request or take FMLA leave. In addition, the law includes certain employer record-keeping requirements.PURPOSES OF THE FMLA
The FMLA allows employees to balance reasonable unpaid leave for certain reasons. The FMLA is intended to balance the demands of the workplace with the needs of families, to promote the stability and economic security of families, and to promote national interests in preserving family integrity. The FMLA seeks to accomplish these purposes in a manner that accommodates the legitimate interests of employers, and which minimizes the potential for employment discrimination on the basis of sex, while promoting equal employment opportunity for men and women.
The enactment of the FMLA was predicated upon two fundamental concerns-the needs of the U.S. workforce and the development of high-performance organizations. Increasingly, American children and growing numbers of the elderly are dependent on working family members who spend long hours on the job. When family emergencies arise, requiring employees to attend to their seriously ill children or parents, or to newly born or adopted infants, or even to their own serious illness, workers need reassurance that they will not need to choose between their job security and meeting their personal and family obligations or tending to vital needs at home.EMPLOYER COVERAGE
FMLA applies to all:
public agencies, including State, local and federal employers, and local education agencies (schools); and to private sector employers who employ 50 or more employees for at least 20 work weeks in the current or preceding calendar year and who are engaged in commerce or in any industry or activity affecting commerce-including joint employers (ERISA definitions of 'joint employers') and successors of covered employers.
For FMLA purposes, most federal and Congressional employees are under the jurisdiction of the U.S. Office of Personnel Management (OPM) or the Congress. (Note that the law has just been adopted requiring that all Congressional Employees be covered by the same laws that apply to the private Sector.)EMPLOYEE ELIGIBILITY
To be eligible for FMLA benefits, an employee must:
(1) work for a covered employer;
(2) have worked for the employer for at least a total of 12 months;
(3) have worked at least 1,250 hours over the prior 12 months; and
(4) work at a location where at least 50 employees are employed by the employer within 75 miles.
LEAVE ENTITLEMENTA covered employer must grant an eligible employee up to a total of 12 workweeks of unpaid leave during any 12-month period for one or more of the following reasons:
a) for the birth or placement of a child for adoption or foster care;
b) to care for an immediate family member (spouse, child, or parent) with a serious health condition; or
c) to take medical leave when the employee is unable to work because of a serious health condition.
Spouses employed by the same employer are jointly entitled to a combined total of 12 work weeks of family leave for the birth or placement of a child, for adoption or foster care, and to care for a parent (but not a parent 'in-law') who has a serious health condition. Leave for birth or adoption (including foster care placement) must conclude within 12 months of the birth or placement.INTERMITTENT LEAVE
Under some circumstances, employees may take FMLA leave intermittently- which means taking leave in blocks of time, or by reducing their normal weekly or daily work schedule. Where FMLA leave is for birth or placement for adoption or foster care, use of intermittent leave is subject to the employer's approval. FMLA leave may be taken intermittently whenever it is medically necessary to care for a seriously ill family member, or because the employee is seriously ill and unable to work. If the need for intermittent leave is foreseeable based on planned medical treatment, the employee is responsible for scheduling the treatment in a manner that does not unduly disrupt the employer's operations, subject to the approval of the health care provider. In such cases, the employer may also transfer the employee temporarily to an alternate job with equivalent pay and benefits that better accommodates recurring periods of leave than the employee's regular job.SUBSTITUTION OF PAID LEAVE
Subject to certain conditions, employees or employers may choose to use or require the use of accrued paid leave (such as sick or vacation leave) to cover some or all of the otherwise unpaid FMLA leave. The employer is responsible for designating if paid leave used by an employee counts as FMLA leave, based on information provided by the employee. In no case can an employee's paid leave be credited as FMLA leave after the leave has been completed.SERIOUS HEALTH CONDITION
'Serious health condition' means an illness, injury, impairment, or physical or mental condition that involves:
a) any period of incapacity or treatment connected with inpatient care (i.e., an overnight stay) in a hospital, hospice, or residential medical care facility;
b) any period of incapacity requiring absence of more than three calendar days from work, school, or other regular daily activities that also involves continuing treatment by (or under the supervision of) a health care provider; or
c) continuing treatment by (or under the supervision of) a health care provider for a chronic or long-term health condition that is incurable or so serious that, if not treated, would likely result in a period of incapacity of more than three calendar days, and for prenatal care.
HEALTH CARE PROVIDERHealth care providers who qualify under the regulations to provide certification of a serious health condition for an employee or an immediate family member include:
a) doctors of medicine or osteopathy authorized to practice medicine or surgery (as appropriate) by the State in which the doctor practices;
b) podiatrists, dentists, clinical psychologists, optometrists, and chiropractors (limited to treatment consisting of manual manipulation of the spine to correct a subluxation as demonstrated by X-ray to exist) authorized to practice in the State and performing within the scope of their practice under State law;
c) nurse practitioners and nurse-midwives authorized to practice under State law and performing within the scope of their practice as defined under State law; or,
d) Christian Science practitioners listed with the First Church of Christ, Scientist in Boston, Massachusetts.
MAINTENANCE OF HEALTH BENEFITSA covered employer is required to maintain group health insurance coverage for an employee on FMLA leave whenever such insurance was provided before the leave was taken, and on the same terms as if the employee had continued to work. Where appropriate, arrangements will need to be made for employees taking unpaid FMLA leave to pay their share of health insurance premiums while on leave.
For example, if the group health plan involves co-payments by the employer and the employee, an employee on FMLA leave must continue making insurance premium payments to maintain insurance coverage, as must the employer. The employee and employer need to work out the method for the employee to pay his or her share of health insurance premiums while on unpaid FMLA leave. An employer's obligation to maintain health benefits under FMLA will stop if and when an employee informs the employer of an intent not to return to work at the end of the leave period, or if the employee fails to return to work when the FMLA leave entitlement is used up. (See the COBRA Q & A at the end of this discourse.) In some instances, the employer may recover premiums it paid to maintain health insurance coverage for an employee who fails to return to work from FMLA leave.OTHER BENEFITS
Certain types of earned benefits, such as seniority, need not continue to accrue during periods of unpaid FMLA leave. For other benefits, such as elected life insurance coverage, the employer and the employee need to make arrangements so that the benefits may be maintained during periods of unpaid FMLA leave. Except for accrued or earned benefits (such as seniority), the employee must be restored to the same benefits upon return from FMLA leave as if the employee had continued to work the entire FMLA leave period. Use of FMLA leave cannot result in the loss of any benefit that accrued before the employee's leave began. Accordingly, an FMLA leave period cannot be counted as a break in service for purposes of vesting or eligibility to participate in benefit programs.JOB RESTORATION
Upon return from FMLA leave, an employee must be restored to his or her original job, or to an equivalent job with equivalent pay, benefits, and other employment terms and conditions. In addition, an employee's use of FMLA leave cannot result in the loss of any employment benefit that the employee earned or was entitled to before using FMLA leave.'KEY' EMPLOYEE EXCEPTION
Under specified and limited circumstances where restoration to employment will cause substantial and grievous economic injury to its operations, the employer may refuse to reinstate certain highly paid 'key' employees after using FMLA leave during which health benefits are maintained. In order to do so, the employer must:
a) notify the employee of their status as a 'key' employee in response to the employee's notice of intent to take FMLA leave;
b) notify the employee as soon as the employer decides it will deny job restoration and explain the reasons for this decision;
c) offer the employee a reasonable opportunity to return to work from FMLA leave after giving this notice; and
d) make a final determination as to whether reinstatement will be denied at the end of the leave period if the employee then requests restoration.
A 'key' employee is a salaried 'eligible' employee who is among the highest paid ten percent of employees within 75 miles of the work site.NOTICE AND CERTIFICATION
Employees seeking to use FMLA leave may be required to provide:
a) 30-day advance notice of the need to take FMLA leave when the need is foreseeable;
b) medical certifications supporting the need for leave due to a serious health condition affecting the employee or an immediate family member;
c) second or third medical opinions and periodic recertification, at the employer's expense;
d) periodic reports during FMLA leave on the employee's status and intent to return to work; and
e) a 'fitness-for-duty' certification to return to work.
When leave is needed to care for an immediate family member or the employee's own illness and is for planned medical treatment, the employee must attempt to schedule treatment so that it will not unduly disrupt the employer's operation.EMPLOYER NOTICES
Covered employers must post a notice approved by the Secretary of Labor explaining rights and responsibilities under FMLA. An employer that willfully violates this posting requirement may be subject to a fine of up to $100 for each separate offense.
In addition, covered employers are obliged to provide information to their employees about their rights and responsibilities under FMLA, including specific information-in response to an employee's notice of the need for FMLA leave-regarding just what will be required of the employee and what might happen in certain circumstances, such as if the employee fails to return to work from FMLA leave.UNLAWFUL ACTS
FMLA makes it unlawful for any employer to interfere with, restrain, or deny the exercise of any right provided by this law. It is also unlawful for an employer to discharge or discriminate against any individual for opposing any practice, or because of involvement in any proceeding, related to FMLA.ENFORCEMENT
FMLA is enforced by the Wage and Hour Division of the U.S. Labor Department's Employment Standards Administration. This agency will investigate complaints of violations. If violations cannot be satisfactorily resolved, the Department may bring action in court to compel compliance.
An eligible employee may bring a private civil action against an employer for violations.OTHER PROVISIONS
Special rules apply to employees of local education agencies. Generally, these rules provide for FMLA leave to be taken in blocks of time when the leave is needed intermittently or when leave is required near the end of a school term (semester). Salaried executive, administrative, and professional employees of covered employers who meet the Fair Labor Standards Act (FLSA) criteria for exemption from minimum wage and overtime under Regulations, 29 CFR Part 541, do not lose their FLSA-exempt status by using any unpaid FMLA leave. This special exception to the 'salary basis' requirements for FLSA's exemption extends only to 'eligible' employees' use of leave required by FMLA.
The FMLA does not affect any other federal or State law which prohibits discrimination. It does not supersede any State or local law which provides more generous family or medical leave protection. Nor does it affect an employer's obligation to provide greater leave rights under a collective bargaining agreement or employment benefit plan. The FMLA also encourages employers to provide more generous leave rights.
For more information, contact the nearest office of the Wage and Hour Division, listed in most telephone directories under U.S. Government, Department of Labor, Employment Standards Administration.
'JOINT EMPLOYMENT'
Section 825.106 entitled, 'How is 'joint employment' treated under FMLA?' This is the Section:
(a) Where two or more businesses exercise some control over the work or working conditions of the employee, the businesses may be joint employers under FMLA. Joint employers may be separate and distinct entities with separate owners, managers and facilities. Where the employee performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the work week, a joint employment relationship generally will be considered to exist in situations such as:
(1) Where there is an arrangement between employers to share an employee's services or to interchange employees;
(2) Where one employer acts directly in the interest of the other employer in relation to the employee; or,
(3) Where the employers are not completely disassociated with respect to the employee's employment and may be deemed to share control of the employee, directly or indirectly, because one employer controls, is controlled by, or is under common control with the other employer.
(b) A determination of whether or not a joint employment relationship exists is not determined by the application of in any single criterion, but rather the entire relationship is to be viewed in its totality. For example, joint employment will ordinarily be found to exist when a temporary or leasing agency supplies employees to a second employer.
(c) In joint employment relationships, only the primary employer is responsible for giving required notices to its employees, providing FMLA leave, and maintenance of health benefits. Factors considered in determining which is the 'primary' employer include authority/responsibility to hire and fire, assign/place the employee, make payroll, and provide employment benefits. For employees of temporary help or leasing agencies, for example, the placement agency most commonly would be the primary employer.
(d) Employees jointly employed by two employers must be counted by both employers, whether or not maintained on one of the employer's payroll, in determining employer coverage and employee eligibility. For example, an employer who jointly employs 15 workers from a leasing or temporary help agency and 40 permanent workers is covered by FMLA. An employee on leave who is working for a secondary employer is considered employed by the secondary employer, and must be counted for coverage and eligibility purposes, as long as the employer has a reasonable expectation that that employee will return to employment with that employer.
(e) Job restoration is the primary responsibility of the primary employer. The secondary employer is responsible for accepting the employee returning from FMLA leave in place of the replacement employee if the secondary employer continues to utilize an employee from the temporary or leasing agency, and the agency chooses to place the employee with the secondary employer. A secondary employer is also responsible for compliance with the prohibited acts provisions with respect to its temporary/leased employees, whether or not the secondary employer is covered by FMLA (see 825.220(a)). The prohibited acts include prohibitions against interfering with an employee's attempt to exercise rights under the Act, or discharging or discriminating against an employee for opposing a practice which is unlawful under FMLA. A covered secondary employer will be responsible for compliance with all the provisions of the FMLA with respect to its regular, permanent work force.
IRS NOTICE DISCUSSING RELATIONSHIP BETWEEN FMLA AND COBRA
Notice 94-103The Family and Medical Leave Act of 1993 ('FMLA'), P.L. 103-3, imposes certain requirements on employers regarding coverage, including family coverage, under group health plans for employees taking FMLA leave. Many employers have raised questions about how the requirements under FMLA affect their obligation to provide COBRA continuation coverage in accordance with the requirements of section 4980B of the Internal Revenue C