Introduction to the Family and Medical Leave Act of 1993

Transcription

1 H Introduction to the Family and Medical Leave Act of 1993 The Family and Medical Leave Act of 1993 (FMLA) was signed into law 1 on February 5, FMLA requires any employer with at least 50 employees to offer up to 12 work weeks of unpaid leave to eligible employees to care for a newborn or newly adopted child, to care for a seriously ill family member, or for the employee to care for his or her own serious illness. The FMLA went into effect generally on August 5, The Department of Labor (DOL) issued interim FMLA regulations on June 4, 1993 and subsequently published final regulations on January 6, 1995, which went into effect on April 6, Employers Covered By the FMLA The FMLA applies to any private-sector employer who engages in commerce, or in any industry or activity affecting commerce, and who has 50 or more employees within a 75-mile radius of the worksite each working day during at least 20 calendar weeks in the current or preceding calendar year. The law also covers all state and local government employers and local education agencies (both public and private schools). Individuals Eligible for FMLA To be eligible for leave under FMLA, an individual must: Be employed by a covered employer and work at a worksite within 75 miles of which that employer employs at least 50 people; Have been employed at least 12 months (which do not have to be consecutive months) for the employer; and Have actually worked at least 1,250 hours during the 12 months before the date the FMLA leave begins. Requirement to Grant 12 Weeks of Leave An employer is required to grant an employee a total of 12 weeks of unpaid leave in any 12-month period, for one or more of the following reasons: Because of childbirth and to care for a child in the first 12 months after childbirth. The employer can require that the leave be taken all at one time. 1 Public Law 103-3, 29 USC 2601 et seq., 29 CFR 825 Copyright 2007 Hewitt Associates LLC 09/2007

2 Because of a child s placement with the employee for adoption or foster care, within the first 12 months of the placement. The employer can require that the leave be taken all at one time. To care for a spouse, child, or parent who has a serious health condition. 2 This leave may be taken intermittently or on a reduced time basis (e.g., by working fewer days in a week or by working fewer hours in a day), but only if such a schedule is needed for medical reasons. Because of the employee s own serious health conditions, where the employee is unable to perform his/her job. As with a family member s illness, this leave can be taken intermittently or on a reduced time basis if medically necessary to do so. The employer can require certification from a health care provider about the employee s condition, including certification that the employee is unable to perform the functions of his or her job. An employee may elect, or the employee may require, that the employee substitute any paid vacation leave, paid personal leave, paid family leave, or (in the case of a serious health condition) paid medical/sick leave as part or all of the 12-week period, if such paid leave would otherwise be available. Requirement to Return Employee to Same or Equivalent Position Under FMLA, the employer must return the employee to the same or an equivalent position and employment benefits if the employee returns after the leave. If the employee returns to work, the employee cannot lose any benefits accrued before the period of leave other than vacation or leave allowance that was used for the leave. Employment benefits includes (but is not limited to) group life insurance, health insurance, disability insurance, sick leave, annual leave, educational benefits, and pensions regardless of whether these constitute ERISA-covered benefits and regardless of whether such benefits are provided by a practice or through written policy. The legislation, however, provides for certain conditions under which an employer does not have to guarantee job restoration: if the employee is a salaried employee who is one of the 10 percent highest paid employees at a given worksite or within a 75-mile radius, job restoration can be denied if the reinstatement will cause substantial and grievous economic injury to the operations of the employer. Requirement to Continue Health Care Coverage Under the FMLA, the employer must continue health care coverage (e.g., medical, dental, vision, hearing, and health care spending accounts) to the employee during the leave, on the same basis as if the person had been actively at work. The FMLA regulations give specific options for employer collection of employee contributions and require that the employer provide the employee advance written notice of the terms and conditions under which those payments must be made. 2 For the Department of Labor s definition of serious health condition, see the Leave Entitlement section of the DOL s Fact Sheet #28 which is available at Copyright 2007 Hewitt Associates LLC 2 09/2007

3 The employer is allowed to charge the employee retroactively for the employer s portion of health care premium cost during unpaid FMLA leave, if the employee does not return to work after the leave for reasons other than health conditions or some other reason beyond the employee s control. Continuation of Other Benefits Under the FMLA, an employer is not required to continue benefits other than health care while an employee is on leave. An employee s right to benefits other than health care during a period of FMLA leave (e.g., holiday pay) is determined according to any existing policy the employer has for providing such benefits during other types of leave (paid or unpaid as appropriate). However, FMLA requires an employer to reinstate an employee with benefits equivalent to those provided before leave. Further, the FMLA prohibits applying any preexisting condition exclusions or evidence of insurability requirements for reinstatement of benefits when an employee returns from FMLA leave. The DOL has made it clear that this protection also applies for coverage of family members. The FMLA regulations also add that an employer may recover the employee s share of premiums for non-health coverages continued by the employer during FMLA leave. This recovery of premiums for non-health coverages is allowed without restriction, regardless of whether the employee returns to work. Excludable Employees FMLA requirements generally apply to all employees of the employer, except that an employer does not have to grant FMLA leave to: An employee with less than 12 months of service with the employer. An employee who worked less than 1,250 hours of service with the employer in the previous 12 months. These hours are to be counted in the same way as under the Fair Labor Standards Act (exempt/nonexempt overtime) purposes. The regulations further specify that any employee who as worked for the employer for 12 months is assumed to be eligible; the burden of proof is on the employer with regard to whether the employee has worked under 1,250 hours. An employee who works at a given worksite that has fewer than 50 employees, if the total number of employees within a 75-mile radius of that worksite is also less than 50. Other Requirements FMLA legislation and subsequent regulations include other detailed requirements that affect employers administration and communication practices. Such requirements include the methods employers may use for various measures (50-employee count, 75-mile radius, etc.), limitations on the type of information the employer may request in the health care provider s certification, the employer s ability to move employees who are on intermittent or reduced time leave to an alternative position that can accommodate such scheduling, notice procedures, etc. Copyright 2007 Hewitt Associates LLC 3 09/2007

4 The regulations include a considerable list of information with a three-year history that the employer must maintain and make available if the DOL requests it for review. The information includes: Basic payroll and identifying employee data; Dates on which FMLA leave was taken by employees; Hours of FMLA leave, if taken in less than full-day increments; Copies of any written notices from employees requesting leave, and notices given to employees, as required under FMLA; Documents describing employee benefits or employer policies and practices about the taking of paid and unpaid leave; Premium payments for employee benefits; and Records of any dispute between employer and employee regarding designation of leave as FMLA leave, including any written statement about the reasons for the designation and for disagreement. Enforcement/Penalties An employer who denies FMLA rights to an employee is liable for damages in the amount of lost wages and benefits. If there has been no loss of wages or benefits, damages are based on the amount of actual monetary loss to the employee, up to an amount equal to 12 weeks of wages. Unless the employer can show good faith, a court can, in its discretion, award double damages. Equitable relief, such as reinstatement, is also available. Employer Communication Requirements The law requires employers to post a DOL-furnished notice that informs employees of their rights under FMLA. Employers must provide written guidance to employees concerning all of their FMLA rights, entitlements, and obligations, either by incorporating this information in existing benefit or policy manuals (or, absent such materials, by providing written FMLA guidance when a leave is requested). When an employee notifies an employer of the need for a leave that would be covered under the FMLA, the employer must also promptly provide the employee with a notice designating the leave under the FMLA and detailing as many as eight specific items regarding the expectations and obligations of the employee and explaining the consequences of not meeting these obligations. An employer is also expected to answer questions from employees concerning their rights and responsibilities under FMLA. The DOL s Web site contains an FMLA Compliance Assistance Web page that includes fact sheets, guides and workplace posters. It is available at Copyright 2007 Hewitt Associates LLC 4 09/2007

5 Coordination with Other Legislation FMLA legislation is clear that it is not intended to preempt any other federal, state or local legislation. Thus, an employer must comply with the laws that grant an employee the greatest rights. Coordination with States FMLA does not preempt state or local laws that provide greater family or medical leave rights than FMLA. As of September 2007, there are 20 states plus the District of Columbia and Puerto Rico that have family leave laws 3 on the books covering private employers (and some states have more than more than one FML law). An even greater number of states have family leave laws covering public employers. Coordination with the Americans with Disabilities Act The regulations clarify that the leave provisions of the FMLA are wholly distinct from the reasonable obligations under the Americans with Disabilities Act (ADA). ADA s disability and FMLA s serious health condition are different concepts and must be analyzed separately. If an employee is unable to perform an essential function of his or her job, then the employee has no right to restoration under the FMLA. However, the employer s obligation to restore my still be impacted by the ADA. If an employee is a qualified individual with a disability within the meaning of ADA, the employer must make reasonable accommodation to the employee s limitations, barring undue hardship. Also, some courts have held that providing a leave of absence is a reasonable accommodation under the ADA, regardless of any FMLA leave obligation. Coordination with COBRA Health Care Continuation The Internal Revenue Service (IRS) and the Department of the Treasury published final regulations in the Federal Register on January 10, 2001, regarding COBRA continuation coverage requirements applicable to group health plans. The regulations confirmed earlier guidance (IRS Notice ) that an FMLA leave does not, in and of itself, constitute a COBRA qualifying event. However, a qualifying event under COBRA does occur when three requirements are met: On the day before the first day of FMLA leave, the employee (or spouse or dependent) is covered under the employer s group health plan; At the end of FMLA leave, the employee does not return to work; and In the absence of COBRA coverage, the employee (or spouse or dependent) would lose coverage under the health plan before the end of the maximum COBRA coverage period (generally 18 months). If the three requirements are met, a COBRA qualifying event occurs on the last day of the person s FMLA leave. Such an event could occur before the passage of the full 12 weeks allowed for FMLA. Even if an employee fails to pay the employee portion of health care premiums for coverage during FMLA leave or declines coverage under a group health plan during FMLA leave, a COBRA qualifying event does not occur until the end of the FMLA leave. Further, the timing of the COBRA 3 Recently, several states have also enacted family military leave laws which allow employees who have family members in the armed services to take a job-protected leave of absence. Copyright 2007 Hewitt Associates LLC 5 09/2007

6 qualifying event is not affected by any state or local law that requires coverage to be maintained longer than the 12 weeks required under FMLA. These final regulations went into effect January 10, Coordination with Cafeteria Plans The IRS published final regulations on October 17, 2001 that address how the FMLA requirements affect the operation of cafeteria plans, including flexible spending arrangements (FSAs). The final regulations generally restated proposed regulations, issued in 1995, that require employers to continue to provide health care coverage for employees taking FMLA leave and to restore employees benefits when they return from leave. They also allow employees to treat paid and unpaid FMLA leaves in a way that is more consistent with the employer s treatment of other, non- FMLA leaves. Among the provisions in the final 2001 regulations: Employees on FMLA leave must be offered the same change in status and open enrollment opportunities as active employees; Employers can require employees on paid FMLA leave to continue health care coverage, if employees on paid non-fmla leaves are also required to continue health care coverage. For employees on unpaid FMLA leave, the employer must either allow the employee to revoke coverage, or to continue coverage but allow the employee to discontinue payment of his or her share of the premium during unpaid leave; On return to work after FMLA leave, employers may require employees to resume participation in health care coverage, if it is also required of other employees returning from non-fmla leaves; Employees do not need to agree in advance to use the catch-up payment option that allows employers to recover missed employee premiums when an employee returns from FMLA leave; If an employee fails to make required payments under the pay-as-you-go option, employers may use the catch-up option to recoup the employee s share of premiums after the employee returns from FMLA leave; and Employees must be given the opportunity to resume health coverage under an FSA upon return from FMLA leave, and make up missed premium payments, or forego the missed premiums and received reduced coverage. The final regulations apply to cafeteria plan years beginning on or after January 1, Copyright 2007 Hewitt Associates LLC 6 09/2007