PAID FAMILY AND MEDICAL LEAVE

STATUS

 In the 110^th Congress:

 On June 21, 2007, Senators Christopher Dodd (D-CT) and Ted Stevens (R-AK) introduced S. 1681, the Family Leave Insurance Act.  This bill seeks to provide up to eight weeks of paid leave to care for a newborn or recently adopted child; to care for a child, spouse or parent with a serious illness; or to care for their own serious illness. 

 Under this bill, employers would pay leave benefits through their regular payroll and be reimbursed by the Family Leave Insurance Fund, created by this legislation.  Employees and employers would both be required to pay a premium into the fund, roughly 0.2 percent of the employee’s earnings.  The benefits would be tiered based on the employee’s earned wages. 

 Participation in this program is mandatory for businesses with over 50 employees.  Those businesses with less than 50 employees may choose to opt into the program at a 50 percent discount (pay only 0.1 percent premiums). 

 Representative Rosa DeLauro (D-CT) and Senator Ted Kennedy (D-MA) have introduced the Healthy Families Act (H.R. 1542 and S. 910, respectively), which seeks to provide the same type of benefit as the Washington law noted above.  This bill would require businesses that employ 15 or more employees to provide a minimum paid sick leave and employment benefits of seven days for those who work at least 30 hours a week, and a prorated amount for those who work between 20 and 30 hours a week. 

 Congresswoman Carolyn Mahoney (D-NY) has introduced H.R. 1369, the Family and Medical Leave Expansion Act, which would expand the FMLA’s coverage to employers with 25 or more workers.  It would also extend leave to those employees who must address the effects of domestic violence.  Finally, it would direct the DOL to make five-year grants to state or local governments to pay for the federal share of the cost of carrying out projects that assist families by providing wage replacement for eligible individuals responding to caregiving needs.

 BACKGROUND

On February 5, 1993, President William J. Clinton signed into law H.R. 1, the Family and Medical Leave Act (FMLA).  This law mandates that private employers with 50 or more employees on their payrolls, and all public employers, regardless of size, provide 12 weeks of job-protected, unpaid family or medical leave to employees who have worked for them for at least 12 months (not necessarily consecutively).  Employees would be eligible for FMLA-leave for the birth and care of a child, the placement of an adopted or foster child, the care of an immediate family member with a serious health condition that necessitates the employee’s presence, or to care for the employee’s own serious health condition that renders them unable to perform the functions of their position. 

Under this law, the employee may take the leave intermittently or through a reduced work schedule.  When the need for leave is foreseeable, employees are to provide their employers with 30 days notice.  If the need is unanticipated, employees are to provide notice “as soon as practicable,” which has been interpreted by the Department of Labor (DOL) as within one to two business days of employees’ realizing the need for time off.  Employees are required to provide enough information to the employer to allow them to determine whether the leave is for a FMLA-qualifying reason.

EMPLOYER RESPONSIBILITIES UNDER FMLA

 Ragsdale v. Wolverine Worldwide, Inc.

In 1996, Tracy Ragsdale, an employee at Wolverine Worldwide, Inc., was diagnosed with cancer.  As the company’s leave policy allowed employees with six months of service to take leave up to seven months, Ms. Ragsdale requested, and was granted, seven months, or 30 weeks, of leave.  After the seven months were over, Ms. Ragsdale was unable to return to work, resulting in her termination by Wolverine.  However, as the original seven month leave was not designated as FMLA leave by her employer, Ms. Ragsdale filed suit alleging claims under the FMLA. 

After losing her case in the district court, Ms. Ragsdale appealed to the Eighth Circuit court, which upheld the lower court’s finding, stating, “Under the FMLA, twelve weeks of leave is both the minimum the employer must provide and the maximum that the statute requires.”  Further, the court concluded that the “DOL regulations must be struck down.”  The case was subsequently appealed to the Supreme Court, which also ruled in favor of the lower courts.  In a 5-4 decision, the Supreme Court decided that the DOL’s regulations were an impermissible alteration of the FMLA’s framework, stating, “The FMLA guaranteed Ragsdale 12 — not 42 — weeks of leave in 1996.”

STATE FMLA

While the federal FMLA provides a minimum threshold for unpaid leave that all states must meet, individual states are allowed to pass their own similar requirements.  When the federal law was passed in 1993, it supplemented roughly 30 state statutes that provided family and medical leave to employees who worked in those states.  The FMLA specifically stated that nothing in the law should “be construed to supersede any provision of any State or local law that provides greater family or medical leave rights than the rights established under [the FMLA].” 

The FMLA and state family medical leave laws tend to differ in terms of coverage and scope.  Whereas the federal statute applies to private employees with at least 50 employees, there are several state statutes that have a much lower employee threshold.  For instance, California requires private employers with at least five workers to provide 12 weeks for family and medical care.  Also, while the FMLA has a fairly narrow scope of reasons for FMLA leave, some states are much broader.  In Rhode Island, an employee is allowed 10 hours of unpaid leave during a 12-month period to attend a school-related activities. 

However, some states are going beyond mandated unpaid leave.  Earlier this year, the State of Washington has a paid family leave law that requires all employers, regardless of size, to allow employees five weeks of family leave to care for children or sick family members.  The payments are administered through the state’s unemployment compensation system.  There is a dollar cap on the amount of the benefit and employers with less than 25 employees are not required to keep the job open for the employee’s return. 

 Currently, Washington is only the second state to pass such legislation (California being the other).  However, similar bills have been introduced in Oregon, New York, and New Jersey and are receiving the same support that helped with the passage of the bill in Washington.

 NEW FMLA REGULATIONS

 The U.S. Department of Labor has issued a final rule updating provisions of the implementing regulations for the Family and Medical Leave Act (FMLA).  The proposed rules were issued in 2007.  The new provisions are effective on January 16, 2009.

 The Ragsdale Decision/Penalties:  The updated rule contains technical changes to be consistent with the U.S. Supreme Court's decision in Ragsdale v. Wolverine World Wide Inc.  The court ruled that the regulation's so-called "categorical" penalty (requiring an employer to provide 12 additional weeks of FMLA-protected leave after the employee had already taken 30 weeks of leave) was inconsistent with the statutory limit of only 12 weeks of FMLA leave and contrary to the law's remedial requirement that an employee demonstrate individual harm.

 The new rule removes these penalties and clarifies that if an employee suffers individual harm because the employer did not follow the notification rules, the employer may be liable.

 Waiver of Rights: The final rule codifies the Department’s longstanding position that employees may voluntarily settle or release their FMLA claims without court or Department approval. Although this is not a change in the law, the clarification is needed because a recent Fourth Circuit decision interpreted the Department’s regulations as prohibiting employees from either prospectively or retroactively waiving their rights.  Prospective waivers of FMLA rights continue to be prohibited under the final rule.

 Serious Health Condition: The final rule retains the six individual definitions of serious health condition while adding guidance on three regulatory matters.  One of the definitions of serious health condition involves more than three consecutive, full calendar days of incapacity plus “two visits to a health care provider.”  Because the current rule is open-ended, the Tenth Circuit has held that the “two visits to a health care provider” must occur within the more-than-three-days period of incapacity.

 Under the final rule, the two visits must occur within 30 days of the beginning of the period of incapacity and the first visit to the health care provider must take place within seven days of the first day of incapacity.  A second way to satisfy the definition of serious health condition under the current regulations involves more than three consecutive, full calendar days of incapacity plus a regimen of continuing treatment.  The final rule clarifies here also that the first visit to the health care provider must take place within seven days of the first day of incapacity.  Thirdly, the final rule defines “periodic visits” for chronic serious health conditions as at least two visits to a health care provider per year since that provision is also open-ended in the current regulations and potentially subjects employees to more stringent requirements by employers.

Light Duty: At least two courts have held that an employee uses up his or her 12-week FMLA leave while on a "light duty" assignment.  Under the final rule, time spent in "light duty" work does not count against an employee's FMLA leave entitlement, and the employee's right to job restoration is held in abeyance during the light duty period.  If an employee is voluntarily doing light duty work, he or she is not on FMLA leave.

 Perfect Attendance Awards: The final rule changes how perfect attendance awards are treated to allow employers to deny a "perfect attendance" award to an employee who does not have perfect attendance because he or she took FMLA leave — but only if the employer treats employees taking non-FMLA leave in an identical way.

 Substitution of Paid Leave: FMLA leave is unpaid.  However, the statute provides that employees may take, or employers may require employees to take, any accrued paid vacation, personal, family or medical or sick leave, as offered by their employer, concurrently with any FMLA leave.  This is called the “substitution of paid leave.”  The current regulations apply different procedural requirements to the use of vacation or personal leave than to medical or sick leave. Complicating matters even further, the Department has treated family leave differently than vacation and personal leave.

 Accordingly, under the final rule, all forms of paid leave offered by an employer will be treated the same, regardless of the type of leave substituted (including generic “paid time off”).  An employee electing to use any type of paid leave concurrently with FMLA leave must follow the same terms and conditions of the employer’s policy that apply to other employees for the use of such leave.  The employee is always entitled to unpaid FMLA leave if he or she does not meet the employer’s conditions for taking paid leave and the employer may waive any procedural requirements for the taking of any type of paid leave.

 Employer Notice Obligations: The final rule consolidates all employer notice requirements into a "one-stop" section of the regulations to clear up some conflicting provisions and time periods.  Further, the final rule clarifies and strengthens the employer notice requirements to employees in order that employers will better inform employees about their FMLA rights and obligations, and allow for a smoother exchange of information between employers and employees.

 Employee Notice: The final rule modifies the current provision that had been interpreted to allow some employees to notify their employers of their need for FMLA leave up to two full business days after an absence, even if they could provide notice sooner.  Under the final rule, the employee must follow the employer's normal and customary call-in procedures, unless there are unusual circumstances.

 Medical Certification Process (Content and Clarification): The final rule recognizes the advent of the Health Insurance Portability and Accountability Act (HIPAA) and the applicability of the HIPAA privacy rule to communication between employers and employees’ health care providers.  Further, in response to specific concerns raised by employees about medical privacy, the Department has added a requirement to the final rule that specifies that the employer’s representative contacting the health care provider must be a health care provider, human resource professional, a leave administrator, or a management official, but in no case may it be the employee’s direct supervisor.  Further, employers may not ask health care providers for additional information beyond that required by the certification form.

 The final rule also improves the exchange of medical information by updating the Department’s optional Form WH-380 to create separate forms for the employee and covered family members and by allowing—but not requiring—health care providers to provide a diagnosis of the patient’s health condition as part of the certification.

 In addition, the final rule specifies that if an employer deems a medical certification to be incomplete or insufficient, the employer must specify in writing what information is lacking, and give the employee seven calendar days to cure the deficiency.  These changes will improve FMLA communications, protect the privacy of workers, and help ensure that the employees who need leave will get it and not be subject to repeated requests for additional information or be denied FMLA leave on a technicality.

 Medical Certification Process (Timing): The final rule codifies a 2005 DOL Wage and Hour Opinion letter that stated that employers may request a new medical certification each leave year for medical conditions that last longer than one year.  The final rule also clarifies the applicable time period for recertification.  Under the current regulations, employers may generally request a recertification no more often than every 30 days and only in conjunction with an FMLA absence unless a minimum duration of incapacity has been specified in the certification, in which case recertification generally may not be required until the duration specified has passed. The final rule restructures and clarifies the regulatory requirements for recertification.  In all cases, the final rule allows an employer to request recertification of an ongoing condition every six months in conjunction with an absence.

 Fitness-For-Duty Certifications: The current FMLA regulations allow employers to enforce uniformly-applied policies or practices that require all similarly-situated employees who take leave to provide a certification that they are able to resume work.  This is called a “fitness-for-duty” certification.  The final rule makes two changes to the fitness-for-duty certification process.  First, an employer may require that the certification specifically address the employee’s ability to perform the essential functions of the employee’s job.  Second, where reasonable job safety concerns exist, an employer may require a fitness-for-duty certification before an employee may return to work when the employee takes intermittent leave.

 MILITARY LEAVE

 DOL also issued new regulations to implement the statutory expansion of FMLA for military families.

 Military Caregiver Leave: Implements the requirement to expand FMLA protections for family members caring for a covered service member with a serious injury or illness incurred in the line of duty on active duty.  These family members are able to take up to 26 workweeks of leave in a 12-month period.

 Leave for Qualifying Exigencies for Families of National Guard and Reserves: The law allows families of National Guard and Reserve personnel on active duty to take FMLA job-protected leave to manage their affairs — "qualifying exigencies."  The rule defines "qualifying exigencies" as:

 (1) short-notice deployment

(2) military events and related activities

(3) childcare and school activities

(4) financial and legal arrangements

(5) counseling

(6) rest and recuperation

(7) post-deployment activities and

(8) additional activities where the employer and employee agree to the leave.

 COVERAGE

 As a refresher, FMLA applies to all private sector employers who employ 50 or more employees for at least 20 workweeks in the current or preceding calendar year - including joint employers and successors of covered employers.

 To be eligible for FMLA leave, an employee must work for a covered employer and: 

• have worked for that employer for at least 12 months; and
• have worked at least 1,250 hours during the 12 months prior to the start of the FMLA leave; and,
• work at a location where at least 50 employees are employed at the location or within 75 miles of the location.

 Covered employers must grant an eligible employee up to a total of 12 workweeks of unpaid leave in a 12 month period for one or more of the following reasons: 

• for the birth of a son or daughter, and to care for the newborn child;
• for the placement with the employee of a child for adoption or foster care, and to care for the newly placed child;
• to care for an immediate family member (spouse, child, or parent — but not a parent "in-law") with a serious health condition; and
• when the employee is unable to work because of a serious health condition.

 Leave to care for a newborn child or for a newly placed child must conclude within 12 months after the birth or placement.

 Spouses employed by the same employer may be limited to a combined total of 12 workweeks of family leave for the following reasons: 

• birth and care of a child;
• for the placement of a child for adoption or foster care, and to care for the newly placed child; and,
• to care for an employee's parent who has a serious health condition.

 ANALYSIS

 The difficulty with the FMLA is not so much the actual law but the practical challenges of implementing it.  The administration and management burdens are enormous.  Managing unscheduled intermittent leave and dealing with medical certifications are the two biggest issues.

 Paid leave brings its own set of challenges.  Aside from the cost, employees will use all the paid leave available to them, increasing practical administrative complexity.

 OUTLOOK

 Expect a strong push in the 111^th Congress for some sort of expansion of paid benefits.

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