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FMLA Compliance: What Small Businesses Need to Know

FMLA compliance
Credit: designer491/Shutterstock

The Family and Medical Leave Act is a federal law that grants employees the right to unpaid, job-protected leave for up to 12 weeks in the event that they or a family member fall ill. It also ensures that employees who are granted leave maintain their health benefits during their approved absence.

Failing to provide this leave can land employers in hot water, leaving them on the hook for lawsuits and damages, oftentimes from more than one employee. To avoid these penalties, it's essential to understand your responsibilities to your employees as set out under FMLA regulations.

At its core, the FMLA guarantees eligible and approved "employees up to 12 workweeks of unpaid leave each year, with no threat of job loss" as well as retained access to their health insurance benefits during their period of leave. Not every employer is required to extend this protection, and even when an employer must, not all employees are entitled to receive it.

To simplify things, let's break the law down into two parts: eligibility and requirements. Each section contains elements that govern both employees and employers, and both are equally important. For employers or employees that are ineligible, obviously, no FMLA requirements apply. Those that meet eligibility, however, are either entitled to or required to provide FMLA leave.

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Which employers are considered covered by the FMLA? Determining that is rather simple, according to Christina Joy F. Grese, special counsel for law firm Duane Morris. The most important threshold is whether the employer maintains a workforce of 50 or more employees.

"Fifty employees is the threshold," said Grese. "So, if you have fewer than that, you're not covered, but, of course, there could always be local laws with similar benefits."

Any employer with 50 or more total employees is covered by the FMLA and must examine their employee eligibility requirements to determine whether or not they must extend FMLA leave to their workers.

However, just because a company maintains 50 or more employees in total, doesn't mean every employee is automatically covered by the FMLA, Grese said. Employers are only required to provide FMLA leave to employees when 50 or more workers are located within a 75-mile radius. That is to say, if an employer maintains two separate offices that are 100 miles away from one another with 25 employees at each location, none of the employees are considered eligible for FMLA leave.

Moreover, employees must meet several standards to qualify for leave, Grese said.

"Employees have to have worked for at least 12 months, and they have to have worked 1,250 hours in that period," she said.

An employee or their family member must also qualify for their conditions under the law, Grese said, which covers things like incapacity due to pregnancy, prenatal care, or childbirth; bonding with the child after birth; searching for adoption or foster care; leave to care for a family member with a serious health condition; leave for a chronic medical condition or a serious condition that incapacitates an employee for more than three days or requires two or more treatments.

There are some exceptions, however, most common among them the "key employee" exception, Grese said.

"That can be a narrow group; it's someone who would cause substantial economic injury if that person were to take leave," Grese said. "For example, if it's a really high-level executive, and the business needs that key executive in place at the time and to have that gap for 12 weeks would be detrimental, they would qualify."

Both employers and employees have a few key requirements under the law that they must respect. Failure to do so on the employee's part can result in denial of leave or, in the case of abuse, termination. For employers, failure to meet FMLA requirements can result in lawsuits from employees.

Employers are not required to offer any kind of payment under federal law during the 12-week FMLA absence, although paid sick and family leave are evermore common at the state and municipal levels. However, employers are required to:

  • Retain employee health benefits plans
  • Protect an employee's job status during their absence
  • Return an employee to their same position (or a comparable one) upon their return

Employees don't simply get to claim 12 weeks of unpaid time off per year, either. They have to provide medical certification of their condition or their family member's condition. Under certain circumstances, the employee will be required to recertify with their employer, especially if they are seeking "intermittent FMLA leave," which occurs when they take a few days at a time, instead of leave in one long block. However, where an employee's responsibility ends and an employer's rights begin isn't always clear, Grese said.

"Employees are required to provide periodic reports of their status and their intent to return to work," Grese said. "They have to provide medical certification to determine their eligibility for leave or continued leave. But there are a lot of questions about how often an employer can request a recertification of leave. Can you get second or third medical opinions? I've seen employers struggling with that."

If you lose an FMLA lawsuit as an employer, it can become quite expensive. Regardless of the outcome, the average cost of defending an FMLA lawsuit is $78,000. Moreover, employers can find themselves on the hook for several different damages. These include:

  • Lost back pay: Employers who lose an FMLA case might have to pay the wages and benefits an employee lost due to the FMLA violation. These include pay from the date of termination to the date of judgment.
     
  • Lost front pay: Much like back pay, front pay refers to wages and benefits you lose in the future. If the FMLA action has resulted in the likelihood an employee will not find work for a year, a judge might order the employer to pay front pay from the date of judgment throughout the following year.
     
  • Liquidated damages: These damages are automatically awarded by a court unless an employer can prove they were acting in good faith and simply made a mistake when they denied an employee leave. In FMLA cases, these damages are equal to lost back and front pay.

As always, the best and most cost-effective solution is to ensure compliance before a problem arises. By staying apprised of the rules and regulations your company is subject to, and crafting a workable policy with the advice of your attorneys, you can keep your employees happy and avoid lawsuits and fines.

Editor's Note: Looking for information on health insurance for your business? Fill out the below questionnaire to be connected with vendors that can help.

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Adam C. Uzialko

Adam received his Bachelor's degree in Political Science and Journalism & Media Studies at Rutgers University. He worked for a local newspaper and freelanced for several publications after graduating college. He can be reached by email, or follow him on Twitter.