Open enrollment has likely begun at your company, often bringing it with changes to employee health plans. When communicating benefits-related information, it is important to ensure that all employees – including those currently away from the workplace on FMLA leave – receive the same communications and opportunity to select the new or changed coverage.
The FMLA regulations provide that:
If an employer provides a new health plan or benefits or changes health benefits or plans while an employee is on FMLA leave, the employee is entitled to the new or changed plan/benefits to the same extent as if the employee were not on leave. . . . Notice of any opportunity to change plans or benefits must also be given to an employee on FMLA leave.”
Reiterating this requirement, the IRS regulations provide the following guidance concerning the effects of the FMLA on the operation of cafeteria plans:
FMLA requires that an employee on FMLA leave have the right to revoke or change elections (because of events described in § 1.125-4) under the same terms and conditions that apply to employees participating in the cafeteria plan who are not on FMLA leave. Thus, for example, if a group health plan offers an annual open enrollment period to active employees, then, under FMLA, an employee on FMLA leave when the open enrollment is offered must be offered the right to make election changes on the same basis as other employees.
Accordingly, it is important to take steps to ensure that employees on FMLA leave are not forgotten during the open enrollment period. Consider providing benefits information to such employees via a method which requires proof of receipt, e.g., certified mail or overnight mail. Additionally, any delivery of open enrollment materials also needs to comply with applicable DOL and IRS rules regarding delivery of participant disclosures.
By now, many U.S. employers are heavily involved in preparing for workplace issues implicated by Ebola. From a benefits perspective, make sure your planning gives appropriate consideration to the Family and Medical Leave Act (FMLA).
Undoubtedly, an employee who is eligible for FMLA leave will be entitled to such leave if the employee contracts Ebola, based on having a serious health condition that requires leave from work. Similarly, an eligible employee whose covered family member contracts Ebola is likely to be entitled to leave to care for such family member (even if such “care” involves only psychological care and not physical care).
But what about the employee who is exposed or potentially exposed to Ebola, and, as a result, is requested or required – or even just volunteers, based on potential exposure – to be in quarantine? And what about employees who have not been exposed but who are fearful of contracting Ebola in the workplace and refuse to come to work?
An argument could be made that an eligible employee who is in quarantine based on exposure or a reasonable belief of potential exposure to Ebola is entitled to leave under the FMLA. This is because the definitions of “serious health condition,” “incapacity,” and “unable to perform the functions of the [employee’s] position” include situations in which an employee must be absent from work to receive “treatment.” “Treatment” in turn includes “examinations to determine if a serious health condition exists.”
Individuals who are in quarantine due to Ebola exposure or potential exposure typically are subject to monitoring by heath care providers over a period of 21 days. Accordingly, such individuals arguably satisfy the requirements for being entitled to job-protected FMLA leave for the duration of their quarantine. It also should be noted that various states have enacted laws prohibiting employers from terminating employees when an official quarantine is implemented by state or federal public health officials.
As for employees who have not been exposed to Ebola but who refuse to come to work based on fears of exposure through contact with co-workers, the FMLA is less likely to be involved (although other federal and state laws, as well as other employer leave policies, could come into play). It is conceivable, however, that an eligible employee may have a serious health condition (physical or mental) which is exacerbated by the stress or anxiety of a perceived (real or imagined) risk of exposure. Assuming such an employee is able to obtain appropriate certification from a health care provider, the employee’s leave from work may be protected by the FMLA.
Continuing our discussion of “quirky” counting rules under the Family and Medical Leave Act (“FMLA”), today we address these questions: May leave granted to an employee who is not eligible for FMLA leave be designated as FMLA leave? And may that leave be counted against the 12-week FMLA leave entitlement.
The short answer (to both) is: No.
This question typically arises because an employer is trying to be generous. For example, the employee is a newer employee and needs leave, but has not yet worked for the employer for 12 months or 1,250 hours. Or perhaps the employer has various office locations and wants to allow employees in smaller offices (which do not meet the 50 employees in 75 miles eligibility rule) to take FMLA leave just like employees in larger offices are able to do.
But while an employer is certainly permitted to provide an employee with leave when not otherwise required by the FMLA, the regulations are clear that such leave is not FMLA leave and may not be counted against an employee’s 12-week FMLA entitlement.
So, for example, if an employee is permitted to begin a leave prior to reaching the 12 months of employment threshold, such leave cannot be designated as FMLA leave at any time. Instead, if and when the employee reaches the 12 months of employment threshold, only leave that occurs after the eligibility requirement is met can be counted against the employee’s FMLA entitlement.
Employers who generously grant “FMLA-like leave” to all employees regardless of whether such employees meet the eligibility requirements need to recognize that when an employee becomes eligible, he or she can demand a full 12 weeks of FMLA leave. Alternatives for handling pre-FMLA eligibility leave requests include establishing a non-FMLA leave policy, providing leave as an accommodation under the ADA (after conducting an appropriate analysis under the ADA to determine whether such leave is appropriate), or handling special situations on a case-by-case basis.
Recently, we began a discussion of “quirky” counting rules under the Family and Medical Leave Act (“FMLA”), starting with issues relating to overtime hours. Today, we continue the discussion by addressing the “quirky” counting aspects involved in the intersection of the FMLA and “light duty” work.
The FMLA regulations are clear that, if an eligible employee submits the required paperwork certifying the employee’s need for leave due to a serious health condition, the employer cannot force or otherwise “coerce” the employee to instead accept a light duty position.
Of course, the FMLA doesn’t preclude an employer from offering a light duty position, and if the employee’s provider approves, there can certainly be benefits to both the employer and the employee of the employee returning to work as soon as possible.
Not surprisingly, when an employer offers, and an employee voluntarily accepts, a light duty assignment, the time spent working in the light duty assignment is not counted against the employee’s 12-week FMLA entitlement. After all, the employee is working, not on leave.
Nonetheless – and here’s the catch – during the period that the employee is working in the light duty position, the employee remains protected by the reemployment rights under FMLA. That is, the employee has an FMLA-protected right to be restored to his or her same position (or to an equivalent one), assuming the employee is able to perform the essential functions of the position. The regulations provide that this right to restoration while in a light duty assignment exists through the end of the 12-month period leave year used by the employer to calculate FMLA leave. How return to light duty work will impact benefits eligibility will need to be separately considered by reviewing the benefit plan documents.
Coming soon…. Quirky FMLA Counting Rules: Leave Prior to Eligibility
Of all the administrative challenges posed by the Family and Medical Leave Act (“FMLA”), the most difficult may be ensuring that you are correctly determining FMLA hours available and taken for each employee. Figuring out how to apply the general FMLA counting rules is hard enough, but add in the some of the “quirky” FMLA counting rules, and the situation can be downright maddening.
One such quirk relates to overtime hours. You are probably aware that overtime hours are considered “hours worked” for purposes of the eligibility requirement relating to 1,250 hours worked. That is, overtime hours are counted on an hour-for-hour basis when determining whether the employee has worked at least 1,250 hours during the 12 month period immediately preceding the commencement of the leave.
And you may also be aware that, for qualifying situations, FMLA can be used to protect leave during what would otherwise be overtime hours (potentially including a general “no overtime” request).
But do you know whether and how to count such missed overtime hours against an employee’s 12-week FMLA leave entitlement? And whether overtime hours must be factored into the amount of FMLA leave entitlement in the first place?
The FMLA regulations speak to these issues. Specifically:
- If the overtime that the employee missed was voluntary overtime, then the missed time may not be counted against the employee’s FMLA leave entitlement.
- If the employee would normally be required to work the overtime, then the missed hours may be counted against the employee’s FMLA entitlement. Such leave is considered, and should be designated as, intermittent FMLA leave.
For purposes of determining whether overtime is voluntary, the DOL has stated that the appropriate focus is whether the employee would have been required to work the overtime hours but for the taking of FMLA leave.
Importantly, required overtime hours must be factored into the FMLA entitlement calculation for eligible employees. In other words, employees who are normally required to work overtime are entitled to more than 480 hours (12 weeks x 40 hours per week) of FMLA leave in the applicable 12-month period. For example, if an employee would normally be required to work 48 hours in a given week, and the employee only works 40 hours due to a serious health condition, then the employee has used eight hours of leave out of 48, or 1/6 of a week of FMLA leave.
Coming soon…. Quirky FMLA Counting Rules: Light Duty
Presently, the federal government uses different rules for different purposes when determining whether a same sex marriage will be recognized. The IRS and the majority of other government agencies use the state of celebration rule for purposes of determining whether a same sex marriages will be recognized. Under this rule, a same sex marriage is recognized so long as it was recognized in the state in which is was performed. However, the DOL uses the state of residence rule for Family Medical Leave Act (FMLA) purposes. Under this rule, a same sex marriage is recognized only if it is recognized in the state in which the couple resides. The resulting inconsistency is confusing and complicates administration of employee benefits.
Secretary of Labor Thomas E. Perez announced on Friday that the Department of Labor (DOL) is proposing a rule to revise the definition of spouse under the FMLA to include all eligible employees in same-sex and common-law marriages. “Under the proposed revisions, the FMLA will be applied to all families equally, enabling individuals in same-sex marriages to fully exercise their rights and fulfill their responsibilities to their families,” states Perez. The proposal is in keeping with the Supreme Court’s June 26, 2013 ruling to strike down Section 3 of the Defense of Marriage Act in the Windsor decision.
The main highlights of the DOL’s proposal are as follows:
- Moving from the current state of residence rule to place of celebration rule; and
- Revising the definition of spouse to include same-sex marriages, common law marriages, and same-sex marriages entered into abroad that could have been entered into in at least one State.
The proposal has not yet been published in the Federal Register and will be subject a 45-day public comment period. However, employers should be mindful of this pending change.
The entire proposed definition reads as follows:
Spouse, as defined in the statute, means a husband or wife. For purposes of this definition, husband or wife refers to the other person with whom an individual entered into marriage as defined or recognized under State law for purposes of marriage in the State in which the marriage was entered into or, in the case of a marriage entered into outside of any State, if the marriage is valid in the place where entered into and could have been entered into in at least one State. This definition includes an individual in a same-sex or common law marriage that either (1) was entered into in a State that recognizes such marriages or, (2) if entered into outside of any State, is valid in the place where entered into and could have been entered into in at least one State.
On June 6th, a Wisconsin federal district court held that state laws prohibiting same-sex marriage are unconstitutional in the matter of Wolf v. Walker. This decision is the latest in a series of rulings in favor of same-sex marriage since the Supreme Court overturned section three of the Defense of Marriage Act in United States v. Windsor, nearly one year ago. Since Windsor, judges in eight states (AR, ID, MI, OK, TX, UT, VA, and WI) have overturned same-sex marriage bans, and judges in four other states (IN, KY, OH, and TN) have issued more limited rulings in favor of same-sex marriage. On June 13th, the district court judge issued an injunction against enforcement of the ban, but stayed the order pending the outcome of the defendant’s appeal to the Seventh Circuit Court of Appeals.
For the employee benefits community, this decision will have an impact on the eligibility of Wisconsin employees to take job-protected leave to care for their seriously ill spouse under the Family Medical Leave Act (FMLA). Current FMLA guidance from the Department of Labor applies a “place of residence” rule that does not require employers to permit employee leave to care for a same-sex spouse if the employee resides in a state that does not recognize same-sex marriage. If upheld on appeal, the decision would mean that an employee who resides in Wisconsin and was legally married in another state would be eligible for FMLA leave to care for her same-sex spouse.
For employers with Wisconsin employees, documents such as HR manuals, policies, procedures, and payroll systems should be earmarked where a change to reflect similar treatment of both opposite-sex and same-sex married couples may be necessary. While reviewing their FMLA policy, employers should pay attention to their plan’s definition of “son or daughter” for purposes of FMLA leave to ensure that definition applies equally to children of the same-sex spouse of an employee. With similar cases pending in the 4th, 5th, 6th, 7th, 9th, and 10th Circuit Courts of Appeals, expect more updates in the coming months as these appeals are decided.
We would like to thank our Summer Associate, Craig Pacheco, for his assistance in preparing this post.
A few weeks ago, we discussed audits from the perspective of the Employer as the audit target. Today our discussion is from the perspective of the Employer as auditor rather than audit target.
For many companies, the sheer size and complication of the task of Family and Medical Leave Act (“FMLA”) administration has led to a decision to outsource the work to a third-party administrator. Whew, you can rest easy now that someone else is in charge of the hassle of FMLA forms, notices, tracking, etc., right?
As the employer, it will be you that is on the hook for FMLA violations, even when such violations occur as a result of a third-party administrator failing to properly perform FMLA administration. You may have an indemnity clause, but such clauses may have limits and, in any event, won’t prevent the costs of fighting a claim in the first place.
Given this potential liability, have you taken steps to ensure that your third-party administrator is handling FMLA matters correctly? Have you audited the administrator’s process? Asked tough questions about how complicated situations are handled? Inquired into the administrator’s training process for the representatives assigned to your account? Ensured that the administrator is knowledgeable concerning your policies and preferences with respect to leave issues?
You have a right to expect your third-party administrator to be an FMLA expert and to follow the current regulations and proper procedures. For example:
- Is the administrator sending the eligibility and rights & responsibilities notice within five business days of receiving a request for FMLA leave?
- Is the administrator sending the designation notice within five business days of receiving enough information to determine whether leave is being taken for a FMLA-qualifying reason?
- Is the administrator reviewing medical certifications closely to ensure they are complete and sufficient? If certifications are not complete and sufficient, is the administrator communicating properly with the employee and providing an opportunity for cure?
- Is the administrator obtaining HIPAA-compliant authorizations before communicating with a health provider concerning clarification of medical certifications?
- If the administrator is responsible for tracking FMLA hours available and used for each employee, is the administrator appropriately counting overtime hours? Leave over holidays and shutdowns?
- Is the administrator requesting recertifications and new certifications at appropriate intervals?
Consider sitting down with your third-party administrator periodically to discuss the above and similar topics, as well as your indemnity provisions, to ensure that you are not risking unnecessary exposure.
But sometimes, “consistency” may not be the best answer.
Take, for example, the question of whether to designate leave taken by an employee to care for a same-sex spouse as leave under the Family and Medical Leave Act (“FMLA”).
Currently, some states recognize same-sex marriage, while others do not. Under the FMLA regulations, the “place of residence” rule determines whether a same-sex spouse meets the definition of “spouse” under the FMLA. Thus, an employee is entitled to take FMLA leave to care for the employee’s same-sex spouse only when the state in which the employee resides recognizes same-sex marriage.
Despite the current FMLA definition, some employers, desiring to treat employees consistently – most times either out of a concern for fairness or for purposes of easing administration – choose to define “spouse” in their employment policies to include same-sex spouses. Such employers then permit employees to take what they call “FMLA leave” to care for a same-sex spouse, even if the individual is not recognized as a “spouse” under applicable state law.
The potential problem with this approach is that only leave that fits within the circumstances that qualify for FMLA leave is permitted to be designated by an employer as FMLA leave and counted against an employee’s FMLA entitlement. Counting FMLA leave incorrectly can result in FMLA interference claims.
For example, an employee who is granted FMLA leave to care for his same-sex spouse despite residing in a state that does not recognize same-sex marriage, and who is later denied additional FMLA leave for his own serious health condition on the grounds that he has used up his FMLA entitlement for the applicable 12-month period, could pursue an FMLA claim against the company. His argument would be that the previous leave to care for his same-sex spouse should not have been counted as FMLA leave, and therefore the incorrect notices from his employer and the subsequent denial of his request for additional FMLA leave interfered with his rights under the FMLA.
Instead of designating leave to care for a same-sex spouse as FMLA leave with respect to an employee who does not reside in a state where same-sex marriage is recognized, an employer who wishes to provide leave in this situation should consider having a separate, non-FMLA policy for this purpose and understand that this leave will not count against the employee’s FMLA leave entitlement.
Employers are all too familiar with the more common investigation efforts by government agencies, such as an EEOC investigation blossoming from a single employee Title VII or ADEA charge into an onsite investigation of purported pattern and practice violations, or HHS turning a self-reported breach into a broad review of HIPAA compliance. But the government is increasingly expanding and using its investigation tools in less common areas. Audits are in the air – are you ready?
Consider whether your policies, practices and files are in order on the following subjects:
- Health Plan Audits under the Health Benefits Security Project (“HBSP”): This audit initiative is part of the Employee Benefits Security Administration (“EBSA”) National Enforcement Projects. It includes a broad range of healthcare investigations as well as enforcement of the Affordable Care Act (“ACA”). More specifically, EBSA will review plans for documentary and operational compliance with the protections of Part 7 of ERISA which includes the Women’s Health and Cancer Rights Act, the Newborns’ and Mothers’ Health Protection Act, the Mental Health Parity and Mental Health Parity Addiction Equity Act, the Genetic Information and Nondiscrimination Act and Michelle’s Law – as well as the Health Insurance Portability and Accountability Act’s portability and nondiscrimination requirements. EBSA’s ACA compliance review encompasses market reforms, patient protections, extension of dependent coverage, internal claims and appeals, external reviews and grandfathered plans. In addition, the HBSP continues EBSA’s long standing commitment to identify and eliminate abusive multiple employer welfare arrangements (MEWA’s).
- Preparation for an audit under the HSBP should include: first and foremost, make sure you have a plan and SPD; review plan documents to ensure compliance with applicable law; demonstrate operational compliance with eligibility terms; and be ready to promptly respond to plan document requests thereby demonstrating good faith and hopefully minimizing the need for follow up inquiries. Requested documents typically include the plan, SPD, participant notices, certificate of coverage, claims procedures, and the most recent 3 years’ returns. See the DOL audit checklist for a more comprehensive list of requested documents.
- Family and Medical Leave Act (FMLA): Over the past year, the DOL has signaled an intent to enhance its compliance investigations, including increasing the frequency of onsite which are likely to include not only a review of policies and records, but interviews with both management and non-management employees.
- Preparation for a potential government audit should include: review policies, forms, notices, communications and practices to make sure they are up-to-date and in compliance with the current regulations (which were revised in 2013); ensure that the FMLA poster is appropriately displayed in the workplace; conduct updated training for both HR and managers, both with respect to the law and your policies; and confirm that required paperwork is being maintained for the correct time period and in the correct manner.
- Form I-9: United States law requires employers to obtain and retain completed Form I‑9s on their employees in order to document the verification of the identity and employment authorization of each new employee hired after November 6, 1986, to work in the United States. Officers from various US agencies, including ICE (U.S. Immigration and Customs Enforcement, the investigative arm of the Department of Homeland Security), have the right to conduct onsite inspections of an employer’s I-9 records. Penalties for non-compliance with the regulations can include civil fines and criminal penalties.
- Preparation for a potential government audit should include: ensure that you have obtained I-9s for all employees hired after November 6, 1986; review I‑9s to ensure they were completed correctly (including any necessary re-verification); engage in appropriate remediation efforts for missing and/or incorrectly completed I-9s; and implementing appropriate retention/destruction policies.
Spending the time to clean up your policies and practices before the government shows up can save a lot of headaches, not to mention time and money in the long run.