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FMLA:
Meeting the Challenge of Compliance
and Cost
Cheryl Jez, Regional Practice Leader
214-432-1311
• FMLA – What is it?
– Intent/Eligibility
– Why is it so challenging
• FMLA Facts and Statistics
• Case Law and Non-Compliance Exposure
• Building a Business Case to Understand Your Options
• Industry Best Practices
• Questions
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Agenda
Intent of FMLA
• Balance workplace demands with
family needs
• Ensure job-protection
• Healthcare continuation
• Minimize discrimination related to
approvals
www.dol.gov
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FMLA Eligibility
• 12 months; need not be consecutive (exclusion: 7 year gap)
AND
1250 hours in the preceding 12 months (24 hrs/wk) - Some states
may vary on requirements for both months and hours
• 50+ employees/75 mile radius – surface miles by available
transportation from worksite (usually waived)
– “No fixed worksite” (i.e. sales): headcount of site they report to
– Determined at time of request; may re-request count during a
leave
• Key employees: 10% highest paid within 75 mile radius - not
denied coverage; employer allowed to deny job restoration if
grievous economic hardship (usually waived)
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Health Benefits Under FMLA
• Employers must maintain group health coverage
• Employees must pay their portion of premium. If
unpaid, benefits could cease with appropriate
employee notification
• Employers can recover unpaid premiums
• Employer not obligated to maintain any other
benefits unless benefits are continued for other
leave types
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Job Protection Under FMLA
• Entitles employee to resume pre-leave or equivalent position
with equivalent pay and benefits
• No FMLA protection for layoffs or a reduction in work force
• If employment would end as an active employee, the
employee can be terminated while on leave
• No entitlement to accrue seniority while on leave (promotions
and benefits)
• Employment contracts
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FMLA Serious Health Condition definition is broad
and is intended to cover many physical and
medical conditions
• Employees Own Serious Health Condition
• Care for employees (well) child after birth, or
placement for adoption / foster care
• Care for employees spouse, child, parent, (next of kin
if service member) who has a serious health condition
• Deployment Activities for Military
Qualifying Event
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Impact of State Regulations
Key: colored areas indicate states with
additional leave regulations
WA MT
OR ID WY
NV
CA
UT
AZ
CO
NM
TX
OK
KS
NE
SD
ND
WI
IA
MO
MN
IL IN OH
MI NY
VT
ME
NH
PA
MA
RI
CT NJ
DE DC
MD
WV VA KY
FL
NC TN
SC GA
AR
AL MS
LA
AK
HI
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ADA Considerations
Consider ADA:
• when an employee requests restrictions
• when you receive a Healthcare Provider’s
certification requesting restrictions
• when FMLA exhausted
• when a company policy exhausts
• when you are considering terminating an employee
• when you are considering replacing an employee’s position
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ADA Considerations
• If an employee is on leave and you want to affect a
change in their status
• Obtain current medical information
- Will the employee be able to return to work with or
without restrictions if they are allowed an extension of
their leave?
- If no, can proceed with action.
- If yes, how long to you anticipate the employee will
need?
1 week, 4 weeks, 2 months, etc. ?
- Depending on the anticipated RTW date and any
potential restrictions the employer is to make a
decision on extending the leave based on business
necessity and “burden on the employer”.
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Why Is FMLA So Challenging?
• Complexity and exposure in three overlapping areas:
• Overlay of state regulations; constantly changing
• Relation to other programs
• Hard-dollar costs (real as well as potential)
Legal
ComplianceAbuse of
Privilege
Administration
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Employer Leave Policy
• Employer must specify in FMLA policy that
FMLA time runs concurrent with Group Disability
and Workers’ Compensation
• Employer must specify if employee is unable to
return to work after 12 weeks, he or she may lose
job and benefits protection (must consider ADA rights)
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Absence Types
• Continuous
– Four or more consecutive calendar days off of work
• Could be Friday, Saturday, Sunday and Monday
• Intermittent
– Reduced number of days in a workweek
– Reduced number of hours in a day
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Intermittent Criteria
• Must meet a serious health condition definition
• Can be a single injury/illness day
-doctor appointment, prenatal exam, physical therapy, chemotherapy,
morning sickness
• Must be measured in smallest increment of time that other leaves
are allowed but not longer than one hour
• Can be intermittent for care of newborn if agreed upon by employer
– CA requires 2 week minimum with twice less than
2 weeks allowed
• Must be calculated according to employees schedule
– Regularly scheduled required OT missed can be FMLA
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Drivers/Trends of Intermittent Leaves
-Chronic diseases of self or family members
-Care of Adult Child-definition of disability is ADA
-Strict Attendance Policies leads to increased open leaves for
protected time off
-Winter Holidays, Summer Time, Weekends
(seen often with high PTO balances)
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Intermittent FMLA Management
-Verify the doctor is qualified to certify FMLA
-Consult with Medical Professionals
-Verify the certification is complete; frequency and duration are clearly indicated
-Frequency and duration is checked for each absence and if trends develop, request is made for updated information
-Check patterns of multiple intermittent leaves which may be indicated for one person; child's asthma, employee’s migraine, father's chemotherapy
-Routinely analyze the file for patterns and every 60 days analyze the “day of the week” usage
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DOL FMLA Facts
• 2012: Approximately 10 million employees took FMLA leaves of
absence
• Employees have utilized FMLA over 100 million times since it
went into effect in 1993
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FMLA Facts and Statistics
• Between 4% and 10% of U.S. employees are absent on any
given day. (Employee Benefit News September 2010)
• Lost time claims can cost organizations more than $19,000 per
employee per year. (Employee Benefit News September 2010)
• 40% of leaves are > 10 days (US Department of Labor, 2012)
• It costs employers an average of $78,000 to defend an FMLA
lawsuit, regardless of outcome (U.S. Department of Labor Wage and
Human Resource Division 2006)
• Employers using decentralized FMLA management are more at
risk of over-entitling their employees to FMLA leaves. (Mercer,
Sept 2009)
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Regulatory Outlook
• Health Family Act - Federal Paid Family leave as an option
• State Leave Laws
– As of April 2013 - 96 bills since January 1, 2013
– 13 states have proposed paid family leaves
• Military leaves – increase activity of employees taking extended
leaves for injured service members and their parents; increased
rest and recuperation leave from 5 to 15 days, coverage for all
service members
• Leave laws ever changing:
– Federal Law: Major overhauls in 2009 and 2013
– Multiple requirements surrounding eligibility, qualifying reasons,
time available
– DOMA impact on FMLA entitlement – June 2013
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Internal FMLA Headaches
• Inconsistent internal administration
• Intermittent leave usually over 20% reported
• Incorrect information relayed to employee
• Supplementary use of sick and vacation time
• Domestic Partner eligibility concerns
• Integration of federal/state and company policies
• Denying a leave based on not meeting the definition of a Serious
Health Condition
• Cannot require employee to return to a Transitional Work
Assignment
• Ever expanding and complex State Leave Laws
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Companies Turn to Experts-Outsourcing
• Impact of DOL 2013 Changes
– More time off of work is protected
• Why employers outsource
– Consistency in administration
– Risk avoidance (Litigation, HIPAA, GINA)
– Compliance with the law
– Reduce Internal Management Costs
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Employer size 2007 2010
All employers 14% 25%**
100 – 999 employees 5% 13%*
1,000 – 4,999 employees 11% 29%*
5,000 or more employees 25% 37%**
10,000 or more employees 24% 39%**
** Up by 50% or more
* More than doubled
(Mercer Absence and Disability Management Survey, 2010)
Companies Turning to Experts
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Failing to Train Supervisors
Hurley v. Kent of Naples, Inc (January, 2013)
– Employee fired after requesting leave. Hurley claimed
interference with his FMLA leave rights. Awarded
damages of over $750,000. Employers total cost with
attorneys fees and costs for both sides, exceeded $1.2M.
Planning: Train managers and supervisors on the basics of
FMLA. Have a clear process for managing FMLA within
your organization and enlist the aid of human resources.
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Intersection of FMLA and ADAAA
Interstate Distribution Company – Class Action Suit
(November, 2012)
• Interstate’s FMLA policy violated ADA. They had a “no
restrictions” policy. Denied reasonable accommodations
and automatically fired employees when FMLA exhausted
with no accommodations. ADA requires employers to offer
reasonable accommodations to disabled employees.
• Judgment rendered: $4.85M
Planning: Employers need to ensure their polices do not
interfere with another entitlement an employee may have.
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Interference – Preventing Double
Dipping
• Pellegrino v. Communications Workers of America (CWA) (3rd
Circuit Court of Appeals, 2012)
• Pellegrino went on vacation while on FMLA leave and was fired
upon her return and sued for interference.
• – CWA policy required:
– Employees on paid sick leave must “remain in the immediate vicinity
of their home during the period of such a leave,” unless they obtain
prior written permission to travel.
– Employees on FMLA leave must use their paid sick leave
concurrently until it runs out
The latter requirement is a common policy that federal law has deemed OK.
Planning: Appeals Court said that employers can require employees to
remain home during sick leave. The fact that the leave ran concurrently with
FMLA leave didn’t make the no-vacation rule illegal.
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Misuse of Leave
Lineberry v. Richards (February 2013)
• Richards was scheduled to go on a prepaid vacation to Mexico
the same month her FMLA started. With doctor’s approval, she
went to Mexico and posted her vacation photos on Facebook. (There she was having fun in a motorboat … lying on a bed holding beer bottles
… and even holding her two 15-pound infant grandchildren in her arms.)
• While on leave, she sent her supervisor an email saying how
hurt she felt that her co-workers hadn’t given her a get-well card!
Instead of a get-well card, Carol’s supervisor replied with his
own email, saying, “The staff were waiting until you came back
from your vacation in Mexico to determine the next step.”
Planning: Clearly communicate that misuse of leave is grounds for
termination
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FMLA Non-Compliance Costs
• Employees who successfully sued for wrongful termination
based on FMLA Absence received on average between
$87,500 - $450,000 in damages (Source: EEOC)
• According to the U.S. Department of Labor, managers and
supervisors can be sued directly and held personally liable for
paying damages (Shultz v. Advocate Health & Hospitals Corp.)
• A federal jury recently awarded a Chase Manhattan regional
manager more than $2.2 Million for violations of the FMLA
(Lore v. Chase Manhattan Mortgage Corp.)
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Non Compliance Penalties
Failure of the employer to provide the required written notice can
be considered “interference” with employee’s FMLA rights
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Potential Costs
Employers may be liable “for:
– compensation and benefits lost by reason of
the violation
– for other actual monetary losses sustained
as a direct result of the violation
– for appropriate equitable or other relief,
including employment, reinstatement,
promotion, or any other relief tailored to
the harm suffered
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Direct cost of FMLA and Absence
• Payroll costs due to unscheduled absences - $760,000
annually. (Commerce Clearing House (CCH) Unscheduled Absence Survey)
• Overall direct costs of FMLA nationally was $21 billion (Employment Policy Foundation Analysis)
– Lost productivity due to FMLA cost employers $4.8 billion in profit.
– Employers paid $10.3 billion to replace workers who took FMLA and paid
$5.9 billion in healthcare coverage for employees on FMLA.
• Costs of unscheduled absence plans (sick leave, Short and
Long Term Disability, salary continuation, workers’
compensation) can add up to 4.4% of payroll (Marsh/Mercer Survey)
• The most common method of covering unplanned absences is
OVERTIME WORK
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Potential Cost of Mismanagement
• Actions by employees:
– Civil actions under State Laws
– Civil actions under the ADA
• lost wages, liquidated damages, prejudgment
• interest, relief; attorneys’ fees, individual liability
• Civil Actions by the Dept. of Labor
– 60% of actions filed with DOL are resolved in employees favor
– Penalties for Non-compliance
– recover lost wages, salary, employee benefits and actual monetary losses suffered
• Class Action – Litigation $$
– (Schultz v. Advocate Health and Hospitals Corp $12,000,000); (Charlene Roby v. McKesson $19,000,000)
– Verizon Settlement – California $6,000,000 - 2011
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Building a Business Case
• Consistency
• Compliance
• Reduce administration expense
• Reduces litigation exposure
• HIPAA
• Tracking tool
– FMLA requirements
– “Where are my employees?”
• Productivity value
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Do Nothing
“As is” with best practices review
Invest in “human capital” (administrative, legal)
Invest in a technology solution
Outsource administration (tracking and/or management)
Other (hybrid models)
Leave Administration Options
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System Features/Technology
– Counts time by federal, state, local requirements and company paid
and unpaid policies (roll backward, roll forward, fixed date)
– Streamlines eligibility determination
– Captures complex intermittent leave scenarios
– System programmed for accuracy and administrative ease
– Call center and telephone technology must be state of the art
– Technology driven communication process to all levels
– Ability to capture ROI – denied leaves
Best Practices to Outsourcing
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Best Practices to Outsourcing
Strong Processes
-Management of medical certification (not tracking of
the leave)
-Medical escalation process
(managing complex issues)
-Legal escalation process
keeping employer informed of “red flags”
-Structured return-to-work process
-Intermittent absences managed to certification
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Industry Best Practices
1. Review and update leave policies for accuracy and thoroughness:
– The law has recently allowed for more controls if documented
2. Develop leave policies which can be applied uniformly across
organization:
– Provides for ease of use and reduced “inconsistency”
– Reduces training complexity
– Increases compliance
3. Centralize your approach to leave:
– Significantly reduces exposure for inconsistent management
– More comprehensive and accurate data
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Industry Best Practices (cont.)
4. Establish relationship between HR/Benefits and Risk Management:
– Ensure tracking and consistency for work comp lost time
5. Seek out technology and its applications across all leaves:
– Ensures compliance from Federal / State perspective
– Ability to track and report
– Best opportunity to manage “productivity”
– Tracking, management, or both
– Standalone or bundled
6. Set base line metrics that can be tracked against over time:
– Data is power
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