In last month's article "Act Now To Take Advantage of Recent Employer-Friendly FMLA Changes," we reviewed an employer's general notice obligations under the recently updated FMLA regulations, including important policy changes that should be implemented to take advantage of employer-friendly regulatory changes.
In addition to meeting the general notice requirements, an employer is required to provide individual notice to an employee concerning eligibility for FMLA leave, rights and responsibilities under the FMLA and, where appropriate, formal designation of time away from work as FMLA leave.1
The final FMLA regulations no longer impose categorical penalties against employers upon their failure to follow these notice requirements. However, potential liability remains and employers should be vigilant in the administration of their FMLA policies.
Eligibility Notice
An employer is responsible for providing, orally or in writing, individual notice of an employee's eligibility for FMLA leave within five business days (absent extenuating circumstances) of when an employee provides specific notice of the need for FMLA leave or when an employer acquires knowledge that an employee's absence may be for an FMLA-qualifying reason.
Eligibility Notice must state whether the employee meets the eligibility requirements for FMLA leave. If the employee is not eligible, the notice must specifically state at least one reason why (e.g., that the employee has not worked for the employer for a total of 12 months). The Department of Labor has updated its Form WH-381 to be used to provide this notice.
The final regulations also confirm that employee eligibility is determined (and notice should be made) at the commencement of the first instance of leave for each FMLA-qualifying reason.
In the event an employee subsequently requests FMLA for a different qualifying reason within the same 12-month period, an employer does not need to provide an additional Eligibility Notice if the employee's eligibility has not changed. If eligibility status has changed, an employer must notify the employee of the change within five business days (absent extenuating circumstances).
The extension from two to five business days for an employer to provide the Eligibility Notice is a welcome change. The final regulations also dropped the automatic penalty that an employee shall be deemed eligible for FMLA leave in the event of an employer's failure to issue a timely Eligibility Notice.
However, there are still consequences when an employer fails to properly provide Eligibility Notice and employers must be wary before waiving any FMLA eligibility criteria:
Train Managers To Recognize FMLA Leave Requests
Since many employees will make a request for leave or report an absence directly to their managers, triggering the running of the five business day time period for an Eligibility Notice, managers must be trained to recognize that statements such as the employee is pregnant, scheduled for surgery or has a family member with an illness requiring the employee's care may all constitute requests for FMLA.
While employees do not specifically need to assert their rights under or even mention the FMLA in order to provide sufficient notice, they must provide information sufficient to alert an employer of the need for FMLA leave as well as the timing and duration of the leave.
If a manager fails to timely forward this information to an employer's HR or leave administrator, it may delay the dissemination of the Eligibility Notice and possibly prevent the employer from meeting the five business day time frame. The result? An employer may be found liable for interference with, restraint of or denial of the exercise of an employee's FMLA rights.
Costly Failure To Accurately Determine Employee Eligibility
Brown v. Nutrition Management Services Co., No. 06-2034, 2009 U.S. Dist. LEXIS 4199 (E.D.Pa. Jan. 21, 2009) highlights the potential employer liability for the failure to properly recognize and notify an employee of eligibility for FMLA leave.
Here, the plaintiff's employment was terminated by her new employer, Nutrition Management, after she disclosed her pregnancy. The employee sued, claiming that the termination interfered with her FMLA rights and arguing eligibility because her prior employer was covered under the FMLA and Nutrition Management was a successor in interest. The employer argued it had a good faith belief that the employee was not eligible for FMLA leave because she was a new hire. The court determined that the new employer made only a cursory determination of the employee's eligibility and awarded liquidated damages under the FMLA in an amount equal to the award of back pay and pre-judgment interest.
Although decided under the prior regulatory framework, the rationale in Brown for imposing liquidated damages applies equally under the final regulations and serves as a reminder that employers must ensure that they are accurately determining employee eligibility.
Be Wary of Waiving Eligibility Requirements
Employers should also be mindful of potential liability for failure to properly articulate FMLA eligibility requirements in their FMLA policy.
In Peters v. Gilead Sciences , 533 F.3d 594 (7th Cir., 2008), an FMLA-coveredemployer had an employee handbook containing an FMLA policy outlining employee eligibility requirements. Absent from the policy, however, was the requirement that an employee must work at a worksite where 50 or more employees are employed within 75 miles of the worksite (the "worksite proviso"). The plaintiff worked out of his home and was provided leave under this policy but was later terminated after he rejected an alternate position offered by his employer. He sued, bringing claims for breach of contract, violation of the FMLA as well as promissory estoppel. The employer denied liability, claiming the employee was not an FMLA-eligible employee because he worked out of his home and did not meet the worksite proviso.
The court rejected the employee's FMLA claim, noting the employee did not meet the eligibility criteria because he worked out of his home but remanded the case to the lower court to permit consideration of the employee's promissory estoppel claim, theorizing that while the employee did not meet the FMLA statutory eligibility criteria, the leave policy contained representations regarding the employee's entitlement to leave on which the employee may have relied.
Peters illustrates the importance of explicitly stating all employee eligibility criteria in an FMLA policy and highlights a potential risk in the event an employer wishes to offer FMLA leave to all employees, even those who work in smaller locations.
Although beneficial from an employee relations perspective to offer FMLA leavecompany-wide, waiving eligibility criteria may prevent an organization from later denying a request for leave or right to return to the same or equivalent position on the basis that the individual is not an eligible employee under the FMLA. A reasonable alternative to consider is offering "FMLA-like" rights to employees who are not eligible for FMLA leave on the basis of their worksite location, but to clearly reserve the right to deny a requests for leave, benefit continuation and/or job restoration rights based upon business operations or staffing needs.
Rights And Responsibilities Notice
Each time an employer provides an Eligibility Notice to an employee, a notice ofemployees' rights and responsibilities under the FMLA (Rights and Responsibilities Notice) must also be provided and must state as appropriate:
• Leave may be designated and counted against the employee's FMLA entitlement if it qualifies and the applicable 12-month period of leave;
• Requirements to provide a certification to support the request for leave;
• Employees' rights to substitute paid time-off benefits, whether the employer will require the substitution of paid time-off benefits and the employee's entitlement to take unpaid FMLA leave where he/she does not meet the conditions for taking paid time-off benefits;
• Requirements concerning an employee's obligation to pay the portion of health care premiums he/she would otherwise be required to make and the consequences for failing to do so;
• Whether an employee is a "key employee" and the consequences regarding job restoration;
• Employee's right to benefits during leave and job restoration rights;
• Employee's potential liability for the employer's portion of health insurance premiums in the event he/she fails to return to work after FMLA leave; and
• Other information, such as the requirement to provide periodic reports of the employee's status and return to work.
If any information in the Rights and Responsibilities Notice changes, an employer must, within five business days of the employee's first notice of the need for FMLA leave subsequent to the change, provide written notice referencing both the prior notice as well as the information that has changed.
Designation Notice
An employer is also responsible for formally designating the employee's leave as FMLA qualifying (Designation Notice).
Once an employer has enough information to determine whether the leave qualifies for FMLA leave, written notice to the employee must be provided within five business days (absent extenuating circumstances).
The Designation Notice must provide:
• Specific information on what paid time-off benefits may run (or are being required by the employer to run) concurrently with FMLA leave;
• Whether the employer will require a fitness for duty examination addressing the employee's ability to perform the essential functions of the position (including a list of the essential functions); and
• The amount of leave counted against the employee's FMLA leave entitlement where known. If the amount of leave is unknown at that time, the employer must provide notice of the amount of FMLA leave taken upon an employee's request, but no more often than every 30 days and only if leave is taken during that period.
The DOL also adopted the reasoning of the Supreme Court's decision in Ragsdale v. Wolverine Worldwide, Inc., 535 U.S. 81 (2002), with respect to retroactive designation of FMLA leave. The final regulations now provide that in the event an employer fails to designate the leave within five business days, the employer may retroactively designate the leave as FMLA so long as the delay does not cause "harm or injury" to the employee.
While the final regulations governing Designation Notice provide employers with an opportunity to fix an erroneous failure to timely designate FMLA leave, an employer should assess the potential harm or injury to the employee prior to imposing a retroactive designation. Where the employee had no choice but to take the leave (as in the case of a medical emergency), it will be difficult for an employee to argue prejudice due to the failure to designate. Where an employee's taking of leave was based upon the assumption that FMLA leave would be subsequently available for another FMLA-qualifying reason, the employee may be able to demonstrate harm and the failure to timely designate FMLA leave may constitute interference with, restraint of or denial of an employee's FMLA rights.
The additional structure and time in which employers must provide notices to employees provides greater opportunity for employers to be in full compliance with the FMLA regulations. Elimination of the categorical penalties reduces risk to employers in the event they miss one of the notice deadlines. However, potential liability remains and internal practices should be reviewed and modified to increase timely communication and responsiveness to employee requests for FMLA leave. 1 The specific requirements of Eligibility Notice, Rights and Responsibilities Notice and Designation Notice are set forth in 29 C.F.R. § 825.300.
Published March 31, 2009.
