Leave Laws Are Ever

Changing –

Are You Keeping Up?

Leave Laws Are

Ever Changing –

Are You Keeping Up?

Cheryl Jez,

Regional Practice Leader

Cheryl.jez@rsli.com

214-432-1311

Presented By:

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

Agenda

Intent of FMLA

Balance workplace demands with family

needs

Ensure job-protection

Healthcare continuation

Minimize discrimination related to approvals

4

www.dol.gov

4

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

7 7

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

8

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

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

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”.

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)

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Legal

Compliance Abuse of

Privilege

Administration

12

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)

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

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)

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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FMLA Facts

and Statistics

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

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)

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

FMLA Metrics by Industry

(EMPAQ Annual Report, Program year 2010)

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

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

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

Case Law

&

Non-Compliance

Exposure

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.

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.

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.

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

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.)

Non Compliance Penalties

Failure of the employer to provide the required written notice can be

considered “interference” with employee’s FMLA rights

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

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

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

Building a Business Case

and

Understanding Your Options

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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)

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Leave Administration Options

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Best Practices to Outsourcing

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

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

Industry Best Practices:

“What Can I Do Right Now?”

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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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Questions?