New FMLA Regulations Contain Many Employer-Friendly Revisions.

As mentioned in the summaries from the past three days, the DOL issued new FMLA regulations on Monday which will become effective on January 16, 2009 and will require employers to modify their employment policies and employee handbooks. Employers should consult with an employment attorney to revise and/or review their FMLA policies and forms before the new FMLA rules become effective in January. In addition to the new rules mentioned at this site at DOL issues Final FMLA Regulations on New Servicemember and Exigency Leaves and Revises Serious Health Condition Rules, the following rules were also revised:

22. §825.207: Substitution of Paid Leave. The DOL made significant changes to this rule. First, the new rule “clarifies” that ‘‘substitution’’ of paid leave for FMLA purposes means that the unpaid FMLA leave and the paid leave provided by an employer run concurrently.” The DOL believed that the FMLA itself intended “to emphasize the limits on the situations in which an employer must allow the substitution of paid sick or medical leave, but does not preclude requiring compliance with the normal procedural rules pursuant to which the leave was accrued for paid personal or vacation leave. For example, it clarifies that an employer is not obligated to allow an employee to substitute paid sick leave for unpaid FMLA leave in order to care for a child with a serious health condition if the employer’s normal sick leave rules allow such leave only for the employee’s own illness. . . . . The legislative history of the substitution provision indicates that Congress understood that employers commonly restrict the situations in
which employees may take paid sick, medical, and family leave.”

Employer may apply procedural rules of paid leave policy. “An employer may limit substitution of paid sick, medical or family leave to those situations for which the employer would normally provide such paid leave (e.g., such policies may restrict the use of paid leave only to the employee’s own health condition or to specific family members). Employers must allow substitution of paid vacation, personal leave, or ‘‘paid time off’’ for any situation covered by the FMLA. In all cases, however, the normal procedural rules subject to which the leave was accrued apply—unless waived by the employer—regardless of the type of paid leave substituted. For example, if an employer’s paid sick leave policy prohibits the use of sick leave in less than full day increments, employees would have no right to use less than a full day of paid sick leave regardless of whether the sick leave was being substituted for unpaid FMLA leave. Similarly, if an employer’s paid personal leave policy requires two days’ notice for the use of personal leave, an employee seeking to substitute paid personal leave for unpaid FMLA leave would need to provide two days’ notice. Employers, of course, may choose to waive such procedural rules and allow an employee’s request to substitute paid leave in these situations, but they are not required to do so.”

“Where an employer’s paid leave policy requires the use of such leave in an increment of time larger than the amount of FMLA leave requested by an employee, if the employee wishes to substitute paid leave for unpaid FMLA leave, the employee must take the larger increment of leave required under the paid leave policy unless the employer chooses to waive that requirement. The employer is not required to permit the employee to substitute paid leave for the smaller increment of unpaid FMLA leave.” However, when “an employee chooses to take a larger increment of leave in order to be able to substitute paid leave for unpaid FMLA leave, the entire amount of leave taken shall count against the employee’s FMLA entitlement.”

New Notice Requirement. The new rule “requires that employers notify employees of any additional requirements for the use of paid leave” and “this information must be included with the rights and responsibilities notice required under § 825.300(c). At the employer’s option, this information may be included in the text of the rights and responsibilities notice itself, or the employer may attach a copy of the paid leave policy to the notice, or provide a cross-reference to a leave policy in an employee handbook or other source available to employees, where paid leave policies are customarily set forth.”

Disability/Workers Compensation. The new rule also “clarified” that “[e]mployees on paid disability leave due to a FMLA-protected condition are not on unpaid FMLA leave and therefore the statutory provision for the substitution of paid leave does not apply.” Nonetheless, "employers and employees may agree, where state law permits, to have paid leave supplement the disability plan benefits, such as in the case where a plan only provides replacement income for two-thirds of an employee’s salary.” Similarly, employees on workers’ compensation leave are not on unpaid FMLA leave and the leaves do not run concurrently. “However, if the workers’ compensation benefits cease for any reason and the employee is still on leave, the substitution provision may become applicable at that time.”

Less Stringent Rule Eliminated. The new, revised rule no longer requires employers to follow the less stringent policy/plan procedures when “paid leave is substituted for unpaid FMLA leave and the employer’s procedural requirements for taking paid leave are less stringent than the requirements of the FMLA, employees cannot be required to comply with the higher FMLA standards.” As a result, when paid sick leave is substituted for unpaid FMLA leave, employers can now require an FMLA medical certification for absences of less three days even if – as is typical-- its paid leave policy does not similarly require a medical statement. Similarly, the employer can require that the notice requirement of the paid policy be complied with by the employee if s/he wants to substitute paid leave for unpaid FMLA leave.

Compensatory time. The new rule permits public employees to substitute compensatory time for unpaid FMLA leave.

23. §825.212: Employee’s failure to pay insurance premiums. This rule currently provides that “an employer may terminate an employee’s health insurance coverage while the employee is on FMLA leave if the employee fails to pay the employee’s share of the premiums, the grace period has expired, and the employer provides sufficient and timely notice to the employee.” The DOL “clarified” this rule further by explicitly reminding employers that “if an employer allows an employee’s health insurance to lapse due to the employee’s failure to pay his or her share of the premium as set forth in the regulations, the employer still has a duty to reinstate the employee’s health insurance when the employee returns to work, and the employer may be liable for harm
suffered by the employee as a result of the violation if it fails to do so.”

24. §825.215: Elimination of Special Bonus Treatment for FMLA Leave. The new rule eliminates a highly unpopular prior requirement that FMLA leave be disregarded for purposes of awarding bonuses for perfect attendance, production or quotas. If “a bonus or other payment is based on the achievement of a specified goal such as hours worked, products sold or perfect attendance, and the employee has not met the goal due to FMLA leave, then the payment may be denied unless otherwise paid to employees on an equivalent leave status for a reason that does not qualified as FMLA leave” such as vacation. This does not mean that employers may utilize no-fault attendance policies. “Penalizing an employee for taking FMLA leave under a ‘‘no fault’’ attendance policy is distinct from disqualifying an employee from a bonus or award for attendance because the former faults an employee for taking leave itself whereas the latter denies a reward for achieving the job-related performance goal of perfect attendance. The Department notes that employers are free to prorate such bonuses or awards in a non-discriminatory manner; nothing in these regulations prohibits employers from doing so.”

25. §825.220: Anti-Retaliation and Settlement of Claims.

a. Remedies for Interfering with FMLA Rights. Violations of the act may result in liability for lost compensation, other actual monetary losses and appropriate equitable or other relief, including reinstatement, or promotion, etc.

b. Waiving FMLA Rights. The current regulations preclude employees from waiving their FMLA
rights. In contrast, the new regulations explicitly provide only that employees cannot waive future FMLA rights. “This does not prevent the settlement or release of FMLA claims by employees based on past employer conduct without the approval of the DOL or a court.”

I will continue to summarize additional significant changes in the new FMLA regulations throughout the week on this blog, including at New FMLA Regulations Significant Modify Employers’ Notice Requirements. Until then, eager beavers and insomniacs can read the 201 pages of single-spaced, 9-point font new rules and explanatory comment in full at http://edocket.access.gpo.gov/2008/pdf/E8-26577.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.