Tag Archives: FMLA

Tax Reform Incorporates Employer Credit For Offering Paid FMLA

In light of the current trend toward state-mandated paid family and medical leave laws, recent tax reforms added a provision to the tax code allowing certain employers to claim a business credit based on wages paid to employees on family and medical leave, subject to certain conditions. The new provision, added by the Tax Cuts and Jobs Act, offers a general business credit of up to 25% of wages paid to certain qualifying employees while they are on family and medical leave. The credit will incentivize employers to offer paid family and medical leave, which will also help prepare employers for impending state and local paid leave laws. The credit is generally effective for wages paid in taxable years beginning after December 31, 2017 and is not available for wages paid in taxable years beginning after December 31, 2019. Therefore, employers interested in utilizing the credit should act quickly in the event Congress does not act to extend the credit beyond 2019.

The employer tax credit is calculated as a percentage of the amount of wages paid to a qualifying employee while on family and medical leave (as defined by the Family and Medical Leave Act of 1993 or “FMLA”) for up to 12 weeks per tax year. The credit is available only if the rate of pay for employees on leave is at least 50% of the employee’s normal wages. The credit is a minimum of 12.5% of the wages paid during leave and is increased by 0.25% for each percentage point by which the amount paid to a qualifying employee exceeds 50% of the employee’s wages (up to a maximum credit of 25% of wages paid).

A qualifying employee is any employee under the Fair Labor Standards Act who has been employed for one year or more and, for the preceding year, had compensation that did not exceed the maximum statutory amount. For an employer claiming a Section 45S credit for wages paid to an employee in 2018, the employee must not have earned more than $72,000 in 2017. Employers taking advantage of the credit must reduce deductions for wages and salaries paid or incurred by the amount determined as a credit. Additionally, any wages taken into account for other general business credits may not be used toward the paid family and medical leave credit.

In order to take advantage of the credit, employers must establish written policies and procedures that operate in accordance with the requirements of the new Internal Revenue Code Section 45S as added by the Tax Cuts and Jobs Act. For example, each year, employers must provide at least two weeks of paid family and medical leave to all full-time qualifying employees, and prorate the same benefits for employees working part-time. Additionally, as noted above, whatever paid leave is offered by the employer cannot be paid at less than 50% of the wages the employee normally receives. Employers can offer up to 12 weeks of paid leave annually under their written policies. The credit is available to employers that are not subject to the FMLA, so long as the employer offers paid family and medical leave consistent with the credit’s minimum standards and establishes a written policy governing the leave.

For purposes of the paid leave credit, “family and medical leave” includes leave taken for any of the following reasons: childbirth; placement of a child for adoption or foster care; caring for a spouse, child, or parent with a serious health condition; a serious health condition causing an employee to be unable to perform his or her work functions; qualifying events due to a spouse’s, child’s, or parent’s coverage on active duty or called to duty in the Armed Forces; or, caring for a spouse, child, parent, or next of kin that is a service member. However, employers should recognize that paid vacation leave, personal leave, or medical or sick leave provided by the employer will not be considered family and medical leave unless it specifically covers one of the aforementioned events. Additionally, leave provided under state and local law may not be included in calculating the employer credit. In other words, the Section 45S credit is unavailable regarding paid leave that is required under state or local law.

The IRS intends to provide employers with more guidance on the employer tax credit, including information on how paid family and medical leave will interact with other employer-provided paid leave, state and local leave laws, controlled group rules, and more. Until the IRS issues further guidance, please contact one of the McGrath North Employee Benefits or Labor and Employment attorneys with any questions or concerns.

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NEW YORK PAID FAMILY LEAVE: A Peek At The Most Comprehensive Paid Family Leave Program In The U.S.

This summer, New York joined the small group of U.S. states that offers paid family leave to employees. New York’s Workers’ Compensation Board adopted final regulations implementing paid family leave, the Paid Family Leave Benefits Law (“NY PFL law”), which goes into effect on January 1, 2018. The New York law has been dubbed one of the most comprehensive paid family leave programs in the nation. The NY PFL applies to all employers with employees working in New York for 30 or more days in a calendar year. The New York law is a benefit for people who work in New York; it does not matter where the employer is headquartered or where the employee lives.

The new law covers both full-time employees that have worked at least 20 hours per week for at least 26 consecutive weeks and part-time employees that have worked at least 175 days within a 52 consecutive-week period. Once an employee has met one of the two aforementioned eligibility requirements, paid leave will be granted in the following situations:

• To provide physical or psychological care and support to a family member due to a family member’s serious health condition;

• To bond with a newborn child during the first year of the child’s life or, if an adopted or foster care child, for the first year after the placement of a child with the employee; or

• For any qualified reason as provided for under the federal Family and Medical Leave Act (“FMLA”) arising from the employee’s spouse, domestic partner, child, or parent being active military duty, or being notified of an impending call or order to active military duty.

Employees on leave will receive up to 50% of the state’s average weekly wage for up to eight weeks in 2018 and this amount will gradually increase during the coming years, reaching 67% of the state average weekly wage for up to twelve weeks by 2021. The program is mandatory for private employers with one or more employees while public employers may opt into the program.

New York’s law is significantly more generous than the FMLA, which does not require paid leave and only applies to employers with 50 or more employees within a 750-mile radius of the worksite at which the employee is employed. Another key difference is that while FMLA requires employees to first use accrued Paid Time Off (“PTO”), an employer under the NY PFL law cannot require employees to use PTO before paid family leave unless that employee is eligible for both FMLA and NY paid family leave. Other benefits under the NY PFL law include continued health benefits during leave as if the employee continued to work, and reinstatement to the same or comparable prior position of employment without reduction in accrued benefits.

The NY PFL law does contain some restrictions on when employees can utilize paid family leave. For example, employees who are eligible for disability benefits and paid family leave benefits may only receive a combined amount of 26 weeks of disability and paid family leave benefits in a 52-consecutive calendar week period, and may not collect benefits for short term disability and paid family leave concurrently. The regulations also list various situations in which paid family leave benefits may not be available to the employee, such as when the employee is collecting sick pay or PTO from the employer, receiving total disability payments pursuant to workers’ compensation, or working part of the day with pay for the employer or any other employer.

Funding for paid family leave will come from employee contributions of up to $1.65/week for 2018. While it is unclear whether the short-term disability insurance carriers required to provide paid family leave benefits will be able to charge an amount in excess of the employee contributions, the intent behind the law is to ensure that the employee contributions are sufficient to fund all paid family leave costs. Employers who either currently self-insure for short-term disability benefits or who provide paid family leave to public employees not represented by employee organizations are given the option to self-insure for paid family leave, but must do so before September 30, 2017. However, self-insurance comes with a risk of bearing paid family leave costs not covered by employee contributions.

In addition to the heightened benefits, the NY PFL law adds notice requirements that may not be ignored. Employers must provide written notice to employees regarding their rights under the NY PFL law, including how to file a claim for leave. Employers must also post a prescribed notice regarding the NY PFL. Employees are also subject to notice requirements, as the law mandates 30 days’ advance notice of intent to take paid family leave.

Looking forward, employers should determine whether to obtain separate coverage for these benefits. Employers that insure short-term disability benefits should contact their insurance carriers to determine when payroll deductions for paid family leave should go into effect. Private employers that self-insure short term disability must determine whether they will elect to self-insure paid family leave, and must do so no later than September 30, 2017. The NY PFL law is much broader than FMLA, meaning that more employees can take leave than before and various leave policies will overlap in a new and complicated manner. Employers should review and update their employee handbooks, notices, plan documents, summary plan descriptions, and leave forms to ensure compliance with the new law.


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Asking An Employee On FMLA Leave To Work: Interference Or Not?


The timing of FMLA leave is not always convenient for employers. But, what can a company do when an employee who is important or even essential to a business function goes on FMLA leave before the work has been completed? Although a recent court decision did not directly answer this question, it did frame the issue of how much work-related contact with an employee on FMLA leave constitutes interference with that leave.

The plaintiff in Smith-Schrenk v. Glennon Energy Services worked in the company’s ethics and compliance department. In that department, she was required to work 50 to 60 hours a week. About two years after she began her employment, the plaintiff began missing work in order to care for her mother and because of her own health needs. She first requested intermittent FMLA leave and then asked that the leave be made full-time, or continuous. Sometime later, the plaintiff resigned her employment, but alleged that she had been constructively discharged because of certain actions taken by the company which she claim were designed to lead to her termination. The plaintiff also alleged interference with her FMLA leave and claimed that the company continued to call and email her during her leave, requiring her to work 20 to 40 hours while she was on leave.

The court reviewed the company’s motion for summary judgment and dismissed all the causes except the interference claim related to the plaintiff’s allegations relating to the work she alleged she was forced to perform while on leave. In examining that claim, the court noted that the FMLA makes it unlawful for any employer to interfere with, restrain or deny the exercise of or attempt to exercise, any right provided under the FMLA. The term “interfering with” was found to include not only refusing to authorize FMLA leave, but “discouraging an employee from using such leave.”

The court noted that the general consensus among the courts is that reasonable contact limited to basic, business-related inquiries about the location of files as well as institutional or status-related knowledge will not interfere with an employee’s FMLA rights. Significantly, the court noted that there is no right in the FMLA to be “left alone” or to be completely relieved from responding to an employer’s “discrete inquiries.” Further, it found that fielding occasional calls about one’s job while on leave is a professional courtesy that does not abrogate or interfere with the exercise of an employee’s FMLA rights.

On the other hand, asking or requiring an employee to work while on leave can cross the line into interference. The court noted that by requesting an employee to perform work during FMLA leave, the employer not only discourages the employee from using such leave, but actually precludes the employee from using such leave during that period of time.

The court then concluded that since there was a dispute about whether the plaintiff was actually required to perform work during her leave and, if so, how much work she was required to perform, the matter should go to a jury.

Even though the issue was not specifically decided, the decision in Smith-Schrenk is instructive to employers. In today’s workplace, there are many jobs that an employee cannot simply walk away from, simply given the nature of the job responsibilities or its importance to the company’s function. Inevitably, there will need to be some contact with individuals on FMLA leave in order to gain information or learn about the status of a matter, or even to bring a task or project to closure, even though the employee legitimately is on leave. However, where the contact with the employee involves a request for work beyond the responses to “discrete inquiries” referenced by the court in its initial analysis, employers should tread carefully. Even if the employee agrees to or acquiesces in such work, that may not be enough to justify the employer’s actions and avoid a claim of FMLA interference. Employees may be able to claim that they felt they had no choice and that a refusal to perform could have impacted their job status. Clearly, with respect to job-related contacts with an employee when they are on FMLA leave, “less is more.”

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What To Do When You Don’t Agree With A Doctor’s Medical Release

When an employee returns from medical leave, employers often question the employee’s “fitness” to return to duty. Most employers have written policies requiring employees to produce a medical note from their doctor releasing them back to work. However, a medical release does not always resolve the issue and the employer may have additional concerns.

For example, consider a situation I recently encountered with a client. An employee had been off work for an extended period due to depression and mental problems. He completed a medical certification and was approved for leave under the Family and Medical Leave Act (FMLA). During his absence, the employee posted numerous comments on his Facebook page which indicated that he may be suicidal and reckless. Shortly after the Facebook post, his doctor released him back to work without any restrictions. This raised serious concerns for the Company and coworkers who saw the Facebook posts.

What can the employer do under the FMLA?

Under the FMLA, the employer does not have to accept a general release to return to work. Instead, the Company can require the employee’s doctor to provide a fitness-for-duty certification. Under a fitness-for-duty certification, the employee’s doctor must specifically address the employee’s ability to perform the essential functions of his or her job. The employer can provide a list of the essential job functions and other relevant information for the doctor to consider (i.e., a copy of the Facebook post or any other recent information raising concerns about the employee’s mental stability).

There are a couple of things to note about a fitness-for-duty certification. First, the employer must have a uniform policy or practice that requires all similarly-situated employees to obtain and present the certification. Second, once the certification is completed, the employer cannot challenge the doctor’s opinion by seeking a second or third opinion. An employer may call the employee’s doctor to obtain a clarification or to authenticate the document, but cannot go any further or delay the employee’s return to work.

What are the employer’s rights under the ADA?

If the employer’s concerns are not alleviated by following the FMLA procedures, there is another option that may be available under the Americans with Disabilities Act (ADA”). An employer may require a medical examination if there is a “reasonable belief” that the employee’s ability to perform essential job functions will be impaired or if the employee poses a direct threat to health or safety. The medical examination must be job-related and be consistent with business necessity.

In order to go this route, the employer must have “reason to doubt” the employee’s ability to perform the essential job functions. For example, there could be conflicting opinions received from the employee’s doctor or other evidence casting doubt on the employee’s ability to perform his or her job. Arguably, the Facebook post in the above example may suffice. A medical exam under the ADA does not have to be performed by the employee’s own doctor. The Company can pay its own healthcare provider to conduct the evaluation.

Employers should always tread carefully when seeking medical information. Medical exams and certifications must be narrowly tailored to address only the particular injury or illness from which the employee suffers. In other words, employers need to be careful not to mandate a general physical or a certificate of “good health.” Many employers get into trouble by trying to obtain additional health information. Finally, employers must always consider whether they are consistently applying these requirements to all similarly-situated employees to avoid any claim of disparate treatment.

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What happens in Vegas, Stays in Vegas, But May Also Be Covered By FMLA

Can a vacation to Las Vegas be covered by FMLA? According to the Seventh Circuit Court of Appeals, if an employee can prove he or she was providing care to a disabled family member while gallivanting in casinos, that employee will qualify for FMLA leave.

Among other things, the FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave to care for the employee’s spouse, child, or parent who has a serious health condition.

In the past, Courts have generally required that care to take place at home. For example, in Tellis v. Alaska Airlines, Inc., the Ninth Circuit declined to extend FMLA protections to an employee who flew cross-country to pick up a car and drive it back to his pregnant wife. The court held that “caring for a family member with a serious health condition `involves some level of participation in ongoing treatment of that condition.’” (See also, Tayag v. Lahey Clinic Hosp., Inc., where the First Circuit considered whether an employee who took leave to accompany her seriously ill husband on a “healing pilgrimage” to the Philippines qualified for leave under the FMLA).

A recent decision by the Seventh Circuit, however, broadens the scope of allowable FMLA absences. In Ballard v. Chicago Park District, a Chicago Park District employee, Beverly Ballard, lived with and provided daily care to her mother who suffered from end-stage congestive heart failure. The employee’s mother was terminally ill and receiving hospice support. As part of that support, her mother met with a social worker to discuss end-of-life plans. The employee’s mother expressed that she had always wanted to take a family trip to Las Vegas and consequently, the social worker was able to secure funding for a six-day trip.

The employee requested unpaid leave from her employer in order to accompany her mother on the trip and the two traveled to Las Vegas where the employee continued to serve as her mother’s caregiver. Several months later, the employee was terminated for accumulating unauthorized absences during the Las Vegas trip.

The employee sued under the FMLA and the employer filed for summary judgment, arguing that the employee did not “care for” her mother in Las Vegas, because (1) she was already providing care at home, and (2) because the trip was unrelated to the mother’s continuing course of medical treatment. After the District Court denied the employer’s motion, the employer appealed.

The Court of Appeals affirmed the District Court’s ruling and found that because the employee tended to her mother’s basic medical, hygienic and nutritional needs during the Las Vegas trip, she was entitled to FMLA leave. The Court’s decision centered on the fact that the FMLA regulations do not set forth any geographical limits on where such care could be provided.

In justifying its divergence with the First and Ninth Circuits, the Seventh Circuit held that “none of the cases explain why certain services provided to a family member at home should be considered ‘care,’ but those same services provided away from home should not be.”

The Court also dismissed the employer’s concerns that such an interpretation of the FMLA regulations would result in abuse of FMLA’s leave provisions. In so holding, the Court stated:

“[The Park District] also raises the specter that employees will help themselves to (unpaid) FMLA leave in order to take personal vacations, simply by bringing seriously ill family members along. So perhaps what the Park District means to argue is that the real reason Beverly requested leave was in order to take a free pleasure trip, and not in order to care for her mother . . . However, we note that an employer concerned about the risk that employees will abuse the FMLA’s leave provisions may of course require that requests be certified by the family member’s health care provider.”

The Ballard case signals a need for all employers and their HR representatives to take a different approach to certain FMLA leave requests. From a practical standpoint, if presented with an employee’s FMLA request to care for a family member during a vacation, employers may want to consider requiring that the employee provide the following information as part of their request to ferret out potential FMLA abuse:

– Whether the primary purpose of the trip is for personal or medical reasons;

– Whether a healthcare provider certified the trip is part of the treatment associated with the family member’s serious health condition; and

– Whether the employee will be providing any care to the family member during the trip

As always, employers are also advised to approach each FMLA leave request on a case-by-case basis and contact counsel when questions arise regarding the validity of an FMLA leave request.

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