Employment and Labor Relations Lawyer & Attorney : Porter Wright's Employer Law Report : Employment Litigation, Non-Compete, Trade Secrets

The military family leave amendment took effect immediately, but left some key issues arising from the new leave categories unresolved. For example, rather than defining what constitutes a “qualifying exigency,” the Congress directed the Department of Labor to define the term in regulations. The DOL is also expected to develop new forms that employees, employers and medical providers can use in reference to the new leave categories. As of today, the DOL has not yet issued even proposed regulations for the military family leave amendment, and the final regulations and military leave forms may still be months away. At the same time, employers also are waiting to see what the DOL will do with respect to the proposed changes to the original FMLA regulations that were released for public comment in February of this year.

Many employers may be waiting for the DOL to issue the new FMLA regulations before revising their policies to include the new military family leave categories. This seems reasonable, but has not been expressly endorsed by the DOL as an acceptable approach. Thus, employers may be acting at their own peril if they wait too long to amend their FMLA policies to incorporate the new leave categories and to address additional issues related to the FMLA amendment. One thing that all employers covered by the FMLA should do immediately if they have not already done so is to post the Notice that the DOL did issue that advises employees of their new rights to military family leave. A copy of that posting is attached hereto, and the Notice can be obtained directly from the DOL's website. Posting of the DOL’s Military Family Leave Notice on employee bulletin boards where other employment law notices are posted is required by the FMLA. Moreover, by complying with this posting requirement, employers can say that they have informed employees of their new rights, albeit not as comprehensively as they will when they revise their employee handbook policies.

The purchasing agents in this case were responsible for ensuring the timely order and delivery of materials; negotiating prices; maintaining records and handling returned goods; and selecting vendors.  DOL properly gave great weight to the fact that the purchasing agents were authorized to make purchases up to $25,000 without managerial review or authorization. This fact was truly significant because 99 percent of purchasing orders fell below $25,000 – indicating that the purchasing agents consistently made significant financial decisions with little supervision. These facts met the test for the administrative exemption. As with previous guidance from DOL, this opinion letter underscores how heavily the agency considers an employee’s decision-making authority in determining exempt status.

Opinion Letter FLSA2008-2 deals with the substitution provision available to public sector employers. Public sector employees may agree, with the approval of the employer, to substitute during scheduled work hours for another employee in the same classification/position. 29 U.S.C. § 207(p)(3). (This situation may occur, for instance, when one employee agrees to cover another employee’s shift.) Under the FLSA, the employer may exclude “substitution hours” from the calculation of overtime. Id. 

The specific issue addressed in the opinion letter was whether the substituting employee must receive any additional compensation for those hours. According to DOL, the public sector employer does not have to compensate the employee for those extra hours except where the employee has worked so many substitute hours that his wages for all hours worked fall below the minimum wage. In that case, the employer must be sure that the employee is paid at least minimum wage but still is not required to pay additional overtime. Conversely, the employer can remain in compliance with the minimum wage provision without paying any additional wages by denying any shift substitution requests that might drop the substitute employee’s hourly wages below the minimum wage.

Joint Employer Definition –

Both the old and new regulations recognize that some employees may have “joint employers,” both of whom have responsibilities under the FMLA. The new regulations clarify that a joint employer relationship generally does not arise from “Professional Employment Organizations” or “HR Outsourcing Vendor” contracts, where the PEO or vendor “merely performs … administrative duties.” However, in the rare circumstance where a PEO or vendor actually has the right to hire, fire, and assign work, a joint employer relationship is still likely to exist.

Employee Eligibility –

To be eligible for FMLA protection, an employee must have worked with an employer for at least 12 months and for at least 1,250 hours in the last 12 months. According to the new regulations, when measuring the 12-month requirement, employers are no longer required to count work performed before a break in service of 5 years or more. An exception is made for breaks in service that were required by military service or pursuant to a written agreement.

The 1,250-hour requirement is similarly changed so that credit is given for military service, time away from the job that would otherwise prevent employees from meeting this requirement.

The new regulations clarify that employees who become eligible for FMLA protection while in the middle of non-FMLA leave may acquire FMLA protection. Leave that begins before FMLA eligibility may start out as “non-FMLA” qualifying leave. However, if an employee becomes eligible for FMLA leave in the midst of the absence, FMLA protections are triggered from that point forward.

Serious Health Condition –

The DOL has provided very little help to employers attempting to determine whether an employee has a “serious health condition” subject to FMLA protection. Two small clarifications have been added in the new regulations. 

One form of serious health condition involves an incapacity of more than three days and either (a) two doctor visits or (b) one doctor visit with a regimen of continuing treatment. The new regulations clarify that the first option only contemplates two or more doctor visits “within a 30-day period.”

Another form of serious health condition involves “chronic conditions.” The new regulations specify that, to qualify as a serious health condition, a chronic condition must require at least two periodic visits per year to a health care provider for treatment.

Placement of Adopted Child –

FMLA leave is available for the placement of adopted children. The new regulations specify that FMLA leave may include time to “travel to another country to complete an adoption.” FMLA eligibility is not affected by the “source of the adopted child.”

Health Care Provider –

The long list of health care providers already eligible to prepare FMLA medical certifications and treat employees has been expanded to include “physician’s assistants.”

Intermittent Leave –

The new regulations provide no useful guidance or changes regarding intermittent leave, despite widespread confusion and requests for clarification from employers. 

Attendance Bonus –

The old regulations specifically required that employee bonuses based solely on attendance not be denied employees solely because of absences related to FMLA leave. The new regulations clarify that bonuses can be properly “based on the achievement of a specified goal such as hours worked, products sold or perfect attendance” and therefore can be denied employees taking FMLA leave. However, FMLA leave and similar non-FMLA leaves must be treated the same for purposes of such bonuses.

Overtime –

The preamble to the regulations attempts to clarify how the FMLA applies when employees do not work scheduled overtime due to a qualifying leave. Specifically, if the employee would otherwise be required to work overtime hours, the hours the employee would have been required to (but did not) work may be counted against the employee’s 12-week FMLA entitlement. When the employee works a part-time or reduced schedule, the employee’s leave usage in any given week is proportionate to the employee’s scheduled hours in the week in which the leave is used.

Light Duty –

The FMLA permits an employer and employee to agree to a “light duty” schedule that allows the employee to continue working rather than take unpaid FMLA leave. Under the old regulations, such light duty time could be counted against the employee’s 12-week FMLA allowance, even though it technically was “working time” for the employee. This provision has been deleted from the new regulations so that employees who accept light duty work need not exhaust their FMLA leave to do so.

Waiver of Rights –

The FMLA prohibits employees from waiving their rights under the statute. The old regulations were ambiguous as to whether this prohibition applied retrospectively or only prospectively. The new regulations clarify that employers cannot induce employees to waive their FMLA rights prospectively, but employees can lawfully waive their FMLA rights after the fact, even without court or DOL approval. Importantly, the new regulations expressly permit employees to waive any hypothetical FMLA violations in settlement agreements without special oversight.

Employer Notice Regarding Eligibility –

Under the old regulations, an employer was required to designate FMLA leave “within two business days absent extenuating circumstances.” The new regulations require employers to notify employees of their intention to provide FMLA leave within five business days after learning of the employee’s FMLA-qualifying condition. 

The employer’s notice must provide employees with eligibility information, must detail the employee’s responsibilities, and must identify consequences for failure to comply. If the employee is not eligible for FMLA leave, the employer’s notice must so state and identify why. The DOL has created a “prototype eligibility notice” for this purpose that differs somewhat from the form provided with the old regulations. The new form includes language for additional inquiries regarding “incomplete” or “insufficient” medical certifications following the initial FMLA designation.

The new regulations clarify that employers may provide the FMLA designation notice immediately after receiving sufficient information to designate the leave as FMLA-qualifying. This appears to resolve a question under the old regulations as to whether employers are prohibited from unilaterally designating absences as FMLA leave where the employee refuses to submit necessary paperwork.

The new regulations codify the Supreme Court’s Ragsdale holding by specifying that employers may retroactively designate leave as FMLA-qualifying, so long as such designation does not “cause harm or injury to the employee.”

Employee Notice of FMLA-Qualifying Absence –

The new regulations retain the standing rule that an employee need not mention the FMLA by name to trigger its protection for a given absence. However, the new regulations do require employees to provide specific information to trigger the employer’s responsibilities. An employee’s notice of his or her need for leave should include: (a) an indication that a condition renders the employee (or family member) unable to work; (b) an anticipated duration of the absence; and (c) whether the employee (or family member) intends to visit a health care provider. This is a higher standard than was required by some courts under the old regulations. The new regulations expressly clarify that an employee cannot merely call in “sick” and thereby trigger a duty for the employer to inquire further about whether the absence is FMLA-qualifying.

The new regulations specify that employees must respond to an employer’s questions to determine whether an absence is FMLA-qualifying. Failure to do so may properly result in denial of FMLA leave.

Employer’s Usual and Customary Procedures –

The new regulations permit employers, absent unusual circumstances, to require employees to follow established call-in procedures (except ones that impose more stringent timing requirements than the regulations provide), and provide that failure to properly notify employers of absences may cause a delay or denial of FMLA protections. Specifically, employers may require employees seeking FMLA leave to call a “designated number or a specific individual to request leave.” Under the old regulations, an employer could not delay or deny FMLA leave if an employee failed to follow such procedures.

Medical Certification –

The new regulations add guidance as to what constitutes sufficient medical facts to support the existence of a serious health condition. Specifically, to streamline the certification form, the DOL proposes that such medical facts may include information about symptoms, hospitalization, doctors’ visits, prescription medication, referrals for evaluation or treatment (physical therapy, for example), or any other regimen of continuing treatment. In addition, the new regulations state that the health care provider may provide information on the diagnosis of the patient’s health condition but clarify that a diagnosis is not a required element of the certification form.

Employer Contacts with Physician –

The old regulations prohibited direct contact between employers and health care providers in most instances. The new regulations carve out an exception, allowing employers to contact physicians directly “[i]f an employee’s serious health condition may also be a disability within the meaning of the Americans with Disabilities Act,” so long as the more liberal restrictions of the ADA are observed. Under the old and new regulations, employers may also contact employees in accordance with state workers’ compensation laws.

The new regulations also permit an employer to make direct contact with the employee’s physician to seek “clarification and authentication” of medical certifications. Previously, only another physician hired by the employer could make such inquiries.

Fitness for Duty Certification –

The new regulations replace the requirement that a fitness-for-duty certification must only be a “simple statement” with the original statutory language that the employee must obtain a certification from his or her health care provider that the employee is able to resume work.  Under the new regulations, the employer may provide the employee with a list of the employee’s essential job duties together with the eligibility notice, in which the employer advises the employee of the necessity for a fitness-for-duty certification. If the employer provides such a list of essential functions, it may require the employee’s health care provider to certify that the employee can perform them.  When providing a fitness-for-duty certification, the health care provider therefore must assess the employee’s ability to return to work against the identified essential functions.

Family Leave in Connection with Injured Members of the Armed Forces and Qualifying Exigencies Related to Active Duty –

In the preamble to the new regulations, the DOL addresses the need to adopt regulations to implement the military family leave provisions of H.R. 4986, the National Defense Authorization Act for FY 2008, and seeks comments before issuing final regulations. Among several questions raised by the DOL are the following:

The DOL’s request for comments on the proposed regulations by April 11, 2008 leaves open the slim hope that additional and necessary revisions will be added to the final version. The new regulations do little or nothing to alleviate concerns about the ambiguous definition for “serious health condition,” and they provide no new insight or relief for calculating and tracking intermittent FMLA leave. Porter Wright will continue to monitor and report on the DOL’s communications concerning the new regulations.

Despite the agreement, Taylor sued in federal court, claiming retaliation for exercising her FMLA rights.  The district court found that her suit was barred by the waiver in the severance agreement, but the Fourth Circuit reversed.  In the Fourth Circuit’s view, the FMLA’s enforcement provisions were designed by both Congress and the DOL to mirror those of the Fair Labor Standards Act (FLSA).  For its part, the FLSA requires that both retrospective and prospective waivers have court or DOL approval.

Ironically, when the case was before the Fourth Circuit, the DOL filed an amicus (or friend-of-the-court) brief that sided with the employer.  In that brief, the DOL argued that only prospective waivers require court or DOL approval and that the applicable regulations permit settling disputed FMLA claims retrospectively or after the fact.  The DOL further asserted that its interpretation of the FMLA regulations should be given deference. I n interpreting the regulations in this way, the DOL argued that the FLSA is not similar to the FMLA because the FLSA, dealing with minimum wage and overtime issues, is designed to protect workers with the least bargaining power at the bottom of the pay scale.  The FMLA, in contrast, protects all workers and is similar to other employment statutes that allow retrospective settlements.

In light of the DOL’s position before the Fourth Circuit, the Supreme Court’s request for input from the department gives employers a reason to be optimistic that the Court will accept the appeal and issue an employer-friendly ruling.  Should the Supreme Court refuse to hear the case, as Taylor’s attorney has urged, the enforceability of FMLA releases in Ohio will be open to question – at least until the Sixth Circuit weighs in.    With any luck, the Supreme Court will make Sixth Circuit review unnecessary.