The FMLA is 25!

Posted on: February 2, 2018 0

BY MARTI CARDI, VP-PRODUCT COMPLIANCE

Happy Birthday!  Monday February 5 marks 25 years since the Family and Medical Leave Act was signed into law.  I was in private practice when the law passed, and I recall an associate with our law firm presented a summary of the new law.  My thought was, “This will never amount to anything.”  So much for my predictive talents!  Who knew that 25 years later the FMLA would be such a big part of my job every day and such a challenge for employers?  The law and regulations have gone through 2 major revisions since enactment, adding things like 26 weeks to care for an ill or injured service member and special rules for flight crews. 

If you want to learn more about this milestone event, including a “Thunderclap” scheduled for 1:00 EST on Monday, check out this page on the website for the National Partnership for Women & Families:  25th anniversary of the FMLA activities.

I also want to take this opportunity to say thank you to all of our clients.  You put your trust in Matrix to manage FMLA and state leave requests for your employees and we strive to live up to that trust. 

Matrix can help!
Remember, in addition to our FMLA and state leave of absence services, we also manage ADA accommodation requests, disability claims, workers’ compensation, state paid family leaves, and more.  For information contact your account manager or send us an email at ping@matrixcos.com.

The Needle in the Tax Bill Haystack – A Paid Family & Medical Leave Tax Credit

Posted on: January 4, 2018 0

BY MARTI CARDI, VP-PRODUCT COMPLIANCE & GAIL COHEN, DIRECTOR-EMPLOYMENT LAW/COMPLIANCE 

 

One might think that the Trump administration would trumpet (ahem . . . ) the supposed family-friendly and employer-friendly provisions of the new Tax Cuts and Jobs Act.  Not so.  A little-publicized provision of the new Act establishes a tax credit for employers who provide paid family and/or medical leave to employees within certain parameters.  Your guess is as good as mine as to why this provision has flown under the radar.  But not under the Matrix Radar!

The tax code provision is based on a bill previously introduced into the House and Senate as the Strong Families Act, which has received strong criticism from pro-family groups.  Google it and you can find websites criticizing and supporting the Strong Families Act.  Politics aside, let’s take a look at what is now the law.  (But please remember, we at Matrix are not tax advisors – consult your own attorneys or tax advisors for specific details!) 

You can review the specific provisions of the law at the link above – the “Employer Credit for Paid Family and Medical Leave” starts at page 221 of the bill (page 223 of the PDF). 

Summary.  The Tax Cuts and Jobs Act (the “Act”) provides employers with a partial tax credit for wage benefits paid to employees during leave taken for reasons covered by the federal Family and Medical Leave Act (“FMLA”).  But note this:  The credit is in effect only for tax years 2018 and 2019, and then automatically sunsets unless Congress takes further action. 

Employee and employer coverage.  The tax credit coverage is not limited to employees and employers covered by the FMLA.  Benefits paid to full time and part time employees are covered by the tax credit.  However, to qualify for the tax credit, payments must be to employees who:

  • Have been employed by the employer for at least 1 year
    • The Act does not specify whether that has to be 12 consecutive months of employment
      or whether, like FMLA eligibility, the employee only needs to have worked an aggregate
      total of 1 year
  • Make no more than $72,000 per year

Employers may voluntarily provide paid family leave to employees who are not eligible for FMLA leave (called “added employees” in the Act) and receive the tax credit for such payments as long as the employer has a policy that complies with the Act.  So, for example, an employer could provide paid leave benefits to an employee who has not worked 1250 hours in the past 12 months, or who has already exhausted their FMLA entitlement, and still get the tax credit.  “Added employers” with fewer than 50 employees or those with small worksites not covered by the FMLA can also make paid leave benefits available to employees and use the tax credit. 

Policy requirements include a minimum of 2 weeks of paid leave benefit, a provision against interference with the employee’s policy rights to paid leave, and a provision against termination of an employee for complaining about a violation of the policy.

Leave reasons.  Leave benefits must be paid for one or more of the leave reasons available under the FMLA – the employee’s own serious health condition, a family member’s serious health condition, birth or placement of and bonding with a new child, military exigencies, and caring for a seriously ill or injured servicemember.  An employer’s policy does not need to cover all of the FMLA leave reasons to qualify for the tax credit.  For example, an employer may provide paid leave only for bonding with a new child and still qualify for the tax credit if all other conditions are met. 

Amount of leave.  The employer’s policy must provide at least 2 weeks of paid leave.  The maximum amount of paid leave that qualifies for the tax credit is limited to 12 weeks per employee in a 12-month period (the same as FMLA leave rights).

Percentage of pay provided.  The employer must provide a paid leave benefit of at least 50% of the employee’s wages (as defined in the tax code – I’m not going there!).

Amount of tax credit.  An employer providing paid family and/or medical leave benefits can receive a tax credit ranging from 12.5% to 25% of the amount paid to the employee.  The credit starts at 12.5% of benefits paid at the 50% level and caps at a 25% credit for benefits paid at full wage replacement.  For every percentage point over 50% of wages that the employer pays in benefits, the tax credit increases by one-quarter of a percent.  Examples:

Percentage of Paid Leave Benefit Percentage Points above 50% Multiplied by 0.25% Employer’s tax credit percentage
50% 0 0 x 0.25% = 0 12.5%
70% 20 20 x 0.25% = 5% Base 12.5% + 5% = 17.5% tax credit
90% 40 40 x 0.25% = 10% Base 12.5% + 10% = 22.5% tax credit
100% 50 50 x 0.25% = 12.5% Base 12.5% +12.5% = 25% tax credit

 

Applicable tax years.  The paid family leave tax credit is available only in tax years 2018 and 2019, unless extended by Congress.  Otherwise, it expires automatically on December 31, 2019.

Relationship to state/local paid family leave.  The Act provides that any leave which is paid or required by a state or local government is not taken into account in determining the amount of the tax credit.  Thus, the credit applies only to benefits paid voluntarily, not required by state or local law. 

PINGS FOR EMPLOYERS

  • Consult your tax advisor. As with all things tax-related, you should consult with your tax advisor
    to determine whether your existing plan is covered by the new paid leave tax credit.
  • Consult your financial advisor. If you don’t have a paid leave plan for your employees, consult
    with your financial (and tax) advisor to determine whether the incentive provided by the tax credit
    is enough to justify offering a paid leave benefit to your employees.
  • Consider benefits beyond monetary. In this day of strong competition for good employees,
    remember that a superior benefits package can be a lure.  But, with the tax credit scheduled to
    last only two years, also consider whether your company can continue the benefit if the tax
    credit expires on December 31, 2019.  Taking away the benefit might not be a good employee
    relations move at that time.

MATRIX CAN HELP!  At Matrix we offer a full suite of leave of absence and disability management tools.  This includes management of employer-specific leave plans, as well as FMLA, state leave laws, leave (and more) as an ADA accommodation, and disability plans.  To learn more, ping us at ping@matrixcos.com.

A Lesson in FMLA Damages: FMLA Retaliation in Layoff Costs Verizon Big Money

Posted on: September 20, 2017 0

By Marti Cardi, VP-Product Compliance
& Gail Cohen, Director-Employment Law/Compliance

Employers, when was the last time you asked the question “What could an FMLA suit potentially cost?” For Verizon, the answer was “a lot,” including a judgement that awarded $800,000+ to a former employee as well as:

    Substantial attorneys’ fees and costs (almost always more than the fees incurred by the plaintiff)

Business disruption and loss of productivity by its employees who had to prepare and serve as witnesses, locate and review documents and assist with other inevitable litigation-related tasks

Here’s the entire story and your opportunity to learn an important lesson.

Facts. Suzette Walker worked for Verizon for over 36 years, starting as an intern and working her way up to a position paying over $93,000.  Walker had a history of good reviews with the exception of 2013, when she was dinged for being absent from work. Her absence was attributed to an FMLA leave taken to recover from a shoulder injury.  In 2015, that review cost Walker her job.

Verizon’s employee evaluation system had 4 ranking levels:  Leading (the top score and rarely given); Performing (employee met and periodically exceeded expectations); Developing (employee had not met objectives and requirements, and improvement was needed) and New (employee had not worked long enough to be evaluated).

In 2013, Walker was assigned to a new position but then had to take FMLA leave for shoulder surgery and recovery.  Walker’s manager, Brian Magee, wrote in her mid-year evaluation:

Suzette [Walker] was moved to Conduit/Highway in the first half of the year due to existing knowledge of conduit and the City Permit process. GPIS review has been a positive transition, but conduit design has been hard to transition.  Suzette has missed time due to an injury, which has made the transition difficult.  The conduit area is still setup for the former Conduit Engineer and I have received complaints about the conduit mailbox being full. We are not where the Conduit/Highway Team needs to be at this time.  [Emphasis added.]

This was written when Walker had been out on FMLA leave for nearly 2-1/2 months and back to work at her new position part time for only about 3 weeks.  In the 2013 year end performance review, which built upon the mid-year review, Magee gave Walker a “Developing” rating, although she had always received a “Performing” score in past years (and was also rated as “Performing” in 2014).

The layoff.  In 2015 Verizon instructed Magee and another manager to eliminate one person from their two teams as part of a reduction in force.  The managers were trained on a “rate and rank” process and instructed to use that process to determine who to terminate, looking back at each employee’s performance over the last two years.  Instead, they spoke by telephone and agreed to select Walker for layoff.  Magee then contrived rate and rank scores that justified the decision.  Walker ended up on the bottom of the rankings, in part because of her “Developing” score in 2013 which counted as only 1 point in the rate and rank process.  A “Performing” score counted as 3 points.  Walker received a total score of 13 and would have tied with the other lowest employee, who received a 15, but for the hit on her 2013 evaluation.  Moreover, the other employee had been on a recent performance improvement plan that, according to the rate and rank process, should have cost him 3 points.  These points were not deducted from his overall rate and rank score.

In support of his bogus rate and rank score, Magee wrote that Walker “received a D[eveloping] rating in 2013 as she hadn’t learned the core engineering role as quickly as expected . . . ”

The verdict.  After a five-day trial, the jury returned its verdict.  Although some of Walker’s claims were dismissed, the jury found that Verizon had committed age discrimination against Walker and had retaliated against her for taking FMLA leave in 2013.  The jury awarded $188,000 in damages in Walker’s favor for back pay (and $10,000 on that age discrimination claim).  We’ll get to the rest of that $800,000 judgment in a bit.

The ruling.  The court affirmed the jury verdict and added other damages that are within the court’s province (see table below).  In its opinion affirming the jury verdict, the court recognized that Magee didn’t really conduct a rate and rank to reach his decision to select Walker for termination.  However, in the fake 2015 rate and rank form, Magee wrote that Walker was slow to learn her job responsibilities in 2013.  The judge stated that a jury could reasonably infer from this that Magee decided to fire Walker in 2015 because she hadn’t learned quickly enough in 2013 due to her FMLA time off.  The judge also stated the jury could believe that Magee’s comments on the rate and rank form were evidence of the reasons he had in mind in selecting Walker for termination.

Insights from the winning trial attorney.  Curious about this case, your intrepid reporter spoke with Christine E. Burke (Karpf Karpf & Cerutti), the attorney who represented Walker.  One fact of particular interest to me was that Verizon’s retaliation (the layoff) took place two years after Walker’s FMLA leave. Usually, the protected FMLA leave and the act of retaliation occur much closer together, making it easier to infer the retaliation.  Ms. Burke explained that because the rate and rank only required a 2-year performance look back, the 2013 “Developing” evaluation took on greater significance than her other 30+ years of good performance – thus allowing Magee to jerry-rig the rate and rank to achieve his desired outcome.

Ms. Burke also explained that the jury was swayed by the lack of fairness in Magee’s supposed rate and rank.  Not only did Magee’s 2013 evaluation work to Walker’s detriment, but Magee did not follow the company’s rules.  His failure to charge the other employee with a 3-point deduction for the PIP probably just stunk to the jury.

Finally, and perhaps most important, Ms. Burke acknowledged that the case would probably not have made it to a jury – meaning never filed, or dismissed by the court pre-trial – but for that comment in Walker’s 2013 mid-year evaluation:  “Suzette has missed time due to an injury, which has made the transition difficult.”

How much?  So how big was the judgment in favor of Suzette Walker?  Here is rundown of the types damages that can be awarded in an FMLA case and the amounts awarded to Walker:

 

FMLA DAMAGES ITEM DESCRIPTION AMOUNT
Back pay Common award in termination case – lost wages up to date of judgment $188,000

 

Front pay Awarded if employee has not yet become re-employed at time of judgment – lost wages looking forward $256,000

 

Pre-judgment interest – on back pay only Always awarded if back pay is awarded, at the “prevailing rate” $6,001

 

Liquidated damages** Similar to punitive damages – equal to amount of back pay plus pre-judgment interest (see **below) $194,001

 

Plaintiff’s attorney’s fees Employer pays if employee wins $153,356
Plaintiff’s costs Employer pays if employee wins $6,213
TOTAL FMLA AWARD TO PLAINTIFF   $ 803,571
Employer’s estimated attorney’s fees and costs

 

Employer always pays (and is usually larger than employee’s attorney’s fees) $ 160,000 est.
TOTAL COSTS TO VERIZON

 

  $963,571

** Liquidated damages are routinely awarded in FMLA cases.  The employer can avoid liquidated damages only if it proves that it had a good faith belief that its act or omission was not a violation of the FMLA.  An explanation for the employer’s actions is not enough; the employer must also prove it took affirmative steps to ascertain the requirements of and comply with the FMLA in the particular situation.  As the Walker court ruled in awarding liquidated damages against Verizon:

The court must award liquidated damages unless the employer proves to the satisfaction of the court that the act or omission which violated the FMLA was in good faith and that the employer had reasonable grounds for believing that the act or omission was not a violation of” the FMLA.

This, Verizon was unable to do.

Pings for Employers

   We sound like a broken record, but you must TRAIN YOUR SUPERVISORS AND MANAGERS on employee rights and employer obligations under the FMLA. Without that ill-advised comment in Suzette Walker’s 2013 mid-year review, Verizon might have succeeded in defeating her FMLA claim.

Training might also have enabled Verizon to avoid the liquidated damages by being able to show a good faith effort to educate its supervisors on employee rights and employer obligations under the FMLA.

In all your processes, treat employees who have taken or are taking FMLA leave consistently with employees who have not.

    Follow your established procedures when applying discipline, assessing layoff, or otherwise affecting the employment of an employee who has taken or is taking FMLA leave.

 

Walker v. Verizon Pennsylvania, LLC (E.D.Pa. August 25, 2017)

Hawaii adds siblings as a covered relationship for family leave

Posted on: July 13, 2017 0

By Marti Cardi, VP-Product Compliance

& Gail Cohen, Director-Employment Law/Compliance

 

On July 10, 2017, the governor of Hawaii signed an amendment to the state’s family leave law, adding siblings as a family member for whom an employee can take leave.  The amendment took effect immediately.

Under the Hawaii law, employees who have worked for an employer for at least 6 consecutive months are entitled to 4 weeks of unpaid, job-protected leave per 12-month period:

 

  • To bond with a newborn biological child or newly adopted child (a newly placed foster child is not covered); and
  • To care for the employee’s child, spouse, reciprocal beneficiary, sibling, or parent with a serious health condition.

The terms “child” and “parent” are defined broadly by the Hawaii statute for the purpose of caring for a family member with a serious health condition:

  • Child: biological, adopted, or foster son or daughter, a stepchild, or a legal ward of an employee.
  • Parent: biological, foster, or adoptive parent, a parent-in-law, a stepparent, a legal guardian, a grandparent, or a grandparent-in-law.

Employers with 100 or more employees must comply with the law.

The Hawaii family leave law does not provide leave for an employee’s own serious health condition.  However, the state does have a pregnancy disability leave law; temporary disability benefits for up to 26 weeks per year through an employee/employer funded state program; and leave to donate an organ, bone marrow, or peripheral blood stem cells.

 

MATRIX CAN HELP!  Matrix provides leave, disability, and accommodation management services to employers seeking a comprehensive and compliant solution to these complex employer obligations. We monitor the many leave laws being passed around the country and specialize in understanding how they work together. For leave management and accommodation assistance, contact us at ping@matrixcos.com.

High Points in Recent FMLA Case Law

Posted on: May 11, 2017 1

By Marti Cardi, VP-Product Compliance

 

Last week I had the distinct pleasure of co-presenting one of the opening general sessions at the Disability Management Employer Coalition Compliance Conference with my buddy and fellow blogger, Jeff Nowak. Those of you who know Jeff and me will understand sharing the stage with him is tough duty: He’s cuter, funnier, and a better singer than me! Nonetheless, I soldiered through and together we provided updates on key FMLA cases decided by the courts in the past 12 months or so. Although there were no headline-making court decisions (think Escriba v. Foster Poultry Farms from a couple of years ago) there is still plenty to learn, and important reminders to gain, from recent FMLA cases. Here are some highlights:

Year of the Third Party Administrator. (Jeff’s title, not mine.) The past few months brought us a spate of cases dealing with an employer’s ability to require employees to provide notice of FMLA leave to both the employer and the employer’s third party administrator. For example, you can require your employees to call one number to report the absence for operational and attendance purposes, and another number (like Matrix!) to comply with and benefit from FMLA processes and protections. The key is to ensure that your employees are aware of the required two-notice process.

What employers should do: Enact a policy and distribute it to your employees spelling out the two-notice requirement, providing both numbers, and – while you’re at it – include time limits within which employees must report to each number. Some of the cases: Scales v. FedEx Ground Package Sys. (N.D. Ill. Jan. 2017); Alexander v. Kellogg USA, Inc. (6th Cir. Jan. 2017); Perry v. American Red Cross (6th Cir. 2016)

Employer’s duty to inquire for more information. The FMLA regulations provide that if an employer is on notice of an employee’s possible need for FMLA leave, the employer has the duty to ask for further information if needed to determine whether the employee’s leave request is for an FMLA-qualifying reason. 29 C.F.R. § 825.3(c); 825.303(b). This rule came up in two different contexts in recent cases.

In Reeder v. County of Wayne (E.D.Mich. Apr. 2016), employee Yasin provided a doctor’s note that identified his health conditions, stated he was under treatment, and directed that he should not work more than 8 hours per day – and thus no overtime (which was frequently required to ensure security at the county jail where he worked). The County did not provide Yasin with an FMLA certification form or a notice of rights and responsibilities. After missing many overtime shifts and receiving discipline, Yasin was terminated. The court ruled that a jury could find the information in the doctor’s note sufficient to put the County on notice that Yasin might need FMLA leave, thus giving rise to the County’s duty to inquire further if it needed more information.

EPILOGUE: The case indeed went to a jury that found the County had interfered with Yasin’s FMLA rights. He won over $187,000 in damages, $125,000 in attorneys’ fees, interest, and costs for a total in excess of $325,000.

Coutard v. Municipal Credit Union (2d Cir. Feb. 2017) reinforces the employer’s duty to inquire but this time in a situation that might surprise employers. Frantz Courtard asked for a leave of absence to care for his grandfather. MCU summarily denied the leave request, stating that the FMLA does not cover leave for grandfathers. Frantz took time off anyway due to his grandfather’s need for home care following hospitalization. Frantz was terminated for unexcused absences. Turns out, Frantz‘s grandfather had cared for him from age 4 when Frantz’s father died to age 14, providing a home, food, clothing, schooling, and other support typical of a parent – in short, a classic in loco parentis relationship. MCU argued that Frantz should have volunteered the information to establish the in loco parentis relationship. The court disagreed, holding instead that MCU had a duty to inquire whether Frantz’s grandfather qualified as ILP. Thus, Frantz’s termination constituted interference with his FMLA rights.

What employers should do: Always follow up with an employee if he or she provides information that a leave request might qualify under the FMLA, depending on additional facts. The regulations clearly state that merely “calling in sick” is not enough, but beyond that (and maybe even in that situation, depending on other facts) you should ask informally for more information to assess whether you should initiate the FMLA notice certification process. You will still be able to deny FMLA protections if the certification does not support the leave under the FMLA.

Beware the FMLA mandatory overtime rules! They can get you coming and going, as tire maker Bridgestone learned. Under Bridgestone’s overtime process, workers were not required to sign up for overtime, but if an employee did sign up and was selected for an OT shift, the employee had to work the assigned shift or be assessed an attendance violation. Employee Lucas was approved for intermittent leave to care for his son, who had asthma. Over time Lucas missed many OT shifts he had signed up for. Bridgestone applied FMLA to excuse most of the missed shifts, but ultimately Lucas exhausted his FMLA and was terminated for attendance violations.

The questions before the court included whether the OT shifts were mandatory, and whether Bridgestone had properly accounted for those shifts under the FMLA. Lucas argued the shifts were not mandatory because an employee could choose to sign up; as a result, they should not have been counted against his FMLA usage – and hence, he would not have exhausted his FMLA. Bridgestone countered that the shifts were mandatory once the employee signed up and was selected for a shift; as a result, Bridgestone argued, it was correct in deducting FMLA hours for the mandatory OT shifts Lucas missed to care for his son.

The court agreed that the shifts were mandatory due to Bridgestone’s OT sign-up, selection, and discipline process. But, Bridgestone had it only half right: The company was in compliance with the FMLA regulations when it deducted missed OT shifts from Lucas’s FMLA entitlement, but the company should also have included Lucas’s mandatory OT hours in its calculation of his “workweek” for FMLA purposes, using the variable workweek method permitted by the regulations. 29 C.F.R. § 825.205(b)(3). By failing to do so Bridgestone shorted Lucas on entitlement. Hernandez v. Bridgestone (8th Cir. Aug. 2016).

Lesson learned: Mandatory overtime counts toward both FMLA entitlement and FMLA usage.

Certification from a treating specialist? Maybe yes. Good news! A court has approved an employer’s request for an initial certification from a treating specialist. Erica was a difficult employee, to say the least. Her many complaints and ultimate termination landed her employer, City of Milford, in court. Lucky us! Erica’s groundless FMLA claims yielded a court ruling that is good news for employers. Erica was a community outreach employee for the City and requested FMLA leave for severe anxiety. She provided an FMLA certification from her primary care provider, who indicated that she was under treatment with a psychiatrist. The City asked for a new certification from the treating psychiatrist, which Erica provided. She received all the leave she requested but later – lots going on in the background, folks – she was fired. She sued and claimed, among many other things, that the City’s requirement that she provide a certification from her specialist was FMLA interference. Au contraire, said the court. Under these facts (a treating specialist referenced on the provider’s certification) the employer was justified in asking for a cert from that specialist.

But there are limits to how far we can rely upon this court decision. If the initial certification does not reference treatment by a specialist, a court may not be as willing to support an employer’s request for a certification from a specialist. After all, who would that specialist be if the employee is not treating? This is a reminder of the advantages of reviewing an employee’s initial certification carefully. The DOL prototype forms have questions to identify whether the employee/patient is receiving treatment from any other provider (WH-380-E and 380-F):

Was the patient referred to other health care provider(s) for evaluation or treatment (e.g., physical therapist)? ____No ____Yes. If so, state the nature of such treatments and expected duration of treatment: ___________________________________.

If the form is blank in this regard, follow the incomplete process spelled out in the regulations. If the form is filled in and indicates no other treatment, the second/third opinion process may be appropriate because the employee’s provider has given a certification on a specialty condition not within his/her practice. Either way, the employer ends up with more precise information about the employee’s need for leave – always a good thing!

The FMLA continues to be a challenge for employers – there seems to be no end to the fact situations employers face in managing employee leaves. If you have questions about the cases above other leave management issues, please contact us for help.

MATRIX CAN HELP!

Matrix provides leave, disability, and accommodation management services to employers seeking a comprehensive and compliant solution to these complex employer obligations. We monitor the many leave laws being passed around the country and specialize in understanding how they work together. For leave management and accommodation assistance, contact us at ping@matrixcos.com.