Developments in Employee Family Leave

Transcription

1 Issue No. 1, July 2008 Disability Insights Absence Management Update Developments in Employee Family Leave

2 Proposed Changes to FMLA Regulations Contain Improvements in FMLA Administration In February 2008, the Department of Labor issued its proposal for the first changes in the Family Medical Leave Act (FMLA) regulations since they were issued in These revisions were intended to address a number of court decisions that have affected the interpretation of the regulations, and to address a number of problems that employers and employees had faced under the previous regulation. Although the revisions significantly rearranged the formatting of the regulations, many employers expressed disappointment that the DOL did not address two of the major challenges employers face in administering the FMLA, the definition of serious health condition, and the minimum time increment permitted for intermittent leave. The DOL s approach to revising the regulations may not have addressed all the problems employers face in FMLA administration, but it may make it more likely that some of the helpful provisions that the DOL did propose will be implemented. Although there were initial expressions of opposition to the revisions from employee groups and from Capitol Hill, there has been no legislative activity aimed at preventing the DOL s proposals from being implemented, and the criticism of the proposal has been somewhat muted. Although the DOL will be considering comments from all different viewpoints after the close of the comment period, based on past history, it is likely that many of the improvements proposed by the DOL will be retained. The following are some of the more significant proposed changes that could ease administration of the FMLA for employers. Employees can be required to use an employer s standard call-in procedures for unscheduled absences, for unscheduled intermittent FMLA absences, except under extraordinary circumstances. Failure to follow these procedures will subject an employee to an employer s normal disciplinary measures, and will allow the employer to delay the FMLA protected leave until the employee complies with the call-in procedure. If an employee gives less than 30 days notice of the need for leave, the employee must explain to the employer, upon the employer s request, why it was not possible to provide an explanation as to why it was not practicable to give 30 days notice. This change supplies employers with a new tool to enforce the requirement that advance notice of leave is required, which will help employers plan for coverage for absent employees. Absence Management Update, Issue No. 1, July

3 An example was added to the definition of as soon as practicable to show that where less than 30 days notice is given, an employee should, absent an emergency, be able to provide notice of the need for leave the same day the employee receives notice of the need for leave, or the day afterwards at the latest. Employees must make a reasonable effort to schedule intermittent leave so as not to disrupt an employer s operations, rather than an attempt. This change should increase an employer s ability to obtain employee cooperation with its business needs. Employers may request recertification of a serious health condition once every six months in all instances. This change will help employers monitor absences resulting from chronic conditions, and provide a way for employers to determine whether a particular absence pattern is medically necessary. Employers may now include the essential job functions in the health care provider certification, and health care providers must now certify that reduced schedule or intermittent leave is medically necessary. Employers may directly contact a health care provider to clarify or authenticate a health care provider certification. The time period for communicating FMLA eligibility and for designating leave as FMLA leave is extended from two to five days. Through these proposed changes the DOL has addressed some of the biggest problems that employers have with the FMLA: the lack of advance notice of leave taking, which makes it difficult for employers to plan work coverage, and controlling the use of intermittent leave. While the proposed regulations contain no silver bullet to solve all of the burdens the FMLA places on employers, these proposals could significantly improve an employer s ability to plan for and administer their FMLA absences. Precisely because of their smaller scope, they stand a better chance of becoming final. Absence Management Update, Issue No. 1, July

4 Employers Face Choices in Applying State Leave Laws to Interstate Telecommuters Telecommuting arrangements are reputed to have many benefits, but employers who use such arrangements extensively are challenged to comply with a thicket of employment laws. Many of these laws were written before telecommuting became technologically possible. These laws often don t fit particularly well with the realities of telecommuting, and as a result, employers face difficult choices when trying to design their telecommuting arrangements to meet the requirements of applicable laws. Compliance is particularly difficult for interstate telecommuting because courts and the common law have not caught up with modern interstate telecommuting arrangements. State leave laws are an example of laws that are difficult to apply in the context of interstate telecommuting. Although most of these leave laws were passed after telecommuting became a reality, the drafters of these laws provided little or no guidance for the employer trying to determine how a state leave law applies to interstate telecommuters; 9 of the 22 state leave laws 1 contain no reference to where either the employee or the employer must be located in order for the law to apply. The 13 state leave laws that give some geographic reference typically indicate that the laws apply to employers who employ workers in this state. This formulation is of little assistance to employers, because it still leaves employers with the question, which applies to all 22 jurisdictions, of how to determine the locus of the work of non-resident telecommuters. Two approaches to answering this question have developed in the context of interstate telecommuting: interstate telecommuters can either be considered to be working at the office to which they report and receive assignments, and to which their computers are likely to be connected (the Reporting rule), or they can be considered to be employed in the state where they are actually present and physically performing the work (the Localization rule). In some contexts it may be possible to apportion a certain percentage to each location, but apportionment cannot be accomplished in the context of family leave laws. 1 Includes Puerto Rico and the District of Columbia. Absence Management Update, Issue No. 1, July

5 There are currently no state or federal court decisions to provide employers with guidance about the locus of the work of an interstate telecommuter in the state family leave context, but there are other areas of law in which the location of the work is an important element. Chief among those areas are tax law, unemployment insurance, workers compensation, and state disability laws. As discussed below, in these areas the courts have either applied the Reporting Rule or the Localization Rule. It is not possible to conclusively predict which of these two rules a court would use to determine whether a state s family leave law applies to an interstate telecommuter, but, unfortunately, the employer faced with this question must choose one rule or the other. The Reporting Rule Work performed out of state for the convenience of the employee is treated as occurring at the employer s office. Used in cases addressing where employees should be taxed, or how taxes should be apportioned. Used by the FMLA to determine the number of employees at a work site. The Localization Rule Physical presence determines location of employment. Used by most states as a test for benefits similar to family leave, such as workers compensation and unemployment benefits. Used when there is a need to choose a single jurisdiction, for example when necessary to choose which state s unemployment benefits apply. The Reporting Rule The federal Family and Medical Leave Act (FMLA) regulations follow the Reporting Rule, and under the FMLA telecommuters are counted as being employed at the worksite to which they report and from which they receive assignments. The residence of a telecommuter does not count as a worksite, unless it is a residence of a supervisor to whom other employees report and receive assignments. Under the federal scheme, the leave entitlements are uniform regardless of the jurisdiction, and the location of the employee s worksite is only relevant to the determination of whether there are fifty employees within 75 miles of a worksite for FMLA eligibility purposes. Of course, the states are not required to follow the federal rule. In the context of state family leaves, the question of whether to apply the Reporting Rule to the interstate telecommuter may determine whether or not the employee has any substantive rights to leave at all. While there is no case that applies the Reporting Rule to interstate telecommuters in the state leave context, New York s highest court applied a similar rule in two cases which involved the taxation of employees who Absence Management Update, Issue No. 1, July

6 performed some of their duties from homes in a different state than the one in which their employer s offices were located. In In Re Zelinski, the New York State Court of Appeals upheld a rule that requires work done at the out of state residence of an employee to be treated as work done at the employer s New York office, if the work done out of state is performed out of state for the convenience of the employee and not out of necessity for the employer. In this case, the employee worked three days a week teaching law school in New York, and for two days every week from his home in Connecticut. The court held that the work could be treated as if it had been performed entirely in the New York office of the employer, to which the employee reported, and that the entire salary could be taxed by New York. In In Re Huckaby, the same court reached a similar conclusion with respect to an interstate telecommuter. The court found that 100% of the interstate telecommuter s work should be treated as though it was performed in the New York office to which the employee reported, despite the fact that the employee telecommuted to the office in New York from Tennessee 75% of the time he worked. These cases involved complex issues of Constitutional law, and were widely seen as discouraging telecommuting because of their potential to result in double taxation. In response, the Telecommuter s Tax Fairness Act was introduced in the United States Congress in 2005 to try to reverse the effect of these cases. This act was resubmitted in 2006 and in 2007, but it has yet to gather sufficient support to be enacted. The Localization Rule The unemployment insurance statutes of most states apply a Localization rule to determine whether work that is performed both within and without of a state qualifies for unemployment insurance benefits within the state. Some of the states with family leave laws use the Localization Rule in connection with their workers compensation and disability benefit laws. The first step in the Localization Rule is to determine whether the work is localized in one state. Work is deemed localized in one state if it is performed entirely within the state, or if it is performed both within and without the state but the work performed without the state is incidental to the employee s service within the state. 2 2 The full test used by the states is as follows: The term employment shall include an individual s entire service performed within or without or both within and without this state, if (1) The service is localized in this state; or (2) The service is not localized in any state, but some of the service is performed in this state, and (a) the base of operations, or if there is no base of operations, then the place from which such service is directed or controlled is in this state; or (b) the base of operations or place from which such service is directed or controlled is not in any state in which some part of the service is performed, but the individual s residence is in this state;. Absence Management Update, Issue No. 1, July

7 There is one unemployment case that has applied the Localization Rule in the context of an interstate telecommuting arrangement. In In Re Allen, another New York Court of Appeals case, an employee who worked for a company located in New York State, worked entirely from her home in Florida over a computer connected to the New York office computer mainframe by a telephone. When the employer decided to discontinue the telecommuting arrangement, the employee declined an offer to relocate to New York and her employment was terminated. The employee eventually filed a claim for unemployment benefits in New York, which was denied when the Commissioner of Labor determined that the employee had no covered employment in New York State during the relevant period. The employee argued that, because she was connected to the mainframe computer in New York, her services were either localized in New York, or not localized in any state. The court disagreed, finding that for the purpose of applying the Localization Rule, physical presence determines localization as that term is used in the labor law. Which Rule to Choose? As used in the above cases, the Reporting Rule concludes that an interstate telecommuter s work is performed at the office to which the employee reports, and from which the employee receives assignments. The Localization Rule holds that physical presence determines the location of a telecommuter s work. Despite the fact that the federal family leave regulation has adopted the Reporting Rule, it may be that the Localization Rule is more suited to application in the area of state family leave laws. The Localization Rule, as used in the area of unemployment compensation, is designed to produce a single jurisdiction that will be the jurisdiction responsible to provide unemployment compensation. Tax issues, which have been analyzed under the Reporting Rule, may more often be suitable to apportionment between two or more jurisdictions. The single jurisdiction outcome would most likely be better suited in the area of state family leave laws. In addition, the states have codified the Localization Rule, and have experience using it in the context of unemployment compensation and in other areas. Unfortunately, because of a dearth of precedent, it is not possible to predict which of the two rules a court would adopt in the state family leave context, or whether a court would fashion a different rule entirely. Despite this lack of guidance, employers have to make the choice of which rule to use. Absence Management Update, Issue No. 1, July

8 There are a number of questions an employer may want to consider when reaching its decision. Is the employer subject to personal jurisdiction in the state? Simply employing a small number of telecommuters in a state has been held not sufficient to create the minimum contacts necessary to create personal jurisdiction, but if the employer otherwise is doing business in the state an employee would be able to bring the employer into that state s court to attempt to assert rights under the state leave statute. Does the use of one rule over the other mean the employee will receive greater or lesser leave rights? How are similarly situated employees treated? Do workers in the same state have different rights depending upon whether they work in an office in the state or telecommute to a different state? Employee relations. Whichever rule an employer chooses, there are bound to be employees who challenge that choice. Until the law catches up in the area of the application of state family leave laws to interstate telecommuters, innovative employers will continue to be subject to legal risk in this area. Absence Management Update, Issue No. 1, July

9 Paid Family Leave Gains Traction Slowly in the States When California s Paid Family Leave benefits went into effect in 2004 many people wondered if other states would be quick to follow California s example. Four years later, no other state is currently providing such benefits, but New Jersey has enacted an extension to its Temporary Disability Benefits program which will provide six weeks of paid family leave starting in July 2009, which will make New Jersey the second state to require the payment of such benefits. The state of Washington has also enacted a paid family leave program, under which paid family leave benefits would become payable beginning in October The Washington measure faces some uncertainty due to questions relating to how the benefit will be funded, and may face a public referendum on whether or not a payroll tax may be imposed to fund the benefits. Despite these questions, the sponsors of the measure have stated that they are confident that the benefits will begin as scheduled. Interest in paid family leave has persisted in the state legislatures, and other states that are considering paid family leave proposals in 2008 include: Alaska, Arizona, Connecticut, Hawaii, Illinois, Indiana, Maine, Massachusetts, Michigan, Minnesota, Missouri, New York, North Carolina and Pennsylvania. The states appear to be taking a cautious approach in considering whether to adopt paid family leave, and though there has not been a rapid groundswell of support for these programs, with New Jersey and Washington joining California in providing these benefits, it seems inevitable that the number of states requiring paid family leave will continue to grow. Highlights of New Jersey s Paid Family Leave Program The program expands New Jersey s Temporary Disability Benefits Law (TDBL) to provide leave/benefits for an employee who is caring for a family member with a serious health condition, or a newborn or adopted child within the first 12 months after the birth or adoption. Six weeks of family temporary disability leave will be available, or 42 days of leave in any 12 month period if the leave is taken intermittently. The employee would pay about 75 cents per week and get benefits of two-thirds pay, up to $524 per week, for six weeks. Contributions would begin on January 1, 2009, and family temporary disability leave benefits would become payable as of July 1, Absence Management Update, Issue No. 1, July

10 Family member includes child, spouse, parent, domestic partner or civil union partner. The family member must be receiving inpatient care, or be receiving continuing medical care from a health care provider who will certify the serious health condition. The employer may permit the use of vacation time, paid sick leave or any other full pay leave, or require the use of up to two weeks of full pay leave prior to receiving family temporary disability leave benefits. Family temporary disability leave will run concurrently with federal and New Jersey family leave. A claimant will have the same right to appeal a denial of family temporary disability leave benefits that they would have to appeal the denial of a claim under the TDBL. Leave for birth or adoption must be taken as a single continuous period of time, unless otherwise agreed to by the employer. Paid family leave benefits can be provided through the state plan or a private plan. Absence Management Update, Issue No. 1, July

11 The information in this update is not intended to constitute legal advice and should not be relied upon in lieu of consultation with appropriate legal advisors in your own jurisdiction (0708) 2008 METLIFE, INC. L (exp0709)(All States) PEANUTS United Feature Syndicate, Inc. Metropolitan Life Insurance Company 200 Park Avenue New York, NY