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Not Everyone is Entitled to FMLA Job Reinstatement

March 14, 2017
Not every user of the Family and Medical Leave Act (FMLA) is guaranteed job reinstatement.
Employers subject to the FMLA (i.e. 50 or more employees) should be alert to the fact that the law recognizes that in some cases, certain individual employees, and even some groups of employees, do not have to be reinstated to their jobs. 
That said, employers may continue to provide reinstatement, even if the law does not require it. 
Among those employees or groups of employees that may not be guaranteed reinstatement are: 
Employees who fail to provide a fitness-for-duty medical certification, when the employer has requested this certification prior to the commencement of the leave and when the leave was taken for the employee's own serious health condition (alternatively these employees may have their reinstatement delayed until the certification is submitted.)
Employees who would not have remained employed had leave not been taken. (For example, if the employee would have been laid-off during the leave.)
Employees whose shifts have been eliminated.
Employees who clearly advise the employer of their intent not to return to work.
Employees who fraudulently obtain leave.
Employees who violate an established and consistently enforced “Moonlighting” policy governing outside or supplemental employment while the employee is on an FMLA leave.
Please see FMLA regulation 825.216 for more detailed information about these provisions.
The number of employees falling under these categories is likely to be relatively small. The most familiar category for most HR professionals is key employee.
Key employees are defined as eligible salaried (i.e. exempt employees including executive, administrative, professional, and computer) employees who are among the highest-paid 10 percent of all employees within 75 miles of the worksite. Determining whether the employee falls into the key employee category requires the following analysis: 
Is the employee among the highest paid 10 percent of all the employees (both salaried and non-salaried, eligible and ineligible) employed by the employer within 75 miles of the worksite. Use the year-to-date earnings divided by weeks worked by the employee (including weeks in which paid leave was taken). Earnings include wages, premium pay, incentive pay, and non-discretionary and discretionary bonuses. Earnings do not inlcude incentives whose value is determined at some future date, e.g., stock options, or benefits or perquisites.
The 10 percent determination is made at the time the employee gives notice of the need for leave. 
Finally, no more than 10 percent of the employer's employees within 75 miles of the worksite may be key employees.
While entitled to the benefits of FMLA leave, including the right to continue health insurance benefits, key employees are not entitled to reinstatement under the FMLA, providing the following conditions are met: 
  • Returning a key employee to his/her job will cause your company substantial and grievous economic injury. (more than a minor inconvenience, and considered a fairly high standard to meet).
  • One factor an employer may use is its ability to replace the employee on a temporary basis (or temporarily do without) the employee on FMLA leave. If permanent replacement is unavoidable, the cost of then reinstating the employee can be considered in evaluating whether substantial and grievous economic injury will occur from restoration; in other words, the effect on the operations of the company of reinstating the employee in an equivalent position.
  • You also may consider the effect of reinstatement on your organization's economic viability.
Assuming your employee seeking FMLA leave meets the key employee criteria, how do you act differently than when you are responding to a regular FMLA leave. Take the following steps: 
  • Notify the employee in writing of his/her status as a "key" employee as soon as practicable following notice of the employee’s intent to take FMLA leave, or when the leave begins. Also notify the employee of the potential consequences in connection with reinstatement and maintenance of health benefits if you determine that reinstatement will cause substantial and grievous economic injury. Failure to give the notice in a timely fashion means you will have to restore the employee to the job. 
  • Notify the employee in writing as soon as you decide to deny job restoration, and explain your reasons. Ideally do this prior to the start of the leave. This notice must be delivered in person or by certified mail and must explain the basis for finding that substantial, grievous economic injury will result.
  • After notice has been given that substantial and grievous economic injury will result if the employee is reinstated to employment, an employee is still entitled to request reinstatement at the end of the leave period. If the employee makes such a request, the employer must again determine whether there will be substantial and grievous economic injury from reinstatement, based on the facts at that time. If the employer determines it to be so, the employer must notify the employee in writing (in person or by certified mail) of the denial of restoration.
This means that any employer seeking to use the key employee option must proceed carefully and be able to justify all steps in case challenged.
Layoffs, Restructurings, Downsizing 
While employees on FMLA are not exempt from economic-based decisions such as a layoff, any employer using that reason must be able to prove it is true and that the employee wouldn't otherwise have been employed at the time he/she requested reinstatement. Any employee let go while on an FMLA leave may well be viewed by a court as a target of opportunity, meaning he/she was let go because of taking the leave. You will need strong evidence of the business conditions that led you to terminate that employee. 
If you decide to lay off the employee, there are benefits to doing it sooner rather than later. Doing it sooner allows you to discontinue health insurance benefits and eliminate job restoration rights at the time of layoff. 
Pay the employee any outstanding wages, accrued but unused vacation time, provide the employee with information about filing for unemployment insurance, and, if applicable, their rights to continue their health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). 
If you have any questions about this or any other HR related matter, please contact the AIM Employer Hotline at 800-470-6277. 
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