Archive for the 'FMLA' Category

Employment and ERISA Law Considerations When Reducing or Laying Off Employees

January 7th, 2009

According to the Administrative Office of the U.S. Courts, for the 12-month period ending June 2007, there were a total of 23,889 business bankruptcy filings.  For the same period ending June 2008, business bankruptcy filings had increased by more than 40% (33,822 filed for the 12-month period ending June 2008).  With the downturn of the U.S. economy, many companies are struggling to reduce costs in order to remain in business.

Unfortunately, during tough times, companies are forced to make hard decisions in order to survive.  One of the largest expenses for most companies is human capital and the associated costs, such as salaries and employee benefits programs.  As companies analyze whether to use terminations and/or layoffs as a means to control or reduce costs, they need to ensure that the analysis includes consideration of legal risks involved and ensure that the ultimate course of action complies with any applicable laws.  Some of the laws that should be taken into consideration include the Family Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA), the Uniformed Services Employment and Reemployment Rights Act (USERRA), the Older Workers Benefit Protection Act (OWBPA), the Employee Retirement Income Security Act (ERISA), Equal Employment Opportunity (EEO) laws and the Consolidated Omnibus .Budget Reconciliation Act (COBRA).

For example, when determining which employees will be terminated and/or laid off, companies need to ensure that the criteria used is objective and does not create a disparate impact on a protected class.  One of the most common mistakes companies make is to use compensation as criteria for determining which employees will be reduced.  In many cases, employees with the highest wage rates in positions generally tend to be older because their salaries have increased with their work experience and time in a position.  Employers should ensure that they are using objective, legitimate business criteria to make their selections, so they do not leave themselves open to an age discrimination claim.

Additionally, depending on the size of the employer and the number of employees being laid off, companies may need to comply with The Worker Adjustment and Retraining Notification Act (WARN).  WARN is a federal law that requires that employers with greater than 100 employees (excluding part-time employees) provide 60 calendar days advance notice of mass layoffs.  A mass layoff is defined as a layoff that either (1) involves at least 50 employees who make up at least 33% of the employer’s work force, or (2) involves at least 500 employees.  Additionally, some states have enacted their own versions of the WARN Act that have lower thresholds which trigger a notice period.  This analysis can be complex for employers to determine whether these laws will apply to them, especially if there have been intermittent lay-offs of some workers during periods of slow downs.

Making the decision to reduce headcount in order to help a company survive is probably one of the toughest decisions an employer can make.  Frequently, an employer is focused on its financial situation and can overlook potential legal pitfalls associated with the decision. 

Companies should consult with legal counsel when they face these difficult situations so that they ensure they comply with all applicable laws and that they have as much legal protection as possible.  Please contact our office with any questions you have or for additional information.

Recent FMLA Amendment — Leave for Servicemember’s Families

February 10th, 2008

On January 28, 2008, President Bush signed into law the National Defense Authorization Act of 2008 (NDAA), which amends the Family Medical Leave Act of 1993 (FMLA).  The NDAA includes provisions which provide families of servicemembers the right to unpaid leave of absence under certain circumstances.

First, the NDAA creates a new category of unpaid leave for eligible employees to take up to 12 weeks of leave “because of any qualifying exigency….arising out of the fact that the spouse, or a son, daughter, or parent of the employee is on active duty (or has been notified of an impending call or order to active duty) in the Armed Forces in support of a contingency operation.”  The NDAA does not include a definition of “qualifying exigency”, but it does call for the DOL to promulgate final regulations that will contain the definition.  Since there is no definitive answer yet what circumstances will qualify to trigger this right to leave, this provision is not yet effective.  It will not become effective until the DOL releases its final regulations.  However, employers are being encouraged to provide “qualified exigency” leave in the interim before the final regulations are available.

Second, the NDAA provisions extend the unpaid leave period for eligible employees from the FMLA’s 12 weeks to “a total of 26 workweeks of leave during a 12-month period to care for” a covered servicemember.  “Covered servicemember” is defined as a member of the “Armed Forces, including a member of the National Guard or Reserves, who is undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list, for a serious injury or illness.”  A “serious injury or illness” is defined as “an injury or illness incurred by the member in the line of duty on active duty in the Armed Forces that may render the member medically unfit to perform the duties of the member’s office, grade, rank, or rating.”  Unlike the “qualifying exigency” leave, this extended leave provision is effective as of January 28, 2008.

The NDAA limits the total amount of leave available under the FMLA to a combined total of 26 weeks in any 12 month period, provided that those 26 weeks include a leave to care for a covered servicemember due to serious injury or illness.  For example, if an eligible employee takes 12 weeks of leave under FMLA, then for the remainder of that 12-month period, only 14 weeks of leave would remain available under the NDAA amendments.  As with FMLA leave, the servicemember leave provided by the NDAA may be taken on an intermittent basis.

Employers need to immediately have their existing FMLA policies and procedures reviewed and amended to accommodate the NDAA changes.  Additionally, until the DOL issues final regulations which clarify some of the open issues left by the NDAA, employers need to tread very carefully when approached by employees with requests for military-related leaves.  Any concerns and questions should be reviewed with an employee benefits attorney to ensure the employer is compliant with the new amendments.

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