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Leaves of AbsenceLeaves of AbsenceThe Family and Medical Leave Act (FLMA) entitles employees at companies with 50 or more employees to take up to 12 weeks of unpaid leave (which may be taken sporadically) each year for a specified list of family and medical reasons. Only those employees who have worked for the employer for a total of at least 12 months, and for at least 1,250 hours in the last 12 months, are covered by the act. A further restriction is that an employee must work at a company location where at least 50 employees are employed within a 75-mile radius of the facility. Valid reasons for taking the leave of absence include the birth of a child, serious illness, or caring for a family member with a serious illness. During their absence, an employer must continue to provide medical insurance coverage if it had been taken by the employee prior to the leave of absence, though the employee can be charged for that portion of the expense that had been deducted from his or her pay prior to the leave. If the employee does not pay this portion of the expense within 30 days, the insurance can be cancelled for the remainder of the leave (though 15 days written notice must be provided), but it must be restored once the employee returns to work. If the terms of the medical insurance plan are changed by the company during the leave of absence, then the new terms will apply to the person who is on leave. Only medical insurance is subject to these provisions; other types of insurance, such as life and disability insurance, do not have to be maintained during the leave of absence. Example. Samuel Lamont had a sick mother and took FMLA leave from the Humble Pie Company in order to care for her. Prior to his leave of absence, he paid $120 per month as his share of the cost of a company-provided medical insurance plan. During the leave, the company changed the employee share of the insurance for all employees to $160. Mr. Lamont concluded that he could not afford this additional cost and stopped paying for his share of the insurance. The company accordingly warned him in writing that coverage would be dropped, and then did so after payment became 30 days overdue. When he returned from leave, the company was required to restore his medical coverage. Because of the large number of provisions of the FMLA and its cost impact on both the employer and employee, it is recommended that the employer fill out a formal, detailed response to a request for a leave of absence, copies of which should go into the employee's file as well as to the employee. The Department of Labor has issued a sample report that covers the key provisions of the FMLA, which is reproduced in Exhibit 6.1. This form, Number WH-381, may be downloaded in Acrobat PDF format from the Department of Labor's web site at www.dol.gov. Upon returning from a leave of absence, an employee must be given the same or equivalent job, with the same level of pay and benefits that he or she had before the leave. However, no additional leave or seniority accrues during the term of an employee's leave of absence. In certain cases, where job restoration would cause significant economic damage to an employer, key positions will not be restored to returning employees. A key position is defined as a salaried employee whose pay is in the top 10 percent of all employees.
A company could be laying itself open to a lawsuit if it makes some types of deductions from employee pay checks without their authorization. The best way to avoid this problem is to have employees sign an authorization notice that clearly specifies the amount and type of any deductions, as well as the start and stop dates for the deductions. An example of such a form is noted in Exhibit 6.2.
[1]This section is reprinted with permission from Steven Bragg, Accounting Reference Desktop (New York: John Wiley & Sons, Inc., 2002), 521. 183
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