The Family and Medical Leave Act of 1993, commonly known as FMLA, is among the most operationally complex employment statutes that businesses face. It grants eligible employees the right to take up to 12 weeks of unpaid, job-protected leave per year for specified family and medical reasons, and requires employers to maintain health benefits during that leave on the same terms as if the employee had continued working. For business owners, FMLA is not merely an employment law issue — it directly implicates employee benefits administration. Managing health plan continuation during FMLA leave, dealing with the employee’s failure to return from leave, and handling the interaction between FMLA and other leave and benefits programs are all areas where compliance failures are common and costly.
FMLA Coverage and Eligibility
FMLA applies to employers with 50 or more employees within a 75-mile radius for at least 20 workweeks in the current or preceding calendar year. An employee is eligible for FMLA leave if they have been employed by the employer for at least 12 months, have worked at least 1,250 hours in the 12 months preceding the start of the leave, and work at a location where the employer has at least 50 employees within a 75-mile radius. Employers with fewer than 50 employees are not subject to federal FMLA, but many states have their own family and medical leave laws with broader coverage that may apply to smaller employers.
The qualifying reasons for FMLA leave include the birth of a child and caring for the child within the first year, the placement of a child with the employee for adoption or foster care and caring for the child within the first year, caring for a spouse, child, or parent with a serious health condition, a serious health condition that renders the employee unable to perform the essential functions of their job, a qualifying exigency arising from a covered military member’s active duty service, and caring for a covered servicemember with a serious injury or illness, for which an extended leave of up to 26 weeks is available.
The concept of a “serious health condition” is defined broadly enough to encompass a wide range of medical situations, including conditions requiring inpatient care, chronic conditions that cause incapacity and require periodic treatment, conditions that require continuing treatment by a healthcare provider, and permanent or long-term conditions for which treatment may not be effective. Because serious health condition includes conditions that recur periodically — like migraines, asthma, or diabetes — an employee can take FMLA leave intermittently for recurring serious health conditions, creating administrative challenges for employers who must track and manage these absences.
Continuation of Health Benefits During FMLA Leave
One of the central employer obligations under FMLA is the requirement to maintain the employee’s group health plan coverage during FMLA leave on the same terms as if the employee had continued working. This means that if the employee was enrolled in the employer’s group health plan before the leave began, that coverage must continue throughout the leave at the same premium cost-sharing arrangement that applied before the leave. If the employer normally pays 80 percent of the health insurance premium and the employee pays 20 percent, that same 80/20 split must continue during FMLA leave.
The employee may be required to continue paying their share of the premium during FMLA leave. If the employee fails to make their premium payment within a specified grace period — which must be at least 30 days — the employer may terminate the employee’s health coverage, but only after providing written notice to the employee at least 15 days before coverage terminates. Importantly, if the employee’s health coverage terminates during FMLA leave due to non-payment of premiums, the employer must restore coverage when the employee returns from leave, as if no break in coverage had occurred.
The FMLA’s requirement to continue health benefits during leave is distinct from COBRA. COBRA provides continuation coverage after coverage is lost due to a qualifying event, including a reduction in hours or termination of employment. FMLA leave does not itself trigger a COBRA qualifying event as long as the employer maintains group health plan coverage during the leave. However, if the employee’s FMLA leave causes them to lose coverage (such as by reducing their hours below the plan’s eligibility threshold), or if the employer properly terminates coverage due to non-payment of premiums and the employee ultimately does not return from leave, COBRA rights may be triggered.
The Employee’s Failure to Return from FMLA Leave
An important cost-recovery issue arises when an employee fails to return to work at the end of FMLA leave for a reason other than the continuation of the serious health condition or other circumstances beyond the employee’s control. In that situation, the employer may recover from the employee the cost of the health plan premiums it paid during the leave. This recovery right is an important tool for employers who have been paying the employee’s share of premiums during leave (for example, by advancing the employee’s premium contribution) or who are concerned about employees using FMLA leave strategically without intending to return.
The recovery right applies only to the employer’s cost of maintaining group health plan coverage. The employer cannot recover the cost of wages or other benefits paid during the leave under this provision. To exercise the recovery right, the employer must have notified the employee before or at the start of the leave that the employer would require repayment if the employee did not return. Many employers include this notice in their FMLA leave designation letter.
Other Benefits During FMLA Leave
While health plan continuation is the most prominent benefits obligation during FMLA leave, the statute’s treatment of other benefits is also important. FMLA does not require employers to maintain other benefits during leave, such as life insurance, disability insurance, or retirement plan contributions. However, the employer must apply the same policies to FMLA leave as it applies to other types of leave. If the employer maintains life insurance coverage for employees on personal leaves of absence, it must do the same for employees on FMLA leave. Applying less favorable terms to FMLA leave than to comparable non-FMLA leave is unlawful.
For retirement plan purposes, the treatment of FMLA leave depends on the plan’s terms. Under ERISA and the Internal Revenue Code, a leave of absence that is required by federal or state statute — which FMLA leave is — is treated as a period of service for vesting purposes during the leave period. This means that the period of FMLA leave must be counted toward the employee’s years of service for vesting and participation purposes, even if no work is performed. For 401(k) plans, the employee who takes FMLA leave does not accrue employer matching contributions during the leave period (because employer matches are typically conditioned on employee deferrals, and the employee is not receiving pay from which to make deferrals). But the employee’s account is not forfeited, and the leave period counts toward vesting.
Intermittent FMLA Leave and Benefits Administration
Intermittent FMLA leave — leave taken in separate blocks of time or as a reduced schedule for a qualifying reason — creates particular administrative challenges for benefits administration. When an employee takes intermittent FMLA leave in small increments (such as a few hours at a time for chronic condition treatments), tracking the leave accurately and ensuring that health benefits are properly maintained throughout can require significant administrative attention.
Employers sometimes question whether an employee is genuinely taking intermittent FMLA leave for a qualifying reason or is abusing the leave designation. While FMLA does allow employers to require certification from the employee’s healthcare provider supporting the need for intermittent leave, and to require recertification periodically, the process for managing intermittent leave requires care to avoid interfering with the employee’s FMLA rights. Denying benefits during periods of intermittent leave that were properly designated as FMLA-protected, or terminating health coverage based on improperly tracked leave, can result in FMLA interference claims.
Interaction with the ADA and Other Leave Laws
FMLA frequently overlaps with the Americans with Disabilities Act and its Amendments Act. An employee who takes FMLA leave for a serious health condition that also qualifies as a disability under the ADA may be entitled to a reasonable accommodation under the ADA, which could include additional leave beyond the FMLA’s 12-week entitlement. Employers who automatically terminate an employee’s employment when FMLA leave expires may be violating the ADA’s reasonable accommodation obligation if the employee’s condition constitutes a disability and additional leave would enable the employee to return to work without undue hardship to the employer.
The interaction between FMLA and state leave laws adds another layer of complexity. Many states have enacted their own family and medical leave laws that provide more generous leave rights than federal FMLA, apply to smaller employers, cover more family members, or require paid rather than unpaid leave. California’s CFRA, New York’s Paid Family Leave, and Washington State’s PFML are among the most well-known state leave laws that supplement or exceed federal FMLA’s requirements. Employers with employees in multiple states must comply with each state’s requirements simultaneously, which can require maintaining multiple policies and tracking different leave entitlements across states.
FMLA Notice and Certification Requirements
Employers must provide employees with notice of their FMLA rights and obligations, both generally and in connection with specific leave requests. The DOL has issued model notice forms that employers can use for this purpose. Required notices include a general notice of FMLA rights (which can be posted and included in the employee handbook), an eligibility notice (which must be provided within five business days of learning of the need for leave), a rights and responsibilities notice (provided at the same time as the eligibility notice), and a designation notice (which must be provided within five business days of the employer having sufficient information to determine whether the leave qualifies as FMLA-protected).
Failure to provide required FMLA notices can constitute interference with the employee’s FMLA rights. If an employee is not properly notified of their FMLA rights and suffers harm as a result — for example, by not requesting the leave to which they were entitled, or by not understanding the terms under which benefits continuation was available — the employer may be liable for the damages that flow from the inadequate notice. Maintaining standardized FMLA administration procedures and training HR personnel on notice obligations is an important compliance measure.
FMLA and Group Health Plan Claims After Return
One practical issue that arises with some frequency is the question of whether an employee who returns from FMLA leave can use group health plan coverage for medical expenses incurred during the leave, if the employer had maintained coverage throughout the leave as required. The answer is generally yes — if the employer maintained coverage during the leave as required by FMLA, the employee’s health plan coverage was continuous, and claims for services received during the leave period should be processed under the normal claims procedures.
Complications arise when health coverage lapsed during FMLA leave (whether due to non-payment of premiums or administrative error) and was then reinstated when the employee returned. In those situations, the employer should work with the health plan and the insurer to address coverage gaps and ensure that the employee is not denied coverage for services that they would have received had coverage been properly maintained throughout the leave. The obligation to restore benefits upon return from FMLA leave means restoring them as if no break had occurred, which may require retroactive claims processing in some circumstances.