The Cost of FMLA Mismanagement

For nearly three decades, the Family and Medical Leave Act (FMLA) has required employers to provide workers with job-protected, unpaid leave for qualifying medical and family reasons.

Managing FMLA leaves continues to challenge employers, and lack of awareness or misunderstanding of FMLA regulations can lead to non-compliance.  This can result in:

• possible financial losses due to decreased productivity
• fines by the US Department of Labor (DOL)
• employee misuse
• legal action

FMLA is very important to helping many employees meet their family and medical needs. But if mismanaged, it can further intensify job disruptions, create additional costs, and further drain productivity. In fact, it’s been recently reported that family and medical leaves contributed to over 1.4 billion days of of absence and illness-related lost productivity; costing employers $178 billion in wages and benefits based on incidental absences due to illness, worker’s compensation and FMLA.

When an employee feels that his/her leave was unfairly managed, he/she may initiate a formal complaint with the DOL. The DOL will quickly investigate, and may file suit to ensure compliance and recover damages if a complaint cannot be resolved administratively. Actions can include:

• Conduct general onsite visits to scrutinize all employment practices beyond the initial complaint.
• Examine past and current employment paperwork and files.
• Fines can range from hundreds to thousands of dollars ― and even smaller fines, such as $110 per violation for noncompliance with general FMLA notices requirements, can add up quickly.

What’s more, DOL investigations may continue even after a complaint has been resolved. The DOL doesn’t need employee complaints to investigate — they may prioritize resources to businesses and companies with previous complaints, where emerging business models lead to violations, and where workers are least likely to exercise their rights.

In 2018, about 52 percent of investigations were initiated not from employee complaints, but by the DOL, resulting in over $334 million in back wages for more than 313,941 workers.

Employees don’t have to take all 12 weeks of FMLA leave at the same time. Rather, they may take leave intermittently in blocks of hours or random days. If managed ineffectively, intermittent leave is a leading challenge for the majority of employers due to the sporadic and disruptive nature of these absences.

To avoid conflicts and liability risk, employers may adopt a rubber‐stamp approach to approving FMLA leaves. While this can reduce potential liability, it may encourage employee misuse of FMLA, and may also backfire on an employer if an employee has a legitimate FMLA claim after using time towards a non-legitimate FMLA leave.

If a claim becomes a lawsuit, there are fines, legal costs, time away from work to deal with the claim(s), as well as an effect on the overall work environment and employment relationships. Plus, managers and supervisors may potentially be sued directly and held personally liable for paying damages. What’s more, lawsuits can be lengthy and time consuming to resolve, and even if the employee loses, there are costs involved for legal defense, etc.

Case in point: In the 2019 case DaPrato v. Massachusetts Water Resources Authority, an employee brought action against his former employer for violation of FMLA, the Americans with Disabilities Act (ADA), and a state law discrimination statute arising from her termination for vacationing in Mexico while on leave. The court awarded the employee $1,937,961 – over $1.3 million in liquidated damages and $605,690 in attorney fees and costs.

By outsourcing FMLA administration, employers engage a neutral party to manage claims based on the most current rules and guidelines, allowing for fair and consistent treatment of leaves across all employees in all company locations. And since many FMLA claims are related to an employee’s own health issue, outsourcing both disability and FMLA has been proven to help promote better absence management outcomes, such as improved productivity, and reducing lost time and direct costs.

Our solution: The Guardian AbsenceWorks® program offers a variety of absence management solutions for companies with 50 to 5,000 employees or more, helping employers of all sizes take advantage of high quality, integrated services that can enhance compliance while helping to get employees back to work sooner.

Learn more about absence management with Guardian.