Workplace leave and absence management is top-of-mind for employers and employees, as it provides an important element of financial stability. Several studies bear this out, including MetLife’s 17th annual U.S. Employee Benefit Trends Study, where more than 90 percent of employees said short-term disability insurance is a must-have or nice-to-have benefit.
As a new decade draws near, employers should monitor the following three trends in employee leave –the legality of local government paid leave laws, employee misuse of leave laws and parental leave laws. All are important and increasingly hot topics of discussion for employers wishing to attract talent with strong benefits packages while staying in compliance with the ever-changing legal landscape.
- Local Government Paid Leave Laws
Decisions on the legality of local leave laws will drive change in the coming year. More than 20 cities and municipalities have passed laws that require employers to offer paid leave to individuals employed within the jurisdiction. Examples include New York City, Chicago, Philadelphia, St. Paul, Minneapolis, Los Angeles, San Diego, Austin, San Antonio, and San Francisco – with more coming on board.
While paid leave is vital to employees’ ability to manage personal health and life responsibilities, the introduction of local laws can create confusion and become a compliance burden – especially when they need to be coordinated with related state laws. For example, a national employer with offices across California might now have to comply with three different laws: the federal FMLA, California’s family leave law or disability law (depending on the type of absence), and either the Los Angeles or San Diego local leave laws depending on the work location of the employee requesting leave.
However, the enforceability of local leave laws has recently been called into question in Austin, Texas. In November 2018, in Texas Association of Business v. City of Austin, Texas, the Texas Court of Appeals entered an injunction blocking the City of Austin’s paid sick leave ordinance. It reasoned that the ordinance establishes a wage by increasing the pay of employees on paid sick leave, thus violating the Texas Minimum Wage Act which governs employee wages and preempts all local laws attempting to establish wages. On August 30, 2019, the Texas Supreme Court (Case #19-0025) agreed to accept briefing on the City of Austin’s appeal.
Key Considerations: Employers should monitor the Texas Supreme Court’s decision. This will likely be the first time that a state’s highest court reviews a local leave law. The decision will impact similar challenges to local laws across the country, all of which will greatly shape employer compliance obligations going forward. In the interim, employers are required to understand and comply with federal, state, and local leave laws.
- Employee Misuse of Leave Laws
When used appropriately, the federal FMLA and other state leave laws fill an important societal need, protecting workers during some of the most vulnerable moments in their lives. Unpaid or paid leaves not only give sick or injured employees a chance to recover while retaining their job and financial stability, but also help ensure a healthier, happier, and more productive workforce.
However, there can be unintended consequences. The issue of employee leave fraud and abuse is a challenge for companies across the nation. It can be disconcerting, for example, to learn that an employee on leave for an alleged serious back injury is discovered to be water-skiing or rock climbing.
Such misuse of leave laws can be detrimental to an employer’s business and result in increased direct and indirect costs, ranging from overtime or temporary worker pay to a team’s lost productivity, safety issues, and low morale. Attempting to combat fraud, however, presents its own challenges as leave laws provide substantial protections to employees. For example, the FMLA makes it unlawful for any employer to “discharge or in any other manner discriminate against any individual” for exercising his or her rights under the law while out on leave (29 U.S.C. § 2615(a)(2)).
Employers can, however, investigate potential fraud with objectivity. One powerful tool when addressing suspected leave abuse is the “honest belief” defense. In jurisdictions that recognize it, the honest belief defense “precludes [retaliation] liability under the FMLA where an employer develops an honest suspicion that an employee is abusing his or her leave.” This defense may protect the employer even if the employer’s suspicions are “ultimately found to be mistaken, foolish, trivial, or baseless.”
In other words, the employer only has to demonstrate that it reasonably believed that the employee was abusing the leave law. When judging the reasonableness of an employer’s beliefs, courts typically consider the thoroughness of the employer’s investigation and the evidence it relied on, including social media posts and employee interviews.
In addition to the honest belief defense, an employer can avail itself of other anti-fraud protections in the FMLA. For example, the law allows employers to invoke the right to request medical certification of the health condition and additional medical opinions if necessary. An employer can also request recertification of leave needs.
Key Considerations: There can be various reasons for unpaid and paid leave abuse, including a simple misunderstanding of the policy. Employers should consult with their company’s legal and HR experts before pursuing action. This will ensure the appropriate steps are taken for each situation and help get to the root cause of the problem.
- Parental Leave Policies
Employers offering paid leave for new parents (maternity, paternity, adoption, foster, or surrogacy) increased between four to six percent from 2017 to 2018 yet held fairly steady from 2018 to 2019, according to a 2019 employee benefits survey from the Society for Human Resource Management (SHRM). Paid paternity and adoption leave are two types of leaves that have continued to evolve in 2019 due, in part, to stricter regulations and societal shifts favoring leave.
Several lawsuits and investigations by the U.S. Equal Employment Opportunity Commission (“EEOC”) in 2018 and 2019 shed light on the importance of understanding employer leave obligations. Employers cannot provide different parental bonding leave benefits solely based on gender. However, the law recognizes that certain types of leaves, for example, leave to due to pregnancy-related medical conditions, such as C-sections, would apply only to the birth mother.
Key Considerations: In light of recent lawsuits and EEOC scrutiny, a growing number of employers are revisiting their parental leave policies to ensure compliance with the current legal landscape. Employers should consult with their legal and Human Resources (HR) counsel to assess their leave benefits. This can help avoid expensive EEOC investigations, multi-million dollar fines and settlements, and negative media exposure.