Don't lose an FMLA regulations battle because you're not up-to-date on FMLA guidelines

A headcount can defeat you if you get in trouble with FMLA guidelines. That’s the message of a recent court case in Kansas.

An employee sued her employer for violating her FMLA rights when she asked for leave following a car accident.

The employer had the ammunition to beat the lawsuit, but due to HR errors, shot blanks in court.

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FMLA guidelines win against flawed execution

The firm’s defense was based on the idea that it had fewer than 50 employees, and so wasn’t covered by the FMLA. That’s a correct reading of FMLA regulations.

Where the firm fell down was in proving its point. It said seven of its 50 or 51 employees were actually general partners, and didn’t count, according to FMLA guidelines.

But the court said the way the information was presented left doubts.

First, the office administrator claimed there were 39 employees and seven partners. Then the HR director stepped up and said 39 was wrong, but there were still under 50 employees not counting partners. But she didn’t tell the court which of the folks on her list were partners, and the court declined to guess.

This was a huge black eye for the HR director. But there’s a useful moral for you: FMLA regulations say that general partners, directors and shareholders aren’t employees for FMLA purposes, even if they work around the office like everybody else.

If you’re sued for violations of FMLA regulations and your headcount is around 50, you’ll want to be sure you can rapidly generate proof of the status of such individuals.

Cite: Arvidson v. Wallace, Saunders, No. 05-4025, D. Kan., 2/16/06.

Parent companies and FMLA guidelines

Regardless how many employees your company has at a given site, FMLA regulations state that you’re FMLA-eligible if you have a parent company with 50 employees within a 75-mile radius – the minimum requirement for compliance.

In this case, an employer wrote a letter to an employee who had asked for medical leave. The letter stated that the company was subject to FMLA. It even detailed the FMLA regulations of the employee’s leave.

But later, the employer claimed it wasn’t subject to FMLA because it didn’t have 50 employees within a 75-mile radius, which FMLA guidelines require. Problem is, the employer’s parent company is Sears. And Sears had a lot more than 50 employees within a 75-mile radius.

The case went to Federal District court, where the employer lost its bid for summary judgment. If someone in HR had known about the FMLA regulations surrounding “integrated” and “joint” employers, this legal headache never would have happened.

Source: Lincoln v. Sears, Roebuck & Co., U.S. District Court, District of Minnesota, No. 02-840, 9/17/02.

Do FMLA guidelines count a subsidiary?

“So with my back messed up like this, I’m gonna need that government sick leave,” Arnie Potts said. “You know– FLMA.”

“FMLA,” HR manager Melinda Kazinski corrected. “Family and Medical Leave Act.”

“Yeah,” Arnie asked. “How much time can I take off, anyway? Is it paid?”

“Whoa,” Melinda said. “Not so fast. We can arrange some time off for you, but not the 12 weeks you’d get under FMLA. We’re a small company, and FMLA regulations say we don’t have to offer family medical leave.”

“What?” Arnie said, looking puzzled. “The guys on the shop floor told me anybody can get FMLA.”

“They’re wrong,” Melinda said. “You have to have 50 employees. We’ve got 32, at last count.”

Which head count do FMLA guidelines want?

“Wait,” Arnie said. “If you count the people over at MaxFlow, there’s got to be 100 of us. That means I can get it.”

“I don’t think so,” Melinda said. “I’m 99% percent sure you can’t count MaxFlow’s employees along with ours, as far as FMLA regulations are concerned.

“Why not?” Arnie asked suspiciously.

“Because we’re just a subsidiary of MaxFlow, and we’re not even in the same business,” Melinda said. “They make pipes, and we make drywall.”

“What’s the difference?” Arnie growled. “You’re making excuses so you don’t have to do right by me.”

“Not at all,” Melinda said. “I’m following FMLA guidelines. If you have unused personal days, you can take them while your back is recovering.”

“I only have a week. It’s not enough,” Arnie said. “I’m going to talk to a lawyer.”

Arnie sued for violation of FMLA regulations. Did he win?

The decision

No, Arnie didn’t win.

The court said Melinda was right: The company was small enough that it didn’t have to offer FMLA leave.

FMLA guidelines say that a company must have 50 or more workers at a single site, or within 75 miles of the site, before it’s obliged to follow the FMLA.

But in this case, why didn’t the workers at the parent company and the subsidiary count together toward the 50-employee threshold?

After all, the parent, MaxFlow, was only 20 miles away.

Looking behind the FMLA guidelines

To answer the question, the court looked at the underlying purpose of the exemption for smaller companies.

The idea behind these FMLA regulations is that a small firm won’t have enough people to fill in for those out on FMLA leave. In a case like this one – where a subsidiary is run as a free-standing company – the parent isn’t likely to furnish replacement employees to fill in for the subsidiary’s FMLA absentees.

It’s different when you’re talking about an integrated division of a larger firm, with common administrative functions like HR and payroll.

Then, the employee pool includes the whole company, as long as everybody is less than 75 miles apart.

If you’re uncertain about your situation, ask yourself whether you could count on an associated company to replace people out on FMLA leave.

Cite: Engelhardt v. S.P. Richards Co., No. 06-1232, 1st Cir., 12/22/06. Fictionalized for dramatic effect.