Understanding the Relationship Between FMLA, Workers' Compensation, and Disability Insurance
The information contained in this article is not intended as legal advice and may no longer be accurate due to changes in the law. Consult NHMA's legal services or your municipal attorney.
In my December 2013 article, I discussed the concept of “employee status.” Every employee has a status: either “active”, “on leave”, “former”, or “conditionally terminated” (terminated, but with a contingent right to return). Understanding these statuses is a key to understanding the relationship between the FMLA, Workers’ Compensation and Disability benefits.
FMLA is a Status
The federally mandated Family and Medical Leave Act (FMLA), requires covered employers to provide eligible employees with up to twelve (12) weeks (26 weeks if caring for an individual injured while on active military duty) of unpaid leave, to allow those employees to continue to participate in group health insurance benefits on the same terms as active employees, and to be reinstated if they return prior to exhaustion of their FMLA leave benefit. All public sector employers are covered employers. This means that all public employers should have FMLA notices posted in the workplace and a FMLA policy, even if they do not have any eligible employees. Eligible employees are those that work for employers with at least 50 employees who work within a 75 mile radius. Eligible employees must have worked for the employer for at least twelve (12) months, although these need not be consecutive. For example, an employee who works for a town for three months every summer may be considered to have satisfied the twelve (12) month requirement after four years of such seasonal work. The employee must also have worked at least 1250 hours during the twelve (12) preceding the need for FMLA leave. In counting the 1250 hours, the employer need only consider hours actually worked and need not include hours paid but not worked, such as vacation, holiday, sick leave and personal days. Finally, the employee must have a qualifying event: the arrival of a new child in the employee’s home, whether as a result of birth, adoption, or foster care placement; the employee’s own serious health condition (illness/injury resulting in an absence from work of at least three (3) days, treatment by a health care provider, and a continuing course of care, such as follow up appointments, therapy, or taking prescription medications); the serious health condition of a member of the employee’s immediate family (generally defined as spouse, parent, minor child and adult disabled child); and for employees called to active military duty, the time necessary to address the exigencies associated with the call to duty.
FMLA is one form of leave status. Like other employees on leave, employees on FMLA are not expected to report to work for the duration of the leave. Generally, employees on FMLA may not be terminated, except in circumstances where they would be terminated if they were active employees. Eligible employees may be placed on FMLA leave at their request, or if the employer’s policy so provides, at the employer’s direction, even if the employee does not want to use FMLA leave.
FMLA leave is unpaid leave. If an employer’s policy so provides, FMLA leave can run concurrent with paid leave benefits by the employer, in accordance with the purposes for which those paid leave benefits may be used. For example, employees on FMLA can normally draw on their employer-provided sick leave when they are absent for their own serious health condition. If the employer’s sick leave policy allows for use of sick leave for family illness, employees on FMLA for a family member’s serious health condition may make concurrent use of the paid sick leave. If the employer does not permit use of sick leave for family illness, then FMLA leave for family illness would be unpaid.
Workers’ Compensation is Not a Status
Workers’ Compensation (WC) is an employer-funded insurance benefit. WC merges two different types of insurance: medical insurance, in that WC policies provide for the payment of medical expenses resulting from work related injury and illness; and disability insurance, in that it provides the injured/ill worker with a payment to partially offset the loss of income resulting from the injury or illness. WC is distinguished from short and long term disability benefits by the fact that it is only available to individuals whose injury or illness is attributable to their employment.
WC is not a leave law; instead, it is a source of medical expense payments and lost income benefits. Accordingly, the status of an employee “on WC” must be defined by an applicable leave policy. If the employee is an eligible employee, the applicable leave policy is the FMLA. FMLA is the status; WC is the income stream (which the employer may allow employees to supplement through the use of other paid leave, such as sick leave).
Disability Insurance is Not a Status
Short term and long term disability insurance (STD and LTD) are insurance benefits which provide employees with payments that partially offset the loss of income resulting from non-work related injuries and illness. Like WC, STD and LTD are not leave policies. To be eligible for STD and LTD benefits, employees generally need to be employed on the date on which the injury or illness occurs. Under many STD and LTD policies, individuals remain eligible to receive benefits even though their employment may have ended.
Like WC, STD and LTD do not define employee status. The status of an employee “on disability” must be defined by an applicable leave policy. If the employee is an eligible employee, the applicable leave policy is the FMLA. However, some employers have treated WC, STD and LTD as if they were leave policies and have treated employees receiving those benefits as if they were on leave for the entire period that they are receiving benefits. Employers are encouraged to review their personnel policies and collective bargaining agreements (CBA) to determine whether the distinction between leave status and income stream is clear.
What Happens When FMLA Leave is Exhausted?
When FMLA leave is exhausted, an employee may be entitled to additional leave described in employer personnel policies or CBAs. Once that additional leave is exhausted, the employer can terminate the employee, regardless of whether or not the employee is continuing to receive WC, STD or LTD benefits. If employees are receiving WC benefits, that termination is conditional, in that the WC statute requires employers to reinstate employees if they regain work capacity within 18 months of the date of injury. However, except for the right to reinstatement, employers may otherwise terminate employees who have exhausted FMLA and other employer-provided leave. This means that all wages and benefits available to active and on leave employees may be discontinued, until and unless the employee makes a timely request
for reinstatement.
Mark Broth is a member of the DrummondWoodsum’s Labor and Employment Group and his practice focuses on the representation of private and public employers in all aspects of the employer-employee relationship. This is not a legal document nor is it intended to serve as legal advice or a legal opinion. Drummond Woodsum & MacMahon, P.A. makes no representations that this is a complete or final description or procedure that would ensure legal compliance and does not intend that the reader should rely on it as such. “Copyright 2014 Drummond Woodsum. These materials may not be reproduced without prior written permission.”