Health Coverage Obligations under the FMLA

Untangling the Family and Medical Leave Act (FMLA) health care
coverage requirements can be a daunting task. What coverage must be
maintained when an employee takes leave and what coverage is the
employee entitled to upon reinstatement? Who pays the premium is
another tricky area.

Although the FMLA allows you to terminate insurance coverage for
nonpayment of premiums or permits your employee to drop the
insurance while on unpaid leave, either scenario could cause problems
when the employee returns to work and must be restored to full
coverage. A review of FMLA guidelines will help you make the right
decisions about maintaining health care benefits and paying premiums
when an employee requests FMLA leave. (Click to download a free FMLA Checklist.)FMLA Health Care Coverage Guidelines

The FMLA, which requires covered employers to provide up to 12
workweeks of leave to eligible employees for various family and medical
reasons, has specific requirements about continuation of health care
coverage when leave is taken and about how you should handle
payment of premiums. In addition, upon return to work, the employee
must be fully restored to health care coverage subject to any changes
that may have occurred. Each of these topics is addressed, below.

-- Continuation of coverage. If you provide health care benefits
under a group health plan, you must provide the same health benefits
during an eligible employee's FMLA leave as would have been provided
if the employee worked throughout the leave. (If you do not provide
insurance before the leave is taken, the FMLA does not require you to
provide it during the leave.) In addition, your obligation to continue
health benefits ends when the employee notifies you that he will not
return to work from the leave. However, the notification must be
unequivocal in order to discontinue health benefits. If the employee
indicates he may not be able to return to work, but wants to, you must
continue to provide health benefits for the duration of the FMLA leave.

Note, too, that employees on unpaid leave may elect to discontinue
health insurance coverage (unless the employer pays the employee's
share of premiums) during the unpaid period of FMLA leave. However,
these employees still must be reinstated to the same insurance benefits
when they return to work.

-- Payment of premiums. The FMLA requires you to pay the
premium on health care coverage on the same terms as you paid the
premium before the employee took leave, paid or unpaid. Therefore, if
you paid 80% of the premium before the employee took leave, and the
employee paid 20%, you must continue to pay at least 80% of the
premium after the employee takes leave. You also may be more
generous, for example by paying the employee's share.

-- Reinstatement of coverage upon return to work. Upon return,
the employee must be restored to the same health benefits coverage as
provided prior to leave, subject to any changes in benefit levels that may
have occurred during the leave. A returning employee may not be
required to meet any qualification requirements normally imposed for
entry or reentry into the group health plan, including any preexisting
condition waiting period or medical examination requirements.


Make sure your company has the HR Policies needed to justify your HR decisions. Furthermore, nothing can replace old fashioned employee training and compliance documentation.

When Do You Need Written HR Policies?

(Part 1 of 2)

Recent developments in harassment and other discrimination case law show just how risky it can be if you do not have written policies. Find out how to make sure your policies protect, not harm, your organization.

When was the last time you reviewed your organization's policies? If you're like many employers, writing or updating policies is at the bottom of a lengthy "to-do" list. And, you may even question the value of having written policies because of the apparently conflicting advice concerning their usefulness.

On one hand, many HR experts advocate having written policies as a way of communicating your organization's values and practices to employees. Alternatively, a growing number of attorneys are warning their clients that poorly drafted policies may land them in court. So, whom should you believe?

The short answer is both groups. Upon closer consideration, these positions are not contradictory. Well-written policies can both serve as an effective communication device and help you stay out of court, or at least give you a better chance of prevailing. In contrast, poorly executed policies can create unintended contracts and be used of evidence of noncompliance in court.

This week's and next week's E-Tips will help define the underlying issues and make clear why written policies that are carefully developed, updated, and applied are an effective tool that you need. This week, you will find out why written policies are important, who needs to have them, and how to make sure they do not create a contract that you must follow.

Next week, you will learn the difference between supervisory manuals and employee handbooks and find out which policies every employer should have.

1. Why are written policies important?

Sound employment policies provide the framework within which an organization governs its employee relations. A policies and procedures manual guides both managers and employees as to what is expected and can prevent misunderstandings about employer policy. In addition, supervisors and managers are more likely to consistently apply policies that are clearly communicated in writing.

It is true that written policies, like any record, can be used against an organization in a lawsuit. Poorly drafted policies often become the main evidence presented when employees allege that the policies were in fact a contract that the employer violated. However, policies that are carefully written so as not to be contracts actually should protect against these claims and not be a problem. (See number 4, below.) In addition, carefully written policies can be used to illustrate your commitment to a positive work environment and nondiscriminatory employment practices. (See number 3, below.)

2. Are we required to have written policies?

Although written policies in general are not legally required, certain policies may be mandatory or at least be considered an important component in helping employers establish good faith compliance with federal and state law.

For example, the Supreme Court has indicated that employers may protect themselves against liability for sexual harassment by having clearly articulated policies against sexual harassment that include effective complaint procedures. In addition, the Family and Medical Leave Act requires covered employers to provide written information regarding employee rights and employer obligations under the Act. Similarly, certain federal contractors must have written equal employment opportunity policies. And finally, many state laws require written harassment policies and policies informing employees about compensation issues.

3. Does every organization need written policies?

As a general rule, every employer, except maybe those with fewer than 15 employees, should have written policies. Employers with 15 or more employees are covered by federal discrimination laws (such as Title VII of the Civil Rights Act and the Americans with Disabilities Act) and most state discrimination laws. Written policies are a good starting point to show your commitment to nondiscriminatory employment practices. For example, a performance review policy can show the job-related criteria used to evaluate employees and any safeguards used to ensure the process is conducted in a fair and objective manner.

Smaller employers should at least consider creating a handbook since it is likely they already have some policies in writing. For example, employment offer letters may explain vacation and sick leave accrual while other items, like a posted memo, may outline pay procedures. Thus, to ensure distribution to all employees, even the small employer is well advised to compile these memos into a handbook that is given to every employee.

4. Will we create a contract if we have written policies?

The simple act of putting your policies in writing should not create a binding contract if the policies are written as guidelines that explain generally what your requirements are and how employees normally will be treated. However, you can create a contract by using language that conveys rigid rules that must be followed exactly as written in all circumstances.

Therefore, you should build flexibility into your wording and steer clear of any promises that could be interpreted as a contract. Your policies should not, for example:

• State that the organization will "only" or "always" do something or"must" act in a particular way;
• Describe employees as "permanent";
• State that employees will be terminated only for "cause";
• Make promises of job security; or
• Use all-inclusive lists, such as in disciplinary procedures or work rules.

Instead, you should use terms such as "generally," "typically," "usually," and "may" so that managers have flexibility in interpreting and applying the policies. In addition, you should specifically retain management's right to update, change unilaterally, and implement all policies as the organization sees fit. Finally, you should include a strong "at-will" statement that clearly specifies that all employees (who do not have contracts or collective bargaining agreements specifying otherwise) may quit at any time and for any reason or may be terminated at any time and for any lawful reason.