B2B – 2:  Employee’s – Who is covered under the FMLA?

Noun | em·ploy·ee | im-plȯ(i)-ē

Let’s chat.  This “Back to Basics” series was intended to cover the 101 type stuff.  There is always somebody new to this industry or this topic and they need info too.  I’m rediscovering what I’ve always reminded others – that every question asked in this FMLA / ADA / Leave management world will generally start with “It depends…”  Whether you’ve been doing this for 20 years (ugh….can’t believe that’s possible, but that’s me) or you’re fresh in the sandbox, one fact holds true: It’s all about the employees.

Merriam-Webster defines an employee as: one employed by another usually for wages or salary and in a position below the executive level.  Clearly Merriam-Webster originated in 1831…162 years before the FMLA came about.  If you were asked to define all employees who are and those who are not covered by the FMLA, would you feel 100% confident?  No worries, that’s what we’re talking about today.

Let me get one thing straight. This conversation is about individuals who are to be counted (or not counted) when determining if the company has to include them in the employee headcount.  I am not going over employees who are eligible to receive job protection for a qualified absence. That is about eligibility and a topic for a different day. Remember that even if an employee is not eligible, but they are ‘covered’, an employer has notification obligations to them, which is why it’s critical to know who is covered, not just who is eligible.  For more information on covered employers, take a look at the AbsenceSoft blog “To Act or Not to Act.”

You have seen it a dozen times that the FMLA uses the definition of “employee” based on the FLSA (Fair Labor Standards Act). Since this is a blog, not a novel, I’m going to spare you that.  However, if you are just dying to read it, here it is – scroll to page 3. Â

Going back to my original point, “It depends” and the courts have said there is no definition that solves all problems as to the limitations of the employer-employee relationship under the Act;….it depends “upon the circumstances of the whole activity”. Â

There are some basic rules to follow. Â

  1. If the individual appears on the employer payroll and are employed within the United States, D.C. (remember, that’s a District, not a state), or any Territory of the United States, they are a covered employee. The number of hours they work is not relevant, as part time and full time employees are counted equally.  Â
  2. Employees who are out on leave, regardless if it is paid or unpaid are counted if the employer has a reasonable expectation that the employee will eventually return to active employment. Â
  3. Employees who no longer have an employer – employee relationship because they have been laid off are not covered.

Here are some less basic rules that should take extra thought when assessing.

  1. Employees in joint employer relationships, where there is a shared employment situation, are to be counted as a covered employee by the primary and the secondary employer. Â Typically, the primary and secondary employers have a different set of requirements and obligations, but they both still have to cover the employee.
    1. Common example: Â Temporary agency placing an employee within a company. Â The temp agency is the primary employer and the hiring organization is the secondary employer. Â They both must include that employee in their FMLA headcount.
  2. Company’s known as a Professional Employer Organization (PEO) typically contracts with an employer to take care of certain tasks.  This scenario does NOT constitute a joint employer relationship unless the PEO has authority to hire/fire/assign or make other benefits decisions for the client company employees.  These employees would be covered only under their individual / primary employer.
  3. Successor in Interest:  If you have acquired a company or been acquired, the ‘parent’ company is likely going to have to cover the new employees. Â
  4. Independent contractors, those who are not on payroll, but receive a 1099 at the end of the year are likely NOT covered employees.  These individuals are not entitled to communications or job protections established by the FMLA. That said, it has been seen that many individuals classified as an Independent Contractor, once put through the “economic realities” test are actually employees.  If you have any doubt, seek further guidance. Here is an interesting publication by the DOL that starts to shed light on the complexities of employees vs. independent contractors.

Note that all of these concepts are specific to private employers.  Public agencies and federal entities play by a different set of rules…but that’s a story for a different day. Â

As you can see, the water can get muddy on this topic. Â The FMLA is not just for the cookie cutter employer who has employees who work a clean schedule, year round, receiving benefits on a regular basis. Â This country employs people so many different ways.

When in doubt, seek additional guidance.  Today’s words of advice come from my second graders teacher and it holds true for the room full of 8 year olds, as well as for anybody managing employees – “If you have to choose between being right and being kind, be kind.”  It will serve you well.