Due to its pervasive nature and complex compliance requirements, FMLA offers new opportunities for CPAs. Such opportunities include--

* helping employers comply with FMLA;

* litigation support for an employer (or an employee) for an FMLA- related dispute; and

* testing for FMLA compliance. Therefore, CPAs who familiarize themselves with FMLA will benefit from these new opportunities.

Employer Coverage and Obligations

In the private sector, FMLA applies to employers who employed 50 or more employees in 20 or more workweeks in the current or preceding calendar year. Employers are obligated to grant up to 12 workweeks of unpaid leave during any 12-month period. Employees may request a leave for any of the following reasons:

* The birth or placement of a child for adoption or foster care;

* To care for the employee's seriously-ill spouse, child, or parent; or

* The employee's own serious health condition.

A person incapable of self-care because of a mental or physical disability is considered a child regardless of age. Spouse is defined in accordance with applicable state laws, including common-law marriages where recognized by the state. However, unmarried domestic partners are not entitled to a leave to care for their partners. A "serious health condition" is defined as one that involves inpatient care or continuing treatment by a health-care provider.

An employer can use any of four methods to establish the "12-month period:" calendar year; a fixed 12-month period, such as fiscal year; 12 months measured forward from the first date of employee's FMLA leave; or a "rolling" 12-month period measured backward from the date employee uses an FMLA leave. The last method, rolling backward, is the only method that prevents stacking of back-to-back leave. Employers must use a method consistently and uniformly to all employees.

Employee Eligibility

Eligible employees are those who have worked for the employer at least 12 months and for at least 1,250 hours during the preceding 12-month period. Eligibility is to be determined as of the date that leave begins, not when the leave is requested. Spouses who work for the same employer are limited to a combined total of 12 work-weeks of leave if leave is taken for the birth or placement of a child for adoption or foster care. This limitation does not apply when either spouse takes a leave to care for the other, or to care for a seriously ill child.

A leave due to a health condition may be taken on an intermittent or reduced schedule basis. An employer may limit leave increments to the shortest time period (not exceeding one hour) that the employer uses to account for leaves or absences. Employers can require an employee taking intermittent leave to transfer temporarily to an equivalent alternative position. If it is a foreseeable medical leave, the employee must make a reasonable attempt not to disrupt unduly the employer's operations. Therefore, employers could require that such leave be taken outside the busy season; e.g., tax season for accounting firms or the Christmas season for retailers.

Either an employee may elect or an employer may require to substitute certain paid leaves for FMLA leave. However, it is the employer's responsibility to designate any paid leave as an FMLA leave. Also, any paid leave which is not taken for an FMLA purpose cannot be counted as an FMLA leave.

Notice and Certification

The Department of Labor (DOL) has developed Form WH-380 that an employer may require an employee to use when requesting a medical leave. Although other forms may be used, no form may ask for more information than is asked for on Form WH-380.

Also, an employer may require doctor's certification to verify serious illness. The employer may require a second opinion and if the second opinion differs from the first, the employer may even require a third opinion. However, the employer must pay for any second or third opinion. An employer may require periodic reports (during the leave) regarding the employee's status and intent to return to work. Similarly, an employer may require "fitness-for-duty" certification as a condition of restoration.

Employers can require at least 30-days notice from employees requesting a foreseeable leave and an unforeseeable leave may require a notice "as soon as practicable." The purpose of this notice is to give the employer an opportunity to plan for handling the work during the leave. Therefore, employees are encouraged to give as much notice as possible. Although such encouragement may be beneficial, mandatory notice or medical certification requirement may not be necessary. First, employees typically can not afford and do not ask for such leave unless it is necessary. Second, when dealing with a serious medical or family problem, such requirement will only compound the problem.

Covered employers must post a notice describing the pertinent provisions of the FMLA and employees' right to file a charge. The DOL has issued a notice (WH Publication 1420) that can be duplicated or emulated. If an employer maintains any written document concerning employee benefits, the FMLA information must be also included in that document. If an employer does not have such a document, the employer must provide written information (concerning employee's rights and obligations) to the employee requesting a leave. This requirement may be met by giving the employee a copy of the four-page fact sheet issued by the DOL.

Interplay with State Laws

The FMLA does not supersede state laws that are more generous to employees. Since state and FMLA leave entitlements run concurrently, FMLA does not mandate FMLA leave in addition to the leave required under state laws. For example, if an employee is entitled to 16 workweeks of family and medical leave over two years under a state law, the employee can take 16 workweeks of state leave in the first year and 12 workweeks of FMLA leave in the second year. Since the first 12 workweeks of the 16 workweeks state leave in the first year will also be FMLA leave, the employee is not entitled to 28 workweeks of leave in one year. However, any leave that is not taken for an FMLA purpose, whether due to a more generous employment practice or state law requirements, cannot be counted against FMLA leave.

Since 34 states, the District of Columbia, and Puerto Rico provide some type of leave guarantee, compliance with the provisions of the FMLA and the laws of the states may be very complex. Therefore, to facilitate compliance, the DOL is preparing informational materials which compare the provisions of each state law side-by-side with FMLA. The DOL also will designate, where possible, which provision it considers to be "more generous."

Benefit Accruals and Job Restoration

Employees covered by a health plan are entitled to coverage during FMLA leave. Therefore, employees must continue to pay their share (if any) of the premium during the leave. In the case of a paid leave, premiums are to be paid in the regular manner. In the case of unpaid leave, an arrangement for payment of the employee's share of premiums must be specified in advance. Also, the arrangement must be such which accommodates both administrative convenience for the employer and the financial situation of the employee who would not be receiving a paycheck during the leave. An employer has no obligation to provide health insurance if the employee's payment is more than 30 days late. However, if the employer chooses to continue health coverage by paying both the employer's and employee's premiums, the employer is entitled to recoup the additional payments made on behalf of the employee when the employee returns to work. Similarly, if an employee does not return from an unpaid FMLA leave, the employer is entitled to (with few exceptions) recoup premium paid by the employer during the leave. An employee who does not return to work for at least 30 days is considered to have failed to return to work. If the health coverage is discontinued due to non-payment of premium by the employee, the restored employee cannot be subject to any qualification requirements to resume coverage.

Employees cannot lose any accrued benefits while on FMLA leave. Therefore, it may be necessary to modify life insurance or other benefit programs so that the employer can restore these benefits when employees return from leave. Employees don't accrue seniority or additional employment benefits while on FMLA leave. However, employees must be reinstated to either the same job or a comparable position. Under very limited circumstances, "key" employees may be denied restoration to work. A key employee is a salaried employee who is among the highest paid 10% of the employees. An employer must notify the employee requesting a leave about his or her status as a key employee. A key employee may be denied restoration only if necessary to prevent substantial and grievous economic injury to the employer.

Compliance Suggestions

When assisting clients to comply with FMLA the following items will be beneficial:

* Determine which of the four methods for establishing the 12-month period will be used for leave entitlement;

* Institute procedures to track employee records to test for "1,250 hours a year" requirement;

* Identify minimum time increment for taking an intermittent or reduced schedule leave;

* Establish policies about continuation of fringe benefits (continuation of health care coverage is required) during the leave;

* Set up procedures to collect employees' share of fringe-benefit costs during the leave;

* Formulate a policy for substituting paid leave for FMLA leave;

* Institute notice requirements and certification procedures;

* Adopt forms and procedures for requesting a FMLA leave; and

* Identify equivalent job categories because of restoration after the leave, and transfer during an intermittent or reduced schedule leave.

Finally, it may be beneficial to set up procedures to involve the employees seeking leaves in planning for how their work will be handled during their absence. Such planning will probably relieve anxiety and foster cooperation.