FMLA – employer coverage and employee eligibility

August 28th, 2019

Nancy Van der Veer Holt

Ford & Harrison LLP


Employers covered

The following employers are covered by the FMLA:

  • employers that employ 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year
    • All employees, whether part time or full time, and even temporary workers, are included in the count to reach the 50-employee threshold. Volunteers (if not on the employer's payroll) will not count. Employees employed outside the United States, the District of Columbia, or United States territories are also not counted.
    • Employees on a leave of absence or suspension are counted towards the threshold as long as there is a reasonable expectation that the employee will return to work. Laid-off employees are not counted.
  • a successor in interest of a covered employer
  • companies that jointly employ employees
  • any public agency (regardless of the number of employees)
  • public and private elementary and secondary schools (regardless of the number of employees)
  • the United States, the Senate and House of Representatives, and all U.S. agencies
  • state governments (regardless of the number of employees)
  • local governments (regardless of the number of employees)

Losing coverage

Once an employer meets the 50-employee threshold, it remains a covered employer under the FMLA unless it does not employ at least 50 employees for 20 or more workweeks during the current or preceding year. The 20 workweeks can be from any point in the year - they need not be consecutive.

Example:

An employer has 50 employees during 2017 and until July 2018. However, from August 2017 to December 2017, it never employs more than 45 employees. It therefore had less than 50 employees for all of 2017. Nonetheless, the employer remains covered under the FMLA throughout 2018 because it had more than 50 employees for more than 20 workweeks during the preceding (2017) calendar year.

Determining if an employer is covered by the FMLA

Successor in interest

The FMLA definition of employer also includes “a successor interest of an employer.” In determining whether an entity is a successor in interest to a covered employer, the same factors used under Title VII of the Civil Rights Act of 1964 and other similar legislation are considered. No one factor is dispositive; all relevant factors must be considered. Factors can include:

  • substantial continuity of the same business operations
  • use of the same plant
  • continuity of the workforce
  • similarity of jobs and working conditions
  • similarity of supervisory personnel
  • similarity in machinery, equipment, and production methods
  • similarity of products or services
  • the ability of the predecessor to provide relief.

If an entity is classified as a successor in interest, an employee’s FMLA rights are determined as if he or she had continuous employment by a single employer. For example, a successor in interest that satisfies the employer coverage test must count length of service and hours worked for both the predecessor and the successor in interest to determine an employee's eligibility for FMLA leave.

Although not all courts will take such a broad approach, the Sixth Circuit has held that the "successor in interest" definition can apply even where there has been no merger or transfer of assets between two companies.

In the case of Cobb v. Contract Transp., Inc., the employee worked for Bryd Trucking delivering mail between Denver and Philadelphia. When Bryd Trucking lost the contract for this delivery route, Contract Transport Corp. took it over and hired the same employee as a driver for his former delivery route. Six months later, the employee needed FMLA leave for an illness, which was denied because he had not worked 12 months for Contract Transport Corp. The Sixth Circuit held that Contract Transport Corp. was a successor in interest even though it merely outbid Bryd for delivery routes and the two companies did not exchange any assets. Therefore, the court held that the employee satisfied the 12-month service requirement.

Joint employers

In addition to the special rules governing successor employers, the FMLA also addresses the concept of joint employers. Joint employer relationships commonly arise with temporary or leasing agencies, but can also arise in other contexts. A joint employment relationship exists when two or more businesses exercise some control over the work or working conditions of the employees, even if the businesses are separate entities with separate owners, management and facilities. Some factors that demonstrate that a joint employment relationship exists include:

  • whether the entities share employee services or interchange employees
  • whether one entity acts directly or indirectly in the interest of the other entity in relation to the employee
  • whether the entities are not completely disassociated with respect to the employee’s employment and may be deemed to share control of the employee, whether directly or indirectly, because one entity controls, is controlled by, or is under common control with the other entity.

These factors are not exclusive and all the aspects of a relationship must be considered. If a joint employer relationship exists, the relationship between the joint employers must be further examined to determine which employer is the primary employer and which is the secondary employer. The primary employer generally has the authority or responsibility to: hire, discharge, assign or place the employee, make payroll, and provide employment benefits. According to the FMLA regulations, a temporary or leasing agency is typically the primary employer.

The primary employer has different obligations under the FMLA. The primary employer must:

  • give required FMLA notices to its employees
  • provide FMLA leave
  • maintain health benefits during FMLA leave
  • provide job restoration.

The secondary employer must:

  • accept the employee returning from FMLA leave, assuming it continues to utilize employees from the leasing agency and the agency chooses to place the employee with the secondary employer

In one representative case, an Ohio district court addressed the secondary employer’s obligation to return a temporary employee to work. In Stierl v. Ryan Alternative Staffing & Moore Wallace North America Inc., the employee worked for Ryan Alternative Staffing and was assigned a job with Moore Wallace. When the employee, Ms. Stierl, was released to return to work, Moore Wallace continued to utilize the services of Ryan Alternative Staffing’s employees. However Ryan Alternative Staffing did not contact Moore Wallace, asking it to put Ms. Stierl to work. Thus, the court found for Moore Wallace as the secondary employer since it was only obligated to accept Ms. Stierl if Ryan Alternative Staffing (the primary employer) requested it to do so. 

In a 2014 case, Cuff v. Trans States Holdings, Inc., the 7th Circuit Court of Appeals determined that where a regional manager was on the payroll of one company that only employed 33 employees but also performed services for two other companies that employed over 300 people, the 50-employee threshold was satisfied because the employee count of all three companies should be aggregated. The Court concluded that the manager was jointly employed by all three companies because:

  1. He represented all three companies before the airport where he worked
  2. His business card carried the logos of all three companies
  3. He was listed as the contact person for all three companies. Thus, the manager was eligible for FMLA leave; when looking at the three companies combined, he was employed at a worksite where more than 50 people worked.  

In January 2016, the DOL issued a FMLA fact sheet discussing joint employer status and further clarified the responsibilities of primary and secondary employers. Fact Sheet #28N: Joint Employment and Primary and Secondary Employer Responsibilities Under the Family and Medical Leave Act (FMLA) can be accessed at:

Integrated employer tests

Under the FMLA, the legal entity that employs the individual is the employer. Thus, a corporation is considered a single employer, rather than considering its divisions or groups to each be separate employers. However, where one business entity merely has an ownership interest in another business, the businesses are considered separate employers under the FMLA (unless a joint employer or integrated employer test is met). To determine whether the integrated employer test is satisfied, the entire relationship between the entities is reviewed. The factors considered are:

  • common management
  • interrelation between operations
  • centralized control of labor relations
  • degree of common ownership/financial control.

If this test is satisfied, all employees of each entity that is part of the integrated employer are counted to determine both employer coverage and employee eligibility. This test is frequently used to determine if subsidiaries owned by the same parent company should be considered one employer. If so, all employees for each subsidiary are aggregated to determine if the 50-employee threshold is met.

Employees covered

An eligible employee is an employee of a covered employer who meets all of the following criteria:

  • has been employed by the employer for at least 12 months
  • is employed at a worksite where 50 or more employees are employed within 75 miles of that worksite.
  • has worked for at least 1,250 hours during the 12-month period immediately preceding the commencement of the leave

More details on each of these requirements are discussed in the sections that follow.

Test Applicable to Flight Crews

The Airline Flight Crew Technical Corrections Act, which President Obama signed into law on December 21, 2009, revised the FMLA’s hours of service requirement for flight crewmembers and flight attendants (as defined in FAA regulations). As a result of the revision, a flight crew member now satisfies the hours of service requirement if he or she has both:

  • worked or has been paid at least 60% of the applicable total monthly guarantee for the previous 12-month period
    • For non-reserve-status flight crew members, “applicable total monthly guarantee” means the minimum number of hours for which the employer has agreed to schedule the employee for any given month.
    • For reserve-status flight crew members, “applicable total monthly guarantee” means the number of hours for which the employer has agreed to pay the employee on reserve status for any given month.
  • has worked or has been paid for at least 504 hours during the previous 12-month period.

Re-determining eligibility status

An employee’s eligibility status under the FMLA is not permanent. An employee’s eligibility must be re-determined at the beginning of a new 12-month measuring period. For example, if an employee requests leave October 1 through January 25 and is eligible for FMLA at that time, the employer needs to reevaluate the employee's eligibility on January 1 (assuming this employer uses the calendar year as its 12-month measuring period).

Service that counts toward an employee's 12 months of employment

The employee need not have been employed for 12 consecutive months to qualify. For instance, if an employee worked for “Company ABC” three years ago for 24 months, he or she has satisfied the 12-month length-of-service requirement upon being rehired. The following rules also apply to the 12-month (52-week) service requirement:

  • employees who are maintained on the payroll for any part of the work week will have the entire week count toward the 12-month requirement – even if absent due to vacation, sick leave, or leave of absence
  • the determination of whether an employee has worked 12 months is made as of the date leave commences; thus, if an employee requests leave in advance, the employer must make the eligibility determination as of the date leave would begin
  • time worked as a temporary employee prior to becoming a full-time regular employee is counted toward this 12-month requirement
  • the months that an employee would have worked but for his military service must be combined with the actual months worked prior to military service to determine if the 12-month service requirement is met.

Thus, any time that the employee has worked for the employer will count towards the service requirement. However, time that an employee worked for an employer prior to a continuous break in service of seven years or more need not be counted, unless the break in service was per a written agreement or collective bargaining agreement for either:

  • military service
  • education or child-rearing purposes (per a written agreement or collective bargaining agreement).

Calculating 1,250 hours of service

The 1,250 hours of service follows the Fair Labor Standards Act (FLSA) and looks only at the actual hours of work as defined by FLSA. Thus, time away from work due to vacation, holidays, sick time, FMLA leave, or a strike does not count toward the 1,250 hours.

As with the 12-month service requirement, hours worked as a temporary employee before becoming a regular full-time employee are considered when determining whether the 1,250-hour threshold has been met. Additionally, the hours an employee would have worked but for his or her military service are counted towards the 1,250-hour requirement. This time must be combined with the employee's actual hours worked.

Example:

Beginning January 2, 2008, Amy worked for eight weeks as a temporary worker for ABC Inc. She was hired as a regular full-time employee on March 1, 2008.  As a temporary worker and a full-time employee, Amy worked 30 hours per week. On February 2, 2009, she is involved in a car accident and needs a leave of absence. Amy fulfilled the 12-month requirement as of January 2, 2009, and assuming she worked 30 hours for at least 42 weeks, she exceeded the 1,250 hour requirement. As long as ABC Inc. has 50 employees within 75 miles and Amy has a serious health condition, her leave of absence will be protected by the FMLA.

The burden is on the employer to prove that the employee, whether exempt or nonexempt, did not work the requisite hours. If the employer cannot meet this burden, the employee is deemed to have worked 1,250 hours. Under the FMLA regulations, if an employer does not have sufficient records to clearly identify an employee’s work hours, the employer has the burden to show the employee did not work 1,250 hours in order to deny FMLA on this basis.

According to a DOL opinion letter, an employee's eligibility for FMLA leave under the 1,250-hour requirement is not reexamined once eligibility is determined for a specific, qualifying reason. Thus, if an employee requests intermittent leave for a chronic condition, he or she need only meet the 1,250-hour requirement upon the commencement of leave. If the requirement is met, that employee's eligibility is not reexamined until the next 12-month measuring period begins or he or she requests leave for a different reason.

Determining whether you employ at least 50 employees within 75 miles

An employer must have at least 50 employees within 75 miles of the employee's worksite in order for that employee to be eligible for leave. The distance between worksite locations is measured by surface miles (surface transportation) over public streets, roads, highways, and the like, by the shortest route from the facility where the eligible employee needing FMLA leave is employed. Several courts have concluded that the 75-mile requirement is measured by road miles not “as a crow flies.” The following rules apply:

  • this determination is made at the time the employee gives notice of the need for leave
  • any later changes as to the number of employees employed within this 75-mile measurement do not affect the initial determination that the employee was eligible
  • all employees “maintained on the payroll” must be counted

It is possible for an employer to be covered by FMLA leave, but for none of its employees to be eligible because of this requirement. For example, If an employer employs a total of 200 individuals, but none of its facilities employs 50 or more employees (and each of its facilities are more than 75 miles apart), no employees will be entitled to leave under the FMLA.

Example 1:

If an employer employs a total of 200 individuals, but none of its facilities employs 50 or more employees (and each of its facilities are more than 75 miles apart), no employees will be entitled to leave under the FMLA.

Example 2:

An employer has three plants located on the east coast, each employing 40 employees. The plants are more than 100 miles apart. The employer employs 120 total employees and is, therefore, a covered employer under FMLA. However, no employee at any facility can satisfy the 50 employee within the 75-mile requirements; therefore, no employee is eligible for FMLA leave.

Where employees do not have a fixed worksite (e.g. a particular building/address), employees' "worksite" is defined as either

  1. The site to which they are assigned as their home base
  2. The site from which their work is assigned
  3. The site to which they report.

Example 1:

If a company employs a salesperson who works out of his home in Nebraska, but all facilities are located in Tennessee, there are obviously less than 50 employees within 75 miles of the salesperson’s home in Nebraska. However, if the Nebraska salesperson reports to a Vice President of Sales in Memphis, Tennessee, the Nebraska salesperson’s worksite is the plant in Memphis, Tennessee. If the Memphis, Tennessee facility employs 100 employees, the Nebraska salesperson is eligible for FMLA leave, provided all other requirements have been met.

Example 2:

A construction company headquartered in New Jersey opens a construction site in Ohio. At the Ohio site, a mobile trailer is set up as the on-site office, and this Ohio site will become the FMLA worksite for employees hired locally who report to the mobile trailer for work assignment and the like. However, managers and superintendents from the New Jersey headquarters are sent to Ohio. For these managers and superintendents, the New Jersey headquarters is their worksite. These New Jersey employees are not counted in determining the eligibility of the Ohio-based employees, but are counted in determining the eligibility of the New Jersey employees.