The Most Common FMLA Compliance Mistake Made by Small Business Owners

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Updated October 18, 2023

As a small business owner, you work hard to balance your time between growing your business and managing your workforce. Among laws around labor and compliance, FMLA is usually one of high focus, as the penalties are costly and violations common.

But what’s the biggest and most common mistake made by small business owners around FMLA compliance? The answer may surprise you – it is failing to track employee time accurately.

Why is this an issue? For starters, FMLA eligibility is directly linked to hours worked during a 12-month period. But that’s not the only reason. Review the major advantages of employee time tracking in maintaining FMLA compliance.

The Basics of the FMLA Law

The Family and Medical Leave Act (FMLA) is a piece of federal legislation that was signed into law in early 1993. It allows eligible employees to take job-protected leave for specific medical and family-related reasons while maintaining employer-sponsored health insurance coverage. Examples of specific reasons that qualify for FMLA leave include:

  • The birth of a child
  • To care for a newborn child within a year of birth
  • The placement of a child with the employee through foster care or adoption (within one year of placement)
  • To care for the employee’s own health condition
  • To care for a spouse, child or parent with a serious health condition

Understanding Common FMLA Violations

You probably understand the basics of FMLA law. However, there are key parts to FMLA that you should know to protect your business and workforce.

Overview of FMLA Leave Rules

The FMLA provides up to 12 weeks of protected leave in a 12-month period. Military members can qualify for up to 26 weeks of leave during a 12-month period under the FMLA.

As an employer, you can choose from a variety of 12-month periods, such as calendar years or a fixed 12-month span, such as the business year. It can also include a rolling 12 months from when the employee first takes FMLA leave or a backward rolling 12 months from when the employee uses FMLA leave.

FMLA law provides employees with job-protected unpaid leave. Although the leave provided by law is unpaid, employers can require employees to use paid leave available to them. This requirement can include PTO, state-required paid family leave, or other types of paid leave available to employees.

Qualifying for FMLA leave

Two main qualifications must be met in order for an employee to take FMLA leave. First, the employer must qualify under the rules of the FMLA, and second, the employee has to qualify.

Qualified employers have at least 50 employees within a 75-mile radius. Without at least 50 employees, employers are not required to follow FMLA laws. Small employers who grant FMLA leave without being qualified are at risk of other forced leave, discrimination accusations and other concerns.

Employees must also meet the qualification requirements of working for their employer at least 12 months. Twelve previous months of employment can be met over the preceding seven years. It does not have to be the previous concurrent 12 months before leave is taken. However, employees do have to have worked at least 1,250 hours for their employer in the previous 12 months.

In other words, an employee may have worked for your company for a year and then quit. Upon returning to employment with your company, they work 1,250 hours before needing FMLA leave. Although the employee only returned six months ago, they are eligible for FMLA leave based on both qualifications.

FMLA law assumes employer guilt and places the burden of proof upon the employer. This means that if/when an employee files a complaint against your company for an alleged violation, the burden of proof rests with you, the employer. Unless you have adequate records, the odds of a settlement and penalties from the DOL are extremely high. Timekeeping is an essential function of adequate records for many reasons.

In addition, there are four important steps employers can take to maintain compliance with FMLA.

  1. Train managers to spot and respond to possible FMLA time off. The Department of Labor continues to penalize employers who failed to respond appropriately to FMLA time off.

Did you know? Your employees don’t have to specifically state that they need FMLA time off. In other words, employees don’t need to ask for “FMLA” time off. He or she only needs to provide enough information that the manager should have realized the employee needed time for FMLA-related time. Take, for example, an employee that mentions needing time to care for a family member, a recurring condition, or taking time off for a newborn child. The manager should be trained to ask further questions.

  1. Managers should notify and alert HR that the employee’s absence may be due to FMLA-related reasons. This allows HR to obtain further information from the employee and to notify them of FMLA leave.

FMLA should not be counted against your attendance policy. Employees who are absent for FMLA reasons cannot be penalized for their absences. This includes perceived discrimination. For example, do your managers understand that comments such as “June, I can’t keep covering for you” or “I need to have you back in the office” or “I can’t believe that HR gave you that time off” counts as retaliation and discrimination? Those comments show an attitude of discrimination against an employee who takes FMLA and can poison others in your company against that employee.

  1. Employees must be notified that leave counts as FMLA leave. Unless the employee is notified, the original leave may be simply “awarded leave.” Under FMLA law, it is extremely difficult to retroactively apply FMLA leave.

The DOL provides the following example: Henry plans to take 12 weeks of FMLA leave beginning in August for the birth of his second child. However, earlier in the leave year, Henry took two weeks of annual leave to care for his mother following her hospitalization for a serious health condition. Henry’s employer failed to notify him at the time of his mother’s hospitalization that the time he spent caring for his mother would be counted as FMLA leave. If Henry can establish that he would have made other arrangements for the care of his mother if he had known that the time would be counted against his FMLA entitlement, the two weeks his employer failed to appropriately designate may not count against his FMLA entitlement.

  1. Employers must track employee time and accruals/leave time

Your company’s compliance with FMLA is dependent on your company’s ability to track employee time and FMLA leave time. Without these two records, your company will struggle to prove compliance in the event of a DOL investigation.

The Importance of Time Tracking to Determine FMLA Eligibility

FMLA compliance starts before employees even request to take leave. If you wait until an employee has taken off on FMLA leave, you are likely to find yourself the unlucky recipient of a complaint. You could also be scrambling to meet compliance deadlines and make sure that FMLA rules have been met.

In addition to providing employees with the required notifications, you also need to track employee time before they take leave.

Did you know? Employers need to track employee time for a full 12 months before they take leave! How do you know when an employee is going to take leave with 12 months’ notice?

You don’t. That’s why employee time tracking 100 percent of the time worked by 100 percent of your employees is vital, including exempt employees.

FMLA Compliance Depends on Tracking Part-Time Employees

In theory, if you have a part-time employee who always works the exact number of hours each week, you might be able to get away with FMLA compliance without tracking their time.

But in reality, most part-time employees vary slightly on the actual hours they work each week. For example, an employee scheduled for 25 hours a week may work 28 hours one week and 23 hours the next. And compliance with FMLA requires tracking variable employees’ schedules.

Determining Variable Employees’ Eligibility Under FMLA

Do you have employees who work from home, telecommute or have flexible schedules? This complicates FMLA compliance. If your employee is taking leave in a 12-week chunk, it’s a bit easier. But what if they take an intermittent leave? It is even more complicated if you allow a reduced work schedule for that employee!

And don’t forget: You must be able to prove an employee’s previous hours when they return from FMLA. This is vital for proving that they returned to the same or similar schedule as before FMLA.

Review this example scenario: Sally has worked for you for 12 months. Her schedule varies. Originally, when she was hired, there weren’t as many hours for her to work. She worked about 10-15 hours a week. After that, her hours fluctuated.

Recently, in the last two months, her hours have increased to nearly 35 hours a week. This is due to some vacancies in the schedule and Sally’s willingness to work extra shifts. Now, Sally needs to take some FMLA time and several questions need to be answered. Does Sally have 1,250 hours in the last 12 months? Is she qualified for FMLA leave?

Of course, we aren’t going to go over her entire 12 months of work schedules to determine her average work week. But if you’ve kept track of all her working hours, you can then easily add up all her worked hours over the last 12 months and determine if she has worked 1,250 hours or not.

You determine that Sally does qualify for FMLA leave and she can now take 12 weeks’ leave. But what if she needs to take intermittent leave or have a reduced work schedule? Skip to those sections to find out what to do next.

FMLA Compliance Depends on Tracking Exempt Employees’ Time

Did you know that many employers fail to track exempt employees’ time? Are you one of them?

Although exempt employees by nature aren’t required to work a set number of hours, there are many benefits to tracking their time. The Department of Labor has specific rules regarding the treatment of exempt employees. Typically, exempt employees must be paid a full week’s salary or risk losing exempt status.

However, when an exempt employee takes FMLA leave and that employee has no paid vacation or sick leave left, the employer can dock their pay. Granting FMLA leave to an exempt employee who didn’t yet qualify for FMLA puts the individual at risk of losing their exempt status.

Typically, exempt employees are assumed to work 40 hours a week. But by nature of being exempt, they may work more or less than 40 hours in a given week. One of the biggest benefits of tracking exempt employees’ time is for FMLA compliance.

FMLA Compliance For Overtime Employees

Let’s consider one last employee: June, the employee who works overtime hours. Since June works overtime regularly, she meets her 1,250 worked hours threshold faster than Joe. She has also previously worked for your company, so the 12-month employment requirement is already met. In addition to qualifying for FMLA leave, you must also be able to calculate the average number of hours June works in a week.

Why? June’s average weekly hours prior to FMLA leave will determine the number of FMLA hours she gets when taking intermittent leave and how many hours count toward FMLA leave during an intermittent or reduced work schedule leave.

For example, if June averaged 45 hours of work a week, then she’s eligible in just over 27 weeks. If she works an average of 50 hours a week, she’s eligible for FMLA leave after 25 weeks.

The Importance of Time Tracking to Determine FMLA Intermittent and Reduce Schedule Leaves

Did you know that employees can take up to three different types of leaves through FMLA? They are:

  • FMLA block leave (up to 12 weeks): Taking the full period at once, making FMLA easier to calculate (one full week off counts toward one of the 12 allowed weeks)
  • Intermittent leave (the equivalent of 12 weeks): When an employee takes partial or sporadic days, rather than all at once, such as to seek care or provide care for another, recover, or undergo treatment. Employees taking this type of leave should attempt to schedule it in a way that minimizes disruption to the employer’s business operations.
  • Reduced work schedule leave (the equivalent of 12 weeks): Allowing an employee to reduce their work hours to provide reasonable accommodation under the ADA, improve retention, or boost morale. The difference in the hours worked prior to and during the period is considered FMLA leave.

Determining the Award Hours for FMLA During Intermittent or Reduced Schedule Leave

For any employee who does not take a full block of leave, you must determine how many leave hours are available to that employee. Employee entitlement hours can vary, as can schedules. Let’s take a look at our employees during intermittent FMLA leave.

Do you remember Sally? She worked a fluctuating work schedule prior to taking leave. How do you determine her leave benefit hours when she takes sporadic days off?

Although Sally worked 10-15 hours a week initially and 35 hours a week just before her leave started, she worked many varied weeks in between. You add her total hours for the previous 12 months and find that she worked a total of 1,404 hours in the last 12 months. Now divide that by 52 weeks. You calculate that she averaged a work week of 27 hours over the last 12 months. This gives you a baseline for her award hours.

Next, multiply her average hours each week (27) by 12 weeks. Her award level is 324 hours. This will be vital when calculating her intermittent hours and reduced work hours.

Calculate the employees’ total hours (including overtime) for the previous 12 months. Divide that total by the number of weeks worked. This is your baseline of average weekly hours worked. Multiply baseline by 12 weeks of benefit.

Determining FMLA Hours Used During Intermittent or Reduced Work-Week Leave

When an employee works a regular schedule, intermittent leave is determined by comparing the employees’ work hours during a partial FMLA week against their regular work hours.

If Joe continues to work 40 hours a week but occasionally takes time off for FMLA-related appointments, you can determine his FMLA use the same way as during a reduced schedule leave. Last week, he left early twice and took an entire day off. For the week, he worked 27 hours.

To figure his FMLA use, just subtract the 27 hours worked from his regular schedule of 40 hours. You can take 13 hours of FMLA away from his total benefit of 480 hours.

How Time Tracking Protects Against Legal Risks

As you’ve seen, time tracking is essential for FMLA compliance. Did you know it’s also important to protect your company? FMLA regulations place the burden of proof on employers. When an employee alleges FMLA violations, it is the employer who must prove compliance.

This is not a court of law where employers are innocent and then proven guilty. Employment law assumes employer guilt first. Your company’s lack of documentation will result in a violation of the law.

The following are additional advantages of tracking time:

  • Prevention against awarding too early or too much time
  • Protection against discrimination claims
  • Knowing how to reinstate the employee to a “comparable” job or position

The Problem with Awarding an Employee FMLA Leave Who Hasn’t Earned It Yet

According to FMLA rules, problems can arise when incorrectly providing employees FMLA leave. A company can’t deduct an exempt employee’s salary for FMLA leave if they didn’t actually earn it. In other words, it’s not considered FMLA leave. If you deduct pay for non-FMLA leave you risk them losing their exempt status. If you award an employee FMLA leave before they have earned it, you may have to award them real FMLA leave once they actually qualify.

Here’s an example: Pete takes four weeks of FMLA leave for the birth of his baby. Although he’s worked 1,250 hours, he’s only been employed with the company for 11 months. As a result, those four weeks of time off were not qualified FMLA leave time. Unfortunately, six months later, Pete’s mom is in a car accident and needs critical care. Pete then takes FMLA to care for his mom.

How much time does he have left? Twelve weeks, because the first four weeks he took off didn’t count – he didn’t qualify yet.

If another employee tries to take more than 12 weeks off under FMLA laws, they could take your company to court over discrimination concerns. And “we didn’t know” isn’t an excuse that will hold up in a court of law. It’s vital for companies to track time to ensure that every employee who uses FMLA leave is legally eligible to do so.

FMLA Compliance: Reinstating Employees to a Comparable Job Position

Prior to taking leave, Sally was regularly working 35 hours a week for three or four weeks. Now, that same job position only requires about 30 hours a week. When you inform Sally of this fact, she informs you that she “understands FMLA law and she must be reinstated to a similar position as she had before.”

What will you do? Easy! Since you already know that Sally’s average work week was 27 hours, you can now show that she is receiving a comparable number of hours after her leave. Once again, proper timekeeping has saved your company from a potential FMLA disaster!

Automated Timekeeping is the Best Solution

Did you know that as many as 40 percent of SMBs maintain paper timesheets? Paper timekeeping can nearly be considered the same as no timekeeping, as documents can get lost or destroyed, and employees can track time inaccurately.

Your business needs automated timekeeping. It provides accuracy and maintains compliance, protecting you against legal concerns. Considering that the average DOL penalty is over $45,000, going to court over a violation isn’t something you want to face.

Automated timekeeping allows you to prove:

  • That employees maintained the same types of schedules as before their leave
  • Which employees did and did not qualify for FMLA leave based on their previous 12 months of employment
  • Compliance with intermittent leave regulations while knowing when the full period been satisfied

Explore WorkforceHub, a powerful time-tracking solution designed for small businesses. It’s affordable and user-friendly yet packs all the features needed to ensure compliance.

Simplify HR management today.

Simplify HR management today.

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