How an FMLA Audit Can Protect Your Small Business and Ensure Compliance

Updated December 19, 2023

The Family Medical Leave Act (FMLA) exists to help employees balance personal needs with the demands of the workplace. Complying with the regulations associated with this law is essential for eligible businesses. Unfortunately, many employers fail to do so, exposing them to costly fines and penalties. Poor compliance with the FMLA can also result in legal risks.

The Department of Labor announced in 2022 that it planned to increase FMLA audits on eligible employers. Finding technical violations or non-compliance can incur significant consequences that have a financial impact on a business. Additionally, those who fail FMLA audits may also face additional audits around any additional potential violations of DOL wage and hour laws.

Learn more about the most common FMLA violations performed by businesses and review a checklist to make sure your company remains in compliance.

Common FMLA Violations

There are many situations that violate the terms of the FMLA. Some of the most common mistakes made by employers include:

• Refusing FMLA leave to an eligible employee
• Discouraging employees from using FMLA leave
• Manipulating an employee’s work hours to avoid responsibilities under FMLA
• Using FMLA leave or request for leave a negative factor for employment actions such as disciplinary actions or refusing a promotion
• Counting FMLA leave under “no-fault” attendance policies
• Failing to recognize leave as FMLA leave

These mistakes can be caught before a Department of Labor investigation through an internal audit. A careless manager can put the entire company at risk through thoughtless comments regarding FMLA leave. It is vital to make sure that your company has the policies and the training in place to ensure FMLA compliance.

FMLA Compliance Checklist for Employers

Most employers don’t intend to violate employment law. Such situations often occur when FMLA is an afterthought or due to human error. Reviewing this FMLA compliance checklist can help you protect your business and employees.

1.Maintain a Written, Up to Date FMLA policy

Your employee handbook is the first defense against FMLA violations. Keep your policy updated to include any new changes in FMLA law. Employee handbooks should be distributed and electronically accessible to your employees through an employee portal.

Your FMLA policy should include:

1. 1. Eligibility requirements for FMLA
   2. Allowed reasons for FMLA.
   3. Any unique requirements around specific reasons for taking FMLA leave.
   4. Whether leave is paid or unpaid.
   5. Employer obligations.
   6. Employee obligations.
   7. Right to benefits during leave.
   8. Prohibitions on outside work during leave.
   9. The definition of a 12-month FMLA year (whether it’s the calendar year or another 12-month period)

2. Outline FMLA Procedures and Practices

When creating an FMLA policy, make sure to consider questions that may arise when employees request to take leave. Examples include:

• How should managers designate FMLA leave in the time and labor tracking system?
• Should all leave requests go through individual managers or the HR department?
• Is your organization providing timely notice to eligible employees?
• Are all FMLA-related procedures in compliance?
• How is intermittent leave calculated?
• Will employees exhaust their PTO at the start of the leave period?

As new questions come up during the process of approving and managing FMLA leave, incorporate them into your procedures and practices to keep everyone on the same page.

3. Outline Call-In Procedures for Leave

Although some FMLA leave is predictable, such as taking time off to bond with a newborn child or recover from a planned medical treatment, other situations are not so straightforward. Sudden emergencies, injuries, or illnesses can necessitate taking FMLA leave.

Make sure your company policy outlines what an employee should do in the event that they need to take immediate FMLA leave. Who should they call, how much notice should they attempt to give, and what should happen if the employee can’t reach their supervisor? These are things to consider when navigating this aspect of your FMLA leave procedures.

Some states have laws in place governing the use of family leave, parental leave, and other leave covered under the FMLA. Sick leave laws in individual states, cities, and counties may also come into play. If the employer requires the substitution of leave with paid leave or PTO. New

4. Outline the Medical Certification Process

Employers may choose to allow reduced work schedules under FMLA leave. However, such a request may require medical certification, which should be clearly outlined, along with how intermittent leave is calculated and advanced.

5. Post All Required Documentation

The Department of Labor requires the posting of the current FMLA poster in a prominent location where employees and applicants can see it. If your company employs remote workers, share the documentation regularly.

6. Maintain Current FMLA Forms

All eligible employees should have access to FMLA forms that are compliant with regulations. These forms include:

• Eligibility notice
• Certification forms
• Designation notice
• Rights and responsibilities notice

7. Maintain Complete Records

Your company should remain in the habit of keeping complete and accurate employee records. This is especially crucial when dealing with FMLA leave. All records relating to this type of leave must be kept for at least three years, and stored separately from personnel files.

FMLA records should contain:

• The dates during which FMLA leave was taken
• Time and labor data
• The number of weeks, days, or hours taken
• Identifying information about the employee
• Any other relevant forms, such as benefit documents, extension requests, employer/employee FMLA notices, certification forms, medical records, etc.

Employers who rely on manual timekeeping are at risk of FMLA violations due to incomplete records. They may also be at risk of having to provide additional FMLA leave if they provide FMLA leave in error to an employee who has not qualified for FMLA leave. Additionally, inadequate records put employers at risk of assumed discrimination if employees are treated differently due to various managers, policies, or positions and inadequate record-keeping.

8. Ensure Compliance with the Americans with Disabilities Act

The Americans with Disabilities Act (ADA) is another law that prevents discrimination against employees with disabilities. Make sure your attendance policy aligns with the regulations outlined in the ADA.

9. Train Managers and HR Professionals

Every member of your team involved in the FMLA approval or management process should undergo training to ensure compliance and consistency. They should be aware of the organization’s specific procedures and policies. Additionally, training should cover how managers should:

• Handle requests for FMLA leave
• Know when to suggest that an employee take FMLA leave
• Avoiding actions that may be seen as retaliatory
• Managing everyday FMLA tasks and interactions

Invest in Recordkeeping Solutions that Support FMLA Compliance

Managing the regulations associated with the FMLA can feel complex, but the process doesn’t have to cause stress. In fact, its purpose is to allow employees to avoid feeling stressed about losing their employment when they need to take extended periods of time away from work.

Conduct an FMLA audit regularly and make sure that your managers are educated around how to respond. Then, when you have employees who may qualify for FMLA leave, the process can run smoothly and stay in complete compliance.

If your company does not have good recordkeeping processes around employee schedules, timekeeping, and payroll, which are vital to FMLA compliance, it’s time to make a change. Explore timekeeping solutions, like WorkforceHub, that make it easier to automate recordkeeping processes and ensure access to the data needed for compliance.