IRS Issues Guidance FAQs Regarding the Paid Family Leave Federal Tax Credit

By Megan G. Holstein on

This week, the Internal Revenue Service (IRS) issued FAQ guidance regarding the employer tax credit for paid family and medical leave. As a reminder, the Tax Cuts and Jobs Act of 2017 (the Act) provides a tax credit to employers that voluntarily offer paid family and/or medical leave to employees. The FAQs clarify some of the requirements in Section 45S of the Act that an employer’s paid family and/or medical leave policy must include. The FAQs also clarify other details, such as the basis for the credit and the tax credit’s impact on an employer’s deduction for wages paid to an employee who is on a qualifying leave.

For information on how to determine if your company can take advantage of the paid family and medical leave tax credit, read our earlier article on this topic. You can estimate your company’s potential annual tax savings using the Jackson Lewis Paid Family Leave Tax Credit Calculator.

Are You Preparing for Washington Paid Family and Medical Leave?

By Megan G. Holstein on

By the end of this year, employers with employees in the state of Washington must be ready to comply with last summer’s newly-enacted a paid family and medical leave law. Since the law’s passage, Washington has been busy fine-tuning the program and providing updates. Recently, Washington announced that employers with employees in the state of Washington can begin submitting their voluntary paid family leave plans this summer through the state’s online portal. However, employers must first decide whether to offer the paid family leave benefits through a voluntary plan, or use the state program and remit employee contribution premiums.

By way of background, in 2007 Washington previously passed a paid family and medical leave law but never funded the program. After a decade of trying to enhance or repeal the 2007 law, in July 2017, Washington passed Senate Bill 595c a bill that expanded upon the original concept in the 2007 law and provided funding to the Employment Security Department (ESD). The law will be effective soon: employers must start payroll deductions, premium remittance, and reporting obligations on January 1, 2019. Employees can apply for paid family leave benefits beginning on January 1, 2020.

Washington paid family and medical leave law provides partial wage replacement to an employee who needs leave due to the employee’s or a covered family member’s illness or injury, to bond with a newborn or newly placed child, and for certain military connected events. Wage replacement benefits range from a weekly minimum of $100 to a weekly maximum of $1,000, adjusted annually, with the exact benefit determined by the employee’s earned wages, state median income, and other factors. The length of benefits depends on the leave reason:

  • Medical Leave: employee’s own serious health condition – 12 weeks per 52 consecutive calendar weeks
  • Family Leave: care for a family member with a serious health condition, bonding, or military exigency – 12 weeks per 52 consecutive calendar weeks
  • Combined paid family and medical leave benefits maximum – 16 weeks per 52 consecutive calendar weeks
  • Extended medical/pregnancy leave: Combined maximum leave extended to 18 weeks if the employee experiences a serious health condition with a pregnancy that results in incapacity

Employers with employees in states like California, New Jersey, Rhode Island, and New York know that setting up a paid family and/or medical or disability program and complying with the state-mandated law is no easy task. In Washington, employers have options and should begin weighing them now to prepare for January’s employer obligations. If an employer wants to offer paid family and medical leave benefits directly to employees outside of the state program, they can do so, but must meet certain criteria and receive approval from ESD.

Jackson Lewis attorneys have assisted employers with their voluntary programs and statutory benefit law compliance in other states and are ready to help employers with Washington’s fast-approaching paid family and medical leave law.

New Jersey Legislature Passes Paid Sick Leave Bill

By Beth L. Braddock and James M. McDonnell on

On April 12, 2018, the New Jersey State Senate, by a vote of 24-12, passed the New Jersey Paid Sick Leave Act (the “Act”). The Act, which passed the Assembly last month by a 50-24 margin, requires businesses of all sizes to provide up to 40 hours of paid sick leave to employees during an employer-established benefit year. The Act, which Governor Phil Murphy pledged to sign, expressly preempts municipal paid sick leave ordinances passed in cities and towns such as Newark, Morristown, and Paterson, in an effort to provide uniform obligations to businesses operating within the State. Read more about the Act here.

Must an Employer Pay for Frequent FMLA Breaks?

By Megan G. Holstein on

Is it compensable time when an employee takes frequent, 15-minute breaks each hour due to the employee’s serious health condition? Today, the United States Department of Labor (DOL) answered this question in a hot-off-the-press opinion letter, verifying that FMLA-covered breaks are not compensable.

In today’s opinion letter, the DOL confirmed that frequent, 15-minute breaks taken each hour and necessitated by an employee’s serious health condition is uncompensated time because the breaks are taken for the employee’s, not the employer’s benefit. The DOL noted, however, that employees who take FMLA-protected breaks must receive as many compensable rest breaks as their coworkers receive:  “For example, if an employer generally allows all of its employees to take two paid 15-minute rest breaks during an 8-hour shift, an employee needing 15-minute rest breaks every hour due to a serious health condition should likewise receive compensation for two 15-minute rest breaks during his or her 8-hour shift.”

The opinion letter sets forth the legal principles behind the compensability of short rest breaks that primarily benefit an employer and distinguished FMLA-leave to take frequent breaks as primarily for the employee’s benefit due to his or her serious health condition. The DOL cited both the unpaid nature of FMLA leave and a case where the court found an accommodation of frequent rest breaks due to an employee’s back pain need not be paid.

In 2010, the DOL stopped issuing opinion letters in exchange for more broad-based Administrator Interpretations. Then in June 2017, the DOL announced it would reinstate issuing opinion letters and updated its website to assist employers and employees in requesting a letter. The DOL has issued 19 opinion letters since reinstating the practice, all related to the Fair Labor Standards Act (FLSA). Today’s opinion letter was also issued pursuant to the FLSA, but addresses a topic that employers struggle with when administering unpaid, intermittent FMLA – whether and how to legally reduce pay when an employee is intermittently absent.

Opinion letters can be a great tool for employers to navigate tricky FMLA and FLSA compliance issues. Receiving an opinion letter can later  establish a good faith defense against liability. If you have a tricky FMLA question, Jackson Lewis attorneys can help untangle the web of leave of absence laws and regulations and assist in drafting a request for an opinion letter when warranted.

Sick Leave Entitlements on the Rise in CA? A Pending CA Bill Is Looking to Do Just That.

By Susan E. Groff and Benjamin A. Tulis on

Just three years after the enactment of California’s paid sick leave law under the Healthy Workplace Healthy Family Act of 2014 (AB 1522), a new bill has been introduced seeking to increase the amount of sick leave employers must provide employees under California law. The bill, AB 2841, was introduced on February 16, 2018, by Assemblywoman Lorena Gonzalez Fletcher. Assemblywoman Gonzalez Fletcher authored California’s existing paid sick leave law.

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Can We Fix It? Eighth Circuit Answers: Yes, We Can!

By Catherine A. Cano on

ADA Title III claims have become a trap for many unsuspecting businesses. The claims often lead to protracted litigation driven by attorney fees rather than the underlying issue.

A recent decision from the U.S. Court of Appeals for the Eighth Circuit offers a potential “fix” for employers. In Davis v. Anthony, Inc. Case No. 16-4051 (8th Cir. March 29, 2018), the court affirmed the dismissal of a disabled patron’s Title III lawsuit based on the restaurant’s quick remedial action.

The complaint specifically alleged the restaurant did not have the requisite number of accessible parking spaces, the parking spaces lacked access aisles and two spaces lacked the requisite signage.

The defendant remedied the alleged violations and filed a motion to dismiss based on mootness and standing. Title III of the ADA only allows individual plaintiffs to seek injunctive relief (e.g., an injunction ordering the defendant to fix the accessibility violations) and reasonable attorneys’ fees. Thus, the defendant argued that there was not a case for the court to decide, because the issues raised in the Complaint no longer existed.

The U.S. District Court for the District of Nebraska granted the motion, dismissed the case, and denied the plaintiff’s request for attorneys’ fees.

On appeal, the plaintiff argued the lawsuit was not moot because the defendant’s evidence had not addressed whether the slope of the parking spaces complied with the ADA. The plaintiff claimed that the defendant waived its right to argue the claims were moot, because it did not provide evidence of remediation when it filed the motion to dismiss. The plaintiff also argued the court prematurely dismissed the lawsuit, and should have allowed her to conduct discovery to determine what other ADA violations existed and about the issues raised in the lawsuit.

The Eighth Circuit rejected each of these arguments. First, the plaintiff did not reference the slope of the parking space in the complaint, so it was not part of the lawsuit. Second, courts have wide discretion to accept evidence regarding jurisdictional issues, like mootness. Third, the plaintiff was not entitled to discovery regarding potential ADA violations inside the restaurant, because she had not gone into the restaurant and was not injured by any alleged barriers inside (e.g., she lacked standing). The plaintiff also failed to establish she was entitled to additional discovery regarding the issues raised in the complaint.

Concerns about abusive practices in Title III litigation has garnered the attention of several states, including Arizona, California, Florida and Minnesota. Federal law does not require Title III plaintiffs to give businesses notice or an opportunity to remedy the alleged violations before filing suit. And, some businesses are forced to choose between settling for an amount that may be more than what the plaintiff could recover under the law and potentially paying thousands of dollars in attorney’s fees to defend the case.

This decision is a good reminder that there may be a third option – fix the issues specifically raised in the complaint and seek to dismiss the case as moot.

What Am I Doing Wrong?? Common FMLA Mistakes

By Sheri L. Giger and Jenna M. Decker on

“What did I do wrong?” and “Am I doing this correctly?” are frequent questions from clients regarding FMLA administration.  This is the fourteenth in a series highlighting some of the more common mistakes employers can inadvertently make regarding FMLA administration.

Not fully analyzing the impact of an adverse employment action taken close in time to FMLA leave.

The FMLA is not designed to shield an employee from termination to which the employee would otherwise be subject.  However, employers should be aware of the significant role that “temporal proximity” of termination to a protected leave can play in an FMLA lawsuit.  Avoiding liability is sometimes more complicated than simply being justified under the law.

In Ethridge v. Nichols Aluminum – Ala., LLC, No. 5:14-cv-02126, (N.D. Ala. Aug. 31, 2016), the employee was terminated immediately upon returning to work from FMLA leave.  The court stated that all an employee needed to show to state a claim for FMLA retaliation is that the employee took protected leave and was terminated shortly after returning to work.  The court stated,  “the timing of Ethridge’s request to return to work is close enough in temporal proximity to establish a causal connection between his FMLA leave and his termination.”

However, in Lopez v. Lopez, et al., No. 2:10-06374 (D.N.J. Feb. 4, 2014), even though the employee, as in Ethridge, had stated a valid FMLA claim due to close timing, the employer was able to respond with evidence of a valid reason for termination, unrelated to FMLA leave.  In Lopez, the employer was able to establish that the reason for termination was based on the employee’s disruptive, unprofessional conduct, and not related to FMLA leave.

In Lopez, the court ultimately found that the employer acted lawfully – but only after the employee filed a federal lawsuit and the parties engaged in litigation.

Because the courts place significant importance on the timing of FMLA leave to an employee’s termination from employment, employers should fully analyze the potential impact of such an employment decision before moving forward with termination or other adverse employment action, such as discipline. Clear documentation supporting the non-FMLA reason for an adverse employment action is crucial in supporting the non-FMLA reason for termination.

Supreme Court Declines Review of ADA Leave Obligations

By Whitney P. Cooney on

Sometimes the actions a court doesn’t take can have a very big impact. The Supreme Court’s April 2, 2018 decision not to review a recent Seventh Circuit ruling is just one of the cases.

In Severson v. Heartland Woodcraft, Inc., a widely-publicized decision relating to the availability of extended leave as a reasonable accommodation under the Americans with Disabilities Act, the Seventh Circuit held that a two-to-three month leave of absence, following the exhaustion of an employee’s leave entitlement under Family and Medical Leave Act, was not a reasonable accommodation under the ADA. In doing so, the Seventh Circuit characterized the ADA as an “anti-discrimination” statute, as opposed to a “leave entitlement” statute.  The Severson decision was recognized as a major victory for employers in the Seventh Circuit, who have long been forced to navigate the ADA’s mandate of leave as a reasonable accommodation with little concrete guidance regarding the duration of leave to be provided. Although the Seventh Circuit’s decision made clear that under certain circumstances, leave may still be an appropriate reasonable accommodation under the ADA, it nonetheless provides a level of clarity regarding employers’ obligations under the ADA that did not previously exist at the federal appellate level.

Of course, the Seventh Circuit’s decision would have been of little value if it were overturned by the U.S. Supreme Court.  In his Petition to the U.S. Supreme Court, Severson asked the Court to resolve the issue of whether there exists a per se rule that a finite leave of absence cannot be a “reasonable accommodation” under the ADA.  In response, Heartland Woodcraft framed the issue as one of whether an individual who requires a multi-month leave following three months of FMLA leave can be considered a “qualified individual” under the ADA, in light of the fact that the extended leave would not enable the employee to perform the essential functions of his or her job.

Ultimately, the U.S. Supreme Court declined to review the Seventh Circuit’s decision and, in doing so, at least for the moment, leaves in place the Seventh Circuit’s finding that the ADA does not, as a matter of course, require employers to provide a multi-month leave following the exhaustion of FMLA leave.  The Tenth and Eleventh Circuits have adopted similar positions in ADA continuous leave accommodation cases.  See our blog posts of those decisions here and here.

FMLA And ADA Claims Put To Bed Where Employer Did Not Know Employee Had Sleep Apnea At The Time Her Employment Was Terminated.

By Daniel P. Schwarz on

Sometimes what you don’t know can help you. In Guzman v. Brown County, a 911 Dispatcher who was fired after being late repeatedly had her FMLA interference and retaliation claims sent to dreamland by the Seventh Circuit Court of Appeals. The Appeals court held that the moribund claim should stay that way because the Dispatcher could not show that she suffered from sleep apnea at the time of her termination or that the supervisor who made the decision to terminate her employment knew of her claimed history of apnea when he reached that conclusion. The Court also declined to resurrect her ADA claims for the same reasons.

Guzman started working as a dispatcher at the County’s 911 call center in 2002. In 2006 she was diagnosed with sleep apnea and treated for it. In 2008 she had gastric bypass surgery, which appeared to alleviate her sleep apnea. Shortly afterwards, she threw away her CPAP machine. In the second half of 2012 and early 2013 she was late for work on four occasions. After the fourth incident Guzman received a written warning that if she were late again, she could be fired.

Guzman was unable to comply and was, within days, late again. Her supervisor decided to fire her. Although she brought a doctor’s note to the meeting at which she was terminated, it said only that she “most probably” had sleep apnea and that she “needs to be re-tested and treated.” In the Seventh Circuit’s view, it was not clear from that note that Guzman even suffered from sleep apnea at the time she was fired. What was clear was that she was not receiving inpatient care for sleep apnea or receiving continuing treatment for it. Consequently, she did not show she had a serious health condition qualifying her for FMLA leave.

The court also put to rest the dispatcher’s argument that the County had notice of her FMLA claim at the time of her termination meeting.It was undisputed that the decision to fire had already been made by a supervisor who had no notice of her sleep apnea before the meeting at which she presented the note from her physician. For these reasons the Court declined to breathe life into her FMLA interference or retaliation claim.
Her ADA discrimination and accommodation claims fared no better. The court did not need to reach the question of whether Guzman had a disability because the evidence was uncontroverted that her supervisor did not know that she had sleep apnea prior to deciding to fire her. As a result she could not prove that she suffered an adverse employment action because she was disabled or because of a requested accommodation.

New York Federal Court Finds Alcoholism Is “Impairment,” Not Necessarily A Disability, Under the ADA

By Kimberly N. Dobson on

It seems axiomatic that a disability discrimination claim requires the plaintiff to suffer from a disability.  In Johnson v. N.Y. State Office of Alcoholism & Substance Abuse Servs., No. 16-cv-9769 (RJS) (S.D.N.Y., March 13, 2018), a judge in the Southern District of New York dismissed a pro se plaintiff’s complaint for failure to allege that his alcoholism impaired a major life activity, as required by the Americans with Disabilities Act (“ADA”).

Plaintiff worked for the New York State Office of Alcoholism and Substance Abuse Services (“OASAS”) as an Addiction Counselor Assistant. He filed a lawsuit alleging discrimination based upon his purported disability – alcoholism – under the ADA.  The court granted OASAS’ motion to dismiss finding Plaintiff failed to allege he suffered from a “disability” as defined under the ADA.  In other words, Mr. Johnson failed to allege:

  • he suffered from a physical or mental impairment that substantially limited one or more major life activities; or,
  • he had a “record of such an impairment”; or,
  • that he was “regarded as having such an impairment” by OASAS.

Mr. Johnson’s self-identification as a “recovering alcoholic,” without more, could not save his claim.  The court noted that “[a]lthough alcoholism is considered an ‘impairment’ under the ADA…more than a physical or mental impairment is required to satisfy the definition of disability.”  Specifically, the court held “a plaintiff who alleges that he is disabled must demonstrate not only that he…was actually addicted to drugs or alcohol in the past, but also that this addiction substantially limits one or more of his…major life activities.”  Mr. Johnson failed to do so.

This case serves as a great reminder that although the term “disability” is construed broadly under the law, whether an individual’s ailment is deemed a “disability” under the law still requires an individualized assessment.

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