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The Labor & Employment Report

Third Party FMLA Administrators

Posted in Employee Leave (FMLA and ADA), HR Compliance, Workplace Trends

Family and Medical Leave Act compliance can be one of the more challenging tasks employers face.  Some employers attempt to avoid the headache of FMLA administration by hiring a third-party administrator.  But employers beware (!) - outsourcing will not solve all FMLA problems.  An employer still needs to make sure it knows what is happening with an employee’s leave status.  A lack of communication between the employer and the administrator can lead to FMLA liability, as vividly demonstrated in the case of Shockley v. Stericycle, Inc.

In that case, a company hired a third-party administrator to manage its FMLA leave process for employees.  An employee requested FMLA leave and there was some confusion as to whether he needed block time or intermittent FMLA leave.  The employee was given one set of directions by the FMLA administrator and contradicting information from his supervisor and the company’s HR and benefits representatives.  His request for FMLA leave was ultimately denied because the company managers would not permit him to submit additional information as requested by the administrator.

This led to a cascade of unfortunate events.  Because the employee’s FMLA request was denied, his leave was considered unprotected and he was disciplined for attendance issues.  Then because of his attendance issues, he was told by his supervisor that he would not receive a raise.  When the employee walked out of the meeting with his supervisor in anger, he was then terminated for insubordination.  (Reminds me of the old children’s rhyme – for want of a nail, the shoe was lost…)

The employee then sued  his employer as well as individual defendants – the head of his department, the HR director, and benefits administrator.  The individual defendants argued that they should not be liable under the FMLA because they had no direct supervisory authority over the employee.  Sadly for them, the Court disagreed and found that each of them exercised some control over the terms of the employee’s employment.  So one of the lessons of this case is that management officials (and not just direct supervisors) can be held individually liable under FMLA.  That should provide serious incentive to all managers to make sure they comply with the FMLA.

The second lesson is that employers need to talk to their third-party administrators, to make sure everyone is on the same page about an employee’s leave request.  In the Shockley case, given the complete lack of communication between the company and its third-party administrator and the resulting conflicting instructions from all involved, the employee seems to have pretty strong claims that the defendants could be liable for interfering with the his right to take FMLA leave and for retaliating against the employee for trying to exercise his FMLA rights.  And all of this could have been avoided with a little communication.