On November 17, 2008, the Department of Labor’s Wage and Hour Division published its long-awaited final rule interpreting the Family and Medical Leave Act of 1993, as amended. The final rule becomes effective on January 16, 2009, and updates the FMLA regulations to implement new military family leave entitlements enacted as part of the 2008 National Defense Authorization Act that was signed into law by President Bush on January 28, 2008. While the final rule incorporates significant changes to what already is a very technically complex and difficult statute, it also clarifies general FMLA rights and obligations for workers and employers. The following article presents a basic overview of the substantive areas of the law affected by the final rule.

As part of the 2008 National Defense Authorization Act that was signed into law by President Bush on January 28, 2008, Congress amended the Family and Medical Leave Act to assist members of the military and their families. As a result of this legislation, there are two major additions to the FMLA:

1. Leave to Care for a Covered Servicemember With a Serious Injury or Illness: 29 C.F.R. §§ 825.127 and 825.310

Permits a “spouse, son, daughter, parent, or next of kin” to take up to 26 workweeks of unpaid leave to care for a member of the Armed Forces, including a member of the National Guard or Reserves, who is undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list, for a serious injury or illness.

(a) The final rule defines “son or daughter” as including adult children for purposes of the covered servicemember leave entitlement. Also the rule defines “next of kin” as the nearest blood relative, other than the covered servicemember’s spouse, parent, son, or daughter, in the following order of priority: (1) blood relatives who have been granted legal custody of the servicemember by court decree or statutory provisions; (2) brothers and sisters; (3) grandparents; (4) aunts and uncles; and (5) first cousins.

If the covered servicemember has specifically designated in writing another blood relative as his or her nearest blood relative for purposes of military caregiver leave under the FMLA, that family member will be deemed next of kin. In such circumstances, only that designated next of kin may take FMLA leave to care for the covered servicemember. When a covered servicemember does not make such a designation, and there are multiple family members with the same level of relationship to the covered servicemember, all such family members shall be considered the covered servicemember’s next of kin.

(b) The 12-month period to be used for purposes of tracking this leave entitlement begins when the employee starts using his or her leave. Therefore, the 12-month period utilized for tracking other forms of FMLA leave may not be utilized for purposes of tracking this entitlement. If the leave covers “covered servicemember leave” protections and protection under the regular FMLA provisions, the employer shall designate the leave as “covered servicemember leave.”

An employee is not entitled to more than 26 weeks of FMLA leave during the 12-month period that commences with the need for leave. Therefore, an employee is not entitled to 26 weeks of leave to care for a family member under this provision, plus an additional 12 weeks of leave for other FMLA-qualifying reasons.

Significantly, the regulations make clear that an employee may utilize the 26-week entitlement for each servicemember and for each illness or injury incurred. Therefore, an employee may take 26 weeks of leave in consecutive 12-month periods for family members covered by this provision.

(c) A “serious injury or illness” means an injury or illness incurred by a covered servicemember in the line of duty on active duty that may render the servicemember medically unfit to perform the duties of his or her office, grade, rank or rating.

(d) The final rule contains optional certification forms for this leave entitlement, and provides that a certification can be requested from an “authorized healthcare provider.”

(e) Employees may take this leave on an intermittent or reduced-schedule basis.

2. Leave Because of a Qualifying Exigency: 29 C.F.R. §§ 825.1262, 825.309

Permits an employee to take FMLA leave for any “qualifying exigency . . . arising out of the fact that the spouse, son, daughter, or parent of the employee is on active duty (or has been notified of an impending call or order to active duty) in the Armed Forces in support of a contingency operation.” The final rule identifies eight different circumstances that will qualify as an “exigency”: (1) short-term notice deployment; (2) military events and related activities; (3) childcare and school activities; (4) financial and legal arrangements; (5) counseling; (6) rest and recuperation; (7) post-deployment activities; and (8) additional activities provided that the employer and employee agree that such activities shall qualify as an exigency.

(a) The final rule also makes clear that exigency leave is limited to circumstances involving a family member in the National Guard or Reserves or a retired member of the regular armed forces or the reserve. This entitlement dos not apply to employees who have family members in the Regular Armed Forces.

(b) Exigency leave is an additional qualifying reason available for an employee to take the standard 12-week leave entitlement provided by the FMLA. It is not a 12-week entitlement in addition to the standard 12-week entitlement.

(c) The first time an employee requests FMLA exigency leave, an employer may require that the employee provide a copy of the family member’s active duty orders or other reasonable documentation; however, an employer may only request this information once per family member. The final rule also provides the type of information an employer can request as certification of the need for leave in addition to the active duty orders, and under what circumstances an employer can verify the information. There are no second opinion or recertification provisions associated with this type of leave.

(d) Employees may take this leave on an intermittent or reduced schedule basis. Other FMLA regulatory requirements generally apply including the eligibility requirements and the substitution of paid leave. In addition to the amendments to the Act related to military leave, the final rule also affects substantive areas of the current law. The following provides a summary of some of the most notable regulatory changes. 1. Eligible Employee: 29 C.F.R. § 825.110(b)(1)

(a) The final rule clarifies that, although the twelve months an employee must be employed need not be consecutive, employment periods prior to a break in service of seven years or more need not be counted in determining whether the employee has been employed by the employer for at least twelve months.

(b) The final rule also clarifies that if an employee is not eligible for FMLA leave at the commencement of leave because the employee has not met the 12-month length of service requirement, the employee may meet this requirement while on leave, because leave time counts toward length of service. The final rule confirms that the leave should be designated as FMLA leave at the point the employee becomes eligible.

2. Holidays: 29 C.F.R. § 825.200(h)

The final rule reaffirms the DOL’s interpretation of the current regulations that if leave is taken in a period greater than or equal to one workweek, any included holidays count against the 12-week leave entitlement. The final rule also provides that when the employee is taking leave in increments less than one workweek, the leave counts against the FMLA entitlement only if the employee would have been required to work on the holiday.

3. Scheduling of Intermittent or Reduced-Schedule Leave: 29 C.F.R. § 825.203

Under the final rule, employees must make a “reasonable effort” (as opposed to a mere “attempt”) to schedule leave so as not to disrupt unduly the employer’s operations; however, the DOL makes clear that “if the healthcare provider determines that there is a medical necessity for a particular treatment time, the medical determination prevails.”

4. Increments of Intermittent Leave: 29 C.F.R. § 825.205(a)

(a) The final rule states that the employer must use an increment no greater than the shortest period of time that the employer uses to account for use of other forms of leave provided that it is not greater than one hour and provided further that an employee’s FMLA leave entitlement may not be reduced by more than the amount of leave actually taken.

(b) If an employer accounts for use of leave in varying increments at different times of the day or shift, the employer may not account for FMLA leave in a larger increment than the shortest period used to account for other leave during the period in which FMLA leave is taken. If an employer accounts for other forms of leave use in increments greater than one hour, the employer must account for FMLA leave use in increments no greater than one hour. An employer may account for FMLA leave in shorter increments than used for other forms of leave.

(c) The final rule also states that where it is physically impossible for an employee using intermittent leave or working a reduced schedule to commence or end work midway through a shift, the entire period that the employee is forced to be absent is designated as FMLA leave and counts against the employee’s FMLA entitlement.

5. Calculating Leave Where Employee Works Variable Hours: 29 C.F.R. § 825.205(b)

The final rule changes the method of calculating an employee’s leave entitlement when an employee works a schedule that varies from week to week. Under the final rule, employers will be required to use the 12-month average of hours worked prior to the commencement of the employee’s FMLA leave in calculating the employee’s leave entitlement.

6. Overtime and Intermittent Leave: 29 C.F.R. § 825.205(c)

In the final rule, the DOL clarifies that if the employee would have been required to work the overtime hours but cannot do so because of a FMLA-qualifying condition, the employee may be charged FMLA leave for the hours not worked. Employers cannot, however, discriminate in the assignment of overtime hours in order to deplete FMLA leave-takers from their FMLA entitlement.

7. Substitution of Paid Leave for Unpaid Leave: 29 C.F.R. § 825.207

(a) Currently, the FMLA allows the employee or the employer to require that any accrued paid sick leave be taken concurrently with any FMLA leave. The final rule applies the same requirements to the substitution of all forms of accrued paid leave; however, one of the more noteworthy changes that the DOL adopts is to make clear that the terms and conditions of an employer’s paid leave policies apply and must be followed by the employee in order to substitute for FMLA leave any form of accrued paid leave, including paid vacation, personal leave, family leave, sick leave, and paid time off.

(b) Under the final rule, if an employer’s policy requires vacation leave to be taken in full-day increments, an employee substituting vacation for FMLA leave would have no right to use less than a full day of vacation leave.

8. Leave Taken Pursuant to a Disability Plan or For a Workers’ Compensation Absence: 29 C.F.R. § 825.207(d) and (e)

Under the final rule, it remains the case that the FMLA substitution provisions are not applicable when an employee’s absence is not unpaid. The final rule provides, however, that the employer and employee may agree to have paid leave run concurrently with FMLA leave to supplement disability benefits or workers’ compensation benefits, as long as such an agreement is permitted under applicable state law.

9. Interplay of Information Required for Disability Plans or Workers’ Compensation Benefits: 29 C.F.R. § 825.306(c)

The final rule makes clear that if an employer has a disability benefit plan that would require the employee to provide more or different medical information than that permitted under the FMLA’s medical certification requirements, an employer can require an employee to provide such information as long as the employer makes clear that the failure to provide this additional information only jeopardizes receipt of disability benefits, not the entitlement to unpaid FMLA leave. This same rule applies in the case of workers’ compensation benefits. The final rule clarifies that an employer may use this additional information to determine whether the need for leave qualifies under the FMLA.

10. Bonuses: 29 C.F.R. § 825.215(c)(2)

Employers will now be permitted to disqualify employees from receiving bonuses predicated on the achievement of a specific goal (i.e., perfect attendance awards) where the employee fails to reach that goal due to FMLA leave, as long as the employer treats employees taking non-FMLA leave in an identical fashion.

11. Light Duty: 29 C.F.R. § 825.220(d)

The final rule clarifies that time spent performing “light duty” work does not count against an employee’s FMLA leave entitlement and changes the rules so that reinstatement rights are not affected by a “light duty” assignment either. If an employee is voluntarily performing a “light duty” assignment, the employee is not on FMLA leave.

12. Definition of “Serious Health Condition”: 29 C.F.R. §§ 825.113 and 825.115

(a) The final rule retains the definitions of serious health condition while adding guidance on two regulatory terms. Currently, one of the definitions of a “serious health condition” includes a period of incapacity of more than three consecutive calendar days (and any subsequent treatment or period of incapacity relating to the same condition). It must also: (a) involve treatment by a health care provider on at least one occasion which results in a regimen of continuing treatment, such as a course of prescription medication or therapy utilizing special equipment; or (b) involve treatment two or more times by a health care provider, by a nurse or physician’s assistant under direct supervision of a health care provider, or by a therapist or other provider of health care services under orders of a health care provider.

(b) The final rule adopts the following modest clarifications to the definition of a serious health condition:

(i) The final rule provides that the two visits must occur within a 30-day period from the onset of the initial incapacity. The final rule also provides that the first visit must occur in person within seven days of the first day of incapacity.

(ii) The final rules also adds language stating that the healthcare provider, and not the employee or patient, must make the determination as to whether a second visit is needed during a 30-day period.

(iii) The final rule also includes the proposed clarification that “periodic” means visiting a physician twice or more per year for the same condition.

13. Retroactive Designation: 29 C.F.R. § 825.301(d)

The final rule removes categorical penalty provisions and clarifies that only where an employee suffers individualized harm because the employer failed to follow the notification rules may the employer be held liable. Incorporating this new legal standard, the final rule provides that employers now may retroactively designate leave, provided that there is no individualized harm to the employee caused by doing so.

14. Employer Notice Requirements: 29 C.F.R. § 825.300

The DOL’s final rule incorporates a revised framework for employer notice requirements. The notice provisions are grouped into four main categories - general notice, eligibility notice, rights and responsibilities notice, and designation notice - and they will create new obligations that employers must incorporate into the FMLA administrative process.

(a) General Notice Requirement: 29 C.F.R. § 825.300(a)

The final rule modifies the “general” notice requirements in several ways:

(i) If an employer has an employee handbook that contains guidance to employees concerning employee benefits or leave rights, employers should include the general notice in the handbook. For employers who do not maintain employee handbooks or otherwise distribute FMLA policies to their employees, employers will need to distribute a copy of the general notice either in paper or electronic form to each employee at the time of the employee’s hire. Under the final rule, it will no longer be sufficient to distribute this general notice only in connection with a specific FMLA leave request.

(ii) In addition, the final rule makes clear that this general notice must include information concerning the procedures for filing complaints of violations of the FMLA with the Wage and Hour Division.

(b) Eligibility Notice Requirement: 29 C.F.R. § 825.300(b)

(i) The final rule requires an employer to provide an employee with a specific “eligibility notice.” This notice informs the employee as to whether the employee meets the statutory eligibility criteria - employment with the employer for 12 months, at least 1,250 hours of service in the 12 months prior to the leave request, and employment at a worksite where 50 or more individuals are employed within 75 miles of the primary worksite.

(ii) The final rule also addresses the content and timing of this notice as follows:

(a) It must be provided within five business days of the start of a FMLA leave “absent extenuating circumstances” (compared to the two-day turnaround required by the current regulations).

(b) In the event that an employee is not eligible for leave, the notice must state at least one reason why the employee is not eligible.

(c) If an employee needs FMLA leave for a different FMLA-qualifying reason in the same leave year that an employer has already provided to the employee eligibility notice due to a different FMLA-qualifying reason, the employer must provide the employee a new eligibility notice within five business days of the second leave request only if the employee’s eligibility status has changed. If the employee’s eligibility status has not changed, however, no further notice must be provided in the leave year.

(c) Rights and Responsibilities Notice Requirement: 29 C.F.R. § 825.300(c)

(i) The final rule also requires employers to provide a “rights and responsibilities” notice detailing the specific expectations and obligations of the employee and explaining any consequences of a failure to meet these obligations. This notice is similar to the specific notice required by the current regulations. The rights and responsibilities notice must be provided each time the eligibility notice is provided to an employee (typically, within five business days of the start of leave). The notice must include notice of the following:

(a) That the leave may be designated and counted against the employee’s annual FMLA entitlement;

(b) Any requirement for the employee to furnish certification supporting the need for leave;

(c) That the employee may substitute paid leave, or whether the employer will require the employee to substitute paid leave, and any conditions related to that substitution, as well as the employee’s right to take unpaid leave if the employee does not qualify for substitute paid leave under the employer’s policies;

(d) Any requirements for the employee to make premium payments to maintain health benefits and the conditions related thereto;

(e) That the employee is a “key employee” under the FMLA, and the consequences related thereto;

(f) That the employee has a right to maintain benefits during the leave and a right to restoration upon return; and

(g) That the employee may be liable for unpaid portions of insurance premiums should the employee fail to return after the end of the leave entitlement.

(ii) Any required certification may be provided with the rights and responsibilities notice. The employer may also include other information pursuant to the employer’s specific policies and procedures related to leave, e.g., that the employer requires periodic status reports.

(d) Designation Notice Requirement: 29 C.F.R. § 825.300(d)

(i) A “designation notice” informs the employee whether the particular leave requested will be designated as FMLA leave. The final rule increases the time for an employer to provide the designation notice from two to five business days “absent extenuating circumstances,” and also modifies the start of the time limit; it begins only after “the employer has sufficient information to determine whether the leave is being taken for an FMLA-qualifying reason.”

(ii) The final rule also requires employers to inform the employee, if possible, of the number of hours, days, or weeks, that will be designated as FMLA leave. Under the final rule, when the amount of leave needed is unknown at the time the designation notice is given, the employer will need to inform the employee of the number of hours counted against the FMLA leave entitlement upon the employee’s request, but no more often than every 30 days if FMLA leave was taken during that period.

(iii) A new requirement associated with the designation notice contained in the final rule is that the designation notice must also do the following:

(a) Notify the employee if the leave is not designated as FMLA leave due to insufficient information or a non-qualifying reason.

(b) Include a statement of the employee’s essential job functions, if the employer will require that those functions be addressed in a fitness-for-duty certification. The final rule now allows an employer to request an employee have his or her healthcare provider certify that he or she is able to perform all of the essential functions of the job before returning from FMLA leave, as opposed to a “simple statement” as provided by the current regulations.

15. Employee Notice Requirements: 29 C.F.R. §§ 825.302(c) and (d)

(a) The final rule provides that, absent extenuating circumstances, employees must follow the employer’s usual and customary call-in procedures for calling in absences and requesting leave. The final rule explicitly states that where an employee does not comply with the employer’s usual procedure, and no unusual circumstances justify that failure, the employer may properly delay or deny FMLA leave.

(b) The final rule provides examples of what constitutes sufficient information from the employee to trigger the employer’s obligations to consider whether the FMLA is at issue including the following: that the employee has a condition that renders the employee unable to perform the functions of the job; that the employee is pregnant or has been hospitalized overnight; that the employee or the employee’s family member is under the continuing care of a healthcare provider; that the leave is due to a qualifying exigency; that a covered military member is on active duty or called to active duty status; and, if the leave is for a family member, that the condition renders the family member unable to perform daily activities. Calling in sick without providing more information will not be considered sufficient notice to trigger an employer’s obligations under the FMLA.

(c) The final rule also provides that when an employee seeks leave due to an FMLA-qualifying reason for which the employer has previously provided FMLA-protected leave, the employee must specifically reference the qualifying reason for leave in notifying the employer.

16. Medical Certification Process: 29 C.F.R. §§ 825.306, 825.305(c), 825.307, and 825.308

(a) The DOL has adopted two simplified forms - one form to be used when the employee needs leave for his or her own serious health condition, and a second form to be used when the need for leave is to care for a family member with a serious health condition. The forms contain new areas for medical providers to provide sufficient medical facts - symptoms, doctor visits, medical treatment regimen - for employers to make a determination as to eligibility. The forms specifically allow doctors to provide a diagnosis, which is not permitted under the current regulations. Employers, however, cannot reject certifications that do not contain diagnoses and employers still need to be cognizant of state laws that prohibit an employer from requesting such information.

(b) The final rule requires that when an employer determines a certification is incomplete or insufficient, the employer must state in writing what additional information is necessary and allow the employee seven calendar days to cure the deficiency. If the deficiencies are not cured in the resubmitted certification, the employer may deny leave.

(c) The final rule also permits direct contact between the employer (human resources or other management official) and the health care provider for purposes of clarification of a medical certification as long as the requirements of the HIPAA medical privacy regulations are met. The final rule does make clear, however, that in no circumstance may the employee’s direct supervisor make contact with the employee’s healthcare provider. The final rule also confirms that if the employee chooses not to provide HIPAA releases, and the employee has not provided information that is sufficiently clear for an employer to determine that the leave qualifies for the FMLA protections, the FMLA leave request may be denied. Employers may not ask for additional information beyond that required by the certification form.

(d) Additionally, the final rule makes clear that an employer may request recertification every 30 days in connection with an absence unless the medical certification indicates that the minimum duration is more than 30 days. The final rule provides that if a longer period is provided, certification cannot occur before the time period expires, unless circumstances change, or an employer has reason to doubt the validity of the initial certification. In all cases, however, employers will be able to request recertification every six months, even where the certification states a longer period.

(e) The final rule also confirms that employers may request a new “initial” certification, and thus obtain a second and third opinion if there is reason to doubt the validity of the certification, each leave year for medical conditions that last longer than one year.

17. Fitness-for-Duty Certifications: 29 C.F.R. § 825.312

The final rule makes two changes to the fitness-for-duty certification process.

(a) An employer may require that the certification address the employee’s ability to perform the essential functions of the employee’s job so long as the employer provides a list of essential functions no later than with the designation notice and advises the employee in the designation notice that the certification must address the employee’s ability to perform the essential functions of the job.

(b) Where reasonable job safety concerns exist, an employer may require a fitness-for-duty certification once every 30 days when the employee takes intermittent or reduced schedule leave so long as the employer includes that requirement in its designation notice.

18. Definition of “Worksite”: 29 C.F.R. § 825.111(a)(3)

The final rule states that after an employee, who is jointly employed, is stationed at a fixed worksite for a period of at least one year, the employee’s worksite for purposes of the employee’s eligibility is the actual physical place where the employee works.

19. Settlement and Release of FMLA Claims: 29 C.F.R. § 825.220(d)

The final rule explicitly states that employees and employers should be permitted to voluntarily agree to the settlement of past claims without having to first obtain the permission or approval of the DOL or a court.

In light of the new regulations that will go into effect on January 16, 2009, employers are encouraged to review their current FMLA policies as well as current procedures related to administering their leave policies to ensure compliance with the final rule issued by the DOL on November 17, 2008.