In 1998, Wells Fargo Bank merged with Northwest Bank. Under Wells Fargo’s sick leave policy before the merger, employees earned one sick day a month, and unused sick days could be carried to the next year. At the time, employees also earned a certain amount of paid vacation days a year, which could be carried over to succeeding years.After the merger, Wells Fargo instituted short-term disability and paid-time-off programs to replace the sick leave and vacation programs. As a result, employees lost their stock of unused sick days, and unused vacation days were converted to PTO days. A group of employees filed a class action, charging that Wells Fargo violated the federal Family and Medical Leave Act by switching to a less favorable leave benefits package.
Our HR Management & Compliance Report: How To Comply with California and Federal Leave Laws, covers everything you need to know to stay in compliance with both state and federal law in one of the trickiest areas of compliance for even the most experienced HR professional. Learn the rules for pregnancy and parental leaves, medical exams and certifications, intermittent leaves, required notices, and more.
Benefits Change Doesn’t Violate FMLA
Now the Ninth Circuit Court of Appeals, which covers California, has ruled that the FMLA didn’t require Wells Fargo to “lock in” a particular benefits package. According to the court, an employer complies with the FMLA as long as it meets or exceeds the law’s minimum requirements of 12 weeks of unpaid leave for the treatment of a serious health condition, the birth of a child or the care of a family member with a serious health condition. An employer may freely change or reduce its benefits program. What’s more, although the FMLA permits employers to require that employees use their accrued sick and vacation time as part of the 12-week leave period, that provision doesn’t create an entitlement to accrued sick time.
The court dismissed the lawsuit because Wells Fargo’s postmerger leave program exceeded the FMLA’s minimum leave requirements.
Practical Advice
This case underscores that your hands aren’t tied by the FMLA when it comes to changing your leave benefits, provided your program meets or exceeds the FMLA’s minimum requirements. To keep your options open to make changes to your employee benefits, be sure your employee handbook and benefits policies state that you have the right, without notice, to make changes, additions and deletions, or to terminate your policies. For more information about changing your personnel policies.