Under the state and federal family and medical leave laws, you must continue health insurance for employees who are out on leave. But do you know the rules for how much of their premiums you can require employees to pay while they’re off?
Employer Asks Employee to Pay Full Premium
Eric Tornberg, a truck driver for Business Interlink Services Inc. (BIS), paid about $22.64 weekly by payroll deduction to cover his share of the premium in the company health plan. When Tornberg was diagnosed with a kidney stone in May 1999, BIS granted him time off but never mentioned the Family and Medical Leave Act.
A month later, while Tornberg was still on leave, BIS notified him that he had to pay the entire health premium—$85.75 a week or $343 a month for July and any subsequent months he was off.
When Tornberg was released to return to work in late July, he found another job and resigned from BIS. The company told him that he had 30 days to make the July health premium payment, but he never paid it.
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.
Employer Terminates Worker’s Health Coverage
BIS then turned around and terminated Tornberg’s coverage, retroactive to May 1999. BIS never informed Tornberg of this, and Tornberg only learned about it months later when a medical claim was denied.
Employee Files Lawsuit
Tornberg sued, claiming BIS violated the federal FMLA by terminating his medical coverage retroactively and without notice. He also argued that it was illegal to require him to pay the entire medical premium while on leave. BIS denied that its actions ran afoul of the FMLA and claimed Tornberg didn’t even qualify for FMLA leave because he never submitted appropriate medical documentation.
Leave Qualified Under FMLA
A federal court ruled that BIS violated the FMLA in several respects. Tornberg’s statements to the company about the reasons for his leave were sufficient to put BIS on notice that the FMLA covered the time off. Then it was up to BIS to designate the leave as FMLA-qualifying and to notify Tornberg of his FMLA rights and obligations, which BIS allegedly failed to do.
Employer Violated FMLA Health Insurance Provisions
What’s more, under the FMLA, BIS couldn’t require Tornberg to pay the entire cost of his health premiums while on leave. An employer has to provide health coverage during an FMLA leave on the same terms as when the employee was working. Also, the court explained, an employer must notify the employee before terminating health coverage for not paying premiums while on FMLA leave.
The court explained that when an employee doesn’t return to work following FMLA leave, the employer may recover its share of the premiums paid under certain circumstances. But this is simply an employee “debt” and doesn’t alter the employer’s obligation to provide coverage.
Although a federal court in Michigan decided this case, the court’s reasoning is applicable in California.
Know the Rules
Here are some key points to help you stay out of trouble under the FMLA and the California Family Rights Act:
- Designate leave under the FMLA. When an employee takes leave, it’s your responsibility to certify the time off as FMLA leave. If you don’t, the time won’t count toward an employee’s 12-week entitlement. You must generally designate time off as family leave within two business days of learning that the leave qualifies. And remember, an employee doesn’t have to mention the FMLA to qualify for leave.
- Follow notice requirements. You have to post separate notices of employee rights under both the FMLA and the California family leave law. You must provide employees who request leave with information about their rights and responsibilities.
- Maintain health benefits. You must maintain group health coverage for an employee on FMLA leave if you provided it before the leave, and you must do so on the same terms as when the employee was working. If you require employees to pay part of their premiums, you can arrange for an employee to continue to pay their share while on FMLA leave. Your obligation to maintain health benefits will stop either 1) when an employee informs you they aren’t returning to work when the leave ends, or 2) if the employee’s premium payment is more than 30 days late and you have given them written notice at least 15 days in advance that coverage will cease if payment isn’t received.