Family Medical Leave Act Understanding federal and state leave regulations will help small business owners comply with the laws.
By Brad Jones
One of the great benefits of owning your own business is the flexibility it offers you, flexibility that you can, in turn, offer to your employees. However, the introduction of new laws and regulations often causes confusion, and small business owners can end up with the short end of the stick.
Such is the case for thousands of small business owners trying to comply with the Family and Medical Leave Act (FMLA) of 1993. More than a decade after the bill was passed, practically all requests for such leave are being granted by American small-business owners, whether required by law or not, according to a national small business poll conducted by the National Federation of Independent Businesses (NFIB).
That’s because many small business owners still are confused and concerned about which businesses are required to comply with FMLA and what leave is covered.
Who FMLA Affects The FMLA mandates that small businesses with 50 or more employees grant their employees 12 weeks of unpaid leave in the case of a serious health condition for either the employee or immediate family, and the birth or adoption of a child.
Confusion arises among small-business owners because a disproportionately large portion of them believe the law covers them when it likely does not. The NFIB poll found that nearly 25 percent of small employers believe they are covered, while 51 percent think they are not, and another 25 percent are uncertain.
Despite the confusion, small business owners tend to exhibit remarkable flexibility when it comes to employee leave.
FMLA Adding to the uncertainty of this issue are proposals by lawmakers to expand the current FMLA by eliminating or lowering the 50-employee small business exemption, and expanding options for leave, such as children’s school activities and routine medical appointments. These changes to FMLA could be harmful and costly to small businesses.
Such government mandates would take away the freedom of small business owners and their employees to negotiate the benefits package that best meets their mutual needs. Expanding FMLA mandates also would drastically increase the amount of paperwork and money spent complying.
The cost of regulation to small business, not just in terms of dollars spent but also in hours consumed, aggravation encountered and opportunities lost, are vast drains on these companies. A 2001 report commissioned by the Office of Advocacy at the Small Business Administration, found that for businesses with fewer than 20 employees (more than 90 percent of all businesses in America), the cost of regulation per employee was $6,975. For a small business owner who typically grosses $40,000 to $50,000, that figure is especially daunting.
Another estimate, based on a regulatory impact model (RIM) used specifically to study the effects of FMLA, found the cost per small business of a mandated FMLA law to be between $32,000 to $48,000 per business, assuming one period of FMLA leave for every four small firms (Business Economics, April 2002).
State Laws There are probably 30 to 40 state amendments or adaptations for specific issues dealing with leave that further complicate the FMLA law. For example, in one state companies with three or more employees must allow two hours of unpaid leave for a parent/teacher conference. That is not an activity covered under the federal FMLA law but is a state adaptation that companies must follow. California now has the nation’s only paid family leave law, which applies to companies with 50 or more employees. So far, Kansas and Missouri follow the federal FMLA law.
Avoiding Confusion Small business owners must research any amendments to the federal FMLA law or additional state laws to ensure they are in compliance.
Also, if you haven’t already, create a formal, written policy to prevent confusion and inconsistencies among you and your employees. According to the NFIB study, only 12 percent of small business owners claimed to have formal leave policies, while 82 percent said they handled such requests on a case-by-case basis.
More than 42 percent of those polled said the most important reason for establishing a policy was the need to attract and retain employees. Only 20 percent cited legal compulsion for their policy.
Based on NFIB research, about one-third of small employers have had one or more requests for family and medical leave within the last three years. Ninety-three percent said they granted the last request they received. Just 2 percent refused an employee’s request but noted they re-arranged the worker’s schedule or duties to compensate. How FMLA Affects Business Most employees of small companies take a modest amount of time off. Forty percent used family or medical leave for a week or less, although 26 percent were away for one month or more. Still, a majority of employers reported that the last employee’s absence created real problems, the most common being increased workload for other employees. Seven-of-10 reported shifting the missing employee’s work to others in the company, while 62 percent said that burden fell on the owner or family members.
Interestingly, few employers said that their employees take unfair advantage of the law, but larger companies tended to experience abuse of the law twice as often as smaller businesses. Brad Jones is the state director of the National Federation of Independent Business, Missouri office. He can be reached at .
