FMLA Key Employee Exception

The Family and Medical Leave Act (FMLA) enables eligible workers to receive unpaid job-protected leave for certain family and medical reasons. The Act requires that the employee’s health insurance coverage be maintained during the leave period under the same terms as if the worker had not taken leave.

In accordance with the FMLA, workers are eligible for 12 weeks of leave in a 12-month period for several reasons, including:

  • The birth of a child
  • The placement of a child for adoption or foster care
  • The care of the worker’s spouse, child, or parent who has a serious medical condition

An employee can take up to 26 work weeks of leave during a 12-month period to care for a family member injured on active military duty.

What is the Key Employee Exemption?

Among the numerous complications and considerations under the FMLA, one of the most commonly asked about is the “key employee” exemption.   In some cases, an employer may choose to “deny job restoration” after FMLA leave to someone who has been designated a key employee.  Under the terms of the FMLA, a key employee is a salaried FMLA eligible worker who is among the top 10% of an employer’s highest paid employees within 75 miles of the employee’s worksite.

To decline the return of a “key employee” after a leave period, an employer must determine that doing so would result in “grievous and substantial economic injury” to the employer’s operation.

This situation may arise when an employee’s function within the organization is so critical that the function cannot be done without the employee and a temporary replacement is not feasible.  If a permanent hire must be made to handle the employee’s work, restoring the job of the returning employee may cause grievous and substantial economic injury.  If this is the case, the employer may choose to deny job restoration to the employee returning from leave.

There is not currently a precise method used to determine the exact degree of hardship to an employer that must result in order to decline the return of a key employee. Minor inconveniences, however, very rarely constitute sufficient harm.

Advice for Employers Considering Use of the Key Employee Exemption

There are several important precautions that employers should take when considering whether to use the key employee exemption. These precautions include the following:

  • Decide if the exemption applies. To determine if a worker qualifies as a key employee, employers should divide year-to-date earnings by the number of weeks that the employee worked. The employer should then determine if it is possible to find a temporary replacement or to perform the work without the employee for the period of the leave.
  • Adequately notify the employee. An employer must notify the worker in writing at the time that leave is requested that the worker qualifies as a key employee and might be denied reinstatement. This notice should mention the potential consequences of denying reinstatement.
  • Approve the underlying leave. Even if an employer informs a key employee that he or she might not be reinstated at the end of a leave period, the leave must still be granted if the worker qualifies for it.
  • Review the applicable state laws. Employers in Texas are subject to the FMLA, but Texas does not have its own separate family and medical leave laws. However, if you have employees in another state, examine applicable state laws concerning employee leave. While some state law provides for additional time off after FMLA leave, elsewhere, the federal and state leave period run concurrently.   

It is also extremely important to remember that making a key employee designation is very factually specific and intensive and employers ideally should not make such a determination without first consulting with their legal counsel.

Speak with an Experienced Employment Lawyer 

If you have questions about the key employee exemption or any other part of the FMLA, it is a wise idea to speak with an experienced employment attorney. Contact Simon | Paschal PLLC to schedule a consultation.

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