Leaves of Absence; Unemployment Strategies
No. 1
No unemployment issue causes more confusion and frustration for employers than dealing with cases involving leaves of absence (LOA). Not only are the legal requirements for collecting unemployment as the result of a LOA confusing, but employers are also confused with how to integrate the requirements of the Family Medical Leave Act (FMLA) with managing their unemployment costs. Employer's policies, usually amended to ensure compliance with the FMLA, cover the employee's FMLA exposure but do little to address the issues that cause unemployment exposure. To make matters worse, statistics show that employers are seeing an increase in LOAs. The MHASC UCP also has identified an increase in claims that are the result of a LOA. The Michigan Employment Security Act (MES Act) addresses the issue of LOA. Employers who understand how the MES Act treats claims on a LOA and who can monitor their policies may save substantially by lowering unemployment costs.
The MES Act states that any employee on an approved LOA is considered "employed" for purposes of determining unemployment compensation eligibility. An "employed" individual is not eligible to collect unemployment benefits.
However, an employer cannot reduce its exposure by merely placing its affected employees on a LOA. Situations often arise when employees, for health or other reasons, find themselves away from work for extended periods. Employers have often characterized these employees as being on a LOA. This characterization may be correct, but if an employee applies for unemployment, the question of the validity of the LOA is opened. The MUA or administrative law judges, in answering this question, look to who initiated the LOA. An employee who requests a LOA has clearly initiated the process. It is less clear when you have an employee who is unable to perform his/her job duties due to medical restrictions and who, therefore, is placed on a leave by the employer. The MUA has consistently found that claimants who have been "inserted" into a LOA slot are eligible for unemployment compensation benefits.
Another issue that creates confusion is the question of the claimant's eligibility. A claimant must be "eligible" before they can collect benefits. One of the eligibility requirements is that the claimant be able to work [MES Act Section 28(1)(c)]. An individual who cannot work due to a medical restriction is not able and is, therefore, not eligible for unemployment benefits. Unfortunately, the ability section, and in fact all questions of eligibility, have an extremely low evidentiary threshold. In other words, it doesn't take much evidence to prove ability to work or ineligibility for work. At first glance, in medical LOA situations, employers appear to be secure. The employee cannot perform his/her job due to a medical condition. The medical condition is documented by a physician's statement provided by the employee. Can a claimant in this situation be eligible for unemployment benefits? The MUA's answer, to the consternation of most employers, is "yes." Claimants in this situation can still be eligible for benefits. The MES Act Section 28(1)(c) requires that claimants be able to work. The act does not require that the claimant be able to work in the claimant's last held position. It only requires that the claimant be able to work period. A nurse with a lifting restriction may not be able to work as a nurse, but she very well could work as a cashier. The claimant, therefore, has the ability to apply for unemployment benefits and state that she is able to work at a position within her restrictions. The claimant must often prove that she has experience for these types of positions, but this is a formality that does little to affect a claimant's eligibility. Therefore, it is possible for an employee out on a valid medical LOA to collect unemployment benefits if she/he can overcome the eligibility barrier of ability.
Failure to return from a LOA is another area which causes problems for employers. Many employees who are off on a LOA fail to return on the assigned return date. Separations which occur as a result of a failure to return are often hotly contested. Employers should ensure that a system is in place to respond to employees who are not punctual in their return. The employer should always utilize written LOA form applications which clearly state the length of the LOA and the expected return date. The employer should communicate, in writing, the decision to grant or deny the leave application. If the application is granted, the return to work date should be clearly stated, along with information about the policy for requesting an extension. If the medical documentation on the application is ambiguous about a return to work, the employer can designate an appropriate date. The extension of leave policy should be clearly communicated and consistently followed.
Two weeks before the expiration of a LOA, a letter reminding the employee of the LOA expiration and return date should be mailed to the employee. If the employee fails to return or extend, a phone call should be made and documented. A letter should also be sent with a notice of consequences. This letter should state that unless the employee contacts the employer by a certain date termination will ensue. This letter should be mailed both certified and first class. Following this procedure, or one like it, will place the employee in a position where the decision to return is on the employee.
Leave of absence situations pose many questions. Contact Mick Baughman of the HCLG or the MHASC UCP if you have any questions.