FMLA Costs Hit $21 Billion in 2004
April 28, 2005--Companies with employees who took leave under the Family and Medical Leave Act (FMLA) in 2004 lost up to $21 billion, according to a study by the Employment Policy Foundation (EPF), a Washington, D.C.-based research group. Losses included net labor replacement costs, continuation of group health benefits, and lost productivity.
According to the report, nearly 15% of employees in 2004 took leave under the FMLA, with employees from telecommunications, healthcare and manufacturing using the option more than other sectors. Telecommunications and transportation were hit particularly hard, paying 2.4% and 3.2% of their labor costs to comply with the FMLA, respectively.
The Family and Medical Leave Act of 1993 allows employees in companies with over 50 workers the option to take up to 12 weeks in unpaid leave annually to attend to personal, parental, or children health conditions, or for other family leave, such as maternity, adoption, or newborn care.
In the last five years, the FMLA has become increasingly popular among employees, said the report. In 2000, 50 million Americans used FMLA leave, said a study by the U.S. Department of Labor. Of those employees, 25% used FMLA leave more than once per year, implying that frequency of usage was low. The EPF study revealed more frequent usage. In 2004, employees took leave nearly one and a half times more during the year. Thirty-five percent of those who took leave did so more than once.
"No one is upset about allowing employees time off for serious medical conditions, but the intermittent leave provisions are so flexible as to make FMLA subject to abuse by a small--but costly--group of employees," said Janemarie Mulvey Ph.D., EPF Chief Economist and author of the report.
According to the EPF, roughly 50% of employees taking leave give less than a day's notice. In over 30% of cases, employees provide notice after the leave has started, with only 35% offering a week's notice, thus offering little chance for employers to work around the leave-taker's schedule.
Intermittent leave or short-term leave that is typically a few days or few hours is what costs companies the most. Intermittent leave is usually granted for recurring medical conditions or treatment. However, employees can abuse the provision to file claims of protection for unscheduled absences. Unscheduled absences increased nearly 26% between 2003 and 2004 according to the Commerce Clearing House, a provider of tax and business law information.
The EPF's report has been criticized by the National Partnership for Women & Families (NPWF), a nonprofit, nonpartisan organization promoting fairness in the workplace, based in Washington, D.C. Lissa Belle, senior policy associate for the NPWF called the EPF report "a disingenuous smear campaign against the FMLA."
"The FMLA is essential because in many instances it is the only thing between the employees and the street. It is the only thing that protects them from losing their jobs when they want to be with their dying father or with a child that is suffering from leukemia," said Belle.
More than 200 organizations led by the NPWF have recently sent a letter to the Department of Labor urging it not to make any changes to the law that could prove detrimental to families and workers. The Department of Labor is currently reviewing the need for any revisions in the FMLA.
The EPF study analyzed responses from 110 employers, covering 500,000 employees about the prevalence of the use of FMLA leave and the extent of leave and notice offered by employees.