FMLA, USERRA and the HEART Act: Effects on Employee Benefits (Portfolio 336)

Tax Management Portfolio, FMLA, USERRA and the HEART Act: Effects on Employee Benefits, No. 336, covers the basic tenets of the Family and Medical Leave Act of 1993, the Uniformed Services Employment and Reemployment Rights Act of 1994, and the Heroes Earnings Assistance and Relief Tax Act of 2008. 

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Description

Tax Management Portfolio, FMLA, USERRA and the HEART Act: Effects on Employee Benefits, No. 336, covers the basic tenets of the Family and Medical Leave Act of 1993, the Uniformed Services Employment and Reemployment Rights Act of 1994, and the Heroes Earnings Assistance and Relief Tax Act of 2008. It describes the core provisions and explores the impact of those three federal statutory schemes on certain categories of employee benefits, including those arising under group and non-group health plans, retirement plans, and executive compensation arrangements.

This Portfolio may be cited as Congiu, Kastrinsky, Pressly and Zuba, 336 T.M., FMLA, USERRA and the HEART Act: Effects on Employee Benefits.

Authors

Michael G. Congiu, Esq.

Michael G. Congiu is a shareholder of Littler Mendelson whose practice touches on leave and disability accommodation issues and employee benefits matters.

D. Finn Pressly, Esq.

Finn Pressly is an employee benefits attorney at Littler Mendelson. He specializes in all aspects of health and welfare benefit compliance, including ERISA, COBRA, HIPAA, the Affordable Care Act, and the Internal Revenue Code. He also regularly counsels clients on plan design and administration issues, including compliance with ERISA fiduciary obligations. Finn is licensed to practice in Florida, Hawaii, and Illinois. He received his B.A. with honors from the University of Notre Dame, his J.D. from the Notre Dame Law School, and his LL.M. in taxation from the University of Florida.

Carly J. Zuba, Esq.

Carly Zuba is Knowledge Management Counsel at Littler Mendelson. Carly's practice includes navigating through leave of absence and accommodation issues. Carly is licensed to practice in Illinois and Wisconsin.

Stefanie Kastrinsky, Esq.

Stefanie Kastrinsky has extensive experience drafting benefit plan documents, plan amendments, and summary plan descriptions, for compliance with ERISA and the Internal Revenue Code. She also analyzes issues related to Section 409A of the Internal Revenue Code. She received her B.A. from Washington University in St. Louis, and her J.D. from Brooklyn Law School.


Table of Contents

Detailed Analysis
I. Family and Medical Leave Act Core Provisions
A. Introduction
B. Covered Employers
C. Eligible Employees
1. 12 Months of Employment
2. 1,250 Hours of Service During 12-Month Period Immediately Preceding Commencement of Leave
3. 50 or More Employees Within 75 Miles
D. Qualifying Reasons for Leave
1. Birth and Care of Newborn Child
2. Placement of Child for Adoption or Foster Care
3. Care for a Covered Family Member with a Serious Health Condition
a. Covered Family Member
b. Serious Health Condition
(1) Inpatient Care
(2) Continuing Treatment
c. Nature of Care
d. Health Care Provider
4. Employee's Own Serious Health Condition
5. Qualifying Exigency Due to Call to Military Service
6. Care for a Covered Servicemember with a Serious Injury or Illness
E. Duration and Scheduling of Leave
1. Measuring the 12-Month Period
2. Circumstances Limiting the Leave Period
F. Intermittent and Reduced Schedule Leave
1. Entitlement to Take Intermittent or Reduced Schedule Leave
2. Calculation of Leave
3. Transfer to an Alternative Position
G. Compensation During Leave
H. Notice of Leave
1. Timing of Notice and Leave
a. Foreseeable Leave
b. Unforeseeable Leave
2. Content of Notice
3. Manner of Providing Notice
a. Foreseeable Leave
b. Unforeseeable Leave
4. Employer Response to Notice
I. Certification for Leave
1. Medical Certification
2. Medical Recertification
3. Certification for Leave Taken for Qualifying Exigency
4. Certification for Leave Taken to Care for Covered Servicemember
5. Fitness-for-Duty Certification
J. Reinstatement Rights and Obligations
1. Restoration to the Same or Equivalent Position
a. Equivalent Pay
b. Equivalent Benefits
c. Equivalent Terms and Conditions of Employment
2. Limitations on Restoration Rights
II. Effect of Family and Medical Leave Act on Employee Benefits
A. Group Health Plans
1. Covered Plans
a. Flexible Spending Arrangements (FSA)
b. Health Reimbursement Arrangements (HRA)
c. Health Savings Accounts (HSA)
2. Payment of Premiums
3. Recovery of Premiums
4. Special Rules for Multiemployer Health Plans
5. Cessation of Obligation to Maintain Benefits
6. Interaction of FMLA and COBRA
B. Cafeteria Plans
1. FMLA Leave and Non-Group Health Benefits
2. FMLA Leave and Group Health Benefits
a. Paid FMLA Leave
b. Unpaid FMLA Leave
(1) Ability to Cease or Change Cafeteria Plan Elections
(2) Payment Options for Health Coverage During Period of Unpaid FMLA Leave
(a) Pre-Pay
(b) Pay-As-You-Go
(c) Catch-Up
c. Special Considerations for Health FSAs
(1) The Uniform Coverage Rule
(2) Resumption of Health FSA Coverage upon a Return to Work
C. FMLA Leave and Employer Policies, Plans, and Collective Bargaining Agreements
D. FMLA Leave and Executive Compensation
1. Bonuses
2. Stock Options
a. General Principles Under the FMLA
b. Special Rules for Incentive Stock Options (ISO)
3. Nonqualified Deferred Compensation and I.R.C. §409A
E. Employer Credit for Paid Family and Medical Leave
III. Uniformed Services Employment and Reemployment Rights Act Core Provisions
A. Introduction
B. Employers Obligated to Provide USERRA Leave
C. Employees Who Qualify to Take USERRA Leave
D. Service Qualifying for USERRA Leave
E. Notice and Verification Requirements for USERRA Leave
F. Compensation
G. Duration of USERRA Leave
H. Reinstatement Rights and Obligations
1. Employee Reinstatement Rights and Obligations
2. Employer Affirmative Defenses to Reinstatement
3. Employee Right to Reemployment Position
4. Other Employee Rights upon Reinstatement
a. Seniority-Based Rights and Benefits
b. Non-Seniority Rights and Benefits
5. Other Employer Obligations Related to Reinstatement
I. Protection from Discharge or Discrimination
J. Enforcement and Remedies
IV. Effect of Uniformed Services Employment and Reemployment Rights Act on Employee Health Benefits
Introductory Material
A. Continuation of Coverage During Leave
B. Reinstatement of Employer-Sponsored Health Coverage upon Reemployment
C. Special Rules for Continuation Coverage Under Multiemployer Plans
D. Cafeteria Plan Issues Under USERRA
V. Uniformed Services Employment and Reemployment Rights Act and Executive Compensation
A. Bonuses
B. Stock Options
C. Nonqualified Deferred Compensation and I.R.C. §409A
VI. Uniformed Services Employment and Reemployment Rights Act and Employer Policies, Plans, and Collective Bargaining Agreements
VII. Uniformed Services Employment and Reemployment Rights Act and Retirement Plans
Introductory Material
A. Covered Plans
B. Effect of Return to Work
C. Noncontributory Pension Plans
D. Contributory Pension Plans
1. Contributory Defined Benefit Plans
2. Contributory Defined Contribution Plans
E. Calculating Compensation for the Period of Uniformed Service
F. Interaction of USERRA and the Tax Qualification Rules for Qualified Pension Plans
G. Plan Loans
H. Multiemployer Plans
I. Pension Plan Terminations During a Period of Military Service
VIII. The Heroes Earnings Assistance and Relief Tax Act of 2008
Introductory Material
A. Survivor Benefits upon Death During Military Leave
B. Optional Service Credit for Benefit Accrual/Contribution Purposes
1. In General
2. Employer Contributions That Are Contingent on Employee Contributions or Elective Deferrals
C. Differential Wage Payments
1. Prior Law
2. HEART Act Changes
a. Income Tax Withholding
b. Retirement Plans
D. Deemed Severance from Employment for Purposes of Taking a Plan Distribution
E. Qualified Reservist Distributions — Retirement Plans
F. Qualified Reservist Distributions — Health Plans
1. Eligibility
2. Amount and Taxation of Distribution
3. Timing
4. Cafeteria Plan Procedures
G. Plan Amendments for Compliance with the HEART Act

Working Papers

Table of Worksheets
Worksheet 1 Certification of Health Care Provider for Employee's Serious Health Condition
Worksheet 2 Certification of Health Care Provider for Family Member's Serious Health Condition
Worksheet 3 Notice of Eligibility and Rights & Responsibilities
Worksheet 4 Designation Notice
Worksheet 5 Certification of Qualifying Exigency For Military Family Leave
Worksheet 6 Certification for Serious Injury or Illness of Covered Servicemember — for Military Family Leave
Worksheet 7 Certification for Serious Injury or Illness of a Veteran for Military Caregiver Leave