Many employers are left in the dark about how overtime plays a role in FMLA administration. With the recent announcement of the Department of Labor’s final rule updating the overtime regulations, we don’t see this analysis getting any easier any time soon.
Starting with the basic rule, if an employee would normally be required to work overtime, but can’t because of an FMLA-qualifying reason, the overtime hours are counted against the employee’s FMLA entitlement. For example, if an employee would normally be required to work for 48 hours in a particular week, but due to a serious health condition the employee is unable to work more than 40 hours that week, the employee would use 8 hours of FMLA leave out of the 48-hour workweek.
But does it make a difference if the overtime is voluntary or mandatory? A recent case out of the Eighth Circuit sheds light on the importance of answering that inquiry for purposes of FMLA entitlement and usage. In Hernandez v. Bridgestone Tire, the employee was approved to take intermittent time off under the FMLA to care for his son who suffers from asthma. His leave entitlement was based on his fixed work schedule at 42 hours a week as a tire-builder, although he would occasionally be offered overtime. The employee exhausted his FMLA entitlement two years later and was subsequently terminated. The company’s progressive attendance policy considered Hernandez’s absences to be unexcused on the days that he was scheduled for overtime. Hernandez argued that Bridgestone violated his FMLA rights.
The court’s decision hinged on the analysis of whether the overtime shifts that Hernandez missed due to caring for his son were ‘voluntary,’ or ‘mandatory.’ As a company standard, when overtime was needed, Bridgestone posted a list for all interested to sign up. Once the list was complete, Bridgestone would then select individuals based on seniority to fill the overtime slots. At the time the employee was selected off the list for overtime, the employee was expected to show up for that overtime shift, or be disciplined in accordance with their regular attendance policy. The court used this company policy to conclude that what was originally a voluntary sign-up became mandatory overtime due to the attendance requirement.
The Eighth Circuit relied on the DOL’s Final Rule, which states that in making mandatory overtime determinations, the focus must be on “whether the employee would have been required to work the overtime hours but for the taking of FMLA leave…” Here, Hernandez, once chosen from the list, was expected to work overtime shifts unless there was a qualifying FMLA reason why he couldn’t, or he would be disciplined and risk termination.
After the court determined Hernandez’s shifts were mandatory once he elected to take them, it looked to see whether Bridgestone correctly accounted for this time in Hernandez’s FMLA entitlement and usage. Bridgestone was correct to deduct any FMLA qualifying leave from Hernandez’s entitlement, but miscalculated Hernandez’s FMLA entitlement. The court noted “hours missed for FMLA-qualifying reasons [are] to be deducted from the employee’s FMLA-leave entitlement only if those hours were included in the employee’s leave allotment.” This is the case “even where the employer may not know in advance of the workweek when overtime will be scheduled or how much overtime will be worked that week.” The court concluded that because Bridgestone did not include the mandatory overtime hours when calculating Hernandez’s FMLA entitlement, it interfered with his FMLA rights.
What does this mean for employer’s who offer overtime to their employees? In light of this case, as well as the DOL’s guidance, we urge employers to review their overtime policies to determine whether or not hours are ‘mandatory,’ or ‘voluntary.’ Next, ensure that employees who are expected to work ‘mandatory overtime’ are receiving FMLA entitlement that reflects those hours based on the overtime schedule. For example, if Employee A works 40 hours a week, with 10 hours of mandatory overtime, Employee A’s FMLA entitlement should be based on a 50-hour work week, rather than a 40-hour work week. While this analysis can be complicated, the DOL provides guidance when an employee’s schedule is inconsistent. Here, the employer has the ability to compute a weekly average of the hours over the 12 months prior to the leave, and this new calculation would be used for the employee’s leave entitlement. (29 C.F.R. § 825.205(b)(3)).
Leave laws can be complicated, especially when it comes to varying schedules and overtime. “Leave” it to the experts at ReedGroup; we offer a compliance centered and clinical approach to leave of absence management.