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Paid Family Medical Leave: The High Cost of the “Grand Bargain” for Employers - Pt. 2

There are several unintended(?) consequences from the Paid Family Medical Leave’s (“PFML’s”) passage that impact employers in the Commonwealth. This article, the second in a series of articles highlighting the problems of PFML, will address two. First, the PFML’s retaliation provision, crafted by special-interest groups, will eliminate at-will employment status for many employees who take PFML leave. Second, PFML will establish an expensive sub-class of employees who work parttime hours but possess full-time benefits.

PFML Consequence # 1: The Erosion of At-Will Employment.

The PFML statute makes clear that employees who take PFML leave on a yearly basis have de facto guaranteed employment. In particular, courts will presume that an unlawful termination happened where an employee took PFML within six months of being fired. Given that PFML allows an employee to remain completely out of work for nearly six months – or take intermittent leave throughout the entire Benefit Year – many employees who use PFML yearly cannot be terminated absent clear and convincing evidence. No statute, common law precedent, or regulation imposes such a stringent termination standard for terminating at-will employees.

An employer’s inability to terminate employees could create efficiency and morale problems. For instance, companies inevitably hire individuals who refuse to perform at anything but minimum levels, or become malcontent. While such employees perform adequately to avoid discipline, they provide no positive benefit to the company. Currently, employers are legally permitted to terminate these individuals, thereby avoiding any lasting detrimental effects on work culture or company morale. But with PFML, malcontent or minimally performing employees need only strategically use PFML for either their own serious health condition or that of a family member at least once every six months to retain their employment indefinitely.

Once PMFL begins in January 2021, employers will be required to retain undesirable workers because there rarely exists clear and convincing evidence when terminating an employee. Being forced to keep mediocre or “just punching the clock” employees will undoubtedly impact the company’s bottom line.

PFML Consequence # 2: Part-Time Employees with Full-Time Benefits.

Another unanticipated(?) but significant cost imposed on employers by PFML will be a newly-created subclass of employees. These employees will use PMFL to unilaterally move to part-time employment while retaining benefits provided solely to full-time employees.

Specifically, PFML provides 20 weeks of leave for employees with a serious health condition. Because this leave can be taken on an intermittent basis, employees have 100 paid leave days to use each Benefit Year. Even assuming an employee has no vacation weeks, and only typical paid holidays, intermittent leave PFML allows employees who work a five-day work week to shift to a three-day work week for 50 weeks each year (52 weeks if they forgo taking PMFL during two weeks that have a paid holiday). Because PMFL resets yearly, employees with “Chronic Conditions” or “Permanent or Longterm Conditions” (or employees with family members having such conditions) effectively become part-time workers. Unlike normal part-time employees, however, these individuals retain their medical and health benefits and are assured perpetual employment due to retaliation provision. Moreover, an employer has no recourse to modify this employees’ work status to be in line with their work schedule limitations, even if the employee has no intention (or is physically incapable) of returning to full-time work. And, even though this employee’s revised work schedule going forward would normally make him ineligible for vacation time, PFML prohibits an employer from prorating or eliminating this employee benefit (unless vacation time is accrued based on hours worked).

Even worse, because most new hires are immediately eligible to take PFML, companies will be targeted by individuals who desire the health, medical, and pension benefits available solely to full-time employees, but who have no intention of ever working full-time. These individuals will apply for full-time employment, but immediately go out on intermittent PFML upon hire and remain on part-time status permanently, while getting on the corporation’s health and benefit plans. And, the company will likely have to hire another individual to cover the hours the first hire takes off for PFML.

Conclusion

The PFML as enacted drastically erodes the Commonwealth’s long-standing jurisprudence governing at-will employment. Moreover, the statute imposes significant financial burdens on employers by mandating that companies continue to provide fulltime benefits to employees who unilaterally decide to work a permanent part-time schedule under the PMFL’s intermittent leave provision. While employers must carefully draft leave policies to attempt to manage these pitfalls, such unintended negative outcomes imposed on Commonwealth employers mandates a necessary review of the PFML Act by the Legislature. Only they have to power to mitigate these unintended consequences of guaranteed employment and perpetual part-time employment for full-time employees.

This article was originally published in the Bristol County Chamber of Commerce Business News for October 2019.

About William Rocha

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William J. Rocha provides part-time general counsel services to privately-owned small and mid-size companies. He began his fifteen-year legal career as a litigator, focusing primarily on business, employment, and patent litigation. He then went in ho… Read More

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