The Family and Medical Leave Act (FMLA) is one of the most frequently misunderstood employment laws affecting small businesses. Some small business owners believe it applies to them when it doesn’t; others assume it doesn’t apply when it does. Getting this wrong — in either direction — creates legal exposure or unnecessary administrative burden. This guide clarifies exactly who FMLA covers, what it requires, and how it interacts with your employee benefits, including group health insurance.
Does FMLA Apply to Your Business?
FMLA applies to “covered employers” — and not every business qualifies. Under federal FMLA, a covered employer is one that: (1) is a private-sector employer with 50 or more employees in 20 or more workweeks in the current or preceding calendar year, (2) is a public agency regardless of size, or (3) is an elementary or secondary school regardless of size.
The 50-employee threshold is the key for most small businesses. If you have fewer than 50 employees, federal FMLA does not apply to you. This covers the majority of small businesses — the U.S. Small Business Administration reports that approximately 80% of private sector employers have fewer than 50 employees.
However — and this is critical — many states have their own family and medical leave laws with lower employee thresholds. New Jersey’s Family Leave Act (NJFLA) covers employers with 30 or more employees. California’s CFRA covers employers with 5 or more employees. Oregon, Washington, Massachusetts, Colorado, and others have their own laws. Even if federal FMLA doesn’t apply, state law may require similar protections. Always check your state’s requirements.
What Does FMLA Require?
For covered employers, FMLA provides eligible employees with up to 12 weeks of unpaid, job-protected leave per year for:
- Birth and care of a newborn child (within the first year)
- Placement of a child through adoption or foster care (within the first year)
- Care for a spouse, child, or parent with a serious health condition
- The employee’s own serious health condition that prevents them from performing job functions
- Qualifying exigency related to a family member’s military service
An additional 26 weeks is available in a 12-month period to care for a covered servicemember with a serious injury or illness.
“Job-protected” means employees must be restored to the same or an equivalent position upon return. Equivalent means virtually identical in terms of pay, benefits, shift, schedule, and working conditions. You cannot discipline, demote, or otherwise penalize employees for taking FMLA leave.
Employee Eligibility Requirements
Not all employees at a covered employer are eligible for FMLA. An employee must: (1) have worked for the employer for at least 12 months, (2) have worked at least 1,250 hours in the 12 months before the leave, and (3) work at a location where the employer has 50 or more employees within 75 miles.
The 1,250-hour requirement is approximately 24 hours per week over 52 weeks. Part-time employees who work less than this threshold are not eligible for FMLA. New employees who haven’t yet reached their one-year anniversary are also not eligible, even if they meet the hour requirement.
Health Insurance During FMLA Leave
One of the most practically important aspects of FMLA for employers who offer group health insurance: you must maintain the employee’s group health coverage during FMLA leave under the same terms as if the employee had continued to work. This means continuing to pay your employer contribution to their health insurance while they’re on leave.
The employee is still responsible for their share of the premium. If they normally pay their portion through payroll deduction, you’ll need to arrange an alternative payment method during leave — some employers bill the employee monthly, others allow employees to prepay or catch up upon return. You must notify employees in advance of their obligation to continue paying their share and the consequences (typically a 30-day grace period before coverage lapses) if they don’t.
If an employee chooses not to return from FMLA leave, you can recover the employer-paid health insurance premiums from the employee — unless they don’t return due to a serious health condition or circumstances beyond their control. This recovery right is often overlooked but can be significant.
FMLA Notice and Documentation Requirements
FMLA involves significant paperwork and notice requirements on both sides. When an employee requests leave (or when you become aware of a potential FMLA situation), you must:
- Provide the employee with a Notice of Eligibility and Rights within 5 business days
- Request medical certification (using DOL form WH-380 or equivalent) within 5 business days
- Provide Designation Notice (confirming or denying FMLA designation) within 5 business days of receiving certification
- Maintain the employee’s FMLA records for at least 3 years
Employees generally must give 30 days advance notice for foreseeable leave (planned surgery, expected birth). For unforeseeable leave, they must notify you as soon as practicable. Employees don’t need to specifically say “FMLA” — if they describe a situation that qualifies, you’re responsible for recognizing the potential FMLA applicability and providing the required notices.
FMLA and Your Group Benefits Strategy
FMLA intersects with your broader benefits strategy in important ways. Businesses approaching the 50-employee threshold should be aware that crossing it triggers FMLA obligations. Some employers strategically manage headcount near this threshold, though employment lawyers generally advise against making hiring decisions primarily based on FMLA avoidance.
Pairing FMLA with short-term and long-term disability insurance creates a comprehensive leave management program. STD provides income replacement during an employee’s own medical leave (which qualifies under FMLA), giving employees financial support while on job-protected leave. This combination — job protection from FMLA, income replacement from STD — is the gold standard for employee leave management.
Frequently Asked Questions
Do I have to pay employees during FMLA leave?
No. FMLA requires unpaid leave. However, you may — and many employers do — require employees to use accrued paid leave (PTO, sick leave, vacation) concurrently with FMLA leave. This means an employee’s FMLA leave runs at the same time as their paid leave, not in addition to it.
What if an employee abuses FMLA leave?
FMLA abuse is a real concern and employers have some tools to address it. You can require medical certification, require recertification every 30 days for continuing conditions, contact the healthcare provider for clarification (through HR, not the employee’s direct manager), and require second opinions at employer expense. Document patterns of suspicious leave (e.g., always on Mondays or Fridays) and work with an employment attorney before taking adverse action.
Can I deny FMLA leave?
You can deny FMLA leave if the employee or the covered employer doesn’t meet eligibility requirements, or if the requested leave doesn’t qualify for a covered reason. You cannot deny FMLA leave to an eligible employee for a qualifying reason. Improper denial of FMLA leave is one of the most common FMLA violations and can result in significant legal liability.
How does NJ Paid Family Leave interact with FMLA?
New Jersey’s Family Leave Insurance (FLI) program provides up to 12 weeks of paid leave benefits (at approximately 85% of wages, up to the state maximum) for bonding or care of a seriously ill family member. FLI runs concurrently with FMLA for qualifying events. For NJ employers, the combination of FMLA (job protection) + FLI (wage replacement) provides employees with meaningful support during family leave events.
FMLA compliance is complex, and the intersection with state laws, group health insurance, and disability benefits makes it even more so. At Garden State Benefits, Paul Z Olah helps small businesses across NJ and 25 other states build benefits packages that meet legal requirements and support their employees. Call 856-880-6340 or email paul@gardenstatebenefits.com for guidance.