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Family leave: what will it mean for Indiana businesses?

Citing the need of the American family for "flexibility in the workplace," President Clinton last February signed into law the Family and Medical Leave Act of 1993.

The bill was twice vetoed by President Bush because of his avowed disaffection for governmental mandates, but Clinton ratified the measure within the first 20 days of his presidency. The law is inspired by the laudable objective of improving the productivity of business by strengthening the American family. But the Family Leave Act is another futile attempt by Congress to resolve the nation's woes by placing the costs of well-intentioned social legislation exclusively on the shoulders of corporate America.

Only the largest American employers--those with 50 or more employees--are covered by the Family Leave Act. Those employers are required to provide up to 12 weeks of unpaid leave to employees with at least one year of service so they may care for a newborn or newly adopted child, a seriously ill spouse, a child or a parent. The worker also may take unpaid leave because of the employee's own serious illness if he or she is rendered unable to perform job functions.

During the leave, the employer is required to continue the employee's group health coverage--to the extent it would otherwise have been provided. At the conclusion of the leave, the employee is entitled to return to his or her former position, or to an otherwise equivalent position with respect to pay and benefits.

Although the requirements may not, at first blush, appear exceedingly burdensome for covered employers, businesses should be aware of three areas of serious concern. First, and perhaps most importantly, the law provides an unmistakable incentive for employee abuse. The law does allow employers to require employees who request leave to obtain a health-care provider's certification of the need for leave. But employers with substantial worker compensation experience will realize how easily the system can be manipulated. Moreover, although a request for 12 weeks of continuous, unpaid leave may be relatively painless for most large employers, the law also allows employees to make repeated requests for short-term or intermittent leave, which may well prove more problematic in day-to-day business operations.

Second, by dictating the specific terms by which employees may take leave, the law may effectively establish a uniform leave policy for the largest American employers. That limits their ability to design leave programs catering to the specific needs of their own work forces. The law may also hinder the ability of employers utilizing cafeteria-style benefits programs to create alternatives to family and medical leave for prospective employees who may not need such leave. That would give smaller employers not covered by the law a distinct advantage in recruiting the most highly qualified candidates.

A third concern for covered employers is that the legislation fails to clearly define--and in some cases fails to define at all--critical terms in the law. In practice, therefore, employers will likely be forced to construe these terms liberally in favor of employees (and employee abuses), or face the threat of costly litigation. What is more, experience has shown that the federal courts tend to treat employee rights expansively when interpreting this type of legislation.

Although it may be true that providing rational family and medical leave policies will ultimately enhance labor-management relations, the Family Leave Act represents the inherently flawed philosophy that federal legislators and bureaucrats know better than the owners and managers of American businesses how best to manage their own work forces.

Moreover, the amendments to the law which will likely surface in the next few years -- paid family and medical leave and coverage of smaller employers--will certainly prove more onerous for American companies than the law's current requirements. Our leader in Washington would do well to learn the important lesson that American businesses, rather than being the enemy of the people and the evil from which government must protect us, are the lifeblood of this nation and the foundation of its fiscal strength.

Gregory W. Guevara practices in the area of labor and employment law with the Indianapolis-based law firm Bose, McKinney & Evans.
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Author:Guevara, Gregory W.
Publication:Indiana Business Magazine
Date:May 1, 1993
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