Can an employer recover its portion of health plan premiums when an employee fails to return from FMLA?

When an employee fails to return from FMLA leave, an employer may recover its share of health plan premiums paid during unpaid FMLA leave unless the reason the employee does not return is due to:

• The continuation, recurrence or onset of either a serious health condition of the employee or the employee’s family member, or a serious injury or illness of a covered servicemember, which would otherwise entitle the employee to leave under the FMLA. When an employee fails to return to work because of these circumstances, the employer may require medical certification of the employee’s or the family member’s serious health condition or the covered servicemember’s serious injury or illness. Such certification is not required unless requested by the employer. The employee pays the cost of the certification. The employee is required to provide medical certification in a timely manner, which is within 30 days from the date of the employer’s request. If the employer requests medical certification and the employee does not provide such certification in a timely manner (within 30 days), or the reason for not returning to work does not meet the test of other circumstances beyond the employee’s control, the employer may recover 100 percent of the health benefit premiums it paid during the period of unpaid FMLA leave.
• Other circumstances beyond the employee’s control. Examples include such situations as when a parent chooses to stay home with a newborn child who has a serious health condition and when a relative or individual other than a covered family member has a serious health condition and the employee is needed to provide care. Other examples are found in the FMLA regulations.
• When an employee elects or an employer requires paid leave to be substituted for FMLA leave. In such a situation, the employer may not recover its share of health premiums for any period of FMLA leave covered by paid leave. Because leave provided under a plan covering temporary disabilities (including workers’ compensation) is paid leave, recovery of health insurance premiums does not apply to such paid leave.

An employee who returns to work for at least 30 calendar days is considered to have returned to work. An employee who transfers directly from taking FMLA leave to retirement, or who retires during the first 30 days after the employee returns to work, is also deemed to have returned to work.

To the extent recovery is allowed, the employer may recover the premium costs through deductions from any sums due to the employee such as unpaid wages, vacation pay and profit sharing accounts provided such deductions do not otherwise violate applicable federal or state wage payment or other laws. In most states this means obtaining authorization from the employee to make the deduction. Acquiring this authorization at the time FMLA leave is initiated is advised, as it may be difficult to obtain authorization at the end of the leave. When the employer cannot make deductions, it may have to resort to initiating legal action against the employee if it is to recover the costs.