How are the FMLA rights of employees handled when the employer undergoes a merger or an acquisition?

Employees maintain their rights under the FMLA when their employer merges with or is acquired by another company if the new employer is considered a successor-in-interest. This term is defined in FMLA regulation 825.107.  The regulation states:

"(a) For purposes of FMLA, in determining whether an employer is covered because it is a "successor in interest" to a covered employer, the factors used under Title VII of the Civil Rights Act and the Vietnam Era Veterans' Adjustment Act will be considered. However, unlike Title VII, whether the successor has notice of the employee's claim is not a consideration. Notice may be relevant, however, in determining successor liability for violations of the predecessor. The factors to be considered include:

(1) Substantial continuity of the same business operations;

(2) Use of the same plant;

(3) Continuity of the work force;

(4) Similarity of jobs and working conditions;

(5) Similarity of supervisory personnel;

(6) Similarity in machinery, equipment, and production methods;

(7) Similarity of products or services; and

(8) The ability of the predecessor to provide relief.

(b) A determination of whether or not a successor in interest exists is not determined by the application of any single criterion, but rather the entire circumstances are to be viewed in their totality."

If the new company is determined to be a successor-in-interest, employees from the previous employer cannot be deprived of their FMLA rights, even if the new company is not considered a covered employer. If the successor employer is covered under the FMLA, the time the employees worked for the previous employer must also be counted when future FMLA eligibility is computed. For example, an employee who worked 10 months and 1,200 hours with the original employer would have to work only 2 more consecutive months and 50 more hours with the new employer to meet the 12 months and 1,250 hours eligibility requirement for FMLA leave.

An employee who was eligible to take leave and had notified the previous employer of his or her intention to take FMLA leave may not be denied leave by the successor employer. By the same token, any employees who began their FMLA leave with the preceding employer must be allowed by the successor employer to continue the leave. In addition, all other requirements that apply to covered employers would still apply to the successor-in-interest with regard to those FMLA leaves earned before the merger or acquisition, even if the successor employer is not covered. Those aspects include (a) continuing required benefits, (b) reserving the employee's original or a substantially equivalent position, and (c) refraining from discriminating in any way against employees who have exercised their rights under the FMLA.

In summary, when an employer is a successor-in-interest, employees' entitlements are the same as if the employment by the predecessor and successor was continuous employment by a single employer.