Family and Medical Leave Act: Benefits for Employees and Employers

Introduction

The world we know today is the result of endless processes of change that have impacted all features of life, and the business community is no exception. The most remarkable shifts include a switching focus from production to customer satisfaction and the transformation of organizational employees from machine operators into a company's most valuable asset. Globalization and market liberalization have generated numerous positive effects, including the maximization of comparative advantages and growing consumer access to a wide range of products and services. They have, however, also prompted more dramatic responses aimed at helping economic agents cope with the demands of a highly competitive era.

The mention of employees' transformation and fierce competition is not incidental — both reveal a strong connection with the topic of this paper. Employees are the ones capable of supporting organizations in reaching their overall objectives; they make companies competitive and increase their chances of success within the market. Given this reality, it was only natural for contemporary managers — in both public and private institutions — to develop and implement strategies that increase personnel satisfaction, which in turn leads to improved performance. A satisfied employee is also a loyal employee, translating into reduced turnover rates and lower expenditures. In order to fully benefit from skilled and qualified staff, organizations develop broad sets of benefits. Employers thus compete not only in the product market but also in the labor market, striving to attract and retain the best-qualified workers, with employee benefits serving as their primary competitive weapon.

The list of employee benefits is extensive, and interest from both scholars and practitioners has grown exponentially in recent years, largely due to the advantages benefits generate for both employee and employer. In the most general terms, employee benefits increase on-the-job satisfaction — a satisfied employee works harder and sustains the organization in reaching its overall goals — which in turn ensures high profitability for the employer, whose investment in benefits returns in the form of increased income.

Employee Benefits in the Modern Workplace

Employee benefits range from offering a pleasant, dynamic work environment and flexible scheduling to bonuses, premiums, and salary raises. "The narrowest definition of the term includes only employer-provided benefits for death, accident, sickness, retirement, or unemployment […] on the other hand, the broadest definition of employee benefits includes all benefits and services, other than wages for time worked, that are provided to employees in whole or in part by their employers" (Beam and McFadden, 2001).

It is somewhat difficult to catalogue employee benefits simply because their number is vast, and because managers increasingly recognize the importance of individualized incentives — tailoring benefits to the personal needs of each employee or group. Despite this complexity, the most common types of employee benefits include medical coverage, flexible work schedules, telecommuting options, training programs, and the creation of a positive work environment.

Medical coverage generally ensures employees that some of their medical costs will be covered through health insurance. Fully covered expenses are typically those ordered or prescribed by a physician, and most often refer to hospitalization costs (room, board, medicines, anesthesia, and so on), outpatient surgical centers, or services provided by nurses (Beam and McFadden, 2001).

Flexible work schedule implies that workers still work 40 hours per week, but could, for instance, work four ten-hour days or five eight-hour days outside the conventional 9-to-5 schedule (McKay, 2009). This significantly improves working conditions and increases satisfaction for both employees and employers; employees are able to arrange their schedules in a way that allows them to attend to personal matters, and when they are at work they are more relaxed and focused, generating higher performance levels for the organization.

Telecommuting is directly linked to flexible scheduling but in a more geographical sense — it enables employees to perform work-related tasks from remote locations outside the traditional office (Hansen). Benefits to the employee include better alignment of personal and professional life and the elimination of a daily commute. For the employer, it generates more satisfied employees and reduced operational costs, as office maintenance fees are lowered.

Training programs were initially conceived as a means of improving employee skills with the aim of driving higher performance and greater contributions to organizational profit. Over time, these programs evolved into a signal that the organization values its employees and invests in their professional development. Gaining advanced professional skills also gives workers greater job security — if an employee eventually leaves, he or she possesses the qualifications to secure a new position. The benefit for the employee is increased satisfaction; the benefit for the employer is increased performance.

The Family and Medical Leave Act: Overview and Eligibility

Other benefits and incentives may include: creating a pleasant yet challenging work environment in which employees can interact both socially and professionally; organizing social events outside the workplace to build team cohesion; performance-based raises and promotions; and extended medical coverage for the employee's spouse and children, among others.

The Family and Medical Leave Act (FMLA) is part of United States federal legislation and was enacted on August 5, 1993. Broadly, it allows eligible employees to take up to 12 weeks of unpaid leave under specific conditions. Throughout this leave, workers continue to enjoy the benefits of a regular employee and their jobs are preserved. It is important to note, however, that in order to maintain those benefits during the leave, the employee must continue to pay their portion of federal taxes, life insurance premiums, and other contributions.

Initially, four conditions allowed employees to take leave under the FMLA, but in 2008 a fifth reason was added. The current provisions of the law state that an employee may take up to 12 weeks of unpaid leave under the following circumstances:

The FMLA's purpose is to allow employees to balance personal and professional responsibilities while protecting their job positions. Since its enactment, millions of employees have taken time away from work to care for themselves or loved ones without fear of losing their jobs. Although FMLA leave is unpaid, employees or employers may opt for an accrued pay arrangement, drawing on accumulated vacation or sick days. Upon return, the employee must be reinstated to the same position, or a substantially equivalent one, with the same salary and benefits as before the leave.

Despite general compliance, the FMLA can at times be difficult to invoke because its eligibility requirements are fairly restrictive. To qualify, an employee must simultaneously meet all three of the following criteria:

An important feature of the FMLA is that leave may be taken intermittently. For example, an employee could choose to work part time over a 24-week period rather than taking 12 consecutive weeks off. An employee might also take one week of leave per month or any other arrangement suited to their circumstances. Employees are generally required to provide 30 days' advance notice of their intent to take leave and may be asked to submit documentation confirming the need for leave. Additionally, when a husband and wife work for the same employer, they cannot simultaneously take FMLA leave for the same newborn, adopted child, or ill parent (Vikesland, 2006).

Conclusion

The business community is evolving at a rapid pace and entrepreneurs must employ numerous strategic courses of action in order to best respond to these modifications. Two of the most notable changes involve the approach taken toward employees and customers: managers now place greater emphasis on increasing satisfaction in both areas. One concrete attempt to improve employee on-the-job satisfaction has been the adoption and implementation of the FMLA.