Does a public school system have to keep paying for an employee's health insurance during unpaid family or medical leave under FMLA?

Plain-English summary

The superintendent of Greene County Public Schools asked whether the Family and Medical Leave Act of 1993 required local education agencies to pay for employees' health benefits during unpaid leave under the Act. The AG answered yes for eligible employees. FMLA required covered employers, including local education agencies, to maintain existing group health coverage during authorized leave at the level and under the conditions that would have applied if the employee had kept working.

The question arose from FMLA's reference to the Internal Revenue Code definition of a "group health plan." A separate part of that Code section says that, for purposes of that section, "employer" does not include a federal or other governmental entity. Read together, those provisions could support an argument that a local education agency's health plan fell outside FMLA's maintenance requirement.

The AG considered that argument unlikely to prevail. The opinion found no indication that Congress intended to exempt state agencies from maintaining eligible employees' health benefits. It also quoted a Labor Department regulation stating that public agencies must maintain those benefits during FMLA leave. The opinion said an agency could recover its contributions if an employee failed to return after authorized leave, except when the failure was for FMLA-qualifying reasons or other reasons beyond the employee's control.

Currency note

This 1993 opinion addresses the Act and Labor Department regulation as they stood when the opinion was issued. Check current FMLA law and the terms of the applicable health plan for a present leave question.

Background and statutory framework

Section 104(c)(1) of FMLA required an employer to maintain coverage under a group health plan throughout authorized leave at the level and under the conditions that would have applied during continuous employment. The opinion quoted the Senate Report: the employer should contribute "at the same rate and in the same amount" as if the employee had continued working.

FMLA borrowed the definition of a group health plan from Internal Revenue Code § 5000(b)(1). The opinion acknowledged that § 5000(d)'s government-employer exclusion, when read with that definition, created a possible objection. It relied on the Act's purpose, the absence of an apparent congressional exemption, and the Labor Department's statement that public agencies must maintain health benefits.

Common questions

Does this opinion require a North Carolina public school system to maintain health coverage during FMLA leave?

Yes, for eligible employees on leave authorized under FMLA. The AG concluded that local education agencies must maintain and pay for their group health benefits during that period.

Why did the Internal Revenue Code definition matter?

FMLA referred to the Code's definition of a group health plan. Another part of that Code section excluded governmental entities from its definition of employer, creating an argument that school systems' plans were outside FMLA's coverage requirement. The AG found that argument unlikely to prevail.

Can a school system recover its health-plan contributions if the employee does not return?

The opinion says local education agencies, like other covered employers, may recover contributions if the employee fails to return after authorized leave, unless the failure is for FMLA-qualifying reasons or other reasons beyond the employee's control.

Source

• Landing page: https://ncdoj.gov/opinions/family-and-medical-leave-act/

Citations

• Family and Medical Leave Act of 1993, Pub. L. No. 103-3
• 29 U.S.C. § 2614(c)(1) (FMLA § 104(c)(1))
• Internal Revenue Code § 5000(b)(1)
• Internal Revenue Code § 5000(d)
• 29 C.F.R. § 825.209 (DOL FMLA regulation)
• 58 Fed. Reg. 31803 (1993)
• S. Rep. No. 103-3

Original opinion text

July 7, 1993

Dr. Paul K. Browning
Superintendent
Greene County Public Schools
301 Kingold Boulevard
Snow Hill, North Carolina 28580

Re: Advisory opinion; Family and Medical Leave Act; Pub. L. 103-3 (1993)

Dear Dr. Browning:

You recently wrote to Mr. Speas to ask whether the Family and Medical Leave Act of 1993, Pub. L. No. 103-3 (FMLA), obligates local education agencies (LEA's) to pay for employee health benefits during the time that the employee might be on unpaid family or medical leave authorized under the FMLA. It is our opinion that the FMLA does require LEA's to pay for health benefits for eligible employees while they are on leave authorized by the Act.

The Act is intended to promote a healthier balance between work and family responsibilities. Under the FMLA, eligible employees of covered employers, including LEA's, are entitled to up to 12 weeks of unpaid leave per year in the event of the birth or adoption of a child or a serious illness of the employee or an immediate family member of the employee. At the end of the leave, the employer must reinstate the employee to the same or an equivalent job.

During the period of leave, covered employers are required to maintain pre-existing health coverage. Section 104(c)(1) (29 U.S.C. § 2614(c)(1)) specifically provides:

[T]he employer shall maintain coverage under any "group health plan" (as defined in section 5000(b)(1) of the Internal Revenue Code of 1986) for the duration of such leave at the level and under the conditions coverage would have been provided if the employee had continued in employment continuously for the duration of such leave.

The Senate Report regarding this section of the FMLA states:

During the period of leave, the employer shall make contributions to the plan at the same rate and in the same amount as if the employee were continuously employed. Unless the contrary is clearly demonstrated by the employer, it shall be assumed that the employee would have continued working on the same schedule, at the same wage or salary, and otherwise under the same terms and conditions as he or she normally worked before going on leave.

S. Rep. No. 103-3.

Therefore, in general, covered employers must pay for eligible employees' "group health plan" while the employees are on leave authorized under the FMLA.

The obligation of LEA's to pay for their employees' health insurance, however, is not clear. Section 104 of the Act incorporates the definition of "group health plan" from section 5000(b)(1) of the Internal Revenue Code of 1986 into the FMLA. Section 5000(b)(1) of the Internal Revenue Code defines "group health plan" to mean:

[A]ny plan of, or contributed to by, an employer (including a self-insured plan to provide health care (directly or indirectly)) to the employers' employees, former employees, or the families of such employees or former employees.

That definition would include the LEA's health plans. However, section 5000(d) of the Internal Revenue Code of 1986 specifically states, "For purposes of this section, the term 'employer' does not include a Federal or other governmental entity." Thus, while the subsection which excludes Federal and other government entities is separate from the section (5000(b)(1)) which is referred to in the FMLA, it is clear that, when read in its entirety, section 5000 of the Internal Revenue Code excludes LEA's health plans from the definition of "group health plans." Therefore, one might argue that the FMLA also excludes those plans from the benefits which LEA's are obligated to maintain for employee on leave under the FMLA.

In our opinion, this argument is unlikely to prevail. Legislative intent is the primary principle of statutory construction. Based on previous sections of the Act and the stated purpose of the Act, it does not appear that Congress intended to exempt state agencies from the obligation to maintain the group health plan benefits of their eligible employees who take leave authorized under the FMLA. Moreover, the U.S. Department of Labor regulations for the Act indicate that LEA's are responsible for maintaining health care premiums during the leave period. The relevant regulation states:

FMLA includes public agencies within its definition of covered employers. There is no indication in either the Act or its legislative history supporting a view that public agencies are not required to maintain employees' health benefits during periods of FMLA leave, and they must do so.

58 Fed. Reg. 31803 (1993) (to be codified at 29 C.F.R. § 825.209).

Therefore, it is our opinion that Congress intended LEA's to maintain and pay for eligible employees' group health benefits during leave periods authorized under the FMLA. Like other covered employers, LEA's may recover any contributions to the group health plan if the employee fails to return to work after the expiration of authorized leave unless the failure to return is for FMLA-qualifying reasons or other reasons beyond the employee's control.