What happens when an employee exhausts their FMLA entitlement and remains unable to work?

The Family and Medical Leave Act (FMLA) provides eligible employees with up to 12 weeks of unpaid, job-protected leave for qualifying reasons, including their own serious health condition or to care for a covered family member. But what happens when an employee exhausts their 12-week FMLA entitlement and still cannot return to work? This situation presents complex challenges for both employers and employees, depending on the reason for leave and applicable laws.

This post explores the key considerations and compliance issues employers should consider when an employee remains unable to work after exhausting FMLA leave, focusing on two common scenarios: (1) leave for the employee’s own serious health condition, and (2) leave to care for a family member. We also discuss extended leave options, the impact to the employee’s benefits, and how employers can manage these situations.

Scenario 1: Employee’s own serious health condition — potential ADA implications

When an employee exhausts their 12 weeks of FMLA leave due to their own serious health condition but remains unable to return to work, the employer’s obligations may not end with FMLA. The employer should consider alternative leave of absence (LOA) options, potentially including state/local leave laws that provide greater entitlement than FMLA, or any company-provided LOA options (e.g., company medical LOA). If the employee is ineligible for, or has exhausted, any state/local or company-provided leave options, the Americans with Disabilities Act (ADA) may come into play. The ADA requires employers to engage in an interactive process to determine whether a reasonable accommodation, such as additional leave, is appropriate.

Key points for employers:

• Review and consider all applicable LOA options: Employers must review the employee’s eligibility for other types of LOA that might cover absences related to the employee’s own medical condition, including any state/local or company-provided leave options. Alternatively, employers must consider whether the LOA can be extended as a reasonable accommodation under the ADA.
• Interactive process: Employers should initiate or continue the interactive process with the employee to explore accommodations that would enable the employee to perform the essential functions of their job. Alternatively, the employer may need to consider how long the employee needs to remain out, and whether extending the employee’s LOA may be considered a reasonable accommodation.
• Duration of extended leave: There is no fixed limit under the ADA for how long an employer must provide extended leave as an accommodation. However, an employer is generally not required to provide indefinite leave. The employer will need to understand the employee’s expected or estimated return to work date in order to determine whether it is reasonable to extend the leave.
• Job protection: Leave as a reasonable accommodation includes the right to return to the employee’s original position. However, if an employer determines that holding the employee’s job open will cause an undue hardship, the employer may consider alternative options to enable the employee to return to work, or deny the extension of leave, potentially resulting in unexcused absences or termination.
• Short-term disability: Coverage under an applicable short-term disability (STD) policy may end upon the exhaustion of job- and benefit-protected leave. However, if an employee has an approved STD claim, the benefits do not necessarily end upon separation of employment (depending on the specific policy language), so an employee may still receive benefits after the end of the approved leave period (and potentially after separation of employment).

Scenario 2: Leave to care for a family member

When an employee exhausts FMLA leave to care for a family member, the ADA generally does not apply because the employee is not the individual with the disability. In this case, the employer’s obligations are limited to leave options available under state/local leave laws or company-provided LOA.

Options for extended LOA to care for a family member:

• State and local leave laws: Some states and localities provide additional unpaid or paid family leave entitlement beyond the 12 weeks available under FMLA. These laws often run concurrently with FMLA, when applicable, but the additional entitlement may provide additional time for the employee to remain on leave.
• Company-provided leave: Employers may have policies that provide extended leave entitlement beyond FMLA. Employers must review the employee’s eligibility for company-provided leaves that cover absences to care for a family member, including any specifically defined caregiver leave options or a more general Personal LOA policy that could be used in this situation. Employers should also review their company-provided leave policies to assess whether and how job protection is applied during these types of LOA.
• No additional leave available: If no state/local law or company policy provides additional leave, the employee’s leave may end after FMLA exhaustion. The employer may then consider any additional absences unprotected.

Impact on employee benefits

When an employee exhausts FMLA leave and remains out of work, benefits administration becomes a key concern.

• Health insurance: Under FMLA, employers must maintain group health insurance coverage on the same terms as if the employee were working. After FMLA ends, continuation of health benefits depends on company policy, state law, or COBRA requirements. If state/local law or company policy provides for the continuation of health insurance coverage, employers should communicate clearly about premium payments and coverage status. If the LOA is unpaid, employers may bill the employee during the LOA or recoup the payments from the employee when the employee returns to work.
• Other benefits: Eligibility for other benefits such as retirement plan contributions, paid time off accrual, and bonuses may be affected by extended leave. Whether these benefits are maintained after exhaustion of FMLA depends on the specific requirements of any state/local law that may apply, or the employer’s policies if leave is extended under some form of company-provided LOA.

Practical steps for employers

To effectively manage situations where employees exhaust FMLA leave and remain unable to work, employers should consider the following best practices:

1. Review applicable laws: Understand federal, state, and local leave laws that may provide additional leave rights or benefits.
2. Engage in interactive process: For employees with their own serious health condition, promptly engage in the ADA interactive process to explore reasonable accommodations, including leave as a reasonable accommodation.
3. Communicate clearly: Maintain open communication with the employee regarding leave status, benefits, and return-to-work expectations.
4. Document decisions: Keep thorough records of leave requests, medical certifications, accommodation discussions, and benefits communications.
5. Update policies: Ensure leave and accommodation policies reflect all applicable legal requirements and clearly outline procedures for extended leave.

Conclusion

Exhaustion of FMLA leave does not necessarily end an employee’s leave rights or employer obligations. Employers must carefully navigate the interplay of FMLA, ADA, state and local leave laws, and company policies to manage extended leave situations. Proactive communication, thorough documentation, and a clear understanding of applicable laws will help employers support employees while minimizing risks.

How can Marsh McLennan Agency’s Absence, Disability, & Life Practice help?

Marsh McLennan Agency’s Absence, Disability, and Life Practice offers expert guidance to help organizations navigate complex leave and accommodation challenges. We provide tailored strategies to ensure compliance, optimize leave management, and support both employees and managers through difficult situations. Partner with us to build effective, compliant leave programs that reduce risk and promote workforce well-being. Contact us today to learn how we can support your organization’s leave management needs.