Compliance December 27, 2006

FMLA Service Requirement Need Not Be Continuous

December 27, 2006 (PLANSPONSOR.com) - A federal appellate court has ruled that a worker does not have to be employed for 12 continuous months to be eligible for Family and Medical Leave Act benefits.
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The 1 st  US Circuit Court of Appeals threw out a lower court ruling that car salesman Kenneth Rucker did not qualify for FMLA leave because his years of service with Auburn, Maine-based Lee Auto Malls was not continuous.

Citing the position of the US Department of Labor (DoL) as stated in a legal brief filed in the appellate case, the 1 st  Circuit judges ruled that the FMLA law was “ambiguous” about whether the 12-month service requirement had to be continuous.

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The appellate court asserted: “We hold that … regulations promulgated by the United States Department of Labor (DOL), as interpreted by the DOL, establish that previous periods of employment do count.”

The 1 st  Circuit Judges sent the case back to US District JudgeGeorge Singal of the US District Court for the District of Mainefor additional hearings.

According to the appellate court, Rucker worked at Lee Auto Malls for five years, left, and returned five years later. Seven months after that, he took medical leave. He was fired two months later and filed the FMLA suit.

 

The case is Kenneth Rucker vs. Lee Holding Co., dba Lee Auto Malls The ruling is  here .

Opinions December 26, 2006

IMHO: Deal or No Deal?

Deals like the one announced on Friday by The 401(k) Company, Nationwide, and Schwab are the kind of thing that gives plan sponsors heartburn.
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Not that one in particular, I should hasten to add—one could have the same queasiness about the recent Great-West/US Bank deal (see  Great-West Sweeps Up More 401(k) Business ), the sale of Southeastern Employee Benefit Services (see  First Charter Lets Go of Recordkeeping Unit ), or just about any structural change at a 401(k) recordkeeper.

The reasons for that angst are obvious, I would suspect.   Change—even change for the better—is frequently disruptive to the human psyche.   Most of us tend to drift into comfortable “ruts” of pattern, or perhaps habit—places where we know what to expect and, roughly anyway, when to expect it.   And, at least in my experience, the more frazzled your existence, the more one pines for these oases of quiet and relative clarity.

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There are few things more disruptive to the peace or clarity of a 401(k) plan than a switch in recordkeepers, even when the change is instigated by a regular, thoughtful, focused evaluation of the alternatives; even when that change is the product of a desperate quest driven by a truly awful service relationship.   But it is perhaps especially disruptive when the change is thrust on the plan by forces outside of its control or instigation.   Particularly because, IMHO, that kind of change calls for at least a passing review of what the change means to the plan.   

Some changes are less impactful than others on the plan’s daily administration, of course.   Changes that trigger a mass departure of key staff can be upsetting, and those that necessitate moving to a new processing platform even more so.   Change that requires communication to participants is anathema to most plan sponsors (and trust me, when a local provider engages in a big financial transaction, the media will cover it, and participants WILL ask).  

On the other hand, changes that are merely structural in nature can be a big yawn—and changes that result in additional resources, better capabilities, a clearer focus, and a stronger commitment to “the business” are not as rare as you might think (though not as common as the post-announcement press releases would have you believe, either).     

Regardless of whether the change appears to be good, bad, or inconsequential on its face, you need to ask—and get an answer to—the question “What does this mean to us?”  

And the question only you can answer—”What are you going to do about it?”

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