What are an employer's obligations regarding benefits for an employee who is out on leave under the Americans with Disabilities Act (ADA) or the Family and Medical Leave Act (FMLA)?

Although the legal requirements of the FMLA and the ADA are similar in some regards, at times an employer may find that the requirements of one law contradict the other, and the employer cannot comply with both laws. In these cases, it is important to know which law takes precedence, or “trumps,” the other. And employee benefits happens to be one such case.

ADA and benefits issues

Continuation. The ADA does not require the continuation of benefits during leave given as a reasonable accommodation unless the employer ordinarily continues benefit coverage for other types of unpaid leave.

Modification. Unpaid leave does not entitle the employer to modify or restrict the benefits to which an employee would otherwise be entitled.

FMLA and benefits issues

Continuation. The FMLA requires continuation of benefits under the following circumstances:

• Health insurance. The employer is required to maintain coverage for employees under any IRS-approved, employer-provided group health plan during leave at the same level and conditions of coverage that would have been provided if the employee had not taken leave.
• Other benefits. The employer is required to follow the same policies for continuing such benefits as are provided for other types of unpaid leave. If the employer has no policy with regard to continuation of benefits, the employer and employee may agree on an arrangement.

Bonuses and evaluations. Employees on FMLA leave are not entitled to any bonus or payment, whether it is discretionary or nondiscretionary, when the bonus or other payment is based on the achievement of a specified goal such as hours worked, products sold, or perfect attendance (assuming that the employee has not met the goal due to FMLA leave).

Employers may deny such payment only if employees on an equivalent leave status (i.e., non-FMLA leave) are also denied the bonus or incentive payment. Bonuses that are not premised on the achievement of a goal, such as a holiday bonus given to all employees, may not be denied to an employee because he or she took FMLA leave.

Premiums and new benefits. The employer and employee must continue to pay premiums as though the employee had continued working. Employees are entitled to any new health plans or benefits that are implemented during FMLA leave.

• Notice. Notice of any opportunity to change plans or benefits must be given to employees on FMLA leave at their address of record.
• Resumption of benefits. If an employee chooses not to retain health coverage during FMLA leave, benefits must immediately be resumed at the same level as when leave began, without a qualifying period, physical examination, or exclusion of preexisting conditions upon the employee’s return to work.

FMLA and ADA interplay

If an employee is on unpaid FMLA leave and has a disability covered by the ADA, the employer must continue benefits (under the FMLA), regardless of whether the employer ordinarily continues benefit coverage for other types of unpaid leave. In this case, the FMLA benefit continuation requirements “trump” the ADA.

This article is part of a series that compares and contrasts various aspects of the two laws.

Next article: Providing intermittent leave under both laws.