Employers who have merged with or acquired another business should conduct an audit of their newly acquired employees. That is because FMLA provides these new employees with continued protections if their new employer meets the definition of a “successor in interest”. Therefore, it is highly recommended when acquiring new employees from a prior business to be aware of compliance issues and liability that the FMLA may create for you.
So, what is a “successor in interest”? The Federal Regulations under 29 CFR 825.107 have provided the following factors to be used to determine if an employer is a “successor in interest”:
(1) Substantial continuity of the same business operations;
(2) Use of the same plant;
(3) Continuity of the workforce;
(4) Similarity of jobs and working conditions;
(5) Similarity of supervisory personnel;
(6) Similarity in machinery, equipment, and production methods;
(7) Similarity of products or services; and
(8) The ability of the predecessor to provide relief.
This last factor has been considered the least compelling factor because, in most FMLA cases, “a former employer cannot grant leave to a person no longer employed by it.” See Osei v. Coastal Int'l Sec., Inc., 69 F. Supp. 3d 566, 570 (E.D. Va. 2014).
This same principle of successor in interest has also applied to contractors who take over a contract from a previous employer, provided they meet the above factors. Specifically, courts have held that the purpose of providing FMLA leave to long-term employees cannot be circumvented by switching companies to handle the contract. Id. at 571.
The obligations for an employer who is a successor in interest are the same as if the employee were continuously employed by a single employer. This means that if an employee took FMLA-covered leave, the obligation continues with the new employer. Additionally, this also means that previous hours of service and periods of employment with the former employer are included when determining if the employee is eligible for FMLA leave. For example, if the employee at the previous employer worked for eleven months, and has now worked for you for one month, that employee will meet the twelve-month employment requirement to qualify for FMLA leave because their prior time is counted.
Should you have questions or concerns about complying with FMLA requirements, Employers Council can help through consultation with our attorneys and HR consultants. Another resource that may be of help includes our training: FMLA: A Guide for Human Resources and Managing the Ill and Injured Worker. Additionally, members of Employers Council have access to our library of whitepapers that address FMLA.
Desiree Sullivan is an attorney with Employers Council.