When it merged with another bank, Wells Fargo replaced its traditional employee sick- and vacation-leave policy with a paid-time-off (PTO) program and a short-term disability plan. A PTO policy combines annual vacation, sick days and personal leave days into a single block of paid time off.
The switch by Wells Fargo meant that employees lost their stock of unused sick days. In addition, unused vacation days were converted to PTO days.
Two employees filed a class-action lawsuit claiming the change violated theAct ( ). They pointed to the company's previous policy that allowed workers to substitute accrued sick or vacation leave for any part of the 12 weeks of unpaid leave that the FMLA requires.
A lower court dismissed the case and a federal appeals court agreed, saying that the bank's switch to a less favorable benefits package doesn't violate the FMLA.
Reason: The FMLA doesn't require employers to "lock in" a particular benefits package. An employer complies with the FMLA as long as it meets or exceeds the law's minimum requirements, which Wells Fargo's programs did. (Funkhouser v. Wells Fargo Bank N.A., No. 00-35397, 9th Cir., 2002)
Advice: You can freely change your leave programs even if the change results in a reduction in benefits. Nothing in the FMLA prevents your company from amending its existing leave and. Just make sure they comply with the requirements of the law.
Also, include a note in your benefits policies that says you can amend your policy at any time. For more on, visit www.dol.gov/esa/fmla.htm.
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