Who is a “key employee” under the Family Medical Leave Act (FMLA)?

Who is a “Key Employee” under the FMLA?
Limits on certain employees’ rights to restoration after taking FMLA leave.

The FMLA provides that an eligible employee is entitled to take medical leave for various reasons, such as a serious health condition, which makes an employee unable to perform the basic duties of his or her job. The FMLA guarantees certain protections to qualifying employees who take FMLA leave. Among these guarantees is the employee’s right to be restored to his or her position or a similar position with the same benefits upon his or her return to work after taking FMLA leave. However, the “key employee” provision in 29 U.S.C. § 2614(b) (http://www.law.cornell.edu/uscode/text/29/2614) provides an exception. The employer is not required to restore an eligible employee if the employee is a key employee (or “highly compensated employee”) and other certain conditions are satisfied.

As defined in 29 C.F.R. § 825.217(a), “A ‘key employee’ is a salaried FMLA-eligible employee who is among the highest paid 10 percent of all employees employed by the employer within 75 miles of the employee’s worksite.” An employer is not required to restore a “key employee” to his or her position upon returning from FMLA leave if three conditions are met: (1) the denial of restoration is “necessary to prevent substantial and grievous economic injury” to the employer’s operations, (2) the employee is notified of the employer’s intent to deny restoration upon the employer’s decision that this injury would occur, and (3) in any case where employee has taken leave, the employee decides not to return to work after receiving this notice. See Regulations.

The idea behind this exception is the recognition that some employees are central to the operation of a business. See 139 Cong. Rec. H 396, 437 (daily ed. Feb. 3, 1993). In limited circumstances, the “employee in question is crucial to the ongoing operation of the employer.” Because of the economic impact on an employer due to the required restoration of a key employee upon returning from FMLA leave, an employer should be entitled to deny these employees automatic restoration. Regulations promulgated by the Department of Labor note that an employee’s restoration “may be denied only when restoration itself – not the employee’s absence – will cause substantial and grievous economic injury.” Kephart v. Cherokee Cnty., N.C., 229 F.3d 1142 (4th Cir. 2000) (unpublished) (citing 29 C.F.R. § 825.218(a)).

Employers have a limited time frame during which they make invoke the exception and must follow specific procedures to do so. An employer must provide written notice to an employee at the time the employee provides FMLA paperwork. In the alternative, notice must be given to the employee as soon as practicable once the employer determines the employee is a “key employee.” The employer must also notify the employee that he or she qualifies as a “key employee” and inform him or her of the potential consequences of that classification. See § 825.219(a). See also Attorney Alan Sklover Article. Thereafter, the employee must be given a reasonable amount of time to return, knowing he or she may no longer have a position upon the end of his or her leave.

Key employees are not limited to CEOs or CFOs of corporations. Court’s have allowed companies to classify a variety of positions as “key employee” positions. For example, a hotel’s executive housekeeper may qualify as a key employee. Oby v. Baton Rouge Marriott, 329 F. Supp. 2d 772, 782 (M.D. La. 2004). The executive housekeeper was the third highest paid hotel employee and was relied on to keep the hotel clean and the customers happy. Id. The hotel needed an immediate replacement, it notified the executive of its intent to replace her, and if forced to reinstate her, the hotel would have suffered grievous economic harm. See id. See also Kephart v. Cherokee County, N.C., 229 F.3d 1142 (4th Cir. 2000) (county tax administrator was a “key employee” and reinstatement to his position after leave would have caused substantial and grievous economic harm to the county).

If you feel that you have been terminated under the key employee exception under the FMLA, you should contact an employment attorney to see if the law was applied correctly. Simply put, every situation must be analyzed individually.