Federal Employment Laws That Impact Compensation and Benefits

The Affordable Care Act

The Affordable Care Act (ACA) regulates individual and employer-sponsored health care coverage in the following ways:

1. Permits young adults to stay on their parents’ employer-sponsored plan until age 26.
2. Eliminates pre-existing conditions and lifetime and annual dollar limits for essential health benefits.
3. Prohibits gender discrimination.
4. Requires employers with greater than 50 “full-time equivalent” employees (this includes a full-time equivalent for every 30 hours worked) to offer qualified employer-sponsored health insurance plans or pay penalties as part of the Employer Shared Responsibility Provisions. An employer sponsored qualified plan must:
   • Be affordable - it does not cost more than 9.96% (2026) of the employee’s household income and
   • Provide minimum value - it covers at least 60% of the allowed cost of benefits
5. Provides a tax credit to small employers based on the number of employees and average annual wage. Small Business Tax Credit Information

FMLA

The Family and Medical Leave Act of 1993 (FMLA) is a United States federal law requiring covered employers to provide employees job-protected and unpaid leave for qualified medical and family reasons. Qualified medical and family reasons include: personal or family illness, family military leave, pregnancy, adoption, or the foster care placement of a child. The FMLA provides eligible employees with leave of up to 12 weeks per year. Leave may be paid or unpaid depending on any paid time off an employee has accrued. Such leave may be for:

• the birth of and to bond with a new-born child
• an employee's adoption or foster care of a child
• care of an immediate family member (spouse, child, parent) with a serious health condition or
• an employee's own serious health condition
• qualified exigencies when an employee’s spouse, child, or parent is on covered active duty or called to covered active duty as a member of the regular armed forces or the national guard.

FMLA also provides eligible employees up to 26 workweeks of unpaid, job protected leave in one 12-month period to care for a covered service member with a serious injury or illness.

The employee is to give 30 days' notice before taking such leave, when practical. The employee retains all benefits during the leave and is entitled to return to the same or equivalent position.

Employers should understand the legal requirements of managing FMLA concurrently with other leaves such as sick, disability, workers’ compensations, or vacation. The FMLA allows employers to require employees, or employees to elect to substitute accrued vacation, sick, or other paid leave for all or part of the 12 weeks of unpaid leave. Employees on workers’ compensation leave typically receive some benefit payment as a percent of their normal pay. In recognition of this benefit, the FMLA regulations do not allow the use of paid leave if the employee is receiving workers’ compensation, even to make the employee "whole" or if requested by the employee. However, the employer may designate the leave as FMLA leave and count it against the employee’s 12-week FMLA entitlement. Some states may have supplemental leave regulations that are in addition to the FMLA.