The Family and Medical Leave Act of 1993, 67934-68133 [E8-26577]

Agencies

• Wage and Hour Division
• DEPARTMENT OF LABOR

[Federal Register Volume 73, Number 222 (Monday, November 17, 2008)]
[Rules and Regulations]
[Pages 67934-68133]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-26577]



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Part II





Department of Labor





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Wage and Hour Division



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29 CFR Part 825



The Family and Medical Leave Act of 1993; Final Rule

Federal Register / Vol. 73, No. 222 / Monday, November 17, 2008 / 
Rules and Regulations

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DEPARTMENT OF LABOR

Wage and Hour Division

29 CFR Part 825

RIN 1215-AB35


The Family and Medical Leave Act of 1993

AGENCY: Employment Standards Administration, Wage and Hour Division, 
Department of Labor.

ACTION: Final rule.

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SUMMARY: This document provides the text of final regulations 
implementing the Family and Medical Leave Act of 1993 (``FMLA''), the 
law that provides eligible employees who work for covered employers the 
right to take job-protected, unpaid leave for absences due to the birth 
of the employee's son or daughter and to care for the newborn child; 
because of the placement of a son or daughter with the employee for 
adoption or foster care; in order to care for a son, daughter, spouse, 
or parent with a serious health condition; or because of the employee's 
own serious health condition that makes the employee unable to perform 
the functions of his or her job. The final regulations also address new 
military family leave entitlements included in amendments to the FMLA 
enacted as part of the National Defense Authorization Act for FY 2008, 
which provide additional job-protected leave rights to eligible 
employees of covered employers who provide care for covered 
servicemembers with a serious injury or illness and because of 
qualifying exigencies arising out of the fact that a covered military 
member is on active duty or has been notified of an impending call or 
order to active duty in support of a contingency operation.

EFFECTIVE DATE: These rules are effective on January 16, 2009.

FOR FURTHER INFORMATION CONTACT: Richard M. Brennan, Senior Regulatory 
Officer, Wage and Hour Division, Employment Standards Administration, 
U.S. Department of Labor, Room S-3502, 200 Constitution Avenue, NW., 
Washington, DC 20210; telephone: (202) 693-0066 (this is not a toll 
free number). Copies of this rule may be obtained in alternative 
formats (Large Print, Braille, Audio Tape or Disc), upon request, by 
calling (202) 693-0675. TTY/TDD callers may dial toll-free 1-877-889-
5627 to obtain information or request materials in alternative formats.
    Questions of interpretation and/or enforcement of the agency's 
regulations may be directed to the nearest Wage and Hour Division (WHD) 
District Office. Locate the nearest office by calling the WHD's toll-
free help line at (866) 4US-WAGE ((866) 487-9243) between 8 a.m. and 5 
p.m. in your local time zone, or log onto the WHD's Web site for a 
nationwide listing of WHD District and Area Offices at: https://
www.dol.gov/esa/contacts/whd/america2.htm.

SUPPLEMENTARY INFORMATION:

I. Background

A. What the FMLA Provides

    The Family and Medical Leave Act of 1993, Public Law 103-3, 107 
Stat. 6 (29 U.S.C. 2601 et seq.), was enacted on February 5, 1993, and 
became effective for most covered employers on August 5, 1993. As 
enacted in 1993, FMLA entitled eligible employees of covered employers 
to take job-protected, unpaid leave, or to substitute appropriate 
accrued paid leave, for up to a total of 12 workweeks in a 12-month 
period for the birth of the employee's son or daughter and to care for 
the newborn child; for the placement of a son or daughter with the 
employee for adoption or foster care; to care for the employee's 
spouse, parent, son, or daughter with a serious health condition; or 
when the employee is unable to work due to the employee's own serious 
health condition.
    On January 28, 2008, President Bush signed into law H.R. 4986, the 
National Defense Authorization Act for FY 2008 (``NDAA''), Public Law 
110-181. Section 585(a) of the NDAA expanded the FMLA to allow eligible 
employees of covered employers to take FMLA-qualifying leave 
``[b]ecause of any qualifying exigency (as the Secretary [of Labor] 
shall, by regulation, determine) arising out of the fact that the 
spouse, or a son, daughter, or parent of the employee is on active duty 
(or has been notified of an impending call or order to active duty) in 
the Armed Forces in support of a contingency operation.'' See 29 U.S.C. 
2612(a)(1)(E) (referred to herein as ``qualifying exigency leave''). 
The NDAA also provided that ``an eligible employee who is the spouse, 
son, daughter, parent, or next of kin of a covered servicemember shall 
be entitled to a total of 26 workweeks of leave during a [single] 12-
month period to care for the servicemember.'' See 29 U.S.C. 2612(a)(3)-
(4) (referred to herein as ``military caregiver leave''). In addition 
to establishing these two new leave entitlements (referred to together 
throughout this document as the ``military family leave provisions''), 
section 585(a) of the NDAA included conforming amendments to 
incorporate the new military family leave entitlements into the FMLA's 
current statutory provisions relating to the use of FMLA leave and to 
add certain new terms to the FMLA's statutory definitions. The NDAA 
amendments were enacted January 28, 2008. The amendments require the 
Secretary of Labor to define ``any qualifying exigency'' through 
regulation. See 29 U.S.C. 2612(a)(1)(E).
    To be eligible for FMLA leave, an employee must have been employed 
for at least 12 months by the employer and for at least 1,250 hours of 
service with the employer during the 12 months preceding the leave, and 
be employed at a worksite at which the employer employs at least 50 
employees within 75 miles of the worksite. See 29 U.S.C. 2611(2). 
Employers covered by the FMLA must maintain any preexisting group 
health coverage for an eligible employee during the FMLA leave period 
under the same conditions coverage would have been provided if the 
employee had not taken leave and, once the leave period has concluded, 
reinstate the employee to the same or an equivalent job with equivalent 
employment benefits, pay, and other terms and conditions of employment. 
See 29 U.S.C. 2614. If an employee believes that his or her FMLA rights 
have been violated, the employee may file a complaint with the 
Department of Labor or file a private lawsuit in federal or state 
court. If the employer has violated an employee's FMLA rights, the 
employee is entitled to reimbursement for any monetary loss incurred, 
equitable relief as appropriate, interest, attorneys' fees, expert 
witness fees, and court costs. Liquidated damages also may be awarded. 
See 29 U.S.C. 2617.
    Title I of the FMLA is administered by the U.S. Department of Labor 
and applies to private sector employers of 50 or more employees, public 
agencies and certain federal employers and entities, such as the U.S. 
Postal Service and Postal Regulatory Commission. Title II is 
administered by the U.S. Office of Personnel Management and applies to 
civil service employees covered by the annual and sick leave system 
established under 5 U.S.C. Chapter 63, plus certain employees covered 
by other federal leave systems. Title III established a temporary 
Commission on Leave to conduct a study and report on existing and 
proposed policies on leave and the costs, benefits, and impact on 
productivity of such policies.\1\ Title IV

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(also administered by the Department of Labor) contains miscellaneous 
provisions, including rules governing the effect of the FMLA on more 
generous leave policies, other laws, and existing employment benefits. 
Title V originally extended leave provisions to certain employees of 
the U.S. Senate and House of Representatives, but such coverage was 
repealed and replaced by the Congressional Accountability Act of 1995, 
2 U.S.C. 1301.
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    \1\ The Commission surveyed workers and employers in 1995 and 
issued a report published by the Department in 1996, ``A Workable 
Balance: Report to Congress on Family and Medical Leave Policies.'' 
See https://www.dol.gov/esa/whd/fmla/fmla/1995Report/family.htm. In 
1999, the Department updated the employee and establishment surveys 
conducted in 1995 and published a report in January 2001, 
``Balancing the Needs of Families and Employers: Family and Medical 
Leave Surveys, 2000 Update.'' See https://www.dol.gov/esa/whd/fmla/
fmla/toc.htm.
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B. Regulatory History

    The FMLA required the Department to issue initial regulations to 
implement Titles I and IV of the FMLA within 120 days of enactment, or 
by June 5, 1993, with an effective date of August 5, 1993. The 
Department issued a Notice of Proposed Rulemaking (``NPRM'') on March 
10, 1993 (58 FR 13394), inviting comments until March 31, 1993, on a 
variety of questions and issues. After considering the comments 
received from a wide variety of stakeholders, including employers, 
trade and professional associations, advocacy organizations, labor 
unions, state and local governments, law firms, employee benefit firms, 
academic institutions, financial institutions, medical institutions, 
Members of Congress, and others, the Department issued an interim final 
rule on June 4, 1993 (58 FR 31794), which became effective on August 5, 
1993, and which also invited further public comment on the interim 
regulations. Based on this second round of public comments, the 
Department published final regulations on January 6, 1995 (60 FR 2180), 
which were amended on February 3, 1995 (60 FR 6658) and on March 30, 
1995 (60 FR 16382) to make minor technical corrections. The final 
regulations went into effect on April 6, 1995.
    On December 1, 2006, the Department published a Request for 
Information (``RFI'') in the Federal Register (71 FR 69504) requesting 
the public to comment on its experiences with, and observations of, the 
Department's administration of the law and the effectiveness of the 
FMLA regulations. The RFI's questions and areas of focus were derived 
from stakeholder meetings, a number of rulings of the U.S. Supreme 
Court and other federal courts, the Department's experience 
administering the law, information from Congressional hearings, and 
public comments filed with the Office of Management and Budget 
(``OMB'') as described by OMB in three annual reports to the Congress 
on the FMLA's costs and benefits.\2\ The Department received more than 
15,000 comments in response to the RFI from workers, family members, 
employers, academics, and other interested parties.\3\ This input 
ranged from personal accounts, legal reviews, industry and academic 
studies, and surveys to recommendations for regulatory and statutory 
changes to address particular areas of concern. The Department 
published its Report on the comments received in response to the 
Department's RFI in June 2007 (see 72 FR 35550 (June 28, 2007)).
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    \2\ These OMB reports may be found at the following Web sites: 
2001 report: https://www.whitehouse.gov/omb/inforeg/
costbenefitreport.pdf; 2002 report: https://www.whitehouse.gov/omb/
inforeg/2002_report_to_congress.pdf; 2004 report: https://
www.whitehouse.gov/omb/inforeg/2004_cb_final.pdf.
    \3\ Comments are available for viewing at the Wage and Hour 
Division of the Employment Standards Administration, U.S. Department 
of Labor, 200 Constitution Avenue, NW., Washington, DC 20210. Many 
comments are also available on https://www.regulations.gov.
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    On February 11, 2008, the Department published an NPRM in the 
Federal Register (73 FR 7876) inviting public comments for 60 days on 
proposed changes to the FMLA's implementing regulations. The proposed 
changes were based on the Department's experience of nearly 15 years 
administering the law, the two previous Department of Labor studies and 
reports on the FMLA issued in 1996 and 2001, several U.S. Supreme Court 
and lower court rulings, and a review of the public comments received 
in response to the RFI. The NPRM also sought public comment on issues 
to be addressed in final regulations to implement the 2008 amendments 
to the FMLA providing for military family leave pursuant to section 
585(a) of the NDAA. The Department's NPRM included a description of the 
relevant military family leave statutory provisions, a discussion of 
issues the Department had identified under those provisions, and a 
series of questions seeking comment on subjects and issues for 
consideration in developing the final regulations.
    In response to the NPRM, the Department received 4,689 comment 
submissions (the majority via the Federal eRulemaking Portal at https://
www.regulations.gov) during the official comment period from a wide 
variety of individuals, employees, employers, trade and professional 
associations, labor unions, governmental entities, Members of Congress, 
law firms, and others. Two submissions attached the views of some of 
their individual members: The American Federation of Teachers (528 
individual comments) and MomsRising.org (4,712 individual comments). 
Additional comments submitted via the Regulations.gov eRulemaking 
Portal after the comment period closed were not considered part of the 
official record and were not considered. (Comments may be viewed on the 
Regulations.gov Web site at https://www.regulations.gov/fdmspublic/
component/main?main=DocketDetail&d=ESA-2008-0001.)
    Nearly 90 percent of the comments received in response to the NPRM 
were either: (1) Very general statements; (2) personal anecdotes that 
do not address any particular aspect of the proposed regulatory 
changes; (3) comments addressing issues that are beyond the scope or 
authority of the proposed regulations, ranging from repeal of the Act 
to expanding its coverage and benefits; or (4) identical or nearly 
identical ``form letters'' sent in response to comment initiatives 
sponsored by various constituent groups, such as the American Postal 
Workers Union and several of its affiliated local unions, the 
Associated Builders and Contactors, MomsRising.org, the National 
Organization of Women, the Society for Human Resource Management, 
Teamsters for a Democratic Union, and Women Employed. The remaining 
comments reflect a wide variety of views on the merits of particular 
sections of the proposed regulations. Many include substantive analyses 
of the proposed revisions. The Department acknowledges that there are 
strongly held views on many of the issues presented in this rulemaking, 
and it has carefully considered all of the comments, analyses, and 
arguments made for and against the proposed changes.
    The major comments received on the proposed regulatory changes are 
summarized below, together with a discussion of the changes that have 
been made in the final regulatory text in response to the comments 
received. In addition to the more substantive comments discussed below, 
the Department received some minor editorial suggestions (e.g., 
suggested grammatical revisions and correction of misspelled words), 
some of which have been adopted and some of which have not. A number of 
other minor editorial changes have been made to improve the clarity of 
the regulatory text.

II. Summary of Comments on Changes to the FMLA Regulations

    This summary begins with a general overview of how the new military

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family leave entitlements have been incorporated into the existing FMLA 
regulatory framework, followed by a section-by-section presentation of 
the major comments received on the Department's other proposed 
revisions. As proposed in the NPRM, the section headings in the final 
rule have been reworded from a question into the more common format of 
a descriptive title, and several sections have been restructured and 
reorganized to improve the accessibility of the information. In 
addition, proposed sections of the regulations have been renumbered in 
the final rule to allow for the addition of new regulatory sections 
addressing the military family leave entitlements as described below.

Incorporation of New Military Family Leave Entitlements Into the FMLA 
Regulations

    In crafting these final regulations on military family leave, the 
Department was mindful of the special circumstances underlying the need 
for such leave. In recognition of the military families who may have 
the need to take FMLA leave under these new entitlements, the 
Department worked to finalize these regulations as expeditiously as 
possible. In addition, because many of the NDAA provisions providing 
for military family leave under the FMLA adopt existing provisions of 
law generally applicable to the military, the Department engaged in 
extensive discussions with the Departments of Defense and Veterans 
Affairs before finalizing these regulations. The Department also 
consulted with a number of military service organizations. These 
discussions focused on creating regulatory requirements under the FMLA 
that reflect an understanding of and appreciation for the unique 
circumstances facing military families when a servicemember is deployed 
in support of a contingency operation or injured in the line of duty on 
active duty, as well as providing appropriate deference to existing 
military protocol. The Departments of Defense and Veterans Affairs are 
fully cognizant of the central role each of them will play in ensuring 
that military families are able to avail themselves of the new 
entitlements when needed and to comply with the statutory and 
regulatory requirements for the taking of job-protected leave under the 
FMLA when a servicemember is deployed or seriously injured or ill. The 
Department also acknowledges the critical role employers play in 
helping the men and women serving in the military, especially those in 
the National Guard and Reserves. In workplaces around the country, 
employer support is vital to the implementation of the military family 
leave provisions in a manner that recognizes and contributes to the 
success of the members of the military and their families.
    In the NPRM, the Department specifically requested comments on 
whether the new military family leave entitlements should be 
incorporated into the broader FMLA regulatory framework, or whether 
completely separate, stand-alone regulatory sections should be created 
for one or both of the new entitlements. The Department proposed to 
adopt many of the same or similar procedures for taking military family 
leave as are applied to other types of FMLA leave and suggested a 
number of sections to which conforming changes would need to be made in 
order to reflect these new leave entitlements. For example, the 
Department cited Sec. Sec.  825.100 and 825.112(a) as sections that 
would need to be updated to reflect the military family leave 
entitlements. Among other items, the Department also suggested that the 
poster and general notice discussed in proposed Sec.  825.300(a), the 
eligibility notice in proposed Sec.  825.300(b), and the designation 
notice in proposed Sec.  825.300(c) would need to incorporate 
appropriate references to the military family leave entitlements. The 
Department also requested comments on any other regulatory sections 
that should be revised in light of the military family leave 
entitlements.
    After reviewing the public comments, the Department concurs with 
the majority of comments that stated that the procedures used when 
taking military family leave should be the same as those used for other 
types of FMLA leave whenever possible. The Department believes that 
this approach is beneficial to both employees and employers--each of 
whom should find it easier to apply the same or similar procedures for 
taking and administering FMLA leave regardless of the qualifying 
reason. Accordingly, the Department has, when feasible, incorporated a 
discussion of the new military family leave entitlements into the 
proposed regulatory provisions that concern the taking of FMLA leave 
for other qualifying reasons. The Department also has created four new 
regulatory sections--numbered as Sec. Sec.  825.126, 825.127, 825.309 
and 825.310--which address specific employee and employer 
responsibilities for purposes of military family leave.
    The Department received a few comments regarding the incorporation 
of the military family leave entitlements into the proposed FMLA 
regulatory framework. The National Partnership for Women & Families and 
MomsRising.org both stated:

    Because the military leave provisions have different time 
requirements, different certification requirements, and different 
definitions than the rest of the FMLA, we strongly recommend that 
the regulations for these provisions not be incorporated in the rest 
of the FMLA regulations. Rather, these regulations should have their 
own sections within the FMLA regulations and can refer to the rest 
of the FMLA when necessary. This organization will reduce confusion 
and will allow DOL to issue the military leave regulations much more 
promptly.

The Pennsylvania Governor's Office of Administration also recommended 
``that the regulations for [the military family leave entitlements] be 
separate from the FMLA regulations.''
    On the other hand, a number of commenters urged that the 
Department, as much as possible, incorporate the new regulations 
regarding military servicemember leave into the existing FMLA 
regulations. For example, TOC Management Services argued:

    The DOL should take its cue from Congress, which chose to 
incorporate the provisions of H.R. 4986 into the existing FMLA 
statutes * * *. By organizing the statutes this way, Congress has 
clearly shown an intent to have the new FMLA provisions be an 
integrated part of the FMLA; not a stand-alone provision within the 
other FMLA provisions. Although carving out a section to address the 
new military servicemember leave provisions would be the most 
convenient option for the DOL, it would ultimately lead to 
confusion. Employees and employers reading through the regulations 
to determine their leave rights/obligations may not be aware that 
there is an entirely separate section dealing with military 
servicemember leave. For instance, an employee may read Sec.  
825.112 to determine whether they qualify for leave to care for 
their injured servicemember spouse and end their inquiry after 
reading through that section. It would be confusing to have an 
entirely different section regarding qualifying reasons for leave 
that relates only to military servicemembers. To the extent 
possible, the DOL should follow Congress's lead in incorporating the 
new provisions into the existing ones.

Similarly, the Illinois Credit Union League stated that, ``[because] 
the military and medical provisions are companion regulations, they 
should be incorporated into one statutory scheme to ensure consistency. 
To act otherwise would be to assure a regulatory legal patchwork * * 
*.'' WorldatWork also suggested that the Department ``should 
incorporate the notice provisions provided in this section with the 
notice provisions provided elsewhere in the FMLA regulations. 
Consistency will help in administration.''

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    The Department has decided to incorporate, wherever feasible, the 
new military family leave entitlements into the proposed FMLA 
regulations governing the taking of job-protected leave for other 
qualifying reasons. The Department believes that completely separating 
the military family leave provisions from the provisions governing the 
taking of other types of FMLA leave would create unnecessary confusion 
and complexity for employees and employers. By integrating the military 
family leave provisions into the proposed FMLA regulations where 
applicable and appropriate, employees and employers will be better able 
to understand their rights and obligations under the new entitlements. 
Because Congress chose to incorporate the new entitlements into the 
existing FMLA statutory framework rather than create a new entitlement 
separate from the rest of the FMLA, ensuring that the totality of the 
FMLA regulations reflects the new military family leave provisions is 
both necessary and consistent with congressional intent.
    In most cases, these changes are modest technical changes that 
acknowledge the military leave entitlements in the context of the FMLA. 
For example, some references to certification in the regulations have 
been altered to clarify whether they refer only to ``medical 
certifications'' of a serious health condition or if they refer also to 
``certifications'' under the military family leave provisions. In some 
places, certain references to an employee's entitlement to 12 workweeks 
of leave are changed to simply reference the employee's leave 
entitlement, including the entitlement of up to 26 workweeks for 
military caregiver leave. Minor changes such as this occur in 
Sec. Sec.  825.101, 825.112, 825.122, 825.124, 825.200, 825.202-
825.207, 825.213, 825.300, 825.301, 825.305-825.308, 825.400, and 
825.500. In some instances, the changes are more substantial, such as 
in the notice provisions in Sec. Sec.  825.302 and 825.303, and the 
general description of the FMLA in Sec.  825.100. In addition, several 
new terms related to the military family leave provisions have been 
added to the definitions in Sec.  825.800. Where significant, the 
specific changes required to incorporate the new military family leave 
entitlements into the proposed FMLA regulations are discussed in 
greater detail in the section-by-section analysis of the final 
regulations which follows.
    The Department also recognizes that the NDAA amendments to the FMLA 
created certain new concepts that are applicable only to the taking of 
military family leave. Accordingly, the final rule includes four new 
regulatory sections, numbered Sec. Sec.  825.126, 825.127, 825.309, and 
825.310, which address those unique aspects of the military family 
leave entitlements. These four sections are discussed in greater detail 
below in the section-by-section analysis. Generally speaking, 
Sec. Sec.  825.126 and 825.127 discuss an employee's entitlement to 
qualifying exigency and military caregiver leave respectively. Sections 
825.309 and 825.310 of the final rule cover the certification 
requirements for taking qualifying exigency and military caregiver 
leave respectively. The proposed FMLA provisions beginning with Sec.  
825.309 and ending with Sec.  825.311 have been renumbered in the final 
rule as Sec. Sec.  825.311-825.313 to allow for the addition of these 
two new military family leave certification provisions.

Section-by-Section Analysis of Final Regulations

Section 825.100 (The Family and Medical Leave Act)
    The Department proposed no substantive changes to this section. 
Section 825.100 in the final rule is amended to include a description 
of the military family leave provisions in the general discussion of 
the FMLA. Section 825.100(a) reflects that the FMLA has been amended, 
and also adds the new qualifying reasons for taking leave. Section 
825.100(b) adds the serious injury or illness of a covered 
servicemember for whom the employee is eligible to provide care under 
the FMLA as another reason that precludes an employer from recovering 
health benefits from an employee who does not return to work. Section 
825.100(d) now includes references to military caregiver leave and 
qualifying exigency leave in the overview of certification.
Section 825.101 (Purpose of the Act)
    The Department proposed no substantive changes to this section. 
Section 825.101(a) in the final rule is amended to include a reference 
to the military family leave provisions in the general discussion of 
the purpose of the FMLA.
Sections 825.102-825.103 (Reserved)
    The NPRM proposed to delete and reserve Sec. Sec.  825.102 
(Effective date of the Act) and 825.103 (How the Act affected leave in 
progress on, or taken before, the effective date of the Act), because 
they are no longer needed. The final rule reserves these sections.
Section 825.104 (Covered Employer)
    The Department proposed no changes to this section, which discusses 
employer coverage under the FMLA, and received no comments on this 
section. The final rule adopts the section as proposed.
Section 825.105 (Counting Employees for Determining Coverage)
    The Department proposed no substantive changes to this section, 
which addresses how to count employees for purposes of determining 
coverage. The only change proposed was to update the dates used in the 
example in paragraph (f). The final rule adopts the section as 
proposed.
    TOC Management Services stated that it believes the rule is 
confusing because it states in paragraph (c) that there is no employer/
employee relationship when an employee is laid off. It noted that there 
may be a continuing obligation to that employee, such as under a 
collective bargaining agreement, because the employee has an 
expectation of recall in the event that business picks up again. It 
also stated that many employers mistakenly use the word ``layoff'' when 
the action truly is an administrative termination or downsizing and the 
employee has no expectation of recall.
    The Department has not heard from any other commenters that this 
rule is confusing. Moreover, the fact that an employer may have 
continuing contractual obligations to an individual on layoff does not 
mean that it has a current employer-employee relationship with that 
person within the meaning of the FMLA. Employees who are laid off 
typically are eligible for unemployment insurance benefits, which 
demonstrates the lack of an ongoing employer/employee relationship as 
it is commonly understood. Therefore, the Department is not making any 
changes to the section and is adopting the rule as proposed.
Section 825.106 (Joint Employer Coverage)
    Section 825.106 addresses joint employment. The proposed rule added 
a new paragraph at Sec.  825.106(b)(2) to address joint employment in 
the specific context of a Professional Employer Organization (``PEO''). 
PEOs are unlike traditional placement or staffing agencies that supply 
temporary employees to clients. PEOs operate in a variety of ways, but 
typically provide payroll and administrative benefits services for the 
existing employees of an employer/client. The proposed rule stated that 
PEOs that contract with clients merely to perform administrative

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functions are not joint employers with their clients; however, where 
the PEO has the right to hire, fire, assign, or direct and control the 
employees, or benefits from the work they perform, such a PEO would be 
a joint employer.
    The commenters generally applauded the Department's recognition of 
the differences between PEOs and traditional staffing agencies, but 
they had a number of suggestions for further improvements and 
clarifications. See, e.g., Strategic Outsourcing, Inc.; TriNet Group; 
National Association of Professional Employer Organizations 
(``NAPEO''); American Federation of Labor and Congress of Industrial 
Organizations (``AFL-CIO''); and Fulbright & Jaworski. But see Harrill 
& Sutter (stating proposed change is completely unnecessary and 
probably harmful because companies will begin to call themselves PEOs 
regardless of facts). Based on the comments received, the Department 
has made a number of additional changes, as described below.
    First, many of the commenters expressed concern regarding the 
proposed rule's focus on a PEO's ``right'' to make certain employment 
decisions rather than the ``actual'' role it exercises when evaluating 
whether the PEO is a joint employer. They were concerned particularly 
in light of the fact that several states' laws require PEOs to reserve 
such rights in their contracts with client employers. The commenters 
had different suggestions for further clarification on this point. For 
example, NAPEO noted that PEOs ``contractually assume or share certain 
employer obligations and responsibilities.'' Therefore, NAPEO conceded 
that the ``reality of PEO arrangements is that PEOs do co-employ client 
worksite employees.'' NAPEO recommended, however, that the regulation 
designate PEO clients as the primary employers for FMLA purposes. See 
also TriNet Group. Both NAPEO and TriNet Group stated that PEOs do not 
create the jobs for which they provide administrative services; rather, 
the client employer creates those jobs and the PEO has no authority to 
move an employee to another client. Therefore, they believed that the 
primary employer duty of job restoration should be the responsibility 
of the entity that creates the job opportunity. The AFL-CIO similarly 
stated that ``it makes no sense to consider PEOs as primary employers. 
In fact, designating the PEO as the primary employer for purposes of 
job restoration threatens to deprive employees of their key post-leave 
FMLA right.'' See also Greenberg Traurig (PEOs do not fit the model of 
a primary employer because they do not hire and place employees at a 
work location and thus should not be responsible for reinstatement).
    On the other hand, Strategic Outsourcing, Inc. objected to NAPEO's 
per-se rule designating the clients of PEOs as the primary employers, 
stating that the PEO industry has changed throughout its history and 
will continue to evolve, and that there is great variety among PEOs as 
to the scope of services they deliver. ``[A]ny per-se rule that fails 
to take into account the unique facts of each case will inevitably 
result in improper application of the FMLA.'' Therefore, Strategic 
Outsourcing, Inc. asked the Department to focus on the economic 
realities of the situation, both to determine whether a joint 
employment relationship exists and, if so, to determine which employer 
is the primary employer. ``Such an approach would allow for the 
multifarious forms PEOs take, and would avoid making the application of 
the FMLA dependent on state law and nuances of contractual terms.'' 
Fulbright & Jaworski similarly noted that the FMLA borrows the 
definition of ``employ'' from the FLSA, which utilizes an economic 
realities analysis. Moreover, it disagreed with NAPEO's suggestion, 
stating that PEOs that do not exercise control over a client's 
employees and that do not hire and fire should not be considered joint 
employers. See also Duane Morris (disagreeing with NAPEO's assertion 
that PEOs are always joint employers); Greenberg Traurig (suggesting 
that the regulation follow the case law ``which emphasizes that it is 
the economic realities of the relationship and actual practices that 
determine the employer/employee relationship''); Kunkel Miller & Hament 
(referencing a number of court decisions holding that PEOs/employee 
leasing companies were not joint employers).
    Jackson Lewis concluded that the joint employment concept ``is 
entirely inapposite to the relationship between a PEO and its client 
companies'' because, although a PEO assumes a number of employer 
responsibilities, it does not have the day-to-day control over the 
employees, cannot meaningfully affect the terms and conditions of their 
employment, and does not benefit from the work of those employees. 
Proskauer Rose similarly stated that, although each relationship must 
be evaluated in its totality, with no single factor controlling, ``the 
joint employer doctrine should rarely, if ever, be applied to PEOs,'' 
and that the right to hire and fire ``should be irrelevant to the joint 
employer analysis unless the PEO actually exercises that right.'' In 
contrast, the Equal Employment Advisory Council emphasized that the 
proposed language (stating that where the PEO ``has the right to hire, 
fire, assign, or direct and control the employees, or benefits from the 
work that the employees perform, such a PEO would be a joint employer 
with the client company'') makes a ``critical'' point that ``must be 
retained, since an organization maintaining one or more of these types 
of control indeed would be a `joint employer' under the FMLA and other 
laws.''
    Some of these commenters also addressed the issue of how employers 
must count their employees, if the PEO is a joint employer, to 
determine whether there are 50 employees within 75 miles. See, e.g., 
Proskauer Rose, Greenberg Traurig, and NAPEO. They noted that the size 
of the average PEO client (17 employees) falls squarely within the 
statutory exception to coverage, and they stated that a small company 
that would otherwise be exempt from the FMLA should not be deprived of 
the exception just because it partners with a PEO.
    Finally, a number of commenters stated that the Department used 
confusing terminology in the proposed rule that did not keep clear the 
distinction between a traditional temporary placement or staffing 
agency and an employee leasing agency or PEO. See, e.g., American 
Staffing Association.
    The Department agrees with the commenters that suggested that the 
economic realities analysis is the proper standard for assessing 
whether a PEO is a joint employer. See Sec.  825.105(a). The FMLA 
incorporates the FLSA definition of ``employ,'' which is ``to suffer or 
permit to work.'' 29 U.S.C. 2611(3), incorporating 29 U.S.C. 203(g). As 
the Supreme Court has repeatedly recognized, that definition is 
strikingly broad. See, e.g., Rutherford Food Co. v. McComb, 331 U.S. 
722, 730 (1947). Whether an employment relationship exists must be 
determined in light of the economic realities of the situation. 
Goldberg v. Whitaker House Cooperative, Inc., 366 U.S. 28, 33 (1961). 
An economic realities analysis does not depend on ``isolated factors 
but rather upon the circumstances of the whole activity.'' Rutherford 
Food Co., 331 U.S. at 730. The Department also applied this economic 
realities principle when it promulgated regulations to clarify the 
definition of ``joint employment'' under the Migrant and Seasonal 
Agricultural Worker Protection Act, 29 U.S.C. 1802(5), which also 
incorporates the FLSA definition of ``employ.'' See 62 FR 11734 (Mar. 
12, 1997); 29 CFR Part 500.
    Therefore, the final rule modifies Sec.  825.106(b)(2) of the 
proposed rule by

[[Page 67939]]

adding a sentence to clarify that the ``determination of whether a PEO 
is a joint employer also turns on the economic realities of the 
situation and must be made based upon all the facts and 
circumstances.'' The final rule retains the proposed sentence 
clarifying that a PEO is not a joint employer if it simply performs 
administrative functions, such as those related to payroll and benefits 
and updating employment policies. The final rule modifies the proposed 
sentence pertaining to the right to hire, fire, assign, or direct and 
control to clarify that ``such rights may lead to a determination that 
the PEO would be a joint employer with the client employer, depending 
upon all the facts and circumstances.'' The final rule also adds a 
sentence at the end of Sec.  825.106(c) to clarify that, unlike the 
situation involving traditional placement agencies, the client employer 
most commonly would be the primary employer in a joint employment 
relationship with a PEO.
    With regard to how to count employees in the joint employment 
context, some of the comments demonstrated confusion about which 
employees an employer must count. There appeared to be a misperception 
that if a PEO jointly employs its client employers' employees, each 
client employer therefore also must jointly employ (and count) both the 
office staff of the PEO and the employees of the PEO's other unrelated 
clients. That would only be true, however, if the economic realities 
showed that the PEO office staff or the employees of the other 
unrelated clients were economically dependent on the client employer, 
something which is unlikely. Therefore, the final rule adds a new 
sentence in Sec.  825.106(d) to clarify employee counting in the PEO 
context.
    Finally, the final rule makes minor editorial changes in response 
to the comments noting that the terminology used was confusing with 
regard to leasing agencies. The Department deleted that terminology, 
and the final rule refers only to temporary placement agencies and 
PEOs, the two main categories of employment agencies. Of course, the 
labeling or categorization of a particular employer does not control 
the outcome; all the facts and circumstances in each situation must be 
evaluated to assess whether joint employment exists and, if so, which 
employer is the primary employer.
Section 825.107 (Successor in Interest Coverage)
    No changes were proposed in this section of the current rule, and 
no substantive comment was received. The final rule adopts this section 
as proposed.
Section 825.108 (Public Agency Coverage)
    The Department proposed no changes to this section, which addresses 
what constitutes a ``public agency'' for purposes of coverage. The 
current regulation states that, where there is any question about 
whether a public entity is a public agency as distinguished from a part 
of another public agency, the U.S. Bureau of the Census's ``Census of 
Governments'' will be determinative. In contrast, the regulations 
implementing the Fair Labor Standards Act use this test as just one 
factor in determining what constitutes a separate public agency. See 29 
CFR Sec.  553.102. Because the FMLA incorporates the FLSA's definition 
of ``public agency'' (see 29 U.S.C. 2611(4)(A)(iii), incorporating 29 
U.S.C. 203(x)), the proposal asked whether the FMLA regulation should 
be conformed to the test in the FLSA regulations. The final rule makes 
this regulation consistent with the FLSA regulation.
    Very few commenters addressed this issue. The AFL-CIO stated that 
the ``FLSA test is more appropriate'' because the FLSA factors include 
employment-specific criteria rather than relying primarily on 
governance and taxation issues as the Census does. In contrast, 
Catholic Charities, Diocese of Metuchen stated that a change was not 
necessary because the Census test was ``sufficient for determining 
whether a public agency is a separate and distinct entity.'' It stated 
that, because the test focuses on whether the agency has independent 
fiscal powers and looks at the type of governing body that the agency 
has and the functions that this body performs, the factors are clear 
and concise and less subjective than the FLSA case-by-case 
determination. See also Harrill & Sutter (no need for an amendment 
because, although the FMLA definition of ``public agency'' incorporates 
the FLSA definition, the definition of ``employer'' is broader and 
refers simply to conduct affecting commerce); Robert Jusino (agencies 
should promulgate their rules by using standardized tests and 
definitions unless the FLSA multiple factors tests is significantly 
superior).
    The final rule amends this section to be consistent with the FLSA 
regulation, pursuant to which the Census is just one factor. Because 
the FMLA incorporates the FLSA's definition of ``public agency,'' the 
Department believes that the regulatory tests should be consistent. 
Moreover, as the AFL-CIO noted, the FLSA test allows employment-related 
factors to play a greater role than they do in the Census analysis, 
which the Department believes is appropriate.
Section 825.109 (Federal Agency Coverage)
    The NPRM proposed to update the existing regulations that identify 
the Federal agencies covered by Title I of the FMLA and the Department 
of Labor's regulations to reflect changes in the law resulting from the 
Congressional Accountability Act of 1995, 2 U.S.C. 1301, and a 
nomenclature change in the Postal Regulatory Commission required by 
section 604(f) of the Postal Accountability and Enhancement Act, Public 
Law 109-435, Dec. 20, 2006, 120 Stat. 3242. No substantive comments 
were received on this section and it is adopted in the final rule as 
proposed.
Section 825.110 (Eligible Employee)
    Section 825.110 addresses the requirement that employees are 
eligible to take FMLA leave only if they have been employed by the 
employer for at least 12 months and have at least 1,250 hours of 
service in the 12-month period preceding the leave. The proposed rule 
added a new paragraph at Sec.  825.110(b)(1) to provide that, although 
the 12 months of employment need not be consecutive, employment prior 
to a continuous break in service of five years or more need not be 
counted. The Department also proposed a new paragraph (b)(2) setting 
forth two exceptions to the five-year rule for: (1) A break in service 
resulting from an employee's fulfillment of National Guard or Reserve 
military service obligations; and (2) where a written agreement, 
including a collective bargaining agreement, exists concerning the 
employer's intention to rehire the employee after the break in service. 
In those situations, the proposed rule provided that prior employment 
must be counted regardless of the length of the break in service. The 
proposed rule also stated, in paragraph (b)(4), that an employer may 
consider employment prior to a break in service of more than five 
years, provided that it does so uniformly with respect to all employees 
with similar breaks. The proposed rule stated in paragraph (c)(2) that 
an employer must credit an employee returning from his or her National 
Guard or Reserve obligation with the hours of service that would have 
been performed but for the military service when evaluating the 1,250-
hour requirement, and paragraph (b)(2)(i) stated that the period of the 
military service also must be counted toward the

[[Page 67940]]

12-month requirement. Proposed paragraph (d) clarified that an 
ineligible employee on non-FMLA leave may become eligible for FMLA 
leave while on leave (by meeting the 12-month requirement), and that 
any portion of the leave taken for a qualifying reason after the 
employee becomes eligible would be protected FMLA leave. The proposed 
rule also deleted portions of current paragraphs (c) and (d), based 
upon the Supreme Court's decision in Ragsdale v. Wolverine World Wide, 
Inc., 535 U.S. 81 (2002), because they improperly ``deemed'' employees 
eligible for FMLA leave. Finally, the proposal moved the notice 
provisions in current paragraph (d) to Sec.  825.300(b) and deleted 
current paragraph (e), which relates to counting periods of employment 
prior to the effective date of the FMLA. The final rule adopts the 
changes made in the proposed rule with one modification that extends 
the period for breaks in service from five years to seven years.
    Many commenters addressed various aspects of the proposed rule. 
Numerous employee representatives opposed the proposed five-year cap on 
breaks in service in order for prior employment to count toward the 12-
month requirement. They asserted that the proposal was contrary to the 
statutory text, which does not have any time limit for the 12-month 
requirement; that the legislative history is clear that the months of 
employment do not need to be consecutive; and that the current 
regulation is appropriate and therefore any change would be arbitrary 
and contrary to the remedial purpose of the law. See, e.g., AFL-CIO; 
American Postal Workers Union; Maine Department of Labor; Legal Aid 
Society--Employment Law Center; Sargent Shriver National Center on 
Poverty Law; and Harrill & Sutter. The AFL-CIO stated that most 
employers retain records for seven years as a routine business 
practice, and that employees also might have records for longer than 
five years. It further stated that employer objections regarding the 
administrative burdens associated with combining previous periods of 
employment were not credible in light of the advances in electronic 
compilation and retrieval of data. Therefore, the AFL-CIO suggested 
that, if any limit is imposed, it should be lengthened to seven years 
to conform to standard recordkeeping practices. The American Postal 
Workers Union similarly commented that a five-year cap strikes the 
wrong balance between employees' need for FMLA leave and employers' 
ability to identify prior periods of service. It stated that in most 
cases there will be no question whether an employee had a period of 
prior service sufficient to qualify the employee for protection, and 
that the increasing use of electronic recordkeeping will minimize the 
burden on employers. The National Partnership for Women & Families, the 
Coalition of Labor Union Women, and Women Employed all emphasized that 
the proposed change would cause particular hardships for women, who 
more frequently take extended time off to raise children or to care for 
ill family members and then return to their jobs; the National 
Partnership suggested six or seven years might have a less harmful 
effect. The Cleveland-Marshall College of Law, Employment Law Clinic, 
commented that an employer is not required to rehire a separated 
employee; therefore, the issue arises only if the employer has made a 
conscious decision to rehire a former employee after determining that 
the burden of hiring an employee who qualifies for FMLA rights sooner 
is outweighed by the value that the former employee would have to the 
employer.
    Numerous employers expressed the opposite view and stated that 
having some cap on the length of the gap was at least a step in the 
right direction. For example, the Equal Employment Advisory Council 
(``EEAC'') noted that with the passage of time, manufacturing methods, 
technology, equipment, customers, marketing methods and product lines 
may change dramatically, and an employee who has been gone for a number 
of years is functionally no different from a new employee. Therefore, 
EEAC commented that having an established cutoff beyond which a break 
in service will be ignored balances the interests of employers and 
employees and allows employers to focus benefits on employees who 
exhibit loyalty. However, EEAC and many other employers stated that 
allowing a five-year gap was too long. They suggested that the 
Department should allow a gap of three years, because that would be 
consistent with the length of the FMLA record keeping requirement and, 
thus, there would be appropriate documentation available. They 
commented that allowing a five-year gap would cause administrative 
problems by putting pressure on employers to retain records for that 
longer period, which would be burdensome and yet of little practical 
value to employees because so few would return to their employer after 
that long a gap. See, e.g., EEAC; Chamber of Commerce of the United 
States of America (the ``Chamber''); HR Policy Association; Fisher & 
Phillips; Food Marketing Institute; and Catholic Charities, Diocese of 
Metuchen.
    Other employers suggested that there should be an even shorter 
period. For example, the National Coalition to Protect Family Leave 
stated that the eligibility determination should be based simply upon 
continuous service for a 12-month period, and it opposed any 
aggregation of service other than pursuant to the two exceptions in 
paragraph (b)(2). See also College and University Professional 
Association for Human Resources; Spencer Fane Britt & Browne; 
Metropolitan Transportation Authority (NY); and National Business Group 
on Health. Jackson Lewis commented that the Department should reject an 
absolute time period, and instead look to each employer's normal 
``break in service'' policies applicable to seniority, eligibility for 
benefits, and accrual of paid leave time; however, if an absolute limit 
is necessary, it suggested a cap of two years. Jackson Lewis regarded 
it as unfair that a returning employee who left employment five years 
ago would be entitled to FMLA leave before a colleague who had recently 
devoted 12 consecutive months of service to the company, and that the 
unfairness would be compounded unless the rules also accounted for FMLA 
leave taken in the last few months of that individual's previous 
employment.
    Some employers stated that allowing a five-year gap brings clarity 
to the decision and strikes the right balance between allowing an 
employee to count previous periods of employment and protecting an 
employer from the burden of tracking former employees for potentially 
long periods of time. They viewed the proposal as consistent with the 
Act, which does not require the 12 months of employment to be 
consecutive, but which also recognizes that there must be balance and 
that the goals must be accomplished in a way that takes account of 
employers' legitimate interests. See, e.g., Burr & Forman; TOC 
Management Services; Retail Industry Leaders Association; Association 
of Corporate Counsel's Employment and Labor Law Committee; Society of 
Professional Benefit Administrators; Cummins Inc.; Domtar Paper 
Company.
    Finally, a number of employers suggested that the Department should 
clarify that employers are required to maintain employee records for 
only three years and provide further guidance on what it means that the 
employee is responsible for putting forth some proof of the prior

[[Page 67941]]

employment for the earlier years. See, e.g., the Chamber; College and 
University Professional Association for Human Resources; Hewitt 
Associates; Retail Industry Leaders Association; Fisher & Phillips. 
Hewitt Associates asked: What would happen if the employer actually has 
the data from the earlier years; what if the data would be difficult to 
retrieve; and how can an employer challenge the employee's proof? 
Vercruysse Murray & Calzone asked whether it would be sufficient for an 
employee to merely assert, by affidavit or otherwise, that he or she 
was employed for a specific period of time five years ago, or to 
present a document evidencing previous employment, even though that 
document may not contain sufficient information to establish the actual 
duration of the previous employment. EEAC suggested that employees 
should be required to provide proof such as pay stubs, W-2 forms, or 
other documentary evidence beyond the employee's mere word that he or 
she is a former employee. In contrast, the AFL-CIO commented that an 
employee should only have to prove prior employment where the employer 
does not have records, because it stated that most employers keep 
employment and tax records for several years beyond the three years the 
FMLA requires.
    Only a few commenters addressed the two exceptions to the five-year 
rule in proposed Sec.  825.110(b)(2), which are applicable where the 
break in service is for National Guard or Reserve service or where 
there is a written agreement regarding the employer's intention to 
rehire the employee. Those commenters generally agreed with or did not 
oppose the exceptions. See, e.g., HR Policy Association; National 
Coalition to Protect Family Leave; EEAC. Burr & Forman stated that the 
military exception is unnecessary because the same administrative 
burdens apply when an employee is gone for over five years for military 
reasons, and the proposed rules already provide sufficient protection 
by counting military service both toward the 12-month requirement and 
toward the 1,250 hour requirement in determining employee eligibility.
    With regard to proposed Sec.  825.110(c)(2), which counts the hours 
the employee would have worked for the employer but for the National 
Guard or Reserve service, EEAC stated that it should be deleted because 
it was beyond the Department's authority to legislate FMLA eligibility 
for employees who have been absent for military service and thus lack 
the minimum 1,250 hours of service within the previous year, as 
statutorily required. EEAC recognized that the Department's proposal 
codifies guidance previously issued concluding that, because the 
Uniformed Services Employment and Reemployment Rights Act (``USERRA'') 
entitles returning service members to the rights and benefits they 
would have had if they had been continuously employed, they are 
entitled to count the time. EEAC disagreed, however, with the 
Department's reconciliation of the two statutes.
    Several commenters addressed the clarification in proposed Sec.  
825.110(d) providing that an employee who is on non-FMLA leave may 
become eligible for FMLA leave while on leave (by meeting the 12-month 
requirement), and that any portion of the leave taken for a qualifying 
reason after the employee becomes eligible would be protected FMLA 
leave, while any leave taken before the employee passed the 12-month 
mark would not be FMLA leave. The AFL-CIO approved of this 
clarification, which is consistent with the court's decision in Babcock 
v. Bell South Advertising and Publishing Corporation, 348 F.3d 73 (4th 
Cir. 2003), stating that this is the interpretation of the regulation 
that best effectuates the 12-month eligibility requirement of the FMLA. 
See also Society of Professional Benefit Administrators (agreeing that 
the proposal would clarify a very confusing issue for employers); 
Domtar Paper Company.
    Other commenters opposed the proposal and suggested that 
eligibility for FMLA leave should attach only to leave that actually 
begins after the employee meets the 12-month and 1,250-hour 
requirements, regardless of whether and when the employee gives notice 
by requesting leave, and should not attach to a block of leave or 
intermittent leave that begins before the employee becomes eligible and 
continues after the employee becomes eligible. See, e.g., National 
Coalition to Protect Family Leave; EEAC; National Business Group on 
Health; and Food Marketing Institute. EEAC stated that, in situations 
where employers provide more generous leave benefits than the FMLA 
requires by providing leave for those who lack the minimum 12 months of 
service, the employer then must provide future FMLA benefits that it 
would not otherwise be required to provide. It stated this ``creates a 
perverse incentive for employers (1) not to provide leave in excess of 
the FMLA requirements and (2) to act swiftly to terminate employees 
before they become eligible for FMLA protection.'' EEAC also noted that 
it results in an employee with only nine months of service who is 
allowed to take three months of approved leave becoming eligible for 
three more months of leave at the 12-month mark, while an employee with 
nine years of service is eligible for only three months total. See also 
Spencer Fane Britt & Browne; Vercruysse Murray & Calzone (also 
commenting that the proposal would create significant administrative 
burdens for employers because they would have to revisit employees' 
eligibility for FMLA leave during the middle of their non-FMLA leave, 
and when an employee reaches 12 months of service the employer will 
have to issue an Eligibility Notice a second time). This commenter also 
asked what happens if the employer's policies do not require group 
health benefits to be continued during the period of a non-FMLA 
absence. Hewitt Associates stated that employers might fear that 
replacing an employee during the first non-FMLA portion of the leave 
would run afoul of the FMLA's prohibition against interfering with an 
employee's right to take leave, thereby effectively extending the 
FMLA's protections through the first non-FMLA portion of the leave and 
providing an employee with greater than 12 weeks of leave. Therefore, 
Hewitt Associates suggested that the Department clarify that the 
employee would have no expectation of, or right to, these FMLA non-
interference protections during the first non-FMLA phase of the leave. 
Finally, Jackson Lewis urged the Department to provide that any non-
FMLA leave that would otherwise qualify counts towards an employee's 
annual entitlement of 12 weeks of FMLA leave.
    A number of the commenters also asked the Department to create 
consistency between the language in Sec.  825.110(d), which states that 
eligibility is determined when the leave commences, and Sec.  
825.110(e), which states that the determination of whether an employer 
has 50 employees within 75 miles is made when the employee gives notice 
of the need for leave. See, e.g., National Coalition to Protect Family 
Leave; Associated Builders and Contractors; International Franchise 
Association. The National Coalition to Protect Family Leave stated that 
it applauded the Department's interest in promoting as much advance 
notice of an employee's need for leave as possible to allow both the 
employer and the employee to plan, but it believed that the statute 
requires the 50/75 eligibility determination to be made when the 
employee actually takes leave rather than when advance notice is given. 
On the other hand, EEAC stated that it ``understands the Department's

[[Page 67942]]

reasoning for selecting a different date,'' and it simply sought 
clarification that the employer could reevaluate the 50/75 
determination at the beginning of each new FMLA leave year, consistent 
with other provisions.
    Finally, a number of commenters applauded the Department for the 
deletions from existing Sec.  825.110(c) and (d) in response to the 
Supreme Court's decision in Ragsdale. See, e.g., EEAC; HR Policy 
Association; and Association of Corporate Counsel's Employment and 
Labor Law Committee. The National Association of Letter Carriers, 
however, objected to the deletion of the requirement that the employer 
must project when an employee will become eligible for leave or advise 
the employee when the employee becomes eligible, stating that the 
requirement minimizes disputes.
    With regard to the cap in proposed Sec.  825.110(b)(1) on gaps in 
service in order for the prior employment to count toward an employee's 
12-month requirement, the final rule modifies the proposal by extending 
the permissible gap to seven years. The court in Rucker v. Lee Holding 
Co., 471 F.3d 6 (1st Cir. 2006), in permitting the five year gap at 
issue in that case, recognized that the statutory language is ambiguous 
as to whether previous periods of employment count toward the 12-month 
requirement, and it stated that the appropriate way to resolve this 
important policy issue was through agency rulemaking. The Department 
believes that a seven-year cap draws an appropriate balance between the 
interests of employers and employees. It recognizes and gives effect to 
the legislative history's clear statement that the 12 months of 
employment need not be consecutive, while limiting the burden on 
employers of attempting to verify an employee's claims regarding prior 
employment in the distant past. In light of the legislative history, 
the Department rejects the comments suggesting that no gap should be 
permitted. By allowing a gap of up to seven years, the rule takes 
account of the comments noting that employees sometimes take extended 
leaves from the workforce to raise children or to care for ill family 
members and emphasizing that women are particularly likely to fill this 
role. The final rule also recognizes that many employers keep records 
for seven years for tax or other standard business reasons; thus, 
allowing a seven-year gap will not impose a burden on those employers. 
The FMLA, however, only requires employers to keep records for three 
years, and the burden of proving eligibility is always on the employee. 
Accordingly, if an employer retains records only for the required three 
years, it may base its initial determination of the employee's 
eligibility for leave on those records. If it therefore advises the 
employee in the eligibility notice that the employee is not eligible 
for FMLA leave, the employee will have to submit sufficient proof of 
his o