The Essential Guide to Family & Medical Leave

chapter 10 | reinstatement | 227
If a benefit is available only to employees who work a minimum number
of hours each year, hours spent on FMLA leave do not count as hours
worked. This means that, as a practical matter, an employee may be ineligible
to receive certain benefits because the employee took FMLA leave.
Retirement Benefits
Just like other benefits, retirement benefits must be restored at the same
level when an employee returns from leave. A few special rules apply to these
benefits:
• FMLA leave cannot be treated as a “break in service” for purposes of
pensions and other retirement benefit plans.
• If a retirement benefit requires an employee to be employed on
a particular date to be credited with a year of service for vesting,
contributions, or participating in the plan, an employee who is on
FMLA leave is considered to be employed during that time.
• FMLA leave does not have to be counted as time in service or hours
worked for purposes of vesting, accrual of benefits, or eligibility.
Example: Hal began working at Jefferson’s Tool and Die on January 1, 2006. The
company allows an employee who has worked at least one year and was employed
as of January 1 to participate in the 401(k) plan for the coming year. When Hal
becomes eligible, he contributes monthly. The company matches his contributions
up to $3,000 a year. Hal is always fully vested in his own contributions to the account;
the company’s contributions vest over three years, one-third each year.
Hal takes FMLA leave for all of December 2007 and January 2008 to bond with
his new daughter. While Hal is on FMLA leave, his 401(k) account must be treated
as if he is still working. The company may not close his account or otherwise treat
his time off as a break in service. The company must also treat him as if he were
employed on January 1 for purposes of participating in the program for the coming
year. However, Hal’s time off does not have to be counted towards the three-year
vesting period. In other words, Hal might have to wait an additional two months to
vest employer contributions that had already been made when he took leave.