WHY FIFTY: AN ANALYSIS OF THE SMALL BUSINESS EXEMPTION CODIFIED IN THE FAMILY AND MEDICAL LEAVE ACT OF 1993.

• Author: Zehrt, Lynn Ridgeway

1. INTRODUCTION

   In March of 2020, in the midst of the global pandemic caused by a novel coronavirus, Congress enacted several emergency laws intended to provide some stability to the U.S. economy and to protect the health and security of Americans. (1) At the time these statutes were enacted, many states had issued stay at home orders for nonessential workers, causing closures of schools and businesses, a downturn in the national economy, and increased unemployment. (2) One emergency enactment, titled the Emergency Family and Medical Leave Expansion Act ("EFMLEA"), (3) temporarily amended the Family and Medical Leave Act of 1993 ("FMLA"). (4) Specifically, the EFMLEA amended the FMLA's definition of the term "employer," temporarily requiring private sector employers with fewer than 500 employees to provide its workers with job-protected leave if the employee was absent from work due to coronavirus-related reasons. (5) This enactment exposed several significant and chronic deficiencies to the FMLA: namely, that there are gaping holes in the coverage of the FMLA that render the statute inapplicable to millions of Americans. (6)

   Moreover, these deficiencies have existed for more than twenty-five years without Congressional intervention.

   When President Clinton signed the FMLA into law in February of 1993, he declared that "the need of the American family for flexibility in the workplace" was "compelling" and that the enactment of the FMLA ensured that "American workers will no longer have to choose between the job they need and the family they love." (7) Despite President Clinton's characterizations of the statute, the FMLA only applies to a limited segment of American workers. Specifically, Congress drafted the FMLA to apply only to those businesses employing fifty or more workers, (8) thereby exempting smaller businesses from its requirements and denying millions of American workers access to its provisions. (9) Passed after almost eight years of Congressional debate and two Presidential vetoes, (10) many of the original goals of the legislation were compromised, (11) with supporters classifying the FMLA as "an important first step" (12) and raising expectations that broader legislation would follow. (13) Although the FMLA was enacted more than twenty-five years ago, Congress never permanently altered the size of its small business exception. (14) Thus, when businesses started laying off a significant number of workers due to the coronavirus in March of 2020, (15) many of these workers were unprotected by the FMLA, a deficiency that Congress considered when enacting the EFMLEA. (16)

   The FMLA is not the only modern employment statute containing a small business exception. (17) Congress previously enacted several employment statutes containing small business exemptions. (18) Yet, none of the small business exemptions in these statutes are as broad as the one codified in the FMLA. For instance, when Congress enacted Title VII of the Civil Rights Act of 1964, it originally applied only to employers with a minimum of twenty-five employees. (19) Three years later, Congress enacted the Age Discrimination in Employment Act of 1967, and its definition was somewhat smaller, applying to employers with twenty or more employees. (20) In 1972, Congress amended the definition of employer contained in Title VII by lowering the requisite number of employees from twenty-five to fifteen. (21) Congress subsequently borrowed Title VII's definition of employer when it enacted the Americans with Disabilities Act of 1990, thereby applying its provisions to employers with fifteen or more employees. (22)

   Unfortunately, when Congress enacted the FMLA just three years after the ADA, Congress increased its small business exception, deviating significantly from its thirty-year trend of gradually reducing the exception in other employment legislation. Instead of following the Title VII model, (23) Congress adopted a larger small business exemption than any employment discrimination statute when it defined a covered employer under the FMLA to require the employment of fifty or more employees rather than fifteen or twenty. (24)

   The larger the definition of a covered employer, the greater the number of employees that remain unprotected from these laws. According to the most recent data from the U.S. Census Bureau, American businesses are overwhelmingly composed of smaller businesses. (25) This data shows that businesses or firms with less than fifty employees comprise 73% of the total composition of businesses, and these same businesses currently employ more than 33.6 million workers. (26) Once the small business exception is combined with the other statutory exclusions of the FMLA, such as the exclusions for part-time and temporary workers, the Congressional Research Service reported in 2012 that approximately 43.5% of Americans are not legally eligible for FMLA benefits. (27)

   Given the significance of this exclusion, this article examines the small business exemption codified in the FMLA. Part I of the article takes a novel approach by exploring the legislative history behind the statute's definition of employer, focusing in particular on the reasons Congress altered the Title VII model so significantly when enacting the FMLA. In part, this legislative history documents the codification of a preemption clause into the FMLA, thereby clarifying that this statute only sets the minimum level of protection for workers (28) and encouraging states to enact more generous protections. (29) Accordingly, Part II examines current state family and medical leave legislation, identifying which states follow or deviate from the federal approach when defining those employers that are obligated to provide family and medical leave. Benefits vary widely from state to state, creating significant inequity in coverage across the country. Given this inequity at the state level, Part III of the article asserts that the time for an amendment to the small business exception is long overdue. Given the disparity of FMLA protection both at the state level and under the EFMLEA, Congress must act to ensure its benefits and protections are available to more American workers.

   1. Legislative History: The Origins of Fifty

      The FMLA has been characterized as a deceptively simple statute as it imposes two primary obligations on covered employers. (30) First, the FMLA is an accommodation statute, requiring covered employers to provide twelve weeks of unpaid leave to eligible employees for qualifying family and medical reasons. (31) Second, the statute prohibits covered employers from discriminating against employees who take protected leave. (32) To better assure compliance with this anti-discrimination mandate, the FMLA affirmatively requires employers to maintain employees' health insurance during their protected absences, and to restore them to the same or an equivalent position upon their return from such leave. (33)

      This statutory right to family and medical leave was deemed necessary to close a gender gap in the federal statutory framework that existed prior to the law's passage. (34) Both the passage of Title VII, and its subsequent amendment through the passage of the Pregnancy Discrimination Act, were undoubtedly important workplace protections for women as they increasingly entered the paid workforce. Title VII prohibited employers from discriminating against women based on their sex; (35) whereas the Pregnancy Discrimination Act established that differential treatment due to pregnancy was a form of sex discrimination and required employers to treat pregnant women in an equivalent manner as their male employees. (36) Under this statutory regime, however, the availability of leave "benefits for pregnant workers were only guaranteed if similar benefits were already available to other workers." (37) If an employer did not offer any sort of leave benefits to its employees, the antidiscrimination statutes did not impose an affirmative obligation on employers to do so. (38)

      Thus, while these "antidiscrimination laws... facilitated women's entrance into and advancement in the workforce... they... afforded women little protection from demotion or termination on the basis of their family caregiving responsibilities." (39) Accordingly, feminists believed that additional protections were needed to create job security for women during periods of caregiving responsibilities, thereby facilitating greater gender equality in the workplace. (40)

      1. The Inaugural Bill: The Dream of Family Leave for All Americans

         Early on in the campaign to achieve statutorily protected leave, advocates of family and medical leave were divided over a number of strategic issues related to the scope of the conceptualized legislation. First, one of the earliest issues to divide them was whether to seek paid or unpaid leave. (41) When the American Association of Junior Leagues held a conference in New York in March of 1985, the attendees endorsed paid leave. (42) The Chairwoman of the Public Policy Department of the Association of Junior Leagues, Joan Krupa, later advocated her organization's preference for paid leave during the hearing before four joint subcommittees in the House on October 17, 1985, testifying that unpaid leave would be particularly difficult for "low income employees [who] simply can't afford to stay away from work very long... [and they would be] forced to return to work too soon." (43)

         On the other hand, many advocates emphasized the realities of navigating the then-Republican-controlled Senate and obtaining President Reagan's support. (44) While these advocates agreed that paid leave was preferable, they believed that an unpaid bill would minimize the anticipated complaints from Republicans about employer costs, and curtail their mischaracterizations of the bill as "a new federal entitlement." (45) Accordingly, the legislation's chief advocates reached an early consensus to...