How to Stay Compliant When Laying Off Workers on FMLA Leave

You’re reviewing your staffing plan, and the numbers aren’t adding up. The budget’s being tightened, and that means layoffs. And then you see something that makes your stomach drop—some of the workers on the list are out on FMLA right now. One’s recovering from back surgery, one just had a baby, and the other one is taking care of a parent who’s sick. It’s the kind of moment that makes you pause: Can I legally lay them off? Or am I setting the business up for trouble?

This isn’t a rare scenario. As of 2025, over 15 million U.S. employees are protected by the FMLA, and the Department of Labor cited an 18% increase in FMLA-related complaints since last quarter. In Connecticut alone, FMLA claims have increased 12% year-over-year. Illegal termination accounts for almost half of those complaints. Still, with the economy being tight, making the right cuts is often unavoidable.

That’s what most employers fail to grasp: FMLA won’t prevent layoffs; it just demands a smarter strategy. You can proceed lawfully, but only with adequately documented, non-discriminatory procedures. In this blog, we’ll break down how to handle layoffs when FMLA is at stake, what documentation the DOL demands, and how to stay compliant without crippling your business.

1. Understand What FMLA Does and Doesn’t Protect

FMLA intermittent leave entitles eligible employees to up to 12 weeks of unpaid, job‑protected leave within a 12‑month period. FMLA also includes 26 weeks of military caregiver leave. However, it does not provide blanket protection from layoffs. As stated in the DOL’s Employer’s Guide, an employee on FMLA may be laid off if the same decision would have occurred had they been actively working.

• They must have worked 1,250 hours in the past 12 months and at a company with more than 50 employees within a 75-mile radius.
• Leave can be taken all at once or intermittently.
• Health benefits must be continued as if the employee never left.
• Employees are entitled to return to the same or an equivalent position.

Does the FMLA protect workers from layoffs? Not if layoff standards are neutral, written, and applied uniformly. Employers must show nonretaliatory, business-justified reasons.

2. Can Employees Be Laid Off While on FMLA?

Short answer: Yes—if the layoff would have occurred anyway. In fact, 62% of firms without effective HR practices faced FMLA penalties. To stay compliant:

1. Objective Selection Criteria: Use measurable, job-related metrics like seniority, performance, or revenue contribution.
2. Consistent Application: Apply the same standards across all departments and locations.
3. Document Everything: Save all supporting documents like meeting notes, projections, and approvals.

3. Special Considerations for Maternity Leave

Can employees be laid off while on maternity leave? Yes—but treat all workers in the same role equally. To avoid risk:

• Include all employees in the candidate pool, not just those on leave.
• Avoid timing layoffs directly after someone returns from leave.
• Be transparent with affected employees. It reduces the chance of wrongful termination lawsuits.

4. Handling Intermittent Leave and Layoffs

FMLA intermittent leave complicates layoffs. Here’s how to manage it:

• Tag employees with intermittent leave in your HR system to ensure even treatment.
• Back up layoff decisions with performance data like projects completed or revenue earned.
• Time your decisions carefully to avoid retaliation claims tied to pending FMLA leave.

5. Building Your Layoff Documentation

Effective layoff documentation includes:

• Business Rationale Memo: Details about financial pressure, downsizing, or reorganization.
• Selection Matrix: Scorecard with objective comparisons between staff.
• Communication Logs: Record of notices, manager communications, and employee feedback.
• FMLA Records: Proof of leave eligibility and usage, to show it wasn’t a factor in layoffs.

In 2024, employers with thorough documentation cut their DOL dispute risk by 60%.

6. Training Managers on FMLA Basics

Managers are often the first contact. Proper training helps avoid costly mistakes. Focus on:

• Identifying FMLA-qualifying leave and escalating to HR.
• Sticking to scripts—avoid statements like “We can’t afford to keep you.”
• Separating performance concerns from leave-related discussions.

7. Using Technology to Maintain Compliance

Modern HR tools can streamline compliance:

• Intermittent Leave Tracking: Accurately track FMLA use.
• Selection Matrix Tools: Automate employee scoring with minimal bias.
• Audit Trails: Preserve evidence for future claims.

A good HCM system can reduce compliance risks by half and save you from $125,000+ in fines per violation.

8. Handling Appeals and Claims

If an employee on FMLA claims wrongful termination:

1. Provide all relevant documentation promptly.
2. Show how your process was neutral and consistent.
3. Prove the decision was made before the leave occurred.

Most disputes resolve when employers share transparent audit records.

9. Frequently Asked Questions

Q: Does the FMLA protect employees from being fired?
A: Only if the termination is tied to the leave. Layoffs for valid business reasons are legal.

Q: Can employees be laid off while on maternity leave?
A: Yes, if done consistently across all similar roles.

Q: What about intermittent leave?
A: Apply neutral criteria and document all decisions in advance of leave usage.

10. Conclusion

Laying off employees on FMLA leave is difficult but legal—if done the right way. Use objective criteria, solid documentation, and well-trained managers.

In 2025, Connecticut saw a 28% rise in layoffs, but companies using standardized documentation systems had 73% fewer FMLA complaints. These aren’t just best practices—they’re what separate lawsuits from legal layoffs.

If you need help reviewing your reduction-in-force (RIF) strategy, OEM America can assist. Our legal and HR experts work with businesses to ensure compliance with DOL and state audits. With a proper foundation, you can move forward with confidence.