Austin TX Business Law Blog

Tuesday, January 31, 2017

Texas Court Rules Employees on FMLA Leave Cannot Receive Unemployment Benefits

How could the Texas appellate court’s ruling impact my company policies?

Texas’s Second Court of Appeals recently examined an issue of first impression—can an employee who is taking leave under the Family and Medical Leave Act (FMLA) obtain unemployment benefits under the Texas Labor Code?  In a favorable holding for employers, the Texas court held that no, an employee cannot simultaneously receive FMLA and unemployment benefits.  The case clarifies an important issue for employers and speaks to the importance of drafting concrete company policies set out in a comprehensive employee handbook.    

Facts of the Case

The case of Texas Workforce Commission v. Wichita County, Texas, involves a Wichita County employee who went on FMLA leave in August of 2011.  Her paid leave ran out and she went on unpaid leave. Two months later, she applied to the Texas Workforce Commission (TWC) for unemployment benefits.  The county disputed the claim, stating that the employee was at no point unemployed.  

Initially, the TWC found the employee was entitled to receive unemployment benefits, holding that while she was on unpaid leave, she was considered unemployed.  The county appealed this finding all the way to the Second Court of Appeals.  In weighing the issue, the court considered the purpose of the competing employee benefit laws.  FMLA leave allows an employee with a serious health condition to take leave if they cannot perform the functions of their position.  Whereas unemployment benefits are intended to provide temporary support to job seekers who are able to work and actively seeking working. The two provisions are contradictory and an employee qualifying for one would not qualify for the other.

The Court of Appeals concluded that employees on FMLA leave cannot receive unemployment benefits in Texas.  However, the matter has yet to be considered by the Texas Supreme Court and the Court of Appeals declined to address the issue of whether termination of employment is necessary to receive unemployment benefits.  There may still be circumstances in which employees are eligible to receive partial unemployment benefits while still employed.  

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