Indemnification for FMLA and ADA Administration: Are Your Clients Really Protected?

The laws concerning the Family and Medical Leave Act (FMLA) and the Americans with Disabilities Act (ADA) can be complex, especially when state-specific requirements and the chances of a related disability claim are added to the mix. Given the complexities of these laws and the risk of noncompliance, which can result in costly litigation, it’s no surprise many employers choose to outsource the management of these programs to expert third-party administrators (TPAs). However, outsourcing the management of these programs doesn’t mean the employer is exempt from being compliant with the laws that ensure their employees are treated fairly and consistently.

In fact, noncompliance with ADA laws can present a significant risk to employers.

• According to the Department of Labor (DOL), in 2015 there were 1,419 FMLA-related complaints (672 of which were deemed “valid” cases) filed against employers that resulted in almost $2 million being collected in back wages¹
• According to the Equal Employment Opportunity Commission (EEOC), in 2015, 61 ADA suits were resolved for a total of $6.2 million dollars2

While these statistics don’t include cases that were moved to federal or state courts to be litigated and also don’t illustrate the costs associated with defending against these claims – even claims that are deemed invalid often result in some legal fees for the employer.

With enforcement action and lawsuits on the rise, employers who opt to partner with outside administrators may be confused about how outsourcing may protect them. Typically, administrators indemnify employers for occurrences that result from the TPA’s action, failure or omission. However, many employers today mistakenly believe that a TPA’s indemnification agreement protects them against any claim that arises; regardless of whether the TPA or the employer made an error. But this is not the case and it is important that your clients understand the scope of indemnification and the role they must play in order to protect themselves from possible litigation. Click here to learn more.