Court Warns: Lax TPA Oversight Can Trigger FMLA Liability

When employers outsource Family and Medical Leave Act (FMLA) administration to a third-party administrator (TPA), compliance responsibility stays with them. 

A recent federal case out of Wisconsin shows how quickly weak TPA oversight can lead to interference and retaliation claims.

Employee Seeks Intermittent FMLA Leave

Rodney Severson was hired as a production employee for S.C. Johnson in 2005 and worked there until he was fired in 2024. 

In February 2023, Severson sought FMLA leave to care for his mother, who had ovarian cancer. 

After the FMLA paperwork was completed, S.C. Johnson approved Severson for intermittent FMLA leave to care for his mom. 

The next month, Severson also requested intermittent FMLA for his own migraine flare-ups.

During this timeframe, Severson had several FMLA-related absences, and he worked with S.C. Johnson’s leave team to report his intermittent FMLA days.

Employer Transitions FMLA Administration to TPA

In July 2023, S.C. Johnson outsourced its FMLA administration to a TPA. 

Around mid-month, Severson contacted the employer’s leave team about his need for several FMLA days to care for his mother. At that point, the leave team notified Severson that the TPA was handling FMLA administration and told him to request FMLA leave through the TPA’s website or phone.

According to Severson, that’s when the problems began. 

Lax TPA Oversight Causes Rocky Transition

From July to October 2023, Severson was periodically absent for FMLA reasons, but he didn’t request leave through the TPA. 

He said that he called the TPA several times, but he was left on hold or disconnected from the call. He testified that it was “almost impossible to get ahold of anybody.” He also said that if callers were still on hold at 5 p.m., the TPA phone line “just hung up on everybody.”

Severson said he also tried to request FMLA leave through the TPA’s website and automated service but found those methods ineffective as well.

He said he reported the communication problems to his immediate supervisor and also texted the supervisor to report his FMLA absences and the reasons for each. According to Severson, the supervisor assured him that as long as his FMLA paperwork was completed correctly, he wouldn’t be penalized for the TPA’s system failures. 

Discipline for Attendance Policy Violations

By October, Severson had racked up 54 “attendance points” – enough to violate company policy. As a result, the company issued a Decision-Making Leave. Severson received a one-day unpaid suspension and was advised to contact the TPA to report any absences he believed were FMLA-related.

After Severson reported the FMLA absences to the TPA, he met with an HR rep, who allegedly told him, “You’re covered. Don’t worry about it. We’ll take care of everything.”

In November and December, the TPA mailed Severson letters to notify him that his FMLA certification was incomplete. But Severson said he never received those letters.

Termination and Lawsuit

In January 2024, Severson was fired for excessive absenteeism, dishonest FMLA reporting and failure to follow FMLA notification procedures. 

The HR manager who drafted the termination recommendation never spoke to Severson about his absences, despite knowing that he had previously taken intermittent FMLA leave.

Severson filed a lawsuit alleging FMLA interference and retaliation. The employer filed a motion to dismiss.

Was It FMLA Interference?

The employer argued that Severson couldn’t state a valid FMLA interference claim because he was granted FMLA leave for all dates covered by his FMLA certification. 

But the court wasn’t convinced. The Seventh Circuit has held that the “actual denial of FMLA benefits” isn’t required to show interference. An employer that “implements a burdensome approval process or discourages employees from requesting FMLA leave could interfere with” employees’ FMLA rights even without formally denying a request. 

Here, a reasonable jury could believe the problems with the TPA’s phone and website amounted to a “burdensome approval process.” As a result, the FMLA interference claim had to proceed.

Signs of FMLA Retaliation?

Turning to the FMLA retaliation claim, S.C. Johnson argued that Severson couldn’t show a causal connection between his termination and his request for – or use of – FMLA leave. 

The court disagreed on this point, too, noting that the termination letter listed reasons for termination that were connected to his FMLA-protected absences. 

Moreover, the court pointed out that the HR manager who drafted Severson’s termination letter was aware that he had issues in the past with his FMLA leave, yet she didn’t take the time to speak to him or his supervisor about the absences before recommending termination.

Together, these circumstances – combined with the close timing between his FMLA activity and termination – could allow a reasonable jury to find retaliatory intent, the court determined. As such, the FMLA retaliation claim had to proceed.

The court denied S.C. Johnson’s motion to dismiss.

HR Takeaways

The employer lost an early opportunity to dismiss the case. Now it faces an expensive trial – or a costly settlement. 

Two key issues stand out:

TPA Oversight

This case shows that handing FMLA administration to a TPA doesn’t absolve employers of compliance obligations. Notably in this case, communication problems between the TPA and employees showed up early in the transition, but lax TPA oversight left the company unaware of those issues.

Moreover, TPA oversight should continue throughout the business partnership –  not just during the transition period. Action steps:

• Establish escalation protocols when employees report access issues
• Audit call center metrics (hold times, abandonment rates) during and after the transition, and
• Require TPA performance service letter agreements (SLAs) tied to responsiveness and system uptime.

HR Leadership Mistakes

According to the preliminary court record, the HR manager failed to talk to the employee before recommending his termination – even though she knew he had a history of FMLA leave approval and usage. To be clear, this case is in the early stages – and we may learn more about the investigative process as the proceedings continue.

Ultimately, this case shows that the appearance of retaliation can be enough to land your organization in court. Proper documentation is your best defense when handling FMLA-related termination decisions, so it’s worth taking the time to have – and document – a conversation with the employee. 

Severson v. S.C. Johnson & Son, Inc., No. 24-CV-1063 (E.D. Wis. 4/27/26).