Our Take
Courts will hold employers liable for TPA failures even when the vendor's broken phone system causes the compliance gap.
Why it matters
HR teams using third-party FMLA administrators face full liability for vendor system failures, requiring active oversight of call center metrics and employee access.
Do this week
HR leaders: audit your TPA's call abandonment rates and hold times this week so you can identify access problems before they create legal exposure.
Employee couldn't reach TPA after S.C. Johnson outsourced FMLA
Rodney Severson worked at S.C. Johnson from 2005 until his 2024 termination. In February 2023, the company approved his intermittent FMLA leave to care for his mother with ovarian cancer and later for his own migraine condition.
S.C. Johnson outsourced FMLA administration to a third-party administrator in July 2023. From July to October, Severson tried repeatedly to report FMLA absences through the TPA but encountered systemic access problems. He testified that calls left him on hold indefinitely or disconnected, and the phone line "just hung up on everybody" at 5 p.m. The TPA's website and automated systems proved equally ineffective.
Severson reported these communication failures to his supervisor, who allegedly assured him he wouldn't be penalized for the TPA's system problems. Despite this, he accumulated 54 attendance points by October, triggering a disciplinary suspension. The company fired him in January 2024 for excessive absenteeism and failure to follow FMLA procedures.
Court finds TPA problems can prove FMLA interference
The Eastern District of Wisconsin rejected S.C. Johnson's motion to dismiss, allowing both interference and retaliation claims to proceed to trial. The court ruled that a "burdensome approval process" can constitute FMLA interference even without formally denying leave requests.
The TPA's inaccessible phone and website systems met this standard, according to the court. The judge also found potential retaliation evidence in the timing between Severson's FMLA activity and termination, plus the HR manager's failure to speak with him before recommending termination despite knowing his FMLA history.
The ruling establishes that employers retain full compliance responsibility when outsourcing FMLA administration. Vendor system failures don't shield companies from legal liability.
Monitor TPA performance with specific metrics
The case reveals critical oversight gaps during S.C. Johnson's TPA transition. Communication problems emerged early but went unaddressed, creating the legal exposure that now faces an expensive trial or settlement.
Effective TPA management requires three specific controls: escalation protocols when employees report access issues, regular audits of call center metrics including hold times and abandonment rates, and service level agreements tied to system responsiveness and uptime.
The HR manager's documentation failure compounded the problem. She recommended termination without interviewing Severson despite knowing his FMLA history, creating an appearance of retaliation that survived the motion to dismiss.