Your TPA Handles Leave. That Does Not Mean You Do.
Many California SMBs outsource leave administration to a third-party administrator. The TPA receives the leave requests, issues the designation notices, tracks the entitlement, and communicates with the employee. The employer writes a check and assumes the compliance obligation has been transferred along with the administrative work.
It has not.
Under the California Family Rights Act (Government Code section 12945.2) and the federal Family and Medical Leave Act, the employer is the responsible party. This is not a technicality. It is the structure both statutes are built on. When a TPA fails to issue a designation notice within the required timeframe, the employer is liable for the failure. When a TPA denies leave on grounds that California law does not recognize, the employer is liable for the denial. When a TPA’s handling of a leave request interferes with an employee’s CFRA rights, the interference claim runs against the employer.
The failure mode in practice is predictable. The employer’s HR contact assumes the TPA is handling it. The TPA’s case manager is managing hundreds of files and misses a deadline or applies federal-only criteria without accounting for California’s broader protections. The employee files a complaint with the Civil Rights Department. The employer discovers, at that point, that the TPA agreement does not include indemnification for CFRA claims, or that the indemnification covers contract damages only, not the FEHA-adjacent liability the leave-interference claim actually produces.
California’s CFRA is materially broader than federal FMLA in several respects that TPAs trained on federal protocols frequently miss: the covered-family-member definition is broader, the qualifying-reason list is broader, the small-employer threshold is lower (five employees, not fifty), and the California designation requirements have their own timing rules. A TPA applying federal FMLA logic to a California CFRA claim will get it wrong in predictable ways.
The right audit question is not whether the TPA is doing the work. It is whether the employer can defend the TPA’s decisions in a California proceeding, and where the liability sits when something goes wrong.
If you want to know where your business stands, contact Michael Trust Law for a no-charge initial consultation. The facts determine what needs to be addressed — and how much of a conversation that takes.
This post shares general information based on common patterns I see in California workplaces. It is not legal advice, does not create an attorney-client relationship, and outcomes depend on specific facts. No lawyer can guarantee a result. Past results do not guarantee or predict future outcomes. AI may have been used to create this post. All content reviewed by a CA attorney before publication.