DOL: Employers cannot mandate PTO use with state/local paid leave benefits during FMLA
The FMLA allows employees of covered employers up to 12 weeks of unpaid leave (or, in some cases, 26 weeks), for medical and family reasons. Covered reasons for FMLA leave include an employee’s own serious health condition, caring for a parent, spouse or child with a serious health condition, and caring for a new child following birth, adoption or foster placement.
Since the FMLA’s enactment in 1993, numerous states (including New York, California, Massachusetts, Connecticut, and others) have instituted family and/or medical leave programs that provide partially paid leave (usually based on a percentage of the employee’s wages, up to a set cap) for personal medical, family care and/or parental leave reasons. Some local governments have also implemented paid family leave and medical leave programs for their municipal employees. State/local paid leave programs often include benefits that differ from or exceed what the FMLA provides, such as longer leave periods or additional covered reasons for leave. While FMLA leave is not paid, the FMLA regulations allow employees to elect to “substitute”, or employers to require that they do so, accrued paid time off provided by the employer (e.g. paid vacation, sick leave, etc.). The FMLA regulations allow employees to “substitute” accrued employer-provided paid time off (e.g., paid vacation, sick leave, etc.) for any part of a non-paid FMLA period. The regulations state that if an employee receives disability or workers’ comp benefits during a part of their FMLA leave, neither the employee nor the employer can demand the substitution of paid leave because the leave is not unpaid. Rather, when disability or workers’ compensation benefits are being received, the employer and the employee may only mutually agree (where state law permits) that accrued paid time off will be used to supplement such benefits.
EXAMPLE
: John tells his employer he requires 12 weeks of leave to recover from a serious back surgery. John’s employer designates 12 weeks of leave as FMLA. John is also approved for 12 weeks disability benefits under the short-term disability program of his employer, which will pay him two-thirds his regular wage. John’s employer can’t require him to substitute his vacation time, because he receives disability benefits. His FMLA is therefore not unpaid. John and his employer agree that he will use a third of his vacation time to supplement his disability benefits each week so he receives 100% pay for the leave. The opinion letter clarifies that “the same principles apply to such programs as they do to disability plans and workers compensation programs.” However, the opinion letter now makes clear that “the same principles apply to such programs as apply to disability plans and workers compensation programs.”
First, the opinion letter emphasizes that “where an employee takes leave under a state or local paid family or medical leave program, if the leave is covered by the FMLA, it must be designated as FMLA leave
” The opinion letter then goes on to state:
here an employee, during leave covered by the FMLA, receives compensation from a state or local family or medical leave program, the FMLA substitution provision does not apply to the portion of leave that is compensated. The FMLA substitution provision does NOT apply to the part of the leave that the state or local program pays for. Neither the employee nor the employers can use this provision to require concurrent use of employer provided paid leave.
, if the employee is receiving compensation through state or local paid family or medical leave that does not fully compensate the employee for their FMLA covered leave, and the employee also has available employer-provided paid leave, the employer and the employee may agree, where state law permits, to use the employee’s employer-provided accrued paid leave to supplement the payments under a state or local leave program.
The opinion letter also notes that if an employee’s leave under a state or local paid family or medical leave program ends before the employee has exhausted their full FMLA leave entitlement and the leave therefore becomes unpaid, the FMLA substitution provision would then apply and the employee would be able to elect, or the employer would be able to require the employee, to substitute accrued paid time off.EXAMPLE
: Jane tells her employer she requires 12 weeks of leave to care for her husband while he recovers from a serious back surgery. Jane’s employer designates 12 weeks of leave as FMLA. Jane is also approved for 8 weeks paid family care benefits through her state’s paid medical and family leave program. She will receive a benefit equivalent to two-thirds her regular wage. Jane’s employer can’t require Jane to substitute vacation time she has accrued during the 8 weeks that she is on FMLA leave, if she is also receiving state family benefits. This is because FMLA is paid during this time. Jane and her employer agreed to use one third of her vacation time per week for the first eight weeks to supplement Jane’s state family care benefits so that Jane receives 100% payment during this time. Beginning on week 9, Jane is no longer eligible for state family care benefits and her FMLA leave is now unpaid, so pursuant to its FMLA policy Jane’s employer requires her to substitute her remaining accrued vacation time during the FMLA leave until it is exhausted.
Implications and Action Steps for Employers
The opinion letter clarifies what has been a gray area around the interplay between the FMLA, state/local paid leave programs, and accrued paid time off. The opinion letter clarifies a gray area that existed in the interplay between the FMLA, state/local paid leave programs, and accrued paid time off. . . It is now clear that such a requirement is not permissible, though employers and employees may agree to use paid time off to supplement NYPFL benefits. It is now clear that such a requirement is impermissible, though employers and employees may agree to use paid time off to supplement NYPFL benefits.[.]Employers should now review their leave policies and practices to ensure that any provisions around the use of accrued paid time off during FMLA leave comport with the WHD’s interpretation of the requirements of the law. To the extent that any such policies require employees to substitute accrued paid time off during an FMLA leave where an employee is concurrently receiving disability, workers’ compensation or state/local paid family or medical leave benefits, the policies should be revised to provide that paid time off may only be used to supplement such other payments and only if both the employer and the employee agree.
[W]However, employers are reminded that, as noted above, there may be situations where employees are eligible for benefits under state/local paid leave laws that are not also covered by the FMLA. Employers should also be aware of the rules of any applicable state/local paid medical or family leave laws and how they may allow (or not allow) the substitution of paid leave. They should apply these rules to any leave period which does not run concurrently the FMLA. Please contact the authors if you have any questions or need help with your company’s policies and benefits.
