Employers Beware — You Cannot Always Require Employees Exhaust Paid Leave Benefits During FMLA Leave

When administering FMLA , employers are generally advised to run FMLA concurrently with other leaves for which the employee may be eligible– as this practice prevents leave stacking.

However, when drafting FMLA policies, how an employer handles the use of paid leave during FMLA is commonly overlooked.  While most leave policies require employees to use their earned vacation, sick or PTO time concurrently with FMLA leave, employers tend to overlook the FMLA regulation that prohibits employers from requiring employees to use paid leave during FMLA.

Employers should consider how to handle situations where an employee who is requesting FMLA also has some type of paid leave available for his or her use.

As an example, employers may require employees to substitute/exhaust paid leave which they are entitled to, such as earned vacation, sick, PTO or personal leave, for FMLA.  Meaning the two types of leave would run concurrently, thus reducing the total amount of paid and unpaid leave an employee would take per year.

FMLA leave is generally unpaid and during periods of unpaid FMLA leave employers can require employees to use those paid leave benefits.  However, the FMLA regulations provide that if during FMLA leave an employee also receives benefits (in any amount) from a disability plan or workers’ compensation, then the FMLA leave is not unpaid.

In fact, employers can only require employee substitution of paid leave when an employee is on an unpaid FMLA leave.  During FMLA leave when an employee receives any income replacement (in any amount) employers cannot require employees to substitute paid leave, or in other words, employers cannot require employees on FMLA to use/exhaust their earned vacation, sick, PTO or personal leave when the employee is receiving income replacement such as disability or workers’ compensation.

If an employee taking FMLA is receiving disability benefits they cannot be required to use PTO, or other paid leave, but they can be required to use paid leave during a waiting period before disability benefits are received, because the limitation is triggered by the receipt of the income replacement benefits, in this case disability.

In Repa v. Roadway Express, Inc.,  Alice Repa suffered an injury requiring surgery and a six-week absence from work. During the leave, Repa received a weekly $300 disability benefit through a third-party disability plan.  While out on FMLA, her employer required her to use her available vacation and sick leave.  The employee sued seeking restoration of her vacation benefits and sick leave.

The Court held that an employer’s ability to require an employee to substitute paid leave during FMLA is limited if the employee also received disability benefits during FMLA leave. While Repa could have elected to substitute paid leave during her FMLA leave at the time she was also receiving disability benefits, it was unlawful for her employer to require the substitution of her vacation and sick time. Information on the  substitution of paid leave is addressed in 29 C.F.R. § 825.207 of the FMLA regulations.

In order to ensure compliance with FMLA and this commonly overlooked limitation, it is strongly recommended that employers review their FMLA policies to ensure that substitution of paid leave is properly administered.  In addition, employers need to be aware that some state family and medical leave laws also regulate the substitution of paid leave.