A recent decision from the Seventh Circuit Court of Appeals addressing Family and Medical Leave Act (“FMLA”) leave and temporary disability benefits creates a potential source of liability for many employers. In Repa v. Roadway Express, 477 F.3d 938 (7th Cir. 2007), the Seventh Circuit ruled that employees receiving temporary disability benefits cannot be forced to substitute accrued paid time off days for unpaid FMLA leave. This opinion is contrary to many employers’ belief that such practices are permitted under the FMLA.
The Repa Decision
Alice Repa, an employee of defendant Roadway Express, had a non-work related injury requiring surgery and a six week absence from work. Repa applied for and was granted short-term disability (“STD”) benefits. On the same day that she applied for STD benefits, Repa notified Roadway of her request for FMLA leave from May 19, 2003 to June 30, 2003. Roadway granted Repa’s request and also notified her that pursuant to company policy, she was required to substitute any accrued paid leave for any unpaid FMLA leave. When Repa returned from leave, Roadway paid her for the five sick days and two weeks of vacation she had accrued. Repa received this money in addition to the benefits paid under Roadway’s STD benefit plan.
Repa subsequently sued Roadway alleging that Roadway had violated the FMLA by requiring her to use accrued paid time off days concurrently with her FMLA leave. This claim focused on an FMLA regulation, 29 C.F.R. § 825.207(d)(1), which states:
“Disability leave for the birth of a child would be considered FMLA leave for a serious health condition and counted in the 12 weeks of leave permitted under FMLA. Because the leave pursuant to a temporary disability benefit plan is not unpaid, the provision for substitution of paid leave is inapplicable. However, the employer may designate the leave as FMLA leave and count the leave as running concurrently for purposes of both the benefit plan and the FMLA leave entitlement. If the requirements to quality for payments pursuant to the employer’s temporary disability plan are more stringent than those of the FMLA, the employee must meet the more stringent requirements of the plan, or may choose not to meet the requirements of the plan and instead receive no payments from the plan and use unpaid FMLA leave or substitute available accrued paid leave.” (emphasis added).
Repa argued that this regulation prohibited Roadway’s policy of requiring the use of paid time off concurrently with FMLA leave under the italicized sentence. In response, Roadway argued that this sentence applied only to disability leave for the birth of a child because of the proceeding sentence addressing the issue. The Seventh Circuit rejected Roadway’s interpretation of the regulation. The court reasoned that of the four sentences in the regulation discussing temporary disability benefit plans, only the first refers to child birth and none of the remaining three sentences refer to the first. Based on this reasoning, the court held that the regulation prohibits employers from requiring employees to substitute disability-related paid leave (e.g., STD, long-term disability, workers compensation leave, etc.) for unpaid FMLA leave.
For many years, employers have created and enforced policies requiring employees taking FMLA leave to substitute and use any accrued paid time off concurrently with the FMLA leave. Repa v. Roadway Express now limits such required substitution in instances where an employee on FMLA leave is also receiving temporary disability benefits, long-term disability benefits, or workers compensation wage payments.
Repa creates a potential source of liability for many employers whose employee handbooks may include FMLA policies inconsistent with Repa. Such policies now should be revised and pending revision, any such FMLA policies concerning substituted paid leave should not be applied inconsistently with Repa.