Since the FMLA came into existence, employers have been advised, where possible, to run FMLA concurrently with other leaves. Doing so prevents leave stacking. When reviewing FMLA policies, a common oversight we see is how employers handle the use of paid leave during FMLA. While the policies require employees to use earned vacation, sick or PTO time concurrently with FMLA leave, some overlook a nuance in the FMLA regulations that prohibits employers from requiring employees to use paid leave during FMLA.
FMLA leave is generally unpaid, and during unpaid FMLA leave an employer can require that employees use paid leave. The FMLA regulations provide, however, if during FMLA leave an employee also receives benefits, in any amount, from a disability plan or workers’ compensation, the FMLA leave is not unpaid. Because the FMLA’s general rule permitting employers to require employee substitution of paid leave only applies to unpaid FMLA, during periods of FMLA when any income replacement is received, employers cannot require employees to substitute paid leave. This exception to the FMLA general rule applies regardless of the amount of income replacement received.
For example, if an employee taking FMLA is also receiving disability benefits that replace two-thirds of their income, the employer may not require that the employee use PTO (or other paid leave) to make up for the one-third of income not covered by the disability benefits. The employee can, however, be required to use paid leave during a waiting period before disability benefits are received, because the limitation is triggered by the receipt of income replacement benefits.
This issue was at the center of Repa v. Roadway Express, Inc., 477 F.3d 938 (7th Cir. 2007). In that case, Alice Repa suffered an injury that required 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 she was on FMLA, her employer required her to use vacation and sick leave. Repa sued seeking to have her sick leave and vacation benefits restored. Repa was awarded summary judgment as the Court held that an employer’s ability to require an employee to substitute paid leave during FMLA is limited if, during FMLA leave, the employee also received disability benefits. While Repa, during her FMLA leave, could have been provided the opportunity to elect to substitute paid 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.
For those wanting to take a closer look, substitution of paid leave is addressed in 29 C.F.R. § 825.207 of the FMLA regulations.
While this limitation is not new, it is commonly overlooked. Employers should review their FMLA policies to ensure they properly administer the substitution of paid leave, and be aware that some state family and medical leave laws also regulate the substation of paid leave.