Are there situations where an employer cannot require an employee to substitute accrued paid leave for unpaid FMLA leave?

Yes. This substitution is limited by a Department of Labor regulation found at 29 C.F.R. §825.207(d)(1). The regulation provides that if the leave is pursuant to a temporary disability benefi t plan, the substitution of accrued paid leave is not permitted. A recent decision of the Court of Appeals for the Seventh Circuit (Repa v. Roadway Express, Inc., No. 06-2360, Feb. 26, 2007) discusses the application of this regulation.

Repa, an employee of Roadway, suffered a nonwork- related injury that forced her to be off work for six weeks. Roadway is a party to a multiemployer labor contract with the Teamsters that requires the employers to contribute to a health and welfare plan providing temporary disability benefi ts to covered employees. Repa separately applied for and was granted disability benefi ts and FMLA leave for six weeks. Roadway notifi ed Repa that she was required to substitute accrued paid leave for her FMLA leave, which was unpaid in the sense that she was receiving no money directly from Roadway. Upon her return to work, Roadway paid her for fi ve sick days and two weeks of vacation in addition to the weekly disability benefi ts she had received from the Teamster plan.

Repa sued Roadway, alleging that it had violated the FMLA by requiring her to use her accrued sick and vacation days when she was receiving disability benefi ts during her FMLA leave. The trial court decided in Repa’s favor, and the decision was affi rmed on appeal. The Court of Appeals rejected Roadway’s argument that the DOL regulation applies only to paid disability leave for the birth of a child. It also rejected the argument that the regulation does not apply when the disability leave benefi ts are paid by a third-party plan managed by a board of trustees rather than by the employer, fi nding no language in the regulation to support this position. It should be noted that when accrued paid leave cannot be substituted because the employee on FMLA leave is being paid benefi ts under a temporary disability plan, the regulation permits the employer to count the leave as running concurrently for purposes of both the benefi t plan and the FMLA leave entitlement.

It also should be noted that many employers will not permit employees to use accrued paid leave while they are receiving disability benefi ts in order to avoid a situation where the employees receive more pay while off on disability than when they are working. If you have any questions about the substitution of accrued paid leave or the FMLA in general, please contact Tom Hancuch (312-609-7824) or any other Vedder Price attorney with whom you have worked.