My understanding is that employers may not require employees to use paid leave not yet available. At my company we make employees use all but 5 vacation days before taking unpaid FMLA leave. Are we violating anything by doing this?
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Substitution of paid leave is covered in section 825.207 of the FMLA regulations, which expressly permit employers to require a FMLA-eligible employee to substitute accrued paid leave for unpaid FMLA leave. In this context, “substitute” means that the paid leave provided by the employer and accrued pursuant to the pre-established policies of the employer will run concurrently with the unpaid FMLA time.
The employee’s ability to substitute this accrued paid leave is determined by the terms and conditions of the employer’s normal leave policy. (In other words, if the employee does not comply with the requirements of the employer’s paid leave policy, then the employee may be forbidden from substituting accrued paid leave, but this does not change the employee’s entitlement to take FMLA).
If an employer otherwise permits non-FMLA employees to “borrow” paid leave that has not yet been earned, then the employer should also allow employees who are taking FMLA to do so; however, employers should not require an employee to exhaust unearned/unaccrued paid leave, as doing so could be seen as retaliation for the employee’s exercise of the right to FMLA. (Note: In general, we do not recommend advancing unearned paid leave to employees in any circumstance, as this can create issues in the event that the employee terminates employment before earning/becoming entitled to the borrowed leave).
With regard to your company’s policy, requiring employees to use all but 5 accrued/earned paid time off days concurrently with approved unpaid FMLA would be permissible (as long as this requirement is applied consistently to all eligible employees). We would not, however, recommend requiring an employee to exhaust all but 5 days of his or her accrued paid time before approving FMLA. Rather, the unpaid FMLA leave should begin as soon as the employee demonstrates eligibility for that leave, then the accrued PTO should run concurrently.
My understanding of the regulations is that if it will be paid via disability or worker’s compensation, then an employer cannot force an employee to utilize any accrued PTO (vacation, etc), but rather it must be agreed upon.
(d) Leave taken pursuant to a disability leave plan would be considered FMLA leave for a serious health condition and counted in the leave entitlement permitted under FMLA if it meets the criteria set forth above in §§825.112 through 825.115. In such cases, the employer may designate the leave as FMLA leave and count the leave against the employee’s FMLA leave entitlement. Because leave pursuant to a disability benefit plan is not unpaid, the provision for substitution of the employee’s accrued paid leave is inapplicable, and neither the employee nor the employer may require the substitution of paid leave. However, employers and employees may agree, where state law permits, to have paid leave supplement the disability plan benefits, such as in the case where a plan only provides replacement income for two-thirds of an employee’s salary.