Leave Management, Policy, and Compliance

Mastering Tough FMLA Issues: Substitution of Paid Leave

This article series addresses some of the most confusing real world problems surrounding the Family and Medical Leave Act (FMLA). In the last installment, we focused on FMLA leave regarding spouses who work for the same company.  In this article, we’ll focus on substituting paid leave for FMLA leave.

Medical Leave

One problem that all FMLA-covered employers need to consider is how they want to handle situations in which an employee who requests FMLA leave also has some type of paid leave available to him or her. How that may or may not affect the amount of leave he or she may take depends on the individual employer and its policies.

For example, employers may require employees to substitute/exhaust any paid leave to which they may be entitled—such as sick, vacation, or personal leave—for FMLA leave. That means the two types of leave would run concurrently, reducing the total amount of paid and unpaid leave employees take per year. Employers also have the option of allowing employees to take such leave consecutively, but that is not generally considered to be desirable.

In order to require employees to substitute paid leave for FMLA leave, you would need to provide notice of that requirement in the Rights and Responsibilities Notice. If you don’t provide such notice, then the employee will be allowed to choose whether to use the two types of leave concurrently or consecutively. That could mean:

  • Using up all of their paid leave first, then using their 12 weeks of unpaid FMLA leave (or 26 weeks of military caregiver leave);
  • Saving their paid leave for other purposes; or
  • Choosing to have their paid leave run concurrently with FMLA leave.

These options also need to be explained in the Rights and Responsibilities Notice. Although it’s not required, a written policy regarding whether employees are required to use paid leave concurrently with FMLA leave is a very good idea. Having a policy will help ensure both that employees are informed about how leave is calculated in your workplace and that the same procedure is applied consistently to all employees.

Although we recommend that the policy require employees to take paid leave concurrently with FMLA leave (or at least that some portion of the employee’s paid leave be used concurrently with FMLA leave), you could choose to simply explain employees’ options regarding the use of paid leave in conjunction with FMLA leave.

If you don’t require the employee to substitute paid leave for FMLA leave and the employee doesn’t make a decision one way or the other, then the employee will remain entitled to all the paid leave she had earned or accrued prior to taking FMLA leave.

Workers’ Compensation

Employers may also require employees to take FMLA leave concurrently with workers’ compensation leave if the employer has such a leave policy and if the employee has an FMLA-covered serious health condition.

In fact, the regulations provide that workers’ compensation leave automatically runs concurrently with FMLA leave once it has been designated as such. When an employee’s workers’ compensation leave is running concurrently with FMLA leave, you may not require the employee to exhaust his other paid leave (such as sick leave). Where state law allows, you may, however, enter into an agreement with the employee to supplement workers’ compensation benefits with paid leave.

If an employee’s workers’ compensation benefits end but the employee is still on FMLA leave, then you may apply your regular policies regarding the exhaustion of paid leave for the remainder of the employee’s FMLA leave.

Other Paid Benefits

Finally, note that an employee who receives short-term disability benefits for his serious health condition while he is on FMLA leave may not be required to exhaust any other paid leave concurrently with the FMLA leave. Employees who receive disability benefits during FMLA leave aren’t on unpaid leave. They cannot be forced to use their other paid leave benefits—like vacation or sick leave—concurrently with their FMLA leave. That is true even if you are not the sponsor of the disability plan under which the disability benefits are being paid.

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 provides only replacement income for two-thirds of an employee’s salary.

As with workers’ compensation benefits, if the disability benefits end before the employee returns from leave, you may then require him to use his paid leave concurrently with any FMLA leave he uses beyond that point.

In the next installment, we’ll focus when it is appropriate to restore an employee’s job rights after returning from leave.