On Jan. 14, 2025, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) issued an opinion letter stating that employers may not require, and employees may not unilaterally elect, to use accrued employer-provided paid time off (PTO), such as paid vacation or paid sick leave, concurrently with leave covered by the Family and Medical Leave Act (FMLA) when an employee is receiving payments from a state or local paid family or medical leave program because the leave is not unpaid. However, if the employee both is receiving benefits from a state family leave program and has accrued PTO, the employer and employee may agree, where state law permits, to use the PTO to supplement those benefits during FMLA-qualifying leave.
Background
The FMLA entitles eligible employees of covered employers to take up to 12 weeks (or in limited circumstances connected to caring for a covered servicemember, 26 weeks) of unpaid, job-protected leave in any one-year period for qualifying family and medical reasons, including the birth or adoption of a child, an employee’s own serious health condition or caring for a family member with a serious health condition.
Though the FMLA provides for unpaid leave, it permits an employee to elect, or an employer to require the employee, to “substitute” accrued employer-provided PTO for unpaid FMLA leave, meaning that the accrued PTO may be, or may be required to be, used concurrently with FMLA leave to enable the employee to receive full pay during an otherwise unpaid leave period. 29 CFR § 825.207(a).
The FMLA regulations also provide that, to the extent an employee is receiving disability or workers’ compensation benefits during FMLA leave, “neither the employer nor the employee can require substitution” of PTO because such leave is not unpaid. In these circumstances, the employer and the employee may only mutually agree, where state law permits, that PTO will supplement such benefits, such as where a disability or workers’ compensation program only provides replacement income for two-thirds of an employee’s salary. 29 CFR § 825.207(d)-(e).
The Opinion Letter
Since enactment of the FMLA, numerous state governments have passed legislation implementing paid family or medical leave programs that partially compensate employees who take leave for reasons that may overlap with qualifying leave under the FMLA. These state and local paid leave programs may also provide benefits for reasons that are not covered by the FMLA. The FMLA and corresponding regulations and guidance do not address state or local paid family or medical leave programs.
The WHD’s recent opinion letter concludes that “[w]hile state or local paid family or medical leave programs are not directly addressed in 29 CFR § 825.207(d) or (e), the same principles apply to such programs as apply to disability plans and workers compensation programs.” This means that neither the employer nor the employee may unilaterally require substitution of PTO for FMLA leave when the employee is receiving benefits under a state or local paid family or medical leave program. Rather, as the opinion letter clarifies, during FMLA leave, PTO days may be used to supplement payments from a state or local paid family or medical leave program only where the employee elects to use PTO and the employer allows it. The opinion letter reminds employers that “where an employee takes leave under a state or local paid family or medical leave program, if the leave is covered by the FMLA, it must be designated as FMLA leave.”
The FMLA substitution provision would apply when an employee’s state paid or local family or medical leave ends before the employee’s FMLA leave period is exhausted, causing the FMLA-covered leave to become unpaid. In that case, the employee would be able to elect, or the employer would be able to require, the employee to substitute employer-provided PTO to compensate the employee during the remaining FMLA leave.
Takeaways for Employers
Employers should review their leave policies to ensure compliance with the WHD’s opinion letter interpreting the FMLA. Any policies that require employees to use accrued PTO concurrently with FMLA leave when the employee is also receiving state or local paid family or medical leave benefits or any other pay should be revised to provide that only when the employer and employee agree can PTO be used to supplement an employee’s pay from a state or local family or medical leave program or any other payment program during FMLA leave.
Additionally, to ensure that employers are correctly designating FMLA leave, employers should be cognizant of situations where employees are eligible for state family or medical leave that is not covered by the FMLA. In those cases, the employer should comply with the state family or medical leave law in determining what substitution, if any, of PTO during a non-FMLA leave is (or is not) permitted. As an example, the regulations governing the New York Paid Family Leave Law (NYPFL) do not allow employers to require employees to use accruals during NYPFL leave. 12 N.Y.C.R.R. 380-6.2(a). Therefore, employees using NYPFL leave that is not covered by the FMLA may use PTO to supplement their NYPFL benefits only where both parties agree to such use. Currently, the following jurisdictions have paid family and medical leave laws: California, Colorado, Connecticut, Delaware, the District of Columbia, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, Oregon, Rhode Island and Washington.
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