U.S. Department of Labor Issues Critical Guidance on Paid Time Off During FMLA Leave
The U.S. Department of Labor’s Wage and Hour Division (WHD) has released an opinion letter clarifying that employers cannot mandate employees to exhaust their accrued paid time off (PTO) while they are on Family and Medical Leave Act (FMLA) leave, particularly when employees are also receiving benefits from state or local paid family or medical leave programs. Although the letter does not hold the weight of law, it illuminates the WHD’s enforcement stance on this significant intersection of federal and state leave regulations.
Understanding FMLA and State Leave Programs
Established in 1993, the FMLA grants eligible employees up to 12 weeks—or, in certain cases, 26 weeks—of unpaid, job-protected leave per year for specific family and medical reasons, including serious health conditions and care for family members. Over the years, many states, including New York, California, and Massachusetts, have enacted their own paid leave programs, which often provide partial wage replacement for various personal and family-related medical reasons. These state programs may offer benefits that enhance those provided by the FMLA, such as extended leave or broader eligibility criteria.
Implications of the Opinion Letter on PTO Substitution
Typically, while the FMLA allows employees to substitute accrued PTO for unpaid leave, the WHD’s recent letter specifies that this substitution principle does not apply when employees receive income from state or local paid family leave programs during their FMLA leave. This aligns the treatment of state and local programs with that of disability or workers’ compensation benefits, wherein substitution of PTO cannot be unilaterally mandated by either party.
For example, if an employee requires leave for a serious medical condition and is simultaneously receiving state benefits, their employer cannot compel them to use their PTO during this compensated leave period. However, they may mutually agree to use PTO to supplement any shortfall between the state benefits and the employee’s regular wages, provided that state laws permit such arrangements.
What Employers Need to Know Going Forward
This opinion letter provides clarity in an area that has historically been ambiguous, particularly for employers navigating various state family leave laws in conjunction with the FMLA. Employers should take immediate action to review and, if necessary, amend their leave policies to reflect these new interpretations. Policies requiring the substitution of PTO during concurrent state and FMLA leaves should be revised to facilitate only agreed-upon supplemental use of PTO.
Additionally, employers must remain vigilant about regulations specific to their state or local leave laws, which may have differing requirements regarding PTO substitution.
Overall, the WHD’s opinion letter serves as an important reminder of the complexities surrounding employee leave rights in the U.S., urging employers to maintain compliance with both federal and state regulations to avoid potential legal ramifications.
