The Family and Medical Leave Act (FMLA) is a federal law providing job-protected time off for specific family and medical reasons. Paid Time Off (PTO) is an employer-provided benefit that offers compensation during an absence. Since FMLA leave is generally unpaid under federal law, employees often seek ways to maintain their income during a protected absence. The mechanism allowing an employee to receive pay while on FMLA leave is the substitution of their accrued PTO for the otherwise unpaid time. Understanding these substitution rules involves federal regulations, employer policies, and state and local laws.
Understanding FMLA Leave
The FMLA provides eligible employees with up to 12 workweeks of job-protected leave in a 12-month period for qualifying family and medical events. Qualifying reasons include the birth or placement of a child for adoption or foster care. It also covers the care of an immediate family member or the employee’s own serious health condition.
To be eligible for FMLA leave, an employee must work for a covered employer, typically private-sector employers with 50 or more employees. The employee must also have worked for the employer for at least 12 months. Additionally, they must have accumulated a minimum of 1,250 hours of service during the 12 months immediately preceding the leave.
The Mechanism of Substituting Paid Leave
Substitution is the process of using an employee’s accrued paid leave, such as vacation time, sick leave, or personal time, to provide compensation during a period designated as FMLA leave. This practice allows the employee to receive their regular wages for a portion of the time they are away from work. This practice is governed by federal regulation 29 U.S.C. § 2612(d)(2).
The substitution rule dictates how an employee’s existing paid leave is applied; it does not create an additional benefit. The paid leave runs concurrently with the FMLA’s job protection. For example, if an employee uses two weeks of vacation time during their FMLA leave, the remaining time off would be unpaid. The employer must observe the terms and conditions of its normal leave policies when determining an employee’s ability to substitute paid leave.
Employer Mandates Versus Employee Choice
Federal regulations permit both the employee to elect and the employer to require the substitution of accrued paid leave for any part of the unpaid FMLA period. This means an employer can mandate that an employee use their existing PTO concurrently with their FMLA leave, even if the employee would prefer to save their paid leave for later use. Mandatory substitution is permissible only for the portion of the leave that is otherwise unpaid.
If the employer requires substitution, they must notify the employee promptly, typically within five business days after the employee gives notice of the need for FMLA leave. A significant exception occurs when the employee is already receiving wage replacement benefits, such as workers’ compensation or a disability benefit. In these scenarios, neither the employer nor the employee can unilaterally require the use of other accrued paid leave.
Distinctions Between Sick Leave and Vacation Time
The type of accrued paid leave an employee can substitute depends on the reason for the FMLA leave. For leave taken due to an employee’s or family member’s serious health condition, the employee may substitute accrued paid sick leave, medical leave, personal leave, or vacation time. However, the use of paid sick leave is conditional upon the employer’s usual policy for sick leave usage.
If the FMLA leave is for bonding with a newborn or a newly placed child, the employee may substitute accrued paid vacation or personal leave. In this situation, the employer cannot require the employee to use accrued paid sick leave.
How Paid Leave Affects the 12-Week FMLA Clock
A common misunderstanding is that substituting paid leave extends the total amount of time an employee has under the FMLA. The 12-week FMLA entitlement clock begins running the moment the employee starts their leave for a qualifying reason, regardless of whether that time off is paid or unpaid.
For instance, if an employee takes 12 weeks of FMLA leave and uses 4 weeks of accrued paid vacation time during that period, they have exhausted their full 12-week FMLA entitlement. The paid leave substitution simply provides income replacement during a portion of the protected leave. The two types of leave run simultaneously.
State and Local Laws Governing Paid Leave Substitution
While the FMLA sets the federal baseline, state and local laws can significantly change the rules regarding paid leave substitution. A rising number of states have implemented mandatory Paid Family and Medical Leave (PFML) programs that provide partial wage replacement to employees. These state programs are treated similarly to disability or workers’ compensation benefits when they overlap with FMLA leave.
When an employee is receiving compensation from a state or local PFML program, the FMLA substitution rule does not apply to that compensated portion of the leave. If the state benefits are exhausted before the FMLA leave ends, the federal substitution rule then applies to the remaining unpaid portion.