DOL: Employers Cannot Mandate PTO Use with State/Local Paid Leave Benefits During FMLA
The U.S. Department of Labor Wage and Hour Division (“WHD”) has issiued an opinion letter stating that employers cannot require employees to substtute accrued paid time off during a Family and Medical Leave Act (“FMLA”) leave where the employee is also receiving benefits under a state or local paid family or medical leave program.
The opinion letter – which does not have the force of law but sets forth the agency’s enforcement position – answers a longstanding open question around the interplay between the FMLA, state/local paid leave programs, and accrued paid time off.
A Quick Refresher: FMLA and State Family/Medical Leave Programs
The federal FMLA entitles eligible employees of covered employers to up to 12 weeks (or in limited cases, 26 weeks) of unpaid, job-protected leave per 12-month period for specified family and medical reasons. Covered reasons for FMLA leave include an employee’s own serious health condition, caring for a parent, spouse or child with a serious health condition, and caring for a new child following birth, adoption or foster placement.
Since the FMLA’s enactment in 1993, numerous states (including New York, California, Massachusetts, Connecticut, and others) have instituted family and/or medical leave programs that provide partially paid leave (usually based on a percentage of the employee’s wages, up to a set cap) for personal medical, family care and/or parental leave reasons. Likewise, certain local governments have implemented paid family and medical leave programs specifically for their municipal employees. Many of these programs permit leave for reasons that are also qualifying reasons for leave under the FMLA. However, state/local paid leave programs often include benefits that differ from or exceed what the FMLA provides, such as longer leave periods or additional covered reasons for leave.
What Do the FMLA Regulations Say About Substitution of PTO?
While FMLA leave is unpaid, the governing regulations allow an employee to elect, or an employer to require the employee, to “substitute” accrued employer-provided paid time off (e.g., paid vacation, paid sick leave, etc.) for any part of an unpaid FMLA period – that is, the accrued paid time off may be used concurrently with FMLA leave to enable the employee to receive full pay during an otherwise unpaid leave period. However, the regulations further state that, during any part of an FMLA leave where an employee is receiving disability or workers’ compensation benefits, neither the employer nor the employee can require substitution of paid time off because such leave is not unpaid. Rather, when disability or workers’ compensation benefits are being received, the employer and the employee may only mutually agree (where state law permits) that accrued paid time off will be used to supplement such benefits.
EXAMPLE: John tells his employer he requires 12 weeks of leave to recover from a serious back surgery. John’s employer designates the 12 weeks as FMLA leave. John also applies and is approved for 12 weeks of disability benefits under his employer’s short-term disability program, pursuant to which he will receive a benefit equal to two-thirds of his regular wages. John’s employer cannot require John to substitute his accrued vacation time because he is receiving disability benefits and therefore his FMLA is not unpaid. However, John and his employer agree to use one-third of his available vacation time each week to supplement his disability pay so John receives 100% pay during the leave.
How Does the Opinion Letter Impact Substitution of PTO During FMLA?
Because they have only more recently come into existence, state and local paid family or medical leave programs are not directly addressed in the FMLA regulations. However, the opinion letter now makes clear that “the same principles apply to such programs as apply to disability plans and workers compensation programs.”
First, the opinion letter emphasizes 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 opinion letter then goes on to state:
[W]here an employee, during leave covered by the FMLA, receives compensation from a state or local family or medical leave program, the FMLA substitution provision does not apply to the portion of leave that is compensated. Because the substitution provision does not apply, neither the employee nor the employer may use the FMLA substitution provision to unilaterally require the concurrent use of employer-provided paid leave during the portion of the leave that is compensated by the state or local program. [However], if the employee is receiving compensation through state or local paid family or medical leave that does not fully compensate the employee for their FMLA covered leave, and the employee also has available employer-provided paid leave, the employer and the employee may agree, where state law permits, to use the employee’s employer-provided accrued paid leave to supplement the payments under a state or local leave program.
The opinion letter also notes that if an employee’s leave under a state or local paid family or medical leave program ends before the employee has exhausted their full FMLA leave entitlement and the leave therefore becomes unpaid, the FMLA substitution provision would then apply and the employee would be able to elect, or the employer would be able to require the employee, to substitute accrued paid time off.
EXAMPLE: Jane tells her employer she requires 12 weeks of leave to care for her husband while he recovers from a serious back surgery. Jane’s employer designates the 12 weeks as FMLA leave. Jane also applies and is approved for 8 weeks of paid family care benefits under her state’s paid family and medical leave program, pursuant to which she will receive a benefit equal to two-thirds of her regular wages. Jane’s employer cannot require Jane to substitute her accrued vacation time during the 8 weeks of her FMLA leave where she is concurrently receiving state family care benefits because her FMLA during that time is not unpaid. However, Jane and her employer agree to use one-third of her available vacation time each week during the first 8 weeks to supplement her state family care benefit so Jane receives 100% pay during that time. Beginning on week 9, Jane is no longer eligible for state family care benefits and her FMLA leave is now unpaid, so pursuant to its FMLA policy Jane’s employer requires her to substitute her remaining accrued vacation time during the FMLA leave until it is exhausted.
Implications and Action Steps for Employers
The opinion letter clarifies what has been a gray area around the interplay between the FMLA, state/local paid leave programs, and accrued paid time off. For example, the regulations governing the New York Paid Family Leave Law (“NYPFL”) state that “[a]n employer covered by the FMLA . . . that designates a concurrent period of family leave under [the NYPFL] may charge an employee’s accrued paid time off in accordance with the provisions of the FMLA.” However, it had previously been unclear whether this language in fact permitted employers to require substitution of accrued paid time off during a concurrent FMLA and NYPFL leave. It is now clear that such a requirement is impermissible, though employers and employees may agree to use paid time off to supplement NYPFL benefits.
Employers should now review their leave policies and practices to ensure that any provisions around the use of accrued paid time off during FMLA leave comport with the WHD’s interpretation of the requirements of the law. To the extent that any such policies require employees to substitute accrued paid time off during an FMLA leave where an employee is concurrently receiving disability, workers’ compensation or state/local paid family or medical leave benefits, the policies should be revised to provide that paid time off may only be used to supplement such other payments and only if both the employer and the employee agree.
However, employers are reminded that, as noted above, there may be situations where employees are eligible for benefits under state/local paid leave laws that are not also covered by the FMLA. As such, employers should also take note of what an applicable state/local paid family or medical leave law may permit (or not permit) around the substitution of paid time off and apply those rules during any leave period that does not run concurrently with the FMLA.
Ten Minute Interview: Family Investments [Video]
Brian Lucareli, director of Foley Private Client Services (PCS) and co-chair of the Family Offices group, sits down with Kay Gordon, partner, and member of our Fund Formation and Investment Management practice group, for a 10-minute interview to discuss family investments. During this session, Kay explained which are the structures utilized for family investments, the benefits of using external, as opposed to internal, management, and what are some of the legal considerations for retaining internal and/or external managers.
California May Soon Require Companies To Submit Elder Abuse Prevention Plans
California legislators are introducing the first bills in the current biennium. One of these bills, AB 83 (Pacheco), would add an entirely new division to the California Financial Code. This new division would consist of a single section and this single section would consist of a single sentence:
The Department of Financial Protection and Innovation shall require companies to submit to the department an elder abuse prevention plan.
Although it has been said that brevity is the soul of wit,* sometimes brevity is simply witless – like this bill. Will all companies be subject to this requirement or only those licensed or directly regulated by the DFPI? How will an out-of-state company know whether it is subject to this requirement? Is this a one-time requirement or must companies file plans annually or on some other periodic basis? Will the DFPI simply receive the submitted reports or will it review the reports? What are the penalties, if any, for failure to file?
Given that this bill is so scant on important details, I suspect that it is a placeholder for some larger, and perhaps, even markedly different legislation.
_______________________________*Wm. Shakespeare, Hamlet Act 2, Sc. 2.
Illinois Human Rights Act Now Protects Employees With “Family Responsibilities”
As of January 1, 2025, Illinois became the latest in a minority of states and municipalities to expand employment protections for employees who act as family caregivers. House Bill 2161, which passed in August 2024, amends the Illinois Human Rights Act (the IHRA or “the Act”) to additionally prohibit discrimination against employees based on their “family responsibilities.”
The phrase “family responsibilities” is defined broadly, including an employee’s “actual or perceived provision of personal care to a family member.” “Personal care” includes activities that ensure a covered family member’s basic medical, hygiene, nutritional, or safety needs are met as well as transporting family members to medical appointments, if the family member is unable to meet such need(s) for themselves.
As amended, the Act makes it unlawful for any employer to “refuse to hire, to segregate, to engage in harassment . . . or to act with respect to recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure or terms, privileges or conditions of employment on the basis of . . . family responsibilities.” In addition, employment agencies are prohibited from failing or refusing to properly classify, accept applications and register for employment referral or apprenticeship referral, refer for employment, or refer for apprenticeship on the basis of family responsibilities.
Although the IHRA amendments increase protections for employees serving as caregivers, they also make clear that employers, employment agencies, or labor organizations are not required to make accommodations or modifications to workplace rules or policies for an employee based on family responsibilities, including accommodations or modifications related to leave, scheduling, productivity, attendance, absenteeism, timeliness, work performance, referrals from a labor union hiring hall, and benefits, so long as the employer’s rules or policies do not otherwise violate the Act.
Illinois employers should review their current handbooks and anti-discrimination/harassment policies — and consult their regular employment counsel — to ensure that these new protections are incorporated.
Solo Aging: Planning for Your Best Life
More and more of the clients I see lately are solo agers. A recent study found that 34 percent of older adults do not have a spouse, significant other or children who can provide their care. Although historically children and close relatives were the primary support for aging adults, there are many ways to fill that gap. Whether through informal networks of friends and “found” families, or through the guidance of professionals like our firm, it is important to plan.
When you live alone, you need to plan for aging differently than someone who is married or has a life-partner. In most instances, those with a partner can rely on them to help out with expenses and be a caregiver, if they should become ill. However, when you are single, especially if you do not have close family, you need to plan in advance and you need to plan better.
Most important of all: make sure that decisions about your health and well-being are made the way you want them to be made, if there comes a time you are not able to make them for yourself. That means picking a person you trust and giving them everything they need to act on your behalf. Your surrogate needs to know about your finances, your health information, your values and goals, so they can step into your shoes.
New Jersey law provides several tools to allow individuals to plan for their future and legacy wishes. In addition to a Will, POA, and health proxy, revocable trusts and health care instruction directives can be very useful for directing your surrogate as to how and where you want to be cared for if you need long term care. Solo agers will be best served if they think beyond basic formulaic legal documents. Because New Jersey does not have required statutory forms, estate planning documents can build in protections against financial exploitation such as trust protectors or advisors, POA monitors or tie-breakers, or trusted contacts. A POLST (Practitioner Order on Life Sustaining Treatment) is another great tool in New Jersey to ensure your treatment wishes are followed. Because it is a medical order, it is more likely to be honored than a Living Will. New Jersey also allows individuals to name a Funeral Representative in their Wills which can be essential for those who want to designate someone other than their next of kin to handle their arrangements.
Getting estate planning documents completed is important but it is not the only thing to consider. You need a care plan which addresses emergencies as well as a financial plan. You may want to consider long term care insurance. Someone turning 65 has a nearly 70% chance of needing long-term care in their remaining years. Solo agers are more likely to need to rely on paid professional caregivers. It’s important to consider your options for care before you need it. You also should discuss these issues with your friends or family who you have nominated to make decisions for you, so they know your wishes. No one likes to think about these issues, but studies show that individuals who have not created a care plan and designated a surrogate often end up receiving care they did not want and are more likely to end up in an institutional setting.
There are a growing array of resources and options available to individuals who are ready to put together an aging life care plan and a team to support them along the way. Being proactive will give you the peace of mind to know you do not have to face aging and illness alone.