DOL Issues Opinion Letter Clarifying Intersection of FMLA and State or Local Paid Family and Medical Leave Benefits

Shortly before the Trump Administration started, the U.S. Department of Labor (DOL) issued an opinion letter clarifying the “substitution” provision under the federal Family and Medical Leave Act (FMLA) when it intersects with a state or local paid family and medical leave program.

The FMLA provides eligible employees with up to twelve (12) weeks of unpaid job-protected leave for certain specified family and medical reasons. Because FMLA leave is unpaid, the employee may choose, or the employer can require, that the eligible employee substitute any employer-provided accrued paid leave for any unpaid portion of FMLA leave. But if an employee takes leave under a paid disability or workers’ compensation program that also qualifies for, and therefore overlaps with, the FMLA leave, the employer must still designate the leave as FMLA leave but it cannot mandate that the employee use any other employer-provided leave (such as PTO). Instead, the FMLA permits the employee and employer to agree to use the employer-provided leave to supplement the paid disability or workers’ compensation benefits (provided the applicable state law also permits this arrangement). The reasoning behind this rule is that, in this instance, the employee has at least some of their FMLA leave paid for, and neither the employer nor the employee should be able to unilaterally require substitution of additional employer-provided accrued paid leave.

In the past few years, many states have implemented paid family and medical leave programs that provide leave for reasons that overlap in large part with the FMLA, and we are likely to see many more take effect in the near future as leave proposals make their way through state legislatures. Until this point, the applicable regulations and guidance did not address whether and how the employer leave substitution provision applies when an employee that qualifies for FMLA leave also receives paid leave benefits under a state or local family and medical leave program; it only addressed it as to state disability and workers’ compensation benefit programs.

The opinion letter has now provided some much-needed clarity on this point: the same distinction that applies to disability and workers’ compensation programs applies to family and medical leave programs – the employer must still designate the leave as FMLA, and where state law permits, the employer and employee can agree to the use of employer-provided accrued paid leave to supplement payments provided by the state or locality. Neither the employer nor the employee can unilaterally require paid leave use though. The substitution provision, however, still applies to any remaining unpaid period of FMLA leave once state or local paid leave benefits are exhausted.

What Should Employers do?

FMLA and state or local paid leave program compliance can be complex, and how an employer’s policies interact with such leave laws may vary. Multiple variables will dictate how the opinion letter’s guidance is applied, including whether the employer provides unlimited or accrued PTO or sick leave policies. State or local paid leave programs may also dictate how an employer’s employer-provided accrued paid leave can be used to supplement or replace wage payments during a period of leave.

In response to the opinion letter, employers should review and/or revise their applicable handbook policy language to ensure proper application of the substitution rule during overlapping periods of FMLA and state or local paid family and medical leave. Employers may also coordinate with any third-party leave administrators to ensure proper implementation.

Employers should also continue to monitor the impact of the changing political landscape on the provision and interpretation of federal leave entitlements like the FMLA. The DOL opinion letter was issued before the Trump administration took office, and while the administration has not indicated to date that it will be withdrawn, it is important to note that a DOL opinion letter is not binding law, but rather provides guidance on how the DOL interprets applicable statutes and regulations. Opinions may change depending on new laws, court decisions, and information. Employers should consult with their counsel regarding whether and how the FMLA opinion letter may affect their paid leave policies and practices.

Subscribe To Viewpoints