Critical Compliance Note for Employers in States With Paid Family or Medical Leave
As we know, employers covered by the Federal Family Leave Act ("FMLA") must provide their qualifying employees unpaid protected FMLA leave. In many instances, employers require employees taking FMLA leave to use accrued and unused vacation, PTO or sick leave while they are on FMLA absences. But what about situations when employees receive state-sponsored income replacement benefits (often referred to as Paid Family Leave "PFL") while on an FMLA or a parallel state law leave? Many states that provide PFL benefits already have laws prohibiting employers from forcing employees on FMLA to use their accrued vacation/PTO/sick leave while receiving PFL benefits.
On January 14, 2025, in one of the final acts of the Biden Administration's Department of Labor ("DOL"), the Wage and Hour Division of the DOL issued an Opinion Letter (FMLA 2025-1-A) advising that employers operating in states that provide paid family or medical leave benefits may not require employees to use their accrued and unused vacation, PTO, or sick leave while they are receiving paid family or medical leave under state law. While the DOL's Opinion Letter does not have the full force and effect of law and may be rescinded by the new administration, courts typically grant deference to the agency's interpretive opinions of the laws it enforces, including the FMLA.
Understandably, this may be unwelcome news to employers. The DOL's opinion, however, is not without precedent; there has long been a similar rule in effect that when employee's protected FMLA leave is paid through workers' compensation or disability benefits, the employer may not require the employee to use any of their accrued vacation, PTO, or sick time.
Indeed, many states and one municipality provide paid family leave benefits, including California, Colorado, Connecticut, Delaware, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, Oregon, Rhode Island, Washington, and the District of Columbia. Of these states, several have laws that prohibit entirely or partially limit the employer from forcing employees to use one or more forms of their accrued time off. These states are: California (which as of 1/1/25 also prohibits employers from requiring employees to use earned and accrued time off in the two weeks before paid family leave benefits commence); Colorado; Connecticut (can only require use until employee has two weeks of accrued leave remaining); the District of Columbia; Maryland; Massachusetts; Minnesota; New Jersey; New York; Oregon; and Washington.
What Employers Can Do
Despite this development, employers still have options to manage the variety of leave and benefit entitlements; for example:
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The prohibition on forcing employees to use accrued paid time off does not mean that the employee may not ask to use accrued and unused paid time off in order to supplement state-sponsored benefits—which typically are less than an employee's full earnings while actively working. This is permitted and lawful, so long as the combined income does not exceed the employee's earnings while actively working.
- The prohibition against forcing the employee to use accrued and unused PTO/vacation/sick leave only applies while the employee is receiving the state-sponsored benefit. So, for example, if the employee is entitled to a maximum of eight weeks of paid family leave under the applicable state law and exhausts the paid family leave benefit, the employer may then require the employee to use accrued and unused PTO, vacation, and, in some states, paid sick leave, for the remainder of the FMLA leave.[1]
If you would like to discuss this development or have any questions, please do not hesitate to reach out to Julie L. Hall, Roy P. Salins, or other DWT employment attorneys.