The federal FMLA requires employers to provide up to
12 weeks of unpaid leave to eligible employees for a variety of reasons
related to family and medical care. Generally, leave taken under the
federal FMLA is unpaid. However, employees may be eligible to receive
money or pay while they are on FMLA leave by substituting paid vacation,
sick, personal, or other paid leave time for unpaid FMLA leave time. FMLA regulations provide that if an employee chooses to substitute accrued paid leave for FMLA
leave, he or she may do so. If an employee does not choose to substitute
accrued paid leave, the employer may require the employee to substitute
accrued paid leave for unpaid FMLA leave pursuant to the employer’s
established policies for use of paid leave.
For example, an established employer-paid vacation policy
could require that vacation must be used in minimum increments, as
Under an employer’s policy, paid vacation leave can be
used only in 8-hour increments. If an employee has a 2-hour FMLA absence,
the employee can choose to take 8 hours of FMLA leave and receive
vacation pay for the entire time, or the employee can choose to take
2 hours of unpaid FMLA leave. If the employer requires the substitution
of paid time off while on FMLA leave, the employer must waive its
8-hour minimum increment rule and permit the employee to use 2 hours
of vacation for the 2-hour FMLA absence.
The employer may require that an employee comply with
its established leave policies for use of paid leave, even if they
are more (or less) stringent than the FMLA’s rules. However, when
an employee chooses, or an employer requires, substitution of accrued
paid leave, the employer must inform the employee that he or she must
satisfy any procedural requirements of the paid leave policy only
in connection with the receipt of such payment. This notice is provided
in the federal Form WH-381 (Eligibility and Notice of Rights and
Responsibilities). If an employee does not comply with the additional
requirements in an employer’s paid leave policy, the employee is not
entitled to substitute accrued paid leave, but the employee remains
entitled to take unpaid FMLA leave.
Some employers are opting for Paid-Time-Off (PTO) programs,
believing that such programs cut down on unscheduled absences. A PTO
program combines days off, which would otherwise be set in fixed allotments
(i.e., vacation, sick time, personal days, and holidays), into a bank
or pool. Employees may take as many days as they need within the employer's
cap or limit, for any reason. The concept of a specific number of
sick days or vacation days is omitted; the employee does not have
to make a choice, and the employer does not have to determine whether
the choice is legitimate.
PTO leave banks may be fashioned in any number of ways.
Some questions the employer should decide are:
• What types of absences will be included? For example,
will the absences include simply sick, vacation, and personal time,
or will jury duty, educational time, or funeral leave be included?
• How many days will be available?
• What happens to unused leave at the end of the year?
• What about when an employee terminates with time remaining
in the bank?