DOL Opinion Letter Addresses Interaction of FMLA and State Paid Family and Medical Leave (PFML) and Local Paid Leave

February 11, 2025

On January 14, 2025, the DOL issued an opinion letter clarifying the “substitution” provision under the FMLA when it intersects with a state paid family and medical leave (PFML) program or local paid leave (e.g., paid sick leave) law. The term “substitute” means that either the employer or employee, on their own, can decide to have employer-provided paid leave (e.g., PTO, sick leave, vacation) run concurrently with the unpaid FMLA leave.

As background, FMLA leave provides eligible employees with up to 12 weeks of unpaid job-protected leave per year for specified family and medical reasons. Additionally, an eligible employee may take up to 26 weeks of leave per year to care for a family member’s service in the military. Because FMLA leave is unpaid, the employee may choose, or the employer can require, that the eligible employee substitute any employer-provided accrued but unused paid leave for any unpaid part of FMLA leave. However, the FMLA regulations state that if the employee is receiving paid disability plan or workers’ compensation payments, the employee may use employer-provided paid leave to supplement the disability or workers’ compensation payment while on FMLA leave only if the employer and employee mutually agree. Neither the employer nor the employee can require the use of employer-provided accrued paid leave during the FMLA leave if the employee receives payment from a disability or workers’ compensation program.

The opinion letter provided much-needed guidance, clarifying that when an employee takes leave under a state PFML or local paid leave program and the leave is also covered by the FMLA, the employer must designate the leave as FMLA and provide the designation notice, and neither the employer nor employee can delay the FMLA leave. Additionally, the opinion letter states that when state PFML or local paid leave programs are applied concurrently with FMLA, the employer and employee can mutually agree to use employer-provided accrued paid leave to supplement payments provided by the state PFML or local paid leave. However, neither the employer nor the employee can unilaterally require the use of state PFML or local paid leave during FMLA. The substitution provision still applies to the unpaid FMLA when paid disability, workers’ compensation, PFML, or local paid law overlaps with the FMLA.

An increasing number of states have implemented PFML programs that provide leave for reasons that overlap in large part with the FMLA. Until this opinion letter, the applicable guidance did not address whether the employer or employee could unilaterally require the use of the accrued employer-provided paid leave to supplement the PFML or local paid leave benefits when an employee that qualifies for FMLA leave also receives PFML or local paid leave benefits. This opinion letter clarifies that when an employee on FMLA is receiving PFML benefits or local paid leave, the FMLA substitution rule does not apply because the employee is not on unpaid FMLA leave. Instead, PFML leave during FMLA leave is treated the same as a paid disability plan or workers’ compensation program. Therefore, both the employer and employee must agree to the employee’s use of accrued paid leave to “top up” the PFML benefits for the employee to receive the full salary.

Employer Takeaway: Coordination of FMLA, state PFML programs, local paid leave, and employer-provided paid leave (e.g., PTO) requires a thorough review of each law and policy. State PFML 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.

Employers should review the opinion letter closely and update their leave policy, if necessary, in consultation with employment law counsel to ensure that the FMLA’s substitution rule is properly followed when FMLA and state PFML or local paid leave run concurrently. Further, employers should work with any third-party leave administrators to ensure proper leave administration.

DOL 2025-01