Substitution of Paid Leave

FMLA leave is generally unpaid. However, an employee may use accrued paid leave at the same time as FMLA leave when permitted by the city’s leave policies. A city may also require an employee to use available paid leave concurrently with FMLA leave, provided the city applies its policy consistently and gives the employee appropriate notice.

“Substitution” of paid leave means that paid leave runs concurrently with otherwise unpaid FMLA leave. The employee receives pay under the city’s applicable paid-leave policy while the same absence is counted against the employee’s FMLA entitlement.

For example, if an employee takes six weeks of FMLA leave for surgery and uses accrued sick leave during the first two weeks, those two weeks count both as paid sick leave and as FMLA leave. Assuming the employee has a 12-week FMLA entitlement and has not used other FMLA leave during the applicable 12-month period, the employee has six weeks of FMLA leave remaining.

The city may establish reasonable policies concerning the order in which accrued paid leave is used, such as sick leave before vacation leave or compensatory time before vacation leave, if the policy is lawful, clearly communicated, and consistently applied. The city should apply the normal conditions of its paid-leave policy only to determine whether the employee receives pay; it may not use those conditions to deny FMLA protection for otherwise qualifying leave.

No stacking of paid leave and FMLA leave
A city may not delay designation of FMLA-qualifying leave until an employee exhausts accrued paid leave. Once the city has enough information to determine that leave qualifies under the FMLA, the city must designate the leave as FMLA leave and provide the employee with a designation notice.

The U.S. Department of Labor Wage and Hour Division confirmed this rule in Opinion Letter FMLA2019-3-A, issued September 10, 2019. The opinion letter states that an employer may not delay designating leave as FMLA leave or permit an employee to delay designation in order to use paid leave first and preserve FMLA leave for later. If leave qualifies under the FMLA, the employer must designate it as FMLA leave and count it against the employee’s FMLA entitlement. The city cannot allow an employee to use paid leave first and then begin the employee’s 12-week FMLA entitlement after paid leave is exhausted. Paid leave and FMLA leave run concurrently when the employee substitutes paid leave for unpaid FMLA leave.

For example, assume an employee has five weeks of accrued sick leave and needs leave for surgery. The city may require the employee to use sick leave during the absence if city policy permits. However, if the leave qualifies under the FMLA, the city must designate the absence as FMLA leave when it has sufficient information to do so. The employee does not receive five weeks of paid sick leave followed by 12 additional weeks of FMLA leave. Instead, the five weeks of paid sick leave also count against the employee’s 12-week FMLA entitlement.

Notice and administration
When a city requires paid leave to run concurrently with FMLA leave, it should state that requirement in its personnel policy and in the employee’s FMLA designation notice. The city should identify:

• The type of paid leave that will be used.
• The order in which paid leave will be applied, if the employee has multiple paid-leave balances.
• The amount of paid leave available.
• The amount of FMLA leave being designated.
• Any normal procedural requirements for receiving pay under the city’s paid-leave policy.

The employee must satisfy the city’s usual procedural requirements for receiving paid leave, such as submitting a leave form or following a call-in procedure, only to receive payment. The city may not deny FMLA protection solely because the employee does not meet a city-paid-leave requirement that is more restrictive than the FMLA notice rules.

Special situations
A city should coordinate FMLA leave carefully with workers’ compensation, short-term disability benefits, paid parental leave, state or local paid-leave programs, military leave, and collective-bargaining agreements. Some types of paid benefits may have different interaction rules under the FMLA and may not be treated as ordinary paid-leave substitution.

For example, when an employee is receiving workers’ compensation benefits or disability benefits, the absence may still count as FMLA leave if it qualifies, but special rules may apply to whether the city may require use of accrued paid leave to supplement those benefits. 

Key authority

• 29 C.F.R. § 825.207, substitution of paid leave.
• U.S. Department of Labor, Wage and Hour Division, Opinion Letter FMLA2019-3-A (Sept. 10, 2019).
• U.S. Department of Labor FMLA Designation Notice, Form WH-382.