In a Jan. 14, 2025, opinion letter, the Wage and Hour Division of the U.S. Department of Labor clarified some thorny questions regarding the interplay between the Family Medical Leave Act and state or local mandated or provided family and medical leave laws. Specifically, the DOL addressed whether an employer can require an employee to substitute their accrued paid time off (vacation and/or sick time) when both the FMLA and state/local family and medical leave laws are in play.

FMLA

The FMLA is a federal law that covers employers with 50 or more employees for at least 20 workweeks in the current or preceding calendar year. Employees may be eligible to take up to 12 workweeks of unpaid job-protected leave in a 12-month period for certain qualifying reasons¹ if they:

• Have worked for the employer for at least 12 months;
• Have worked at least 1,250 hours during the prior 12 months (as of the date the requested leave is to begin); and
• Work at a location where the employer has 50 or more employees within a 75-mile radius.

The FMLA requires only unpaid leave; however, an employer may require employees (or employees may elect) to substitute accrued paid time for their unpaid FMLA leave. In other words, employers may require (or employees may choose) that the accrued paid time off runs concurrently with the unpaid FMLA leave.

State and Local Leave Laws

Some states and the District of Columbia have enacted state paid family and medical leave programs, including California, Colorado, Connecticut, Delaware, Maryland, Massachusetts, Minnesota, New Jersey, Oregon, Rhode Island and Washington. These laws differ as to the amount of leave and qualifying events but generally provide a covered employee with a percentage of their regular income during their leave.

Other states have enacted paid sick leave or other paid time off laws. For example, Illinois enacted a Paid Leave for All Workers Act, which allows employees to earn up to 40 hours of paid leave each year to use for any reason. Some municipalities have also enacted sick leave laws. Over 20 cities and counties in other states (mostly in California) have mandatory paid sick leave laws. For example, Chicago has a Paid Leave and Paid Sick and Safe Leave ordinance that covers any employee in Chicago who works at least 80 hours for an employer in any 120-day period.

Indiana does not currently have any mandatory paid leave law; however, if an Indiana business has operations or locations in another state, they are subject to the laws of those jurisdictions. Also, if an Indiana business has employees who work remotely from their homes or other remote locations in another state, the employer must, typically, comply with the laws of the state where the remote worker resides.

Guidance From the DOL

The DOL answered questions about what happens when an employee is entitled to leave under both the FMLA and a state or local family and medical leave law. The DOL clarified that while the time off runs concurrently with any FMLA leave entitlement, the employee cannot be required to substitute their paid time off during the part of the FMLA leave that is being fully compensated by state or local paid family and medical benefits. If an employee is only receiving a partial wage replacement benefit under the state or local paid leave program, the employer and employee may both agree (but the employer cannot require) that the employee use their accrued paid time off to supplement the state/local benefits.

The DOL likened the situation to leaves of absence that are taken in connection with a disability leave plan (e.g., short-term disability insurance program) or workers’ compensation, where the employee is also entitled to FMLA leave and these same rules apply.

To be clear, the DOL guidance does not affect FMLA leave generally. If only FMLA leave is at play (and no state/local paid family and medical leave law), employers can still either allow or require the use of accrued paid time off during their unpaid FMLA leave (unless an applicable state law provides otherwise).²

What Employers Need to Know

The key takeaways from the DOL guidance are:

• When an employee’s leave qualifies for both FMLA and state or local paid family and medical leave, the employer must designate the time off as FMLA.
• Employers cannot require an employee to substitute their accrued paid time off during the part of their FMLA leave where the employee is being fully paid under a state/local family or medical leave law.
• If the employee is only receiving a partial payment under the state/local program, the employer and employee may mutually agree to supplement the state/local benefits with accrued paid time off, where permitted by state/local law.
• Once the employee’s state/local benefits end, the FMLA substitution rule applies. In other words, the employer can require an employee to use their accrued paid time off for the remaining unpaid portion of the leave.

Employers that are subject to the FMLA with locations or remote employees in states or localities that have paid leave laws or ordinances should review their FMLA policy and administration practices to ensure they are in compliance.