1/21/25 DOL Opinion Letter: Use of Employer-Provided Paid Leave When Employee’s Leave Qualifies Under Both FMLA and State Paid Leave Program

January 21, 2025

By Amy Angel & Missy Oakley

Last week, the U.S. Department of Labor (“DOL”) issued an Opinion Letter (“Opinion Letter”) regarding the application of the Family and Medical Leave Act of 1993 (“FMLA”) rule regarding substitution of employer-provided paid leave when an employee takes FMLA leave that also qualifies as leave under a state or local paid family or medical leave program.

Designation of Leave Covered by Both FMLA and State Paid Leave Program

First, the Opinion Letter states that, if an employee takes leave under a state or local paid leave program and that leave also qualifies as FMLA leave, the leave must be designated as FMLA leave by the employer and counted against the employee’s FMLA leave entitlement. This is the same rule that applies when an employee takes leave under a paid disability leave plan or workers’ compensation program and that leave also qualifies as FMLA leave.

The FMLA Substitution Rule

FMLA generally provides that an eligible employee may elect, or an employer may require the employee, to substitute any of their accrued paid vacation leave, personal leave, or family leave of the employee for the unpaid FMLA entitlement period. This is known as the FMLA Substitution Rule. However, the Opinion Letter states that, when an employee takes leave under a state or local paid leave program that also qualifies as FMLA leave, neither the employer nor the employee may use the FMLA Substitution Rule to unilaterally require the concurrent use of employer-provided paid leave during the portion of leave that is covered by the state or local paid leave program. However, employers and employees may mutually agree, where state law permits, to have employer-provided paid leave supplement the state or local paid leave program payment.

Again, these are the same rules that apply when an employee takes leave under a paid disability leave plan or workers’ compensation program and that leave also qualifies as FMLA leave. For example, when an employee only receives partial income replacement under a workers’ compensation program, the employer and employee may agree that the employee can use their employer-provided paid leave to supplement their workers’ compensation payment.

Paid Leave Oregon

Under Paid Leave Oregon (“PLO”), an employee may use employer-provided paid leave to supplement their PLO benefits up to 100% of the employee’s regular pay. Additionally, an employer may permit an employee to use employer-provided paid leave in addition to PLO benefits such that the amount exceeds 100% of the employee’s regular pay.

This means that, to the extent an employee takes leave that qualifies under both PLO and FMLA, mutual agreement between the employer and employee is not required as Oregon law allows an employee to use employer-provided paid leave to supplement their PLO benefits up to 100% of their regular pay.

Washington Paid Family & Medical Leave

When an employee takes leave that qualifies under both Washington Paid Family & Medical Leave (“PFML”) and FMLA, an employee may receive “supplemental benefit payments” in addition to their PFML benefits. Supplemental benefit payments are payments made by an employer to an employee as salary continuation or as paid time off (“PTO”)—including vacation leave, personal leave, medical leave, sick leave, compensatory leave, or any other paid leave offered by an employer under the employer’s established policy.

Supplemental benefit payments are intended to make up the difference between an employee’s regular pay and their PFML payment, but employers can offer their employees a supplemental benefit that exceeds their regular pay. While an employer gets to decide whether to offer supplemental benefits, the employee decides whether to accept them.

However, if an employee receives wages or PTO while they are receiving PFML benefits, and the wages or PTO are not designated as a “supplemental benefit payment,” the employee is obligated to report the wages or PTO on their weekly claim, which will reduce their PFML benefit amount. Thus, it is important that employers make clear to employees whether such payments are a supplemental benefit.

For questions about the FMLA, Paid Leave Oregon, or for any other leave inquiries, contact Amy Angel at 503-276-2195 or aangel@barran.com, or Missy Oakley at 503-276-2122 or moakley@barran.com.