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. The information in this article is provided for general information purposes only and does not constitute legal advice or an opinion of any kind. You should consult with legal counsel for advice on your institution’s specific legal issues. 1 The qualifying reasons for leave include parenting (leave to care for the employee’s newborn child, or child who has been adopted by the employee or placed with the employee by foster care), the employee’s medical condition (leave for a serious health condition that makes the employee unable to perform the essential functions of their job), family medical (leave to care for a spouse, child or parent who has a serious medical condition), military family exigency (leave for a qualifying exigency arising out of the fact that an employee’s spouse, son, daughter or parent is a service member on covered active duty or called to covered active duty status) and military caregiver (26 workweeks of leave in any one 12-month period to care for a covered service member with a serious injury or illness if the eligible employee is the service member’s spouse, son, daughter, parent or next of kin). 2 Wisconsin, for example, has a mini-FMLA law (the WFMLA), which prohibits an employer from requiring the employee to use available paid time off during the two-week WFMLA leave period. Under that law, an employee may elect to use their paid time off during that period. Debra A. Mastrian Partner Amundsen Davis LLC DMastrian@AmundsenDavisLaw.com Debra grew up watching her father practice law and seeing him help people resolve their problems inspired her to become a lawyer. With a focus on employment litigation and counseling, Debra’s practice includes defending employers against discrimination claims, wage and hour violations, retaliation claims, unfair competition and FLSA collective actions. She also handles a wide range of business litigation matters. Amundsen Davis LLC is a Diamond Associate Member of the Indiana Bankers Association. MARCH/APRIL 2025 15
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