March, 2007

New Limits on Substituting Paid Leave During Periods of FMLA Leave

Click for PDF version.

By Alan M. Levy

The federal Family and Medical Leave Act ("FMLA") requires employers to allow their employees up to twelve weeks per year of unpaid leave for illness and injuries, childbirth, care of a family member, and related reasons. The federal statute also allows employers to require that employees use any accrued paid leave such as vacation or paid sick leave during the FMLA absences ("substitution").¹ Employers often mandate such substitution so a person absent up to twelve weeks on FMLA time is not also absent for vacations and other non-work illnesses and injuries in the same year; thus, substitution prevents a twelve week FMLA absence from "stacking" with an additional vacation absence of several weeks.

The United States Court of Appeals for the Seventh Circuit has now issued two decisions which put some limits on the employer's imposition of substitution. In Repa v. Roadway Express Inc.,_F.3d_, Dkt. No. 06-2360 (7th Cir. 2007), the employee took a six-week FMLA leave due to a non-work related injury, and she also requested and received $300.00 per week during that period from a union-sponsored short-term disability program under her collective bargaining agreement. The employer approved the absence, but insisted that the employee use her accrued sick leave and vacation benefits for seven of the 30 days she was absent.

The Court held that an employer may not impose substitution when the employee is entitled to receive benefit payments for the FMLA leave period pursuant to a "temporary benefit plan." This comes from a Department of Labor regulation, 29 C.F.R. §825.207(d)(l), which defined a leave for which an employee received a "temporary benefit" such as a short-term disability benefit, as "not unpaid." Therefore, held the Seventh Circuit, Roadway was not seeking to substitute "paid leave" for "unpaid leave," and the use of vacation and sick leave could not be imposed without the employee's consent. Further, the source of the temporary benefits (a third-party collectively bargained program instead of the employer) did nothing to change the application of the DOL regulation.

A week later the Seventh Circuit ruled that a railroad could not impose FMLA substitution if that action was a unilateral change in the working conditions of employees subject to a collective bargaining agreement. In Bhd. of Maintenance of Way Employees v. CSX Transportation, Inc.,_F.3d_, Dkt. No. 06-2744 (7th Cir. 2007), a different panel of the same court held that the employer's right to require substitution could not be imposed on employees whose labor contracts had already spelled out their entitlement to paid vacation, sick leave, and personal leave. Such a change in the use of the negotiated benefits must be bargained with the union before it can be implemented with employees who were seeking to use FMLA without accepting substitution.

Employers often seek to prevent "stacking" - the practice of employees expanding permissible absences from work by taking a vacation or other paid leave and then an FMLA leave, or vice versa. These two decisions clarify that employer-mandated substitution cannot be used when the employee's FMLA leave is paid from some other source (the third-party plan in Repa) or his/her paid benefit is the product of collective bargaining. Whether other limits will be imposed by the courts will be a case-by-case evolution of these principles.

Lindner 85 Marsack, S.C. continues to monitor developments in labor, employment and employee benefit law and provide its clients with the most current information available in these fields. If you have any questions about FMLA or employee benefits, please contact one of our attorneys to help you resolve them promptly and efficiently.

*****

¹ Wisconsin's state FMLA gives the employee his/her choice whether to substitute paid leave for unpaid leave during the period it covers concurrently with the federal leaves, i.e., six weeks per year for childbirth and adoption, and two weeks per year for all other FMLA absences, If the employee is covered by both acts, the employer cannot mandate substitution during the leave period covered by state law.

If you have any questions about the issues raised by this e-alert, please feel free to contact Alan M. Levy at (414) 273-3910 or by e-mail at alevy@lindner-marsack.com

Lindner & Marsack, S.C. represents management exclusively in labor, employment, and employee benefits law, including the administration of employee health and retirement programs. Established in 1908, Lindner & Marsack, S.C. is consistently rated among the top labor and employment law firms in the nation. We are located at 411 East Wisconsin Avenue, Suite 1800, Milwaukee, Wisconsin, 53202. Call us at (414) 273-3910 or visit our website, www.lindner-marsack.com, to learn more about our firm and its talented and innovative legal professionals.

If you would like to unsubscribe to this E-Alert, please notify Mary Gemeinhardt at mgemeinhardt@lindner-marsack.com

This update is intended for general informational purposes and is not a substitute for legal advice.