The substitution of paid leave for unpaid FMLA leave occurs often. A employee eligible for FMLA leave will substitute accrued vacation, sick, medical, or other similar types of paid leave so that he avoids a loss of pay during the leave. In most circumstances, employers also benefit because, when substitution occurs, the time counts against both the employee’s FMLA and paid time off entitlements.
Under the prior FMLA regulations, substitution of paid leave could be abused. For example, vacation leave was required to be substituted for any FMLA leave. Common restrictions imposed on the use of vacation such as advanced notice or requiring it to be used in minimum blocks of time could not be imposed to prevent substitution. This ready availability of paid leave surely was very tempting to some employees that could not otherwise use such time.
The new FMLA regulations, however, give employers the ability to reduce abuse. Under the new 29 C.F.R. § 207, employers can require employees to meet all of the normal requirements of paid leave policies before permitting substitution. For example, if a policy requires that vacation be taken in full day increments, an employer can deny substitution for an employee’s one-half day FMLA leave. Similarly, if vacation time cannot be taken during a particular month, substitution could be denied during that time period.
The consequences of the new rule are obvious. Employees might now be required to take unpaid FMLA leave rather than substitute paid leave. As a result, the temptation to use the FMLA to obtain paid leave that they otherwise would not be entitled is eliminated.