On January 14, 2025, the Wage and Hour Division of the Department of Labor (“DOL”) issued two opinion letters. One of the letters, FMLA 2025-1-A (“Opinion Letter”), provided guidance on the application of federal Family and Medical Leave Act (“FMLA”) regulations to paid leave employees take under state and local government family and medical leave programs. The Opinion Letter clarifies FMLA regulations regarding paid leave “substitution”—when employer-provided paid leave runs concurrently with unpaid FMLA leave. The other DOL opinion letter, FLSA 2025-1, provided guidance on when managers and supervisors can lawfully receive a share of the tip pool

FMLA Background

FMLA provides eligible employees of employers with at least 50 employees access to up to 12 weeks of unpaid leave during a 12-month period. (29 U.S.C. § 2612(a)). Entitled individuals receive job protection and continuation of group health insurance coverage during their leave as long as the leave is for specified family, medical or military exigency reasons. Since the law does not require that the employee be paid during FMLA leave, to mitigate any financial hardships, 29 C.F.R. § 825.207 contemplates circumstances in which (i) an employee may elect or (ii) the employer may require the employee “substitute” unpaid leave with employer-provided paid leave [e.g., paid time off, vacation, sick days, together “PTO”)] for any part of an unpaid FMLA period. However, this substitution alternative is limited to the unpaid portion of an employee’s FMLA leave: if the employee is receiving disability pay or workers’ compensation for any part of the FMLA period, neither the employer nor the employee can require substitution of other paid time during that period. In other words, because this is not unpaid leave, the employer cannot require that the employee apply accrued PTO in order to “use up” that benefit. Instead, they have to mutually agree, if state law allows, that PTO be applied to the FMLA period.

FMLA standards set the federal floor, but states are free to raise the standards on their own, and recently, an increasing number of states have chosen to expand upon these standards in a variety of ways. Some states enacted programs that provide comprehensive mandatory paid family leave largely funded by payroll taxes. California, Colorado, Connecticut, Delaware, Maine, Maryland, Massachusetts, Minnesota, New Jersey, Oregon, Rhode Island, Washington and the District of Columbia fund their systems through pooled payroll taxes on employees or employers. New York requires coverage through private insurance companies. Others, including Alabama, Arkansas, Florida, Kentucky, New Hampshire, South Carolina, Tennessee, Texas, Vermont and Virginia, provide voluntary paid leave systems through the private insurance market with varying degrees of state oversight. Until the Opinion Letter, the DOL had provided little guidance on how these state and local programs impacted the FMLA substitution provision.

DOL Guidance on Coordination of Benefits

In the Opinion Letter, the DOL clarified that state or local paid family or medical leave programs should not be treated differently than disability plans and workers’ compensation programs for purposes of coordination with FMLA benefits:

  • Any paid leave an employee takes through a state or local program that could also be covered by FMLA must be designated as FMLA leave and, accordingly, the employer must provide the employee with all required notices of such designation.
  • Because state/local paid family and medical leave programs are treated as paid disability programs under the FMLA substitution provision, the employer and the employee must mutually agree to apply PTO during the period in which the employee is receiving this disability pay. Note: if the employee’s entitlement under a state/local program ends before FMLA is exhausted, the remaining period of leave is unpaid and the FMLA substitution provision applies (meaning that the employer can then require substitution of accrued PTO).

DOL opinion letters are based on the specific facts and circumstances provided in the request. Therefore, while the above guidance is helpful in clarifying how the DOL would interpret FMLA charges given state and local paid leave programs, these letters do not have the force or effect of law. Importantly, though it has not yet chosen to, the new administration may rescind this Opinion Letter.

Practical Takeaways

  • As more states and localities enact paid family or medical leave programs, employers should stay up to date with laws applicable to their operations.
  • Since state or local programs have their own requirements regarding coordination of benefits, with each other and with FMLA, employers must ensure that their actions remain in compliance with these programs.
  • Employers should review their leave policies and seek guidance on any updates that may be necessary due to this Opinion Letter or recently enacted state/local programs.

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Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.

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