If you require employees to use accumulated sick leave, vacation time or other paid leave when they’re out on , be aware of a little-known trap: If that employee also is receiving payments through a disability plan, you can’t force the person to use up his or her accumulated paid leave.
That’s true whether the disability payments come from workers’ compensation, an employer-sponsored short-term disability plan or a third-party one.
The practical effect is that employees who enjoy partial wage replacement under disability insurance plans can come back to work with accrued vacation, sick leave and personal leave intact, or use that to extend their leave beyond the 12 weeks guaranteed by the .
Note: Nothing prevents you from running the 12 weeks of unpaid FMLA leave concurrent with partially paid disability leave. You still can subtract the FMLA entitlement for the year. What you cannot do is wipe out other paid leave, as you can when employees take unpaid FMLA leave and don’t have a disability plan providing partial wage replacement.
Recent case: Alice Repa worked for Roadway Express when she was injured off duty and needed surgery. Her injury qualified for FMLA coverage and for partial wage replacement payments under a short-term disability policy, which was sponsored by her employer and union.
Roadway informed her that it was applying six weeks of her FMLA entitlement to her time off. It then paid her for accumulated vacation and sick leave, wiping those balances out. In effect, when she returned to work, she had no sick leave or vacation time left.
She sued, alleging the move violated federal , which say that employers can require substitution of paid leave only if FMLA leave would otherwise be unpaid.
The court reasoned that employees receiving partial payments under an insurance policy aren’t on unpaid leave and, therefore, you can’t apply accumulated paid leave. (Repa v. Roadway Express, No. 06-2360, 7th Cir., 2007)
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