Continuing Issues Regarding Coordination of Employer-Provided Paid Time Off with FAMLI Leave
Robert M. Thomas, Of Counsel
Campbell Litigation recently discussed certain proposed changes and additions to the rules governing Colorado’s new paid family and medical leave program (“FAMLI”).[1] Other anticipated changes include amendments to existing rules discussing coordination of employer-provided benefits with FAMLI leave benefits. But, issues remain for employers who provide generous paid time off (“PTO”) and sick leave policies, as such policies may result in significant stacking of employee time away from work.
Coordination of FAMLI Benefits With Employer Paid Leave Benefits
While FAMLI is clear that paid leave time and benefits under its program can run concurrently with unpaid, protected leave entitlements under the federal Family and Medical Leave Act (“FMLA”), FAMLI generally prohibits running employer-provided PTO concurrently with paid FAMLI leave, with the exception of leave and benefits under disability benefit policies or a special, separate bank of PTO time for FAMLI purposes.
Specifically, if an employee’s reason for leave is a qualifying reason under both FAMLI and the employer’s short or long-term disability policies, then both the wage replacement amounts and time away from work while on FAMLI leave may count against the leave duration and benefit amounts provided under the applicable disability policy.[2] Apart from disability benefit coordination, the FAMLI statute only provides that FAMLI leave may run concurrently with any “separate bank of time off solely for the purpose of paid family and medical leave,” but the statute and regulations currently do not further address the “separate bank of time off” that may run with FAMLI leave.
The Meaning of “Separate Bank of Time Off”
Proposed amendments to the benefit coordination rules, if adopted, will provide that a “separate bank of time off solely for the purpose of paid family and medical leave” means just that—a separate, exclusive bank of PTO provided by an employer that can only be used for qualifying purposes under FAMLI, and which is completely separate from any other employer-provided leave. This definition necessarily excludes paid sick leave provided pursuant to the Healthy Families and Workplaces Act (“HFWA”), and such leave cannot run concurrently with FAMLI leave since the protected qualifying reasons for leave under the HFWA are broader than those under FAMLI.
Stacking PTO and FAMLI Benefits Under the Rules
Thus, for HFWA sick leave and other forms of employer-provided PTO, the only concurrent use of PTO and FAMLI leave contemplated by FAMLI is agreed-upon top-offs of FAMLI benefit payments with accrued and unused PTO. Employers and employees may agree, in writing, to supplement any FAMLI leave benefit payments with accrued/unused PTO up to the employee’s average weekly wage.[3] But, FAMLI also prohibits employers from requiring employees to use or exhaust accrued/unused PTO prior to or while taking leave under FAMLI. The regulations simultaneously provide that employees may use “paid sick leave prior to receiving family and medical leave insurance benefits,” if they so choose, and without the need for a written agreement between the employer and the employee to do so.[4]
Because of FAMLI’s significant restrictions on concurrent uses of employer-provided PTO, depending on an employer’s PTO policy, employees will likely be able to stack paid leave entitlements, resulting in time away from work well-beyond the 12 weeks contemplated by FAMLI. For example, many employers provide employees with generous, all-inclusive PTO entitlements which may be used for any reason (vacation, paid sick leave, personal days, etc.), so long as the policy is otherwise HFWA-compliant. In these situations, if an employee has a qualifying need for leave under FAMLI, then nothing in the statute or regulations prohibits the employee from using all of his or her accrued PTO before taking any FAMLI leave, since the regulations allow employees to use “paid sick leave” prior to FAMLI leave if they so choose and the PTO can be used for paid sick leave purposes.
Further, even if an employer maintains a separate PTO bank for paid sick leave under the minimum requirements of the HFWA, the employee may use that first, and then take FAMLI leave without any concurrent reduction to FAMLI leave allotments, even though the reason for leave may qualify under both the HFWA and FAMLI.[5]
Employer Considerations Moving Forward
It is fair to assume that many Colorado employers that provide generous global PTO policies or separate paid sick leave benefit policies that exceed the HFWA’s minimum requirements may curtail these policies significantly to account for benefit-stacking under FAMLI. As the statute and regulations are written now (and including the Division’s proposed amendments), employees with large global PTO or paid sick leave banks have no incentive to take FAMLI leave first, or even use PTO time and benefits to supplement FAMLI leave payments, when they can simply use fully-paid time off first and then use their FAMLI leave entitlements if needed.
As always, Campbell Litigation is available to assist employers with these and other FAMLI-related questions and issues.
[1]https://www.rockymountainemployersblog.com/blog/2023/4/6/division-of-family-and-medical-leave-insurance-announces-new-regulations-concerning-the-procedures-for-famli-violations.
[2]See Colo. Rev. Stat. § 8-13.3-510(1)(b); 7 C.C.R. 1107-4:4.7.1.
[3]Colo. Rev. Stat. § 8-13.3-510(1)(c); 7 C.C.R. 1107-4:4.5.1.
[4]7 C.C.R. 1107-4:4.5.1(C).
[5]In contrast, paid sick leave under the HFWA may run concurrently with unpaid FMLA leave when applicable, which avoids the stacking of time problems inherent with the HFWA and FAMLI.