U.S. Department of Labor Attempts to Untangle Coordination of Benefit Issues for FMLA Leave and State-Run Family and Medical Leave Programs, Such as Colorado’s FAMLI Program
U.S. Department of Labor Attempts to Untangle Coordination of Benefit Issues for FMLA Leave and State-Run Family and Medical Leave Programs, Such as Colorado’s FAMLI Program
Rob Thomas, Of Counsel
Multiple states are joining Colorado in implementing state-run paid family and medical leave programs, similar to Colorado’s Paid Family and Medical Leave Insurance program (“FAMLI Program”).[1] The adoption of these programs raises questions regarding the interplay and coordination between the benefits and protections afforded by the federal Family and Medical Leave Act (“FMLA”), state-run paid family leave programs like the FAMLI Program, and employer-provided benefits such as short-term disability, paid sick leave, and other paid time off—particularly as to when and how employees may supplement either unpaid FMLA leave or state-run paid family leave with employer-provided benefits. In a January 14, 2025 Opinion Letter,[2] the U.S. Department of Labor has attempted to answer some of these questions.
The FMLA, the FAMLI Program, and Employer-Provided Benefits – Background
Under the FMLA, eligible employees of covered employers may take up to twelve weeks of unpaid, job-protected leave per year for certain family and medical reasons, including but not limited to the illness or injury or the birth or adoption of a son or daughter. The FAMLI Program likewise provides that eligible employees may apply to the state for paid leave benefits for similar purposes, although the FAMLI Program provides additional qualifying reasons for leave.
Because FMLA leave is unpaid, the FMLA permits employers to require employees to use any accrued paid vacation or other employer-provided paid leaves while out on unpaid FMLA leave, with such leaves running concurrently. If an employee is also entitled to benefits under the employer’s disability insurance policies, the employer may count such disability leave as FMLA leave. However, the employer may not require employees to supplement such disability benefits with additional accrued paid time off in order to achieve 100% wage replacement, unless the employer and employee expressly agree to do so.
Similarly, the FAMLI Program provides that to the extent an employee qualifies for both FMLA leave and FAMLI Program leave, such benefits are intended to run concurrently. The FAMLI Program also provides that if an employee applies for and receives FAMLI Program benefits (which do not provide for 1-to-1 wage replacement), the employer and employee may agree to supplement the employee’s FAMLI Program benefits with accrued vacation, sick leave, or other paid time off, up to but not exceeding the employee’s average weekly wage, but employers may not require such supplementation. The FAMLI Program does, however, provide that employers may require employees to take FAMLI Program leave concurrently with or otherwise coordinated with any benefits provided under the employer’s disability insurance policies, so long as written notice is given of this requirement.
The DOL’s Opinion Letter
The question posed in the DOL’s Opinion Letter concerns whether the FMLA’s regulations concerning the substitution of paid leave apply when employees take leave under state-run paid family leave programs (like FAMLI) in the same manner as when employees take leave pursuant to disability benefit plans, given that state-run family leave programs are not expressly addressed in the FMLA’s regulations.
The DOL opined that, based on the questions and factual circumstances presented to it, the FMLA would treat any state-run family leave benefits like the FAMLI Program the same as employer-provided disability benefits, for purposes of coordination and supplementation. In other words, because leave under the FAMLI Program is paid, the FMLA’s ordinary leave substitution provisions do not apply and employers cannot require employees to use any other paid-leave entitlements (vacation, paid sick leave, etc.) concurrently with the FMLA and FAMLI Program leave. But, where state law permits (such as in Colorado), employers and employees may agree to supplement state-run paid family leave benefits with other paid leave entitlements, subject to state law. But, if the employee’s state-run paid family leave expires prior to the exhaustion of unpaid FMLA leave, the employer could then require the employee to substitute other forms of remaining paid leave consistent with FMLA regulations during the remainder of the FMLA period.
Employer Considerations
The interplay between the FMLA, the FAMLI Program, employer-provided disability benefits, and other employer-provided paid leave entitlements involves a lot of moving parts which can result in confusion. However, for Colorado employers, the DOL’s Opinion Letter provides at least some clarity on the FMLA side of things, noting that for substitution of benefit purposes, FAMLI Program leave and paid disability insurance benefits are essentially treated alike. Accordingly, if a Colorado employee is eligible for FMLA leave and FAMLI Program leave and disability insurance benefits, the employer may require the employee to take paid FAMLI Program leave in coordination with the employer’s disability insurance policy and FMLA leave, but it may not require the employee to substitute or supplement such FAMLI Program/disability insurance benefits with other forms of accrued paid leave, unless the employer and employee agree to supplement such leave up to the employee’s average weekly wage (assuming there is still a wage replacement shortfall). Campell Litigation remains available to assist with these and other leave coordination questions under federal and Colorado law.
[1]See Colo. Rev. Stat. §§ 8-13.3-501 et seq.; 7 C.C.R. 1107-1 et seq.
[2]Opinion Letter FMLA2025-01-A, U.S. Department of Labor, Wage and Hour Division (January 14, 2025).