April 17, 2007 / Issue No. 2-07
 
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HR Policies & Practices
Court Strikes Down Employee Confidentiality Policy as Unlawful Interference with NLRA Rights
Employer Can’t Force Employee Receiving Disability Benefits to Use Paid Leave Over FMLA Leave
Labor Policies & Practices
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  Employer Can’t Force Employee Receiving Disability Benefits to Use Paid Leave Over FMLA Leave

An employer may not require an employee receiving temporary disability benefits to substitute accrued paid leave for unpaid Family and Medical Leave Act (FMLA) leave, the U.S. Court of Appeals for the Seventh Circuit (IL, IN, WI) has held.

The case arose after Roadway Express employee Alice Repa suffered an injury unrelated to her job that required surgery and a six-week absence from work.  Repa applied for and was granted disability benefits offered to Roadway employees through a Taft-Hartley multiemployer health and welfare plan.  Repa also applied for and was granted FMLA leave by the company.  Roadway notified Repa that she was required to “substitute any accrued paid leave for any unpaid FMLA leave.”  When Repa returned to work after her time off, Roadway paid her for five sick days and two weeks of vacation.  Repa also received $300 per week of leave under the disability plan.  Repa sued Roadway alleging that the company violated the FMLA by requiring her to use her sick and vacation leave days for the time when she was receiving disability benefits.

The FMLA provides that “an employee may elect, or an employer may require the employee, to substitute any of the accrued paid vacation leave, personal leave, or family leave of the employee” for unpaid FMLA leave.  Department of Labor regulations implementing the FMLA [20 C.F.R. § 825.207 (d)(1)] further provide:

Disability leave for the birth of a child would be considered FMLA leave for a serious health condition and counted in the 12 weeks of leave permitted under FMLA. Because the leave pursuant to a temporary disability benefit plan is not unpaid, the provision for substitution of paid leave is inapplicable. However, the employer may designate the leave as FMLA leave and count the leave as running concurrently for purposes of both the benefit plan and the FMLA leave entitlement. If the requirements to qualify for payments pursuant to the employer’s temporary disability plan are more stringent than those of FMLA, the employee must meet the more stringent requirements of the plan, or may choose not to meet the requirements of the plan and instead receive no payments from the plan and use unpaid FMLA leave or substitute available accrued paid leave.

Repa’s claim relied upon the regulation’s statement, “Because the leave pursuant to a temporary disability benefit plan is not unpaid, the provision for substitution of paid leave is inapplicable.”  Roadway, however, maintained that the statement applies only to disability leave for the birth of a child, relying on the first sentence of the provision as setting the context.  The court disagreed with Roadway, noting that none of the other three sentences discusses disability leave for the birth of a child but that they do address temporary disability plans. 

Roadway also argued that the regulation was inapplicable because the disability benefits that Repa received were from a third-party plan rather than an employer plan.  The court rejected this argument as well.  Because nothing in the second sentence expressly limits the regulation to situations involving employers’ temporary disability plans, the fact that the plan in question is managed by a labor-management board of trustees appointed by the sponsoring union and multiemployer association is irrelevant.

Finally, Roadway argued that the regulation is invalid because it contravenes Congress’s intent as manifested in the statute, which places no restriction on an employer’s right to substitute paid leave.  The court did not express an opinion on this issue, because Roadway failed to properly raise the argument at the trial court level.   Accordingly, the validity of the regulation remains in question.  In the meantime, employers should consider the regulation before requiring an employee receiving disability benefits to substitute paid leave for unpaid FMLA leave, and should consult qualified legal counsel with any questions.

Repa v. Roadway Express, Inc., 477 F.3d 938 (7th Cir., 2/26/07).

For further guidance on the FMLA, click here. [ return to top ]