Requiring use of PTO for medical leave depends on state law

Q           We have a paid-time-off (PTO) policy that combines sick and vacation time, with no separate bank for paid sick leave. Can we require the use of PTO for all reasons, like pregnancy, serious health conditions, etc., and can we continue requiring the use of PTO to supplement the state’s wage replacement benefits?

If your PTO policy combines vacation and sick leave into a single bank, you may typically require employees to use available PTO when taking leave for qualifying reasons, including pregnancy-related conditions and other serious health conditions. Under the Family and Medical Leave Act (FMLA), you may require employees to use accrued paid leave during otherwise unpaid FMLA leave.

This answer becomes more complicated, however, when the employee is already receiving wage-replacement benefits, such as state temporary disability insurance or paid family leave. Under 29 Code of Federal Regulations (CFR) § 825.207(d), once an employee receives disability-plan payments, the leave is no longer “unpaid,” and neither the employer nor the employee may require substitution of accrued paid leave. At most, the parties may agree to use PTO to supplement, or “top off,” partial wage replacement but only “where state law permits.” Whether supplementation may be required, permitted, or prohibited will depend on the terms of the benefit program and any applicable state law