Pay and Benefits

Pay and Benefits During Leave

Family and medical leave is generally unpaid, though employees have certain rights to substitute accrued paid sick or vacation leave for the otherwise unpaid time. You must continue providing any group health benefits at the same level and under the same conditions as if the employee were actively employed. This includes medical, dental, vision, mental health and other coverages, and coverage for dependents. If the employee does not return from the leave, you can recover benefit premiums paid during the leave under certain conditions. Under FMLA regulations, employers cannot require employees on FMLA who receive pay under a disability benefit plan to use accrued benefits such as sick, vacation or paid time off (PTO) during the leave. Similarly, the employee cannot require the employer to substitute paid leave if the employee is receiving pay under a disability benefit plan. Because of the complexity of this issue, it is strongly suggested that you consult legal counsel. Because FMLA/CFRA is unpaid leave, you are not obligated to compensate an employee taking FMLA/CFRA leave. However, employees can obtain compensation through state disability insurance (SDI) and paid family leave (PFL) benefits, sick pay, vacation and PTO.

State Disability Insurance (SDI) and Family and Medical Leave. If an employee takes FMLA/CFRA leave for his/her own serious injury or illness, he/she can receive SDI payments. SDI is an employee-funded insurance program administered by the California Employment Development Department (EDD). Most employees are eligible for payments if absent for a qualifying reason. There is a seven-day waiting period before benefit payments begin.

Paid Family Leave (PFL) and Family and Medical Leave. Employees absent to care for a family member or to bond with a child during the first year after the birth, adoption, or placement for foster care may be eligible for PFL benefits. Like SDI, PFL is also an employee-funded insurance program administered by the EDD. There is a seven-day waiting period before benefits begin. A woman who begins CFRA leave for baby bonding need not wait seven days for PFL benefits to begin if she had been receiving SDI while on PDL or FMLA. Although PFL benefits are available to employees on CFRA leave to care for a domestic partner or a domestic partner’s child, the FMLA does not cover those reasons.

Other Insurance Benefits and Family and Medical Leave. You must be aware of other benefit requirements while an employee takes family and medical leave. Employees on FMLA/CFRA leave (paid or unpaid) are entitled to retain employee status during the leave period. The leave does not constitute a break in service for purposes of longevity or seniority under any collective bargaining agreement or under any employee benefit plan.

Pension and Retirement or Supplemental Unemployment Insurance. The employee is entitled to participate in the plans to the same extent as employees on unpaid personal or disability leaves can participate. You are not required to make plan payments to any pension and/or retirement plan or to count the leave for purposes of time accrued under the plan during any unpaid portion of family and medical leave. However, you must allow the employee to continue to make contributions in accordance with the terms of the plan. For further information on the DOL regulation, contact:

Office of Workforce Security
Employment and Training Administration (ETA)
U.S. Department of Labor
200 Constitution Avenue, N.W., Room S-4231
Washington, D.C. 20210
Telephone: (202) 219-5200 ext. 391

Life Insurance, Short- or Long-Term Disability Plans or Insurance, Accident Insurance or Other Similar Benefit Plans. As a condition of continued coverage, you can require the employee to pay premiums at the group rate. If the employee chooses not to pay premiums to continue these benefits, the employer cannot consider the nonpayment of premiums as a break in service for purposes of longevity, seniority under any collective bargaining agreement or any employee benefit plan requiring the payment of premiums.

Vacation, Paid Time Off (PTO) and Family and Medical Leave. If the FMLA/CFRA leave is unpaid, you can maintain a policy requiring the use of vacation or other accrued PTO during the family leave. One exception to this is when the leave is also pregnancy disability leave (PDL). The PDL regulations prohibit requiring the use of vacation or PTO while the employee is on PDL. This is true whether the leave is PDL only or PDL/FMLA. Be sure that there is no conflict with their use under your policy.

Example: The employer’s policy states that vacation can only be used during slow months of the year — November and December. The employee who takes FMLA/CFRA to care for a spouse during January and February could not be required to use vacation for the FMLA/CFRA leave.

If you do not have a policy requiring the use of accrued vacation or PTO during family and medical leave, the employee can choose to use vacation or PTO at his/her option.

If an employee receives paid disability payments (such as state disability insurance, workers’ compensation or other disability payments) while on FMLA leave, you cannot require the employee to use accrued benefits such as vacation or PTO during the leave. The employee can use accrued benefits to supplement disability benefit payments if you both agree to do so.

CFRA regulations do not prohibit the required use of vacation or PTO. If the leave is CFRA only, you could require the use of vacation or PTO if there is no conflict with the permitted use under your policy.

Sick Pay and Family and Medical Leave. If the FMLA/CFRA leave is unpaid, you can maintain a policy requiring the use of paid sick leave during the leave, if there is no conflict with the use under your policy. For example, your policy states that sick leave can only be used for the employee’s own illness or injury or the amount covered by kin care. Example: An employee is off for four weeks to care for an ill child. The employer’s policy states that employees cannot use sick leave in excess of kin care to care for a family member. You could require the use of sick leave only to the extent that the employee has time available as kin care.

If the FMLA/CFRA leave is unpaid and you have no policy about the use of sick leave, the employee can use sick leave at his/her option. If an employee receives paid disability payments (such as state disability insurance, workers’ compensation or other disability payments) while on FMLA leave, you cannot require the employee to use accrued sick leave benefits during the leave. However, the employee can use accrued benefits to supplement disability benefit payments if you both agree to do so.

CFRA regulations do not prohibit the required use of sick leave. If the leave is CFRA only, you could require the use of sick leave if there is no conflict with the permitted use under your policy. Example: The employer’s policy states that sick leave can only be used for the employee’s own illness or injury, except for the time that is also kin care. An employee who uses CFRA to care for a registered domestic partner will be limited to the time available as kin care for paid leave under the employer’s sick leave policy.

Health Insurance and Family and Medical Leave. If you provide health benefits under any group health plan, you must continue providing those benefits during an employee’s family and medical leave. The following rules apply:

You must maintain and pay for the employee’s health coverage at the same level and under the same conditions as coverage would have been provided if the employee was continuously employed during the entire leave period (up to 12 weeks or up to 26 weeks during a leave to care for an ill or injured service member). Example: You pay 80 percent of an employee’s health insurance premium and the employee pays 20 percent. When an employee takes family and medical leave, you must continue to pay 80 percent. The employee must pay you the remaining 20 percent each month to remain covered. Because you cannot make normal payroll deductions during any unpaid portion of the leave, you must make payment arrangements with the employee.
If your group health plan includes dental care, vision care, mental health counseling, etc., or if it includes coverage for the employee’s dependents and for the employee, you also must continue this coverage to the same extent.
Your obligation to continue benefits may extend longer than 12 weeks if you provide more than 12 weeks of benefits to employees on other types of leave.
If the leave is also for pregnancy disability, you must continue health benefits for a maximum of four months in a 12-month period.
Pregnancy disability law requires that employers continue group health coverage for a maximum of four months, at the same level and under the same conditions as if the employee were still employed.
California’s amended pregnancy disability regulations (effective December 30, 2012), clarify that the time the employer maintains and pays for group health coverage during PDL cannot be used to meet the employer’s obligation to pay for 12 weeks of group health coverage under the California Family Rights Act (CFRA). Rather, the entitlements to employer-paid group health coverage during PDL and CFRA are two separate and distinct entitlements.
The CFRA regulations contradict the amended pregnancy disability regulations. Under CFRA, employers must provide group health benefits for a maximum of 12 workweeks in a 12-month period. This obligation begins on the date leave first begins under FMLA/CFRA or FMLA/PDL.

Employers should consult with legal counsel for advice on this contradiction between the PDL and CFRA regulations.

Salary Deductions, Exempt Status. Family and medical leave taken by an exempt employee will not affect his/her status. You can make deductions from the exempt employee’s benefits, such as paid sick leave, for hours taken as intermittent or reduced schedule family and medical leave without affecting his/her exempt status.

Although federal law permits deductions from the exempt employee’s salary for partial days of absence for FMLA, no provision exists in state law. California employers should never make a partial day deduction from an exempt employee’s salary, even if the employee is on a reduced or intermittent schedule.

If the exempt employee has sufficient sick leave, vacation or PTO time available, that can be used, if it is in accordance with state law and your company’s policy about the use of paid time off. Because FMLA and CFRA often run concurrently, you should consult legal counsel with any questions regarding partial-day deductions.

If the exempt employee no longer performs exempt duties, you can temporarily change the employee’s classification to nonexempt. This will require that you pay him/her on an hourly basis. You must ensure that the employee takes all required rest and meal breaks and is paid any applicable overtime.