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May20

required vacation usage and STD

Our company requires employees to use paid vacation time when out on FMLA leave. My question is if an employee decides they want to use short term disability (STD) as a form of monetary compensation on leave can we as the employer still require their vacation paid out?? Any help would be greatly appreciated.

Yes, but it is probably not the employees choice.

Your company has a policy that employees are required to use their paid vacation time for the first few weeks of FMLA. That policy is entirely legal, even under the new 2009 FMLA regulations. There is no reason that you should waiver from that policy. In fact, doing so may be illegal discrimination against employees who have been required to use their vacation on FMLA in the past. You would be allowing this employee to take up to 12 weeks of FMLA plus their paid vacation. This is a benefit you have denied other employees in the past.

You do not mention the employees source of short term disability income. However, whether it is state benefits (in the 5 states that offer them) or a private STD insurance policy, the benefits will almost certainly not be paid while the employee is collecting full salary on vacation. STD exists only to replace an employees lost income, and in this case the employee has no lost income while on vacation.

Suppose the employee had 2 weeks of paid vacation, and was on FMLA for 6 weeks. The employee would be paid full salary — vacation pay — for the first two weeks. For the remaining 4 weeks the employee would qualify for short term disability benefits.

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7 Responses to “required vacation usage and STD”

  1. Ian Says:

    So an employee that does not wish to use vacation on FMLA leave because they are going to receive STD benefits…if normal company practice is to require employees to use accrued vacation while on FMLA, would that still be okay to do? Or would that be a violation to the substitution of paid leave section of FMLA…”Because leave pursuant to a disability benefit plan is not unpaid, the provision for substitution of the employee’s accrued paid leave is inapplicable, and neither the employee nor the employer may require the substitution of paid leave.”

  2. Caitlin Says:

    Hi Ian!
    The employer can still require that the employee use vacation while on FMLA, if that is the company policy.

    We are assuming that the disability benefit under discussion is not provided by the employer. Under that assumption, the quote you included does not apply to this situation.

    FMLA regulations have always permitted the employer to require that employees use any accrued paid leave (such as vacation or sick time)as the first portion of FMLA. The new 2009 regulations require that the employee be allowed to use vacation while on FMLA, even if the employer did not permit it in the past. However, no portion of the new FMLA regulations prohibit the employer from requiring that the employee use paid leave while on FMLA.

    If the employer (not the state or an insurance company) is providing the short term disability beneifts, different rules apply. HTH, and thanks for reading the blogs!~ Caitlin

  3. Ian Says:

    Thanks Caitlin, this makes sense, very big help.

  4. Laurie Says:

    What if the employer pays the premiums for the STD benefit? Does that change our ability to require they use vacation time?

  5. Caitlin Says:

    Hi Laurie! No, it really doesn’t change. The employer can still require that the worker use any paid vacation time as the initial portion of FMLA.
    If — and only if –the employer has a company policy of providing paid short term disability instead of unpaid FMLA, the employee cannot be compelled to use vacation time. However, as long as the benefit comes from an insurance company rather than the employer, the company policy prevails. HTH, and thanks for reading the blogs. ~ Caitlin

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  7. Caitlin Says:

    Thanks for reading the blogs, Parking!~ Caitlin

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