A new case from the Seventh Circuit Court of Appeals addresses a narrow, but important question under the Family and Medical Leave Act. In this case, a Roadway Express employee took non-Workers’ Compensation leave for surgery. She was eligible for short-term disability (“STD”) benefits under an insured plan provided by the union. While Roadway granted the employee FMLA leave, it required that she burn off accrued vacation and sick leave in addition to receiving her STD benefits. She sued, claiming that this policy violated FMLA regulations found at 29 C.F.R. § 825.207(d)(1). Under this rule, employers cannot require employees on FMLA leave to substitute paid leave for unpaid leave if they receive temporary disability benefits from another source.
The Seventh Circuit affirmed summary judgment for the plaintiff. The court rejected Roadway’s argument that the regulation in question only applies to situations where the employee is absent from work for birth of a child. The substitution prohibition applies regardless of the qualifying reason for leave. Also, this rule applies whether the STD plan in question is provided by the employer, or by an outside entity through a collective bargaining agreement. While employers generally can require substitution of paid for unpaid FMLA leave, this option will not apply when the employee is receiving STD, Workers’ Compensation, or other paid benefits.