There must be something in the water, but several clients have asked me this week whether they are required to pay an employee for the Memorial Day holiday even though the employee was out on FMLA leave. Interesting question, and the answer is fairly straightforward: treat them the same way you would treat another employee on non-FMLA leave. This issue is governed by 29 C.F.R. § 825.209(h), which states:
An employee’s entitlement to benefits other than group health benefits during a period of FMLA leave (e.g., holiday pay) is to be determined by the employer’s established policy for providing such benefits when the employee is on other forms of leave (paid or unpaid, as appropriate).
Put in simple terms, you first look to treat the leave in the same manner you treat other forms of non-FMLA leave. If FMLA is being taken in conjunction with paid leave, look to the manner in which you treat employees on paid leave.
In her firm’s blog, Sara Jodka illustrates the point with a common scenario:
Suppose you have an employee who is taking vacation time during the holiday week and your policy provides that if an employee is on vacation the day before the holiday the employee will get paid for the holiday, but will not get paid for the holiday if the employee is on an unexcused absence the day before the holiday. Now suppose an employee is absent for an FMLA-qualifying reason the day before the holiday. The way you treat that holiday pay may depend on whether the FMLA leave is going to be running concurrent with the employee’s paid vacation leave, or whether it is simply an unpaid leave under the FMLA. If the employee is using vacation, and the employer policy would allow the employee to take holiday pay if they are using vacation the day before the holiday, the employer would have to allow that for the employee on FMLA leave. On the other hand, if an employer does not ordinarily pay an employee for the holiday if the employee is absent on some other kind of unpaid leave the day before the holiday, the employer would not have to pay the employee on FMLA leave. Employers just have to be sure they are treating employee consistently with similar forms of non-FMLA leave under your policies.
The Department of Labor addressed this issue head on in one of its first FMLA opinion letters in 1993. There, the employer did not provide holiday pay to any employee on personal leave or educational leave, which were unpaid forms of leave. Because FMLA by its very nature is unpaid, the DOL opined that the employer was not required to pay holiday pay in this instance because it did not provide holiday pay to those employees on unpaid leave. However, if the employee was entitled to obtain holiday pay while on paid leave, “the employee is entitled to holiday pay when the paid leave is being substituted for unpaid FMLA leave.”
Insights for Employers
To pay or not to pay for the holidays rests largely on the language in your personnel policies. In my model FMLA policy, when addressing non-group health benefits, I make clear the expectations with respect to payment of holidays that occur during FMLA leave. Consider adopting this language in your own FMLA policies:
Consistent with Company policy for all types of leave, you will not accrue vacation or other benefits while you are on unpaid FMLA leave. Additionally, you will not be paid for holidays that occur during the leave. However, the leave period will be treated as continuous service (i.e., no break-in-service) for purposes of vesting and eligibility to participate in the Company’s retirement plan.
Bottom line: Treat employees on comparable leaves in the same fashion. It will help insulate you from an FMLA claim.