FMLA, Short-Term Disability and Unemployment Compensation - How Do They All Fit Together?

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FMLA - Job Security - No Money

Family and Medical Leave is available under a number of circumstances, including when an employee is suffering from a serious health condition.  The Family and Medical Leave Act provides that employees suffering from a serious health condition that limits their ability to perform their essential job functions are entitled to up to 12 weeks of UNPAID leave per 12 month period with a right to job reinstatement upon their return from leave.

The Family and Medical Leave Act is designed to insure that employees who are forced to take time off from work due to a health crisis will not suffer the loss of their employment.  The FMLA is all about JOB SECURITY.

Click Here for a detailed description of the Family and Medical Leave Act.

STD Insurance - Money Not Job Security

The term "Short-Term Disability" refers to an insurance policy purchased by employers to provide income subsidy payments to employees who are out of work due to a serious health condition.  A Short-Term Disability insurance policy typically provides benefits equal to 2/3rds of an an employees base salary or weekly earnings for up to 26 weeks.

Short-Term Disability insurance policies are issued by insurance companies such as Hartford, State Farm, Cigna, Prudential, etc.  These insurance companies are not employers of the employees who require benefits.  Consequently, these insurance policies have nothing to do with job security.  They simply provide income subsidies.

So, FMLA provides unpaid leave and job security, while Short-Term Disability policies provide payment while one is out on leave, but no job security.

FMLA and Short-Term Disability policies are completely separate animals, but often are both in play when an employee needs to miss work due to personal illness or injury. 

If you require FMLA Leave, you will be eligible for Short-Term Disability insurance payments.  Under these circumstances, you will be paid Short-Term Disability benefits for the entire 12 weeks that you are out on FMLA leave.

One does not have to be employed to receive Short-Term Disability payments.  How can that be, and how do such circumstances arise?

If an employee cannot return to work within 12 weeks of the start of  FMLA leave, he/she can be fired without recourse.  However, such an employee would still be eligible for up to 14 more weeks of Short-Term Disability payments.  Consequently, an employee who is terminated from his/her job because he/shecould not return to work within 12 weeks of the start of FMLA leave could still receive Short-Term Disability payments for an additional 14 weeks.

You Must Be Physically Able to Work to Be Eligible

If, however, you are unable to work due to a disability, you cannot receive Unemployment Compensation payments.  That is so because one is eligible for unemployment Compensation benefits only if one is available for work, i.e. physically able to work.

This can be a complicated situation for folks, especially when they are out on FMLA leave due to stress.  What does one do when, due to stress, one is out on FMLA, receiving Short-Term Disability payments and unable (or in most such cases unwilling, if you will) to return to work within 12 weeks of the start of FMLA Leave?  Should a person in such circumstances continue to receive Short-Term Disability benefits, and thereby sacrifice Unemployment Compensation benefits?  If one does not return to work, but then discontinues receiving Short-Term Disability payments in order to apply for Unemployment Compensation, will the Unemployment Compensation benefits be denied?

These are thorny issues, and it is best to consult with counsel prior to starting stress-related FMLA leave to map out a strategy.

NOTE:  Sometimes employees seeking Short-Term Duisability benefits due to job-related stress apply, or are encouraged to apply for, Workers' Compensation benefits.  This is usually a mistake.  Click Here for a comprehensive discussion on the relationship between STD, Workers' Compensation, FMLA leave and Long-Term Disability insurance payments.