Do You Accrue PTO While on FMLA? Employer Guide

An employee is about to go out on FMLA leave and they ask you, reasonably, whether they will keep earning PTO while they are gone. You look it up. Every page you find tells you it depends on your policy, which is technically correct and completely useless, because you are the one who wrote the policy and you are the one trying to find out what it should say.

The reason nobody gives you a straight answer is that the straight answer is a rule about your own consistency rather than a rule about accrual. Federal law deliberately declines to decide this. It cares about something else entirely: whether you treat FMLA leave the same way you treat every other comparable leave. Once you understand that, the question stops being a legal puzzle and becomes a policy design decision with a right answer for your business.

This guide covers what the regulation actually says, the consistency test that decides the outcome, why the same twelve-week leave can produce two different answers depending on the week, the closely related question of whether PTO accrues while an employee is on PTO, the 2025 Department of Labor guidance on state paid leave that changed the substitution analysis, and policy language you can adapt. Tracking accrual across paid and unpaid leave periods is exactly the kind of thing I built FirstHR to handle. This is general information rather than legal advice, and leave law varies considerably by state.

The Short Answer

Whether PTO accrues during FMLA leave depends on your company policy, not on federal law. The FMLA neither requires nor prohibits accrual during leave. If your PTO accrues based on hours worked or paid status, it generally stops during unpaid FMLA leave. If accrual is frontloaded or tied to tenure, it generally continues. The one federal requirement is that you treat FMLA leave the same as other comparable leaves.

That is the whole answer in five sentences, and if you only read this section you will not get it wrong. The rest of this guide is about applying it to the specific way your company actually calculates PTO, which is where the ambiguity lives and where the mistakes happen.

What the FMLA Actually Says

The governing text is short and often paraphrased badly, so here is what it actually establishes. The relevant regulation states that an employee may, but is not entitled to, accrue any additional benefits or seniority during unpaid FMLA leave. Read that twice: it is a permission, not a mandate, and not a prohibition either.

Notice the word unpaid doing quiet work in that sentence. The permission to suspend accrual is written about unpaid FMLA leave specifically. When an employee is substituting accrued PTO and the leave is therefore paid, that clause is not the one that applies, and the analysis shifts to whatever your policy does during ordinary paid time. That distinction is the source of most of the confusion in this area and the subject of its own section below.

The Department of Labor's own plain-language material makes the same point from a different angle. Fact Sheet #28 describes FMLA as job-protected unpaid leave that employees may take at the same time as employer-provided paid leave, and confirms that an employer may require employees to use their paid leave during FMLA leave. Nothing in it obliges you to keep accrual running, and nothing in it lets you stop accrual selectively.

One threshold point before going further, since it determines whether any of this binds you at all. The federal FMLA generally applies to private employers with 50 or more employees, so a large share of small businesses fall outside it entirely. The broader eligibility and coverage rules are covered in the FMLA guide. What follows still matters below that threshold, because state leave laws frequently reach smaller employers and because the accrual question arises the first time anyone takes a long absence, covered or not.

The Consistency Rule

The rule that actually decides whether your policy is lawful is consistency: whatever you do for other comparable leaves, you must do for FMLA leave. This is the part that competing articles either skip or bury, and it is the part that creates real legal exposure.

Think about what the alternative would mean. If a company let employees keep accruing PTO during an unpaid personal leave but froze accrual during unpaid FMLA leave, it would be imposing a cost on the employee specifically for exercising an FMLA right. That is the shape of an interference claim, and it is why the regulation frames benefits during FMLA leave in terms of equivalence rather than in terms of a fixed outcome.

There is a practical benefit to this framing. It means you do not have to guess at the right answer or hire someone to tell you what it is. You have to make one decision, apply it uniformly, and write it down. A policy that says accrual stops during all unpaid leave is defensible. A policy that says accrual continues during all unpaid leave is equally defensible and more generous. A policy that has never been written down is the one that causes trouble.

Paid vs Unpaid FMLA

The distinction that decides the answer week to week is whether the FMLA leave is paid or unpaid at that moment, because a single twelve-week leave frequently switches between the two. This is the mechanic that surprises employers who expect one answer for the whole absence.

Here is how a typical leave actually plays out. An employee goes out for twelve weeks. They have four weeks of accrued PTO, which your policy requires them to substitute. For those four weeks, they are being paid, and your accrual rule sees paid status. For the remaining eight weeks, they are on genuinely unpaid leave, and the accrual rule sees no pay and, under most systems, no hours worked. Same leave, same employee, two different accrual outcomes.

Employers who do not anticipate this end up in an awkward conversation, because the employee sees their balance grow for a month and then stop, concludes something has gone wrong with payroll, and asks. There is nothing wrong. It is just the policy working exactly as written. But it is a much better conversation to have in advance, in the Designation Notice, than in arrears.

How Your Accrual Mechanic Decides It

Your accrual mechanic, chosen when you first wrote the policy and probably not revisited since, determines the answer more decisively than anything in the FMLA does. There are three common mechanics and they behave differently.

Read that grid and something becomes clear: the employers with the least ambiguity are the ones using hours-worked accrual, because the rule answers itself. No hours, no accrual, in every scenario, with no judgment call. The employers with the most ambiguity are the ones on per-pay-period accrual, because the period is a calendar unit and somebody has to decide what a half-worked period earns.

If you are designing a policy from scratch and you want the version that generates the fewest arguments, hours-worked accrual for hourly staff is the cleanest instrument available. The broader mechanics of setting rates and choosing between methods are covered in the accrued PTO guide.

Do You Accrue PTO While on PTO?

In most systems, yes. If accrual runs per pay period, is frontloaded, or is tied to paid status, it keeps running while an employee is using PTO, because the employee is still being paid. If accrual is strictly tied to hours actually worked, it generally does not, since no hours were worked. There is no federal law on this question whatsoever.

This question gets asked far more often than it gets answered clearly, and the pages that do answer it frequently contradict each other. Some state flatly that PTO never accrues on PTO because accrual requires hours worked. Others state just as flatly that it always does. Both are describing their own assumed accrual mechanic as if it were a universal rule, which is why the answers look irreconcilable.

The practical consequence for a small business is that this needs one sentence in your handbook and currently probably does not have it. Employees notice accrual behavior far more closely than employers expect, particularly around long vacations, and an unstated rule gets interpreted in whichever direction the employee expected. Write the sentence.

Running PTO and FMLA Together

Separate from accrual is the question of whether you can make an employee spend their PTO during FMLA leave, and the general answer is yes, subject to two conditions and one significant exception.

Under 29 CFR 825.207, an employer may require an employee to substitute accrued paid leave for unpaid FMLA leave. Substitution means the paid leave runs concurrently with the FMLA leave rather than extending it, so the employee gets paid and the twelve-week clock runs at the same time. Both parties usually want this, since it converts unpaid time into paid time for the employee and consumes the entitlement for the employer.

The two conditions are straightforward and frequently missed. Your written policy has to establish the requirement, because the employee's ability to substitute is governed by the terms of your normal leave policy. And the requirement has to be reflected in the FMLA Designation Notice you provide, which is where the employee learns that their PTO is being consumed. Requiring substitution that your handbook never mentions is a compliance problem regardless of how sensible the outcome is.

The State Paid Leave Wrinkle

The significant exception to the substitution rule is that where an employee is receiving payments from a disability plan, workers compensation, or a state or local paid family leave program, the leave is not unpaid, and you generally cannot require them to burn PTO on top of it.

The disability and workers compensation part of this is long-settled. The state paid family leave part is more recent. In a January 2025 opinion letter, the Department of Labor concluded that state and local paid family and medical leave benefits should be treated the same way, meaning the FMLA substitution provision does not apply to the compensated portion of the leave and neither party can unilaterally require accrued paid leave to run concurrently with it. The parties may still mutually agree that the employee uses PTO to top off the gap between the state benefit and full pay, where state law permits.

One caveat worth stating plainly. An opinion letter is the agency's interpretation rather than a statute, and interpretations can be withdrawn by a later administration. Even if that happened, several states impose the same restriction under their own laws, so the practical guidance for an employer with staff in a paid-leave state does not change much either way. Confirm the current position for your states before you write the rule into a handbook.

Note also that the substitution answer and the accrual answer remain separate here. Concluding that you cannot require PTO substitution during a state-paid period tells you nothing about whether accrual continues. That still turns on your own policy and on whether the period counts as paid status under it.

Four Worked Examples

Abstractions get slippery here, so these are the four scenarios that come up most often at a company with five to fifty people, worked through to the outcome.

The second example is the one worth studying, because it is the case that surprises people. Nothing unusual happened, no rule was misapplied, and the employee still saw their accrual behave two different ways during a single continuous absence. That is the system working correctly, and the only real failure available is failing to explain it in advance.

What You Cannot Touch

Whatever you decide about future accrual, the balance the employee had when leave began is protected and must be available to them when they return.

The regulation is explicit on this point: benefits accrued at the time leave began, including paid vacation, sick, or personal leave to the extent not substituted for FMLA leave, must be available to the employee upon return from leave. So an employee who went out with 60 hours banked and substituted 40 of them comes back with 20 hours available, not zero, and not a balance that quietly reset over the twelve weeks they were gone.

The last item in that second column is worth flagging because it is adjacent to accrual and catches employers with point-based attendance systems. FMLA leave cannot be counted as a negative factor in employment actions, and attendance points are a negative factor. If your attendance policy and your leave policy have never been read side by side, that is a productive hour.

Separately, if the employee does not return and instead separates at the end of leave, the protected balance becomes a payout question rather than an accrual question, and payout obligations vary sharply by jurisdiction. The state-by-state detail sits in the PTO laws by state guide.

Policy Language That Works

What resolves all of this is four sentences in your handbook that most handbooks do not contain. Here is language you can adapt, covering accrual during unpaid leave, accrual during paid time off, substitution, and the protected balance.

Two notes on adapting this. First, the accrual clauses have to match the mechanic you actually run in payroll, not the one you wish you ran. A handbook that promises accrual during paid status while your system quietly accrues only on hours worked creates a gap between the written promise and the actual behavior, and in a dispute the written promise is what gets enforced.

Second, check the clauses against your other unpaid leaves before you publish. The consistency rule means these sentences are only defensible if the personal leave, unpaid medical leave, and any other unpaid absence in your handbook behave the same way. If your leave of absence policy says something different, one of them has to change.

Where Employers Get This Wrong

The failures in this area follow a short and predictable list, and every one of them is avoidable with a written policy and one afternoon of review.

The first row is the only one with real legal risk attached, and it is also the most common. It happens because FMLA feels like the special case that deserves careful handling, so it gets a carefully considered rule while the ordinary unpaid personal leave sitting three pages later in the same handbook never got one. The result is an inconsistency created by paying more attention to FMLA rather than less.

What Employees Should Know

If you are on the other side of this and checking whether your accrual should have stopped, the short version is that your employer is generally allowed to suspend accrual during unpaid FMLA leave, provided they do the same during other unpaid leaves.

Three things are worth checking. Whether the pause matches what your handbook says, because the handbook is the promise your employer made. Whether your employer continues accrual during other unpaid absences, since treating FMLA leave worse than a comparable leave is the actual problem. And whether the balance you had before leave began is still intact, because that part is protected regardless of what happens to future accrual.

If the answer to any of those looks wrong, the productive first move is asking HR or the owner to walk you through the calculation, since the most common cause by a wide margin is a system configured differently from the written policy rather than anything deliberate.

Frequently Asked Questions