How does PTO work in states with disability and family leave benefits?

As a growing number of states roll out statutory Paid Family and Medical Leave programs and short-term disability insurance benefits, employers, HR managers, benefits advisors, and insurance brokers, alike, are trying to understand how PTO and PFML interact in terms of claims.

In some states, employers can require workers to use their PTO first, but some states do not allow that.  Understanding all the rules can be complicated, especially for insurance brokers selling these new PFML benefits across multiple states.

Fortunately, said Sonja Spruiel, who serves as the Regional Business Development Manager, Accident and Health, for Arch Insurance, “The broker doesn’t have to be the expert.”

She added, “I position myself as the expert because I read into the laws and create spreadsheets for my company. If brokers bring an expert to the table who is knowledgeable about the products and can really be consultative to the client, it can help them navigate the transition into these mandated paid leave programs.”

That’s just one of the ways insurance brokers can benefit from using an insurance wholesaler with close relationships with top carriers. Spruiel sat down with The DBL Center marketing team to unravel the different paid family and medical leave benefits in different states and how they affect PTO for employees in those states.

Understanding PTO and PFML / State Disability Laws

“Some states allow employers to require the employee to use PTO first, and some states do not allow it,” Spruiel said as the starting point to a deeper, state-by-state dive.

In places like New Jersey, it’s desirable to use PTO to fill in gaps, she explained.

The state has a one-week waiting period for disability benefits paid through the New Jersey State Insurance Fund, so employees may be able fill in their missing income with PTO. “A lot of employees elect to receive PTO so they can receive pay for those seven days,” Spruiel said.

Additionally, New Jersey employees may use PTO in increments to make their weekly earnings whole. “In New Jersey, if an employee is earning 85% of their wages up to a cap, they can use PTO to get paid up to 100% of their pre-disability earnings,” Spruiel said.

Connecticut employers are allowed to require their employees to use PTO – or allow them to opt to use PTO concurrently with Connecticut Paid Leave – as long as the total compensation doesn’t exceed the employee’s full regular pay. The Connecticut law also permits employers to mandate that workers use their accrued vacation time, but must allow the worker to retain at least two weeks of PTO or vacation time, according to

In Massachusetts, an employee can opt to use PTO to receive income during the seven-day waiting period for PFML, but they aren’t required to. They can also opt to use PTO instead of PFML at any time during leave if the benefit is higher.

However, employees in Massachusetts, cannot use PTO concurrently with PFML on the same day to make their salary whole. They can, however, collect PTO and PFML benefits within the same week, but not on the same day, according to

As you can see, rules vary across states and, in some states, employees may not have a need to use their PTO.

“States like Oregon and Colorado, which do not have a waiting period and benefits start on day one, cannot require an employee to use PTO. If an employee elected to take PTO, it would be an offset to the benefit,” Sprueil said.

The Future of Paid Family Medical Leave

As we spoke, the topic came up regarding a federal paid family and medical leave program and how this may (or may not) affect the disparate state programs. The federal Family and Medical Leave Act provides employees in companies larger than 50 lives with unpaid, job-protected leave. But, so far, there has been no federal paid leave program.

If legislation passes, Spruiel said it would be a “minimal benefit,” and that states would still have the option to meet – or exceed – the requirements through their own programs. “States with programs in place would not be subject to the federal plan.”

This would leave the future of privatized FMLA and PFL benefits secure as a revenue stream for insurance brokers and as a recruiting and retention tool for employers, as well as for states that are competing for tax revenue from homeowners and employees.

FMLA Benefits as a Recruiting and Retention Tool

With skilled office workers able to work from virtually anywhere, many states are trying to prevent “brain drain,” or the phenomenon of skilled workers relocating from more expensive regions. Robust, state-mandated benefits can help attract higher income workers and, therefore, tax revenue, to specific states with competitive FMLA laws in place.

“Many of the bigger states already have plans,” Spruiel said. “A smaller state may not see a desire for the expense of administration of a program, so they may let the federal program reside in their state. But there are a lot of other states to compete with in this world of remote working, so there’s a big edge for states who choose to be competitive on this.”

We can expect to see more state plans introduced, even if federal paid leave legislation manages to pass through Congress within the next few years.

With that in mind, Spruiel emphasized that it is usually a worker’s “payroll state,” or the state where they complete the majority of their work and pay taxes, that determines their statutory benefit eligibility and the state where they would file a paid leave claim. “Remote work is changing the landscape of everything,” Spruiel said.

It’s more important than ever for statutory insurance brokers to position themselves as a resource to employers and benefits supervisors. In many cases, that means fostering relationships with carriers through The DBL Center. As a concierge for brokers, we can act as your back-office staff and help guide your clients through this ever-evolving landscape of employee benefits.