FMLA vs. Short-Term Disability: An Overview For Small Businesses

When life throws a curveball at your employees, the proper support can help them focus on recovery. For small businesses, understanding the difference between FMLA vs. short-term disability matters in this process. Both types of leaves can protect your employees, but they do so in different ways. Once you know how each one works, you can create leave policies that safeguard your team’s well-being and productivity. Let's break down the benefits and applications of FMLA vs. short-term disability.

What is FMLA?

Some family and medical emergencies are unavoidable. The Family and Medical Leave Act (FMLA) guarantees up to 12 weeks of unpaid leave per year for eligible employees. It may help them manage significant life events, such as:

• Welcoming a new child

• Recovering from a serious health condition

• Caring for a loved one

• Military family needs, including up to 26 weeks of unpaid leave to care for a covered military service member

With FMLA, employees don’t have to worry about losing their jobs or health coverage. To qualify, employees must:

• Work for a covered employer that employs 50 employees or more

• Be employed for at least 12 months

• Have worked 1,250 hours in the past year

While on FMLA leave, employees retain their health insurance coverage under the same terms as when they were actively working. Once they return, employers are required to restore them to the same or an equivalent role. Some states have implemented different rules. For example, if your business is based in California, you should follow the California Family Rights Act.

What is Short-Term Disability?

Short-term disability replaces a portion of an employee's income when they can’t work due to a non-work-related injury or medical condition. It helps employees focus on recovery without the stress of losing their paycheck. Short-term disability is usually part of a benefits package that includes paid leave programs. Employees may access it through a group insurance policy or as an optional add-on that they can purchase.

Coverage typically lasts between six and 12 weeks, though some plans may provide more extended coverage. Most short-term disability policies replace 50%-70% of an employee’s regular wages during the benefit period. To qualify, employees have to meet the insurance company’s requirements. They may have a waiting period before benefits can begin, and they generally need to provide medical documentation supporting the claim.

Common reasons for using short-term disability are:

• Recovery from surgery

• Serious illness

• Pregnancy complications

• Injury outside of work

By offering short-term disability, you give employees a safety net that supports financial stability during health-related absences. Clear communication about eligibility and claim procedures for FMLA vs. short-term disability helps employees understand their options. For example, they may have to request leave in writing, and you should answer with a letter spelling out the details.

What's the Main Difference Between FMLA vs. Short-Term Disability Benefits?

You or your employees may be wondering if they need FMLA or short-term disability. The primary distinction comes down to purpose. The FMLA protects an employee’s job and benefits during leave, while short-term disability replaces part of their income while they're away.

Depending on the situation, your employees may be eligible for both. Understanding how and when to use these policies ensures you meet legal requirements and support your team’s needs.

How to Implement FMLA and Disability Policies in Your Business

Clear policies help you apply the appropriate benefit at the right time, whether it’s FMLA vs. short-term disability or a combination of the two. By defining procedures upfront, you can reduce confusion and remain compliant. Here are some tips to implement the policies:

1. Create a Written Leave Policy

Explain eligibility requirements and documentation needs. Then spell out how each benefit works. Highlight the difference between FMLA vs. short-term disability, so employees and managers know which one applies.

2. Train Managers and HR Staff

Give your managers and HR staff the tools to process leave requests consistently and lawfully. They should know how to designate FMLA leave and guide employees through a short-term disability claim.

3. Coordinate Across Teams

Work closely with payroll and benefits administration to ensure accurate pay and benefits continuation. Working with both departments helps maintain compliance at every step. 

4. Keep Detailed Records

Track all leave requests and related documentation. Organized records protect your business during audits or disputes.

5. Communicate Clearly With Employees

Ensure employees understand their rights and obligations for requesting leave. Help employees understand how either benefit might work for them.

Managing Leave Policies with Justworks

Managing FMLA or short-term disability becomes much simpler when you have the right systems and support in place. A streamlined approach can save valuable time and reduce administrative errors. The Justworks PEO and EOR platforms provide localized HR expertise. If you have employees in the U.S. or in another country, you can review and track requests all in one place. Get started with Justworks today.