Does Gusto automatically track FMLA when our company hits 50 employees?

No. Gusto does not automatically track FMLA eligibility or maintain the 5-day Department of Labor notice schedule. When an employer reaches 50 employees for 20+ workweeks, they become covered by federal FMLA, but Gusto's native time-off tool only tracks basic PTO accruals.

How do we handle health insurance premiums in Gusto during unpaid FMLA leave?

Under FMLA (29 U.S.C. § 2614(c)), employers must maintain group health benefits on the same conditions as if the employee continued working. In Gusto, you can either collect the employee's premium share via catch-up deductions upon their return or arrange direct payments while on unpaid leave.

Can we track state Paid Family Leave (e.g. CA PFL, NY PFL) in Gusto?

Gusto handles statutory payroll tax withholdings for state PFL programs, but it does not manage the employee leave claims, medical documentation, or federal FMLA concurrency coordination.

Small Business Payroll & Leave2026 Guide

Gusto Leave of Absence: How to Track FMLA & Benefits for Growing Teams

Gusto is the gold standard for small business payroll. But when an employee requests maternity leave or goes on medical leave, payroll teams face serious legal risks coordinating unpaid status, health insurance deductions, and federal FMLA notices. Here is how to handle leaves of absence seamlessly alongside Gusto.

Fact-Checked & Regulatory AuditVERIFIED E-E-A-T

Verified by AI SoloHR Compliance & Editorial Team (U.S. Employment Law & Regulatory Compliance Research Group)

Last Audit: September 2026

50-Employee Coverage Checker Calculate FMLA 12-Week Entitlement

Compliance Blindspots

3 Costly FMLA Mistakes Made by Startups Using Gusto

1. Dropping Health Insurance Prematurely

When an employee goes on unpaid leave in Gusto, setting their gross pay to $0 often triggers payroll confusion. If employer health contributions stop, it is a catastrophic per se violation of 29 U.S.C. § 2614.

2. Missing the 5-Day Notice Clock

Gusto does not issue Department of Labor notices. Failing to send Form WH-381 within 5 business days can invalidate an employer's ability to designate the leave retroactively.

3. Calendar Year vs. Rolling Lookback

Gusto's native time off calculates on an annual calendar basis. If an employee takes 12 weeks of leave at year-end, they could wrongfully claim another 12 weeks on January 1st if not tracked on a dynamic rolling 12-month period.

Operational Playbook

Step-by-Step: Managing a Leave of Absence with Gusto & AI SoloHR

Step 1: Check 1,250-Hour Eligibility in Gusto

Run a Gusto Year-to-Date Hours report for the employee. Ensure you deduct paid holiday and vacation hours—only actual hours worked count toward the 1,250-hour FMLA threshold.

Step 2: Issue Mandatory DOL Notices via AI SoloHR

Generate and email Form WH-381 (Eligibility Notice) and WH-380 medical certification within 5 business days using AI SoloHR's pre-filled templates.

Step 3: Configure Gusto Payroll for Unpaid Leave

In Gusto, place the employee on an unpaid leave of absence status rather than terminating their profile. Set up an agreement for employee health insurance premium catch-up deductions upon return.

Step 4: Reinstatement & Catch-Up Deductions

Upon return with a valid fitness-for-duty note, restore full regular pay in Gusto. Add post-tax deduction items to recover the employee's unpaid benefit shares gradually over subsequent pay cycles.

Frequently Asked Questions

Gusto & FMLA Compliance FAQs

Can we use Gusto PTO tracking for intermittent FMLA?

Gusto allows employees to submit hourly time-off requests, but it cannot differentiate between voluntary PTO and legally protected FMLA hours. If an employee exceeds their PTO balance, Gusto will simply reject the request, which can lead to unlawful FMLA interference.

Does Gusto integrate with third-party absence management platforms?

Enterprise tools like AbsenceSoft or Tilt require expensive custom integrations. AI SoloHR offers a lightweight solution tailored specifically for Gusto-powered SMBs, allowing you to maintain compliance without high PEPM fees.

Made for Gusto Employers

Audit-Proof Your Small Business Leave Compliance

Pair your Gusto payroll with AI SoloHR to automatically track rolling 12-month balances, verify 1,250 hours, and generate compliant DOL notices.

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Statutory Sources & Regulatory Citations

This compliance document references official regulatory guidance from federal employment enforcement agencies: